Q&A: Physician Financial Relationships and Stark Law

Our recent webinar, "Understanding Physician Financial Relationships: Stark Law & Anti-Kickback Statute," had great attendee turnout and participation. Those in attendance posed dozens of questions in the Q&A portion of the webinar, but because of limited time we had to leave many excellent questions unanswered with the promise that we'd write a blog post to address them. As promised, this is that post.

If you weren't able to attend the webinar, no worries. You can watch the on-demand recording any time by clicking here >>

And finally, before we get to the Q&A, we want to thank all of you who attended and participated in the webinar. Your interest, attendance, and participation are what make it possible for us to present information on these important topics and are greatly appreciated.

Now on to the unanswered questions.

Q&A

Q1: In the Stark Law, you mentioned a physician cannot be employed as an independent contractor. Does this refer to being employed by the same entity that might also employ the physician as an independent contractor? Or does this preclude any provider from engaging as an independent contractor for one entity while employed by another?

A1: This only applies to the same entity. Let's say New York Hospital System had an employed emergency department physician. That physician could not also work for New York Hospital as an independent contractor. The physician is allowed to work for another entity either as an employed physician or an independent contractor (affiliated).

Q2: Who is required to keep the non-monetary log? Is it the entity that employs the physician or the physician practice? What about physician organizations that are member organizations?

A2: Each covered entity is required to keep the non-monetary compensation log. The entity can assign this to anyone. The trick is making sure all other relevant workforce members know the person that is responsible for the stark log so that they can report non-monetary compensation that needs to be recorded on the stark log. Keep in mind Stark's only implicated IF: the physician has a financial relationship with the entity (not ownership), and the physician refers "designated health services" to that entity. Let us know if you need help with an analysis; having an independent, written legal analysis is a good learning experience and can offer protection.

All non-monetary compensation needs to be tracked on the stark log. This includes employed physicians, independent/affiliated physicians, or a physician that is neither employed or affiliated. If New York Hospital is the entity that paid the non-monetary compensation to a particular physician, then it is New York Hospital's responsibility to track that non-monetary compensation on their stark log. If a separate physician practice pays non-monetary compensation to a physician, then it is their responsibility to track any non-monetary compensation that they provide. Basically, the entity that incurs the cost for the non-monetary compensation is the entity that is responsible for tracking it on their stark log.

Q3: What is an RVU rate?

A3: Structuring compensation based on RVUs, or sometimes referred to as wRVUs and fair market value, can be a little tricky and sometimes intimidating. Let me know if you need help structure physician contracts or if you need a physician contract template developed for your organization; my rates are very affordable. This is a description of RVUs: Medicare uses a physician fee schedule to determine payments for over 7,500 physician services. The fee for each service depends on its relative value units (RVUs), which rank on a common scale the resources used to provide each service. These resources include the physician’s work, the expenses of the physician’s practice, and professional liability insurance. To determine the Medicare fee, a service’s RVUs are multiplied by a dollar conversion factor. Estimating and updating the RVUs is a labor-intensive process because there are no readily available, up-to-date data on the resource requirements of each service.

Physician services, which are described by Current Procedural Terminology (CPT) codes and Healthcare Common Procedure Coding System (HCPCS) codes, ranging from those that require considerable amounts of physician time and effort to specialized equipment. For each service, Medicare determines RVUs for three types of resources. Physician work RVUs account for the time, technical skill and effort, mental effort and judgment, and stress to provide a service. Practice expense RVUs account for the non-physician clinical and non-clinical labor of the practice, as well as expenses for building space, equipment, and office supplies. Professional liability insurance RVUs account for the cost of malpractice insurance premiums. Although the actual percentages vary from service to service, physician work and practice expenses comprise 52% and 44% of total Medicare expenditures on physician services, respectively.

Q4: If the hospital caters a meal for Hospital Week and for an Annual Christmas Party for all employees and physicians are invited, does one of those meals need to be included on the log?

A4: No, neither of these situations would require adding the cost to your stark log. The catered meal for Hospital Week is considered an incidental benefit if it is served at the hospital and if it is worth less than $34. The Annual Christmas Party counts as the "one-time annual party allowance" and doesn't need to be added to the stark log as long as there are no other parties for the providers/physician during that year. 

Q5: Anything different with compensation logs when the physician is 51% owner of the clinic?Getting supplies, medications, etc.

A5: There is no need to add anything to a log if the physician in question is an owner.

Q6: As a DME Provider with Marketing reps, are we required to keep a Stake Log for the Physicians we visit?

A6: No, the physician would need to have a financial relationship with the DME and also refer patients/designated health services to the DME. However, there may be an Anti-Kickback risk in this situation. Let us know if you need help with vendor/supplier contracts or developing supplier relations policies.

Q7: So if you believe a physician is receiving some type of benefit based on the lack of MN of services he is referring to one laboratory, what is the best way to inquire or validate the relationship between the referring provider and the billing lab?

A7: This could be a difficult situation. Depending on the position the suspecting person is in, they may be in a position to review the contract the physician has with the lab or see the compensation that is being paid from the lab to the physician. It is highly suspicious if a physician refers patients to a lab and receives something in return. you should call your compliance hotline or compliance officer or speak to a qui tam/whistleblower attorney. 

Q8: Could you please elaborate a little more on the education, CEO/recruiting efforts under Incidental vs. Non-compensation? Thank you. "It is important to educate different workforce groups in different ways because they encounter different types of situations that may implicate Stark or AKS. I would require organizational leaders that have anything to do with physician/provider contracts, payments, time logs, etc. to participate or complete an annual 'physician financial relationships training.'"

A8: The training should focus on the general requirement that, if there is an exchange of money or something of value between the entity and a physician, there needs to be a contract in place that specifies what the money exchange is for (legitimate business purposes or services). Also, the education should touch on the difference between incidental benefits and non-monetary compensation but request that the leader speaks with the compliance officer/department before the physician is paid or benefits from something paid for by the entity.

If you are talking about how Stark applies when a hospital or CEO uses an employed or affiliated physician to help recruit other physicians or when a CEO is recruiting a new physician. There are allowances for recruiting physicians that remove the necessity to track non-monetary compensation on your stark log. Recruiting physicians is another big area of risk under the Stark Laws. In general, you should have an agreement drafted during the recruiting process that formalizes the relationship and any compensation going to the physician candidate. Also, once the physician decides to commit to a position, certain compensation can be allowed for things like moving expenses, student loan repayment, but all of these need to be specific amounts and stated in the contract--including contingencies for payback of these expenses if the physician leaves the employment before a certain time period has passed.

Q9: Would tickets to physicians to games (football, basketball, hockey) need to be recorded in the Stark Log?

A9: Yes, If the entity paying for the tickets has a financial relationship with the physician and the physician refers patients/designated health services to the entity, then it needs to be tracked on the entity's stark log.

Q10: What is the difference between personal services vs. contracted services?

A10: A personal service generally means a service/patient that a physician refers to another entity but then personally provides the services. A contracted service is a service a physician/provider provides for an entity and the remuneration/pay is formalized in a contract. Services can be both personally provided services and contracted services.

Q11: Does Cumulative effect apply to the same physician having an Medical Directorship and Call Coverage for the same hospital?

A11: Yes, the entity would need to take into consideration the total amount of time it would take the physician to provide all the known services. This includes services the entity knows the physician provides for other entities, comparing the total compensation to FMV and also determining if it is actually possible for the physician to provide all the services without double dipping or overlapping the time services that are being provided.

Q12: What is a good rule of thumb to measure excessiveness or extravagance for an event/party?

A12: This is very difficult to determine without knowing other related facts, such as what is the market and costs in the area where the entity is located and where the event will take place. However, we would recommend the following: avoid giving any gifts, if possible; avoid paying airfare, hotel, spa treatments; avoid meals/events that cost more than $100/per person; avoid serving alcohol or paying for alcohol (this could also lead to a liability claim if there is an accident or injury); if alcohol is available, don't have an open bar--make the physicians/providers pay for their own alcohol or give them a voucher for 1-2 free drinks and they pay for additional alcoholic drinks. Some markets may justify spending more than $100/per person (I gave the example of Park City). Markets like NY, San Francisco, LA, D.C., Chicago, or resort cities like Vail, Breckenridge, etc. will be justified in spending more, but only if the entity is located in that area.

Q13: If flowers, etc. are paid for by employees themselves rather than from the company, does this trigger Stark?

A13: No, unless it seems like a circumvention to avoid tracking the non-monetary compensation.

Q14: Does the non-monetary compensation log need to be kept for each facility? For example, if there is a physician that works for a hospital chain, is it one log for that physician for each hospital in the chain or is there one log for the chain of hospitals?

A14: There is a lot of debate about this. We believe that each covered entity can keep a separate log. Therefore, if a health system has several hospitals but they all have separate provider numbers, each hospital can have a separate stark log.

Q15: Are there any AKS concerns when a hospital partners with a medical device company on an event which invites patients back to reunite with physicians who treated them with a particular device sold by the company? In this scenario, the hospital would fund the event and the device company would provide all the logistics.

A15: Yes, AKS would be implicated if the physicians benefit from something of value coming from the hospital and AKS would be implicated because the medical device co. is providing something of value to both the hospital and the physicians (if the hospital and physicians receive any type of federal funds). Let us know if you need help with a situation like this. There is a way to structure an arrangement and formalize it in writing so that it avoids an AKS issue.