Legal Alerts

A Guide to Holiday Gift Giving & Receiving in the Healthcare Industry

(December 5, 2019) - It's that time of year again when we show our appreciation for those who have contributed to our success in the past year. Gift cards, baskets of goodies, theater tickets, meals, and bottles of alcohol are typical in the business world. Those in the healthcare industry, however, must be extremely careful when making gifts to referral sources, or even receiving gifts from vendors and others. The law takes a view that is different from what is commonly accepted, and gift giving in healthcare can be a tricky business that should be approached with care to avoid violating a variety of state and federal anti-kickback, fee-splitting, and self-referral laws. This alert provides some best practices for healthcare providers during this season of giving and receiving.

Medicare’s Anti-Kickback Law

The Medicare anti-kickback statute prohibits the payment or receipt of any form of remuneration intended to reward or induce the referral of patients. The federal government is concerned that such gifts or other kickbacks may lead to the overutilization of services reimbursed by Medicare and other healthcare benefit programs, thus increasing the cost of healthcare through the corruption of medical decision-making based more on financial incentives than on the needs of the patient.

Specifically, the law prohibits the knowing and willful offer, payment, solicitation, or receipt of remuneration (i.e. gift giving) to induce referrals for items or services covered by a government program, such as Medicare and Medicaid. If just one purpose or aspect of such remuneration is to induce or reward referrals, then the law is violated, even if there may be other legitimate purposes behind the payment. Violation of this anti-kickback statute is a felony punishable by five years in prison, a $25,000 fine, and other penalties, including exclusion from the Medicare and Medicaid programs.

Cash-Equivalent Gifts

Gifts which are considered cash equivalents, such as gift cards, gas cards, gift certificates, etc., are particularly suspect because they are used in the place of cash. For example, a radiology practice in Jupiter, Florida settled allegations brought by the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) in 2015 that it gave holiday gift cards to a number of its referring physicians. The OIG alleged that the physician used reports of referring physicians to determine the corresponding value of holiday gifts based on the volume of referrals. In this case, the medical practice self-disclosed the error and was able to settle the matter for a mere $50,000.

Not so in a 2013 case involving a Texas hospital that settled false claims allegations for $258,000 because it had, among other inappropriate acts, given gift cards to its referring physicians. Similarly, in 2012, a Raleigh, North Carolina laboratory violated Medicare law by giving gift cards to employees in referring physician offices. That settlement cost the company over $151,000 to settle. In that case, the gift cards were worth only about $25 each, but the company had distributed over $100,000 worth of gift cards over a five-year period.

Takeaway

While gift giving, especially around the holidays, may be considered both an act of gratitude and a marketing expense, when giving anything of value to referral sources, one must be extremely careful. This is especially so if the government can prove that one purpose of the gifts was to reward referrals. In deciding whether to give such gifts, one should never base the decision upon the volume or value of referrals. Furthermore, the dollar amount should be relatively nominal, especially if the gift giver is risk-averse. In any event, one should treat referral sources equally without showing any form of favoritism among referral sources based upon the volume or value of referrals. One should also consider gifts that are not cash equivalents, such as food baskets. 

Healthcare providers and organizations should adopt compliance plans that address, among other things, the subject of gift giving or receiving and other marketing expenses, and educate their compliance officers and staff on the importance of complying with such plans in order to avoid giving or receiving inappropriate, and potentially illegal, gifts.

For more information on this topic, contact the author of this alert, or visit our Healthcare Law Practice page to find an attorney in your area.

Author:

Lee F. Lasris, Partner

Related Practices

• Healthcare
• Healthcare Regulatory & Compliance

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