Physicians and Gifts: A Legal Primer

December 17, 2014

Before you give - or receive - a gift this year, understand the federal and state laws that govern gifts to physicians and medical practices.

It’s that time of year again. My phone is ringing and my e-mail box is full of the same client questions: What kind of holiday gifts can physicians give without getting into trouble? Why am I limited to how much I can spend? Will I really get in trouble if everyone else does it?

I have covered this topic before, but it is still one that physicians like to review as they make decisions during the holiday season concerning how best to thank those who helped contribute to a successful year in practice. Most physicians are aware that ethically they should not pay those in a position to refer to their practice, nor should they accept gifts from providers to whom they refer patients. The basis for this prohibition is found in numerous laws, including the Stark laws and Anti-Kickback Statute. Under Stark, which generally prohibits physicians from referring federal patients for certain designated health services (DHS) to an entity with which the physician (or immediate family member) has a financial relationship, physicians may not accept gifts valued at more than $385 in 2014, with each gift being a maximum of $32. This number will go up to $392 ($33 per gift) in 2015. This law requires physicians to track gifts from all sources throughout the applicable year. Although this rule is typically associated with physicians on the medical staff of a hospital, it does in fact apply to physicians with a variety of relationships that may involve referrals of DHS.

The Anti-Kickback Statute is a criminal statute that is generally implicated by the giving of anything of value in order to induce a referral of a patient, services, or item billable to a the federal healthcare program. Both the giver and the receiver of the gift may violate the statute. This statute is intent-based and therefore the intent behind the receipt (or making) of the gift is important to determine whether the law has been implicated. There is no gift-giving exception under the Anti-Kickback Statute, but HHS' Office of the Inspector General  has determined that incentives of nominal value (not more than $10 per item or $50 in the aggregate for a year to a single individual) are likely acceptable. 

Physicians often forget to look at their state laws to see what other prohibitions or rules might apply. In fact, most states have laws very similar to Stark and the Anti-kickback Statute, and such laws may or may not include de minimis-type exceptions. This means that satisfying Stark and Anti-Kickback requirements does not necessarily eliminate a physician’s/practice’s risk of violating state law. Similarly there may be other limitations, such as state practice statutes that prohibit the giving of gifts to anyone in a position to generate a referral or to recommend patronage by a patient. For this reason, talking with your local counsel as you make your gift-giving plans is always recommended.

The tradition of giving gifts has become a burden for many practices. Sometimes my clients insist a gift is needed to compete with the offerings of other providers, or to be attractive to new referral prospects. Sometimes the gift is truly a thank you for providers who have been loyal referral sources over the course of the past year. Many clients report they have switched to making donations to charities related to their specialty in lieu of gifts, or are simply choosing to send a greeting card in order to minimize any potential risk in today’s regulatory environment. What’s most important is that every practice review the reasons it gives (and accepts) gifts carefully, and determine whether the approach being taken is compliant. Do not assume that because another physician or practice engages in certain gift-giving activities, that such activities are legal or acceptable.

I urge all providers to think carefully as they plan their gift-giving this coming year. The decisions made this holiday season can have a long-term impact on your practice and those you do business with. Happy holidays to everyone.