When It is Legally Acceptable to Accept Gifts at Your Medical Practice

November 11, 2012

Yes, your medical practice can accept gifts from the healthcare industry, but be aware of the rules before saying thanks. Here's some guidance.

In this third installment of the series on gifts and payments from the industry to physicians, we will cover some of the more common issues under AMA Ethics Opinion 8.061, Stark Law and the Anti-Kickback Statute (AKS).

It all starts during internships and residency programs with three-foot-long subway sandwiches and pizza offered to exhausted doctors in training. Later, boxes of expensive gifts arrive in your established practice. You may be offered free educational trips, employment contracts, or research grants. Or, you may be offered free stuff to hand out to your patients. This is all designed to condition physicians to associate pharmaceutical detailers with "goodies," and to condition the human response so well known to Madison Avenue’s “Mad Men.” If you give someone freebies, the gift triggers a human instinct to reciprocate; even if the reciprocation involves nothing more than giving the detail person a few moments of your time.  The more successful you become, (defined by how many prescriptions you write) pizza boxes are replaced by offers of free trips or contracts to serve as a “thought leader” who shapes opinions in your field, on the pharmaceutical company’s nickel.  And it works - studies are able to link spikes in prescription activity to pharmaceutical giveaways.

The government has also figured this out. Stark Law, 42 U.S.C 1395nn and the AKS 42 U.S.C §1320a-7b and the new Sunshine Act under the Affordable Care Act have fairly well put an end to the days of cash kickbacks and free or discounted product to be sold for profit, at least with major pharmaceutical companies.

AMA ethics opinions are the source material for many Stark Law and AKS rules.  Although the government may not expressly say so, it does seek to defer to, and reconcile Medicare and Medicaid Fraud and Abuse Laws with AMA Ethics Rules (See, AMA Ethics Opinion 8,061 “Gifts to Physicians from Industry.”)   

The question remains: What can you accept from the industry? First as AMA Opinion 8.061 (7) makes clear: “No gifts should be accepted if there are strings attached.” In governmental AKS parlance, you may not accept a gift or employment, if the idea is that you will write prescriptions in exchange for the consideration. Additionally, employment compensation must do no more than compensate you for the time spent. With that in mind, let’s start with the simple, less complex examples, and progress to more sophisticated (and expensive) giveaways. Think of “kickbacks” in terms of an accounting balance sheet. Anything given which adds to the “income” side, or gives away something you ordinarily must pay for on the “expenses” side, is suspect. Income for doing work should balance against the time you lost seeing patents while doing the work. Under the AKS, if what you gave for something is out of balance with what you received, you may have kickback issues. 

It’s Just Lunch

Can a pharmaceutical detail person still buy you or your staff a pizza? Probably. Especially where lunch is a forum for learning about a drug or device that may help you serve your patients. Do not accept cash or gifts cards redeemable anywhere. Although HHS has grumbled, there is a link between lunches and prescribing practices, the practice is still legal, to a point. See, HHS’ Roadmap to Physicians. The Roadmap notes, (as I wrote in "Stark Laws and Gifts Sent to Your Medical Practice,") under the Sunshine Act, gifts will be reported. Additionally, you cannot ask for a free lunch, and you can’t, under the AKS, offer to write a prescription in exchange for a free meal. (That’s selling patronage to the highest bidder.) Currently, the occasional meal won’t likely land you on the OIG’s 10 most wanted list, even if HHS doesn’t like free lunches.   

Free Specimen Cups and More Expensive Glucometers

Because AMA Ethics Opinion 8.061 makes clear, “gifts to your practice from the industry should be of primary benefit to the patient,” pharmaceutical and device companies may offer everything from free specimen cups to more expensive free gulcometers to be given to insulin-dependent patients. It is one thing to accept a few specimen cups, pens, or writing pads to save a trip to the supply store; it is another to accept medical devices which have real value, with the intent they be given to patients. Remember, you may not ordinarily ethically give anything of value to a patient to induce the patient to come to you. This is because often, someone else is paying the bill, and the patient should be motivated solely by his medical needs. This is especially true if the patient is a government program beneficiary, it does not matter where you got the thing of value, nor does it matter that it did not cost you anything. It is a felony to offer freebies of significant value to get medicare/medicaid patients in your door.

Free Drug Samples

Everyone gives away free samples.  Particularly prior to Medicare Part D, it was somewhat understood that physicians might be able to identify those patients who could not afford a prescription, and distribute accordingly. What you may not do is sell free samples as though you paid for them. Further, it is the safest practice to give away no more than is necessary to start the patient on therapy, until he can get the prescription filled. In some states, such as Texas, the limit you may hand out is codified (72-hour supply). You must also have a system in place to separate free samples from those administered under Medicare Part B to ensure that free samples are not comingled with those for which reimbursement may be sought.

Trips

The basic ethics rule is that educational trips paid for by pharmaceutical and device manufacturers should not be “fun.” (Many False Claims Act cases involve trips to Scotland to play golf.) Trips ethically should be educational in nature, and should not be simply payment of a free trip to listen to a short infomercial. Certainly, the trip should not come with strings attached.

Employment

According to the HHS Roadmap for Physicians: “Some pharmaceutical and device companies have used sham consulting agreements and other arrangements to buy physician loyalty to their products. As a practicing physician, you may have opportunities to work as a consultant or promotional speaker for the drug or device industry. For every financial relationship offered to you, evaluate the link between the services you can provide and the compensation you will receive.”

The Roadmap for Physicians lists a series of questions which you should ask yourself before accepting employment. These questions might seem a bit ridiculous. I assure you, the OIG takes these very seriously. Further, employment agreements must meet the safe harbors under Stark Law and the AKS.

If you are paid $1,500 to write and deliver a speech, you are likely going to be fine, as long as you spend $1,500 in time writing and delivering the address. The larger the contract, or the greater the length of time you are retained as a consultant, the more likely you will wish to seek the advice of an experienced Stark Law attorney to ensure that the employment agreement meets the safe harbors.  

Finally, the Roadmap for Physicians lists a set of resources on page 9, under the “help” graphic.

Next week, I'll take a look at Independent Practice Associations, or IPAs.