Mind Your Manners

Have you ever provided free or discounted services to referring physicians or their staffers or families? How about hospital personnel, affiliated with discharge planning or otherwise? Home health agency staffers?

The provision of medical services to health care providers, their families or staffs at a discounted charge or gratis is known in the industry as “professional courtesy.” And professional courtesy can get you in serious trouble with the government unless handled carefully.

The problem is that professional courtesy can be construed as a reward for referrals. Such rewards run afoul of the federal anti-kickback laws, which prohibit “remuneration” (that is, anything of value, like professional courtesy) to a referral source in exchange for referrals. The government takes a dim view of such arrangements and investigates them enthusiastically.

In 1997, HIPAA set out conditions under which professional courtesy would violate the law. The Stark Law then created a professional courtesy exception for a physician or his/her immediate family members or office staff under specific conditions. Among other requirements:

• The professional courtesy must be offered to all physicians in the local community or service area without regard to whether they are referral sources;

• The courtesy policy must be set out in writing;

• The courtesy may not be made available to anyone who is a beneficiary of Medicare, Medicaid or any other federal health care program; and

• If the courtesy involves any reduction of copay or deductible, the insurer must be informed in writing of the reduction.

So what sort of professional courtesy is permitted? First, professional courtesy offered to physicians/families/staffs is permitted if it complies with the Stark Law exception listed above. Second, if a policy can be set up in a way that demonstrates it is not intended to induce referrals, and is offered to all health care providers (or all providers within a specific category, such as the entire staff of a hospital) then it may also be permitted.

Third, note that the Stark Law's very limited exception precludes professional courtesy for patients insured by government programs. Thus, it may make sense to limit professional courtesy to patients not covered by such payers.