Corporate Compliance

Hosting internal social events

Compliance Monitor, April 6, 2007

Q: With summer just around the corner, we would like to host some nice breakfasts and dinners for our physicians on weekdays after they complete their patient rounds. These would either be held at the hospital or at a local caterer. How should we proceed?

A: Pursuant to the federal Stark Law and its accompanying regulations, there are certain exceptions to the referral prohibition related to compensation arrangements. One of the exceptions relates to medical staff incidental benefits. This regulatory exception provides that compensation in the form of items or services (not including cash or cash equivalents) from a hospital to a member of its medical staff when the item is used on the hospital's campus are acceptable if each of seven conditions are satisfied.

One of the seven exceptions requires that the compensation be of "low" value. This regulatory exception specifically provides an example relating to a meal given to a physician while he or she is serving patients who are hospitalized. In 2006, the dollar equivalent for this "low" value medical staff incidental benefit had to be less than $27.

A second regulatory exception to the Stark Law places an annual limit on the non-monetary compensation from an entity in the form of items or services (not including cash or cash equivalents) to a physician. Because you did not list how much you want to spend on these breakfasts or dinners, it is not known whether these expenditures will raise any issues. A hospital must be sure to comply with the federal Stark Law, the federal Anti-Kickback statute and any relevant state statutes and regulations in its dealing with its physician staff members.

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