The world of private practice physical therapy is certainly competitive, so it makes sense that owners and directors consider every angle when it comes to promoting their businesses. (On that note, be sure to check out our free modern PT marketing guide to learn fresh—and legally compliant—promotional strategies.) Unfortunately, some of those angles can get you and your practice in hot water with Medicare. Today, I’ll discuss handling gifts, donations, and discounts in a way that doesn’t rile up the big M.

But before I launch into that, here’s a legal primer:

Stark Law vs. Federal Anti-Kickback Statute

Both of these exist to stop financial incentives from influencing medical decision-making. However, the laws are different in scope, structure, and approach.

It’d be far more entertaining—and much less concerning and confusing—if Stark Law had to do with Game of Thrones (governance of the North set forth by House Stark). In reality, though, according to the APTA, Stark Law is a civil statute that:

  1. “prohibits physicians from making referrals for clinical laboratories or other designated health services (e.g., physical therapy services) to entities in which the physician has an ownership or financial interest”
  2. “prohibits entities from presenting or causing to be presented [with] claims or bills to any individual, third-party payor, or other entity for designated health services (e.g., physical therapy services) furnished pursuant to a prohibited referral.”

In other words, physicians can’t refer patients to certain designated health services, including physical therapy, if they’ll receive a financial benefit, except for “enumerated exceptions.” And designated health services cannot generate claims or bill to any entity if the services for which they’re billing came from a prohibited referral. (Makes POPTPs sound a bit sticky, eh? According to this article, they exist as a result of a loophole—one that the APTA is working to change.)

Now, the federal anti-kickback statute is a criminal law that, according to the APTA, “prohibits the knowing and willful offer, payment, solicitation, or receipt of remuneration to induce federal health care program business.” In short, it’s illegal to give or accept anything of value, such as gifts, trips, or hotel stays, regardless of the dollar amount, if your intent is to provide or receive referrals for patients or services covered by government healthcare programs, like Medicare and Medicaid.

Gifts to Physician Offices

When it comes to gifting, the murky part of the anti-kickback statute lies in the intent. According to the APTA, “the gift has to be given with the intent of obtaining the referral.” For example, if a PT clinic owner takes a physician out for lunch with the intent of encouraging that physician to provide more referrals, then it’s clear the PT is providing remuneration—in this case, lunch—for more business. Alternatively, if a PT clinic owner takes a physician out to lunch and discusses a new therapy technique she provides at her practice, the intent of the meeting is not generating business, but providing education. Therefore, according to the APTA, the luncheon “should be acceptable.” On the other hand, says the APTA, “golfing or fishing trips from vendors may implicate this statute because in many cases vendor costs are either directly or indirectly reimbursed by a government healthcare program, such as Medicare.”

The Stark Law also has something to say about gifts: You can provide gifts to physicians with a $300 aggregate per year allowance. However, in alignment with the anti-kickback law, the gift cannot account for the size or worth of the referral(s).

So, what to do? You can take the hardline route and prohibit giving or receiving anything of value to or from referring healthcare professionals. Or, you can make clear distinctions—with documented policies outlining guidelines and risks that your lawyer or counsel reviews—regarding intent. Modest spending (tip: establish limits) with the intent to inform and educate, (i.e., legitimate business purposes) = legal. Lavish spending with the intent to influence, give, or receive = illegal.

Patient Discounts

The anti-kickback statute allows discounts under one of the law’s safe harbors, which denotes that exemptions exist for healthcare providers who submit claims to Medicare and Medicaid if those providers properly disclose and accurately report the discounts, and those discounts represent reductions in the prices of goods and services based on arm’s length transactions. Holy mouthful. In a nutshell, you can discount the price of a specific product or service for a Medicare or Medicaid beneficiary, and that discount must occur or be set at the time of sale. However, according to ASHA, “applying such a discount cannot lower the amount collected to less than the amount allowed (the so-called ‘allowed amount’) by Medicare for the same current procedural terminology (CPT) code service. Discount-for-cash offers or policies cannot be for an amount less than what Medicare allows because Medicare prohibits providers from charging the program more than is charged to others.” So, while the APTA may say, “discount arrangements may also come in the form of waivers or deductions in insurance costs, but cannot be used as marketing incentives,” in my book, I wouldn’t impose discounts on the Medicare fee schedule to entice a patient to obtain therapy from you over another Medicare provider. Charge what Medicare’s fee schedule denotes.

One more note: patient discounts are not the same as waiving copayments. For more on that topic—and why you shouldn’t do it—check out this blog post.

Gifts to Patients

In certain circumstances, you can offer gifts—promotional products or services—to potential or current patients being reimbursed under federal healthcare programs. What are those circumstances? According to the APTA:

  1. The gifts must be “inexpensive” (i.e., a retail value of no more than $10 individually or $50 total annually per patient).
  2. The gifts cannot be cash or eligible for cash equivalents.
  3. You cannot give the gift with the intent of “securing your services to a patient.”

Now, what about incentives? As we all know in this age of gamification, incentives are an effective marketing practice. According to the APTA, patient or prospective patient incentives are permissible if that “incentive is to promote the delivery of preventive care services” and if the delivery of such preventive care services “is not related to the provision of other services.” Similar to the caveats listed in the above paragraph:

  1. Incentives cannot be cash or eligible for cash equivalents.
  2. The value of the incentive cannot be greater in value than that of the preventive care services.

The APTA also recommends that you refer to your state laws to determine if there are any additional provisions regarding patient gifts.

Now that you know the rules, it’s time to follow them. As I recommended above, define and document all rules in writing in a company policy, and ensure legal professionals thoroughly review everything. And lastly, a blanket CYA for myself: while I’m quite experienced in researching, deciphering, and writing about Medicare rules and regulations as well as legalese, I am not a lawyer nor do I have any Medicare certifications. So, please, if you have specific questions about these rules, regulations, and laws, feel free to ask them in the comments section below, but be advised, I may recommend (scratch that, I am recommending) that you speak to a legal professional or certified compliance expert.