Many professionals must follow laws that regulate what gifts they can offer in return for their services. Medical professionals, in particular, need to understand which gifts count as kickbacks, as laws prohibiting kickbacks are very strict, especially when gifts are exchanged for referrals involving federal insurance programs.
This article explains when a medical professional offering gift cards, rewards programs, or other benefits might violate Federal or State anti-kickback statutes.
What Is A Medical Kickback?
In medical practices, a “kickback” refers to something of value given or received to encourage patient referrals. Both state and federal law prohibit kickbacks.
Anti-kickback statutes require medical professionals to prioritize patients’ best interests over financial incentives for referrals. Providers must not pay patients or non-providers for referrals, as decisions should follow best practices, not financial motives. Both federal and state laws govern anti-kickback rules, and these laws differ.
What Does the Federal Anti-Kickback Statute Prohibit?
The federal anti-kickback statute bans providers from offering gift cards, cash, discounted services, or other valuables in exchange for referrals involving federal insurance programs like Medicare and Medicaid. The penalties are severe, so understanding what constitutes a kickback is crucial.
The U.S. Department of Health and Human Services has confirmed that offering discounted or free items to patients in government programs in exchange for something of value may violate the anti-kickback statute. However, this might be allowed if a statutory or regulatory exception applies or if specific safeguards are in place to prevent fraud and abuse. Since these exceptions can change, medical professionals should consult an attorney before assuming that offering a free or discounted item complies with federal anti-kickback laws.
What Does the Illinois Anti-Kickback Statute Prohibit?
Illinois law and federal law are similar, but Illinois’ anti-kickback law is stricter. In Illinois, you cannot give or receive anything to encourage or reward patient referrals. State law prohibits kickbacks only if insurance benefits are involved or if an insurance claim will be made. Additionally, Illinois law requires you to report any solicitation for a kickback to law enforcement, even if no kickback occurs. Therefore, medical professionals should consult an attorney before offering or accepting a kickback.
Are Gift Cards Considered Illegal Kickbacks?
Offering patients gift cards for referrals likely violates anti-kickback statutes since people view them as cash substitutes. However, in some cases, giving gift cards may be permissible.
The Office of The Inspector General (OIG) recently found that offering gift cards to patients as an incentive for using healthcare services poses a low risk for fraud and abuse. While gift cards could implicate anti-kickback statutes, administrative sanctions are unlikely if they are not meant to induce referrals.
In one case, the OIG did not sanction a federally qualified healthcare center (FQHC) for giving $20 gift cards to patients as a one-time incentive to attend appointments. Offering a $20 gift card to a patient under 19 who missed two appointments was allowed to encourage attendance.
The OIG deemed sanctions unnecessary in this case because safeguards reduced the risk of fraud and abuse with these $20 gift cards.
Some reasons the OIG found that the medical provider would not face punishment include:
- Small Pool of Existing Patients: The eligible patients were those who missed two appointments. The OIG found a low risk of inappropriate patient steering since these patients already had a relationship with the provider. Offering gift cards to attract new patients would likely raise concerns.
- No Increase in Costs to Federal Health Care Programs: The FQHC gave gift cards only to existing patients, so patients did not visit the provider just for the gift card. Rescheduled appointments reflected the expected use of the federal health care program.
- No Harm to Competing Providers: Offering gift cards to existing patients did not harm competing providers. Patients already chose this provider and received incentives to improve their health, not to switch providers.
- Goal to Improve Patient Care: The gift cards encouraged patients to attend appointments and focus on their health. The FQHC did not require further visits for the gift card and also provided patient education.
The OIG based its decision on the specific circumstances of one medical practice’s gift card program. These determinations do not apply universally to all providers as they depend on individual facts.
If you plan to set up a gift card program, avoid using the cards as referral incentives. Keep the amounts small and treat all patients equally without favoritism based on referrals. The permissibility of a gift card program varies by practice, so consult an experienced attorney before starting any benefits or rewards program.
Should I Contact an Attorney About My Kickback Concerns?
Creating a gift card or rewards program carries risks due to potential anti-kickback penalties. Consulting an attorney experienced in assisting medical providers will help ensure your program complies with the law. Call us today at (312) 779-1818 or fill out our online contact form if you have any questions about your practice’s gift card or rewards program.
