Providing Remuneration to Address Physician Burnout: Stark Law Considerations

Hospitals and Other Providers Should Make Sure Any Items or Services of Value That They Provide to Their Referring Physicians To Alleviate Burnout Comply With the Stark Law
Amidst the ongoing labor market shortages and disruptions from the COVID-19 pandemic, the well-being of physicians and other front-line healthcare providers has become a topic of much attention. Throughout the pandemic, many physicians have encountered significant stressors and challenges, including intensified work burdens, economic disruption to their practices, and increased exposure to the COVID-19 virus itself, among others.

Various studies, such as a recently published survey of physicians conducted by researchers from the American Medical Association, the Mayo Clinic, and Stanford University School of Medicine, have found that physicians facing these pandemic-related stressors are at a greater risk of burnout.

For the hospitals and other healthcare entities where such physicians practice, burnout raises concerns not only about physician welfare, but also about organizational productivity, morale, efficiency, and the quality of care. Consequently, these institutions have an important stake in devising solutions to physician burnout.

While there are various measures – some tangible, others intangible – that institutions may deploy to remediate burnout, hospitals and other facilities with physician workforces should be aware that providing items or services of value to their referring physicians to address burnout potentially could implicate the federal Stark Law.

How the Stark Law May Apply to Initiatives to Mitigate Physician Burnout

The Ethics in Patient Referrals Act (or the “Stark Law,” as the legislation and its implementing regulations are more commonly known in reference to former Congressman Pete Stark) prohibits a physician who has a “financial relationship” with an entity from referring a patient to the entity to receive “designated health services” (a “DHS entity”) to be paid by Medicare. DHS entities include hospitals, clinical laboratories, and imaging centers, all of which are prohibited from billing Medicare for DHS pursuant to a referral from a physician with whom they have a financial relationship. The only way to avoid the Stark Law’s sweeping restrictions  is by structuring a financial arrangement between a referring physician and DHS entity in compliance with one of the law’s numerous “exceptions.”

Hospitals and other DHS entities potentially could trigger the Stark Law to the extent they compensate their referring physicians with various remunerative benefits to improve their workplace experience and manage burnout. These benefits could include nonmonetary compensation in the form of subsidized child care, gourmet meals, onsite massage or wellness services, access to a mental or behavioral health specialist, and offsite entertainment and social events, among other proposals.

In these instances, it may be necessary for the DHS entity to structure the benefit to fit within a Stark Law exception. While the applicability of an exception always turns on the particular circumstances of an arrangement, the following are some key exceptions that may be relevant to ensuring a remunerative arrangement to address physician burnout does not violate the Stark Law:

  • Medical staff incidental benefits (42 C.F.R. § 411.357(m)): This exception authorizes the provision of nonmonetary items or services from a hospital to a referring physician who is a member of its medical staff. In general, such “incidental benefits” must be used or consumed while the medical staff member is on the hospital campus and must have a connection to patient care or hospital operations. Each occurrence of these benefits is subject to a per-benefit dollar amount cap, which the Centers for Medicare and Medicaid (CMS) updates annually. For 2022, the per-benefit cap on medical staff incidental benefits is $38.
  • Professional courtesy (42 C.F.R. § 411.357(s)): This exception authorizes a hospital or other DHS entity with a formal medical staff to furnish free or discounted healthcare items or services (i.e., a “professional courtesy”) to a referring physician or his or her immediate family members or office staff. The requirements of this exception include that the DHS entity must have a professional courtesy policy in writing and approved in advance by the entity’s governing body.
  • Nonmonetary compensation (42 C.F.R. § 411.357(k)): This exception authorizes a DHS entity to provide nonmonetary items or services to a referring physician who does not otherwise solicit the items or services. In contrast to the above two exceptions, this exception is available irrespective of whether or not the physician is on the hospital or DHS entity’s medical staff. Nonmonetary compensation under this exception is subject to a calendar year aggregate dollar amount, which CMS updates annually. For 2022, the aggregate limit on nonmonetary compensation is $452.

The COVID-19 “Blanket Waivers” of the Stark Law

While the COVID-19 pandemic remains a public health emergency (PHE) as declared by the U.S. Secretary of Health and Human Services (HHS), hospitals and other DHS entities may have additional flexibility to implement remunerative arrangements to curtail physician burnout without running afoul of the Stark Law.

Effective since March 1, 2020, CMS has maintained “blanket waivers” of sanctions for a Stark Law violation. In effect, these waivers loosen certain Stark Law requirements, including some exception criteria, with which DHS entities and their referring physicians ordinarily must comply. To qualify under the blanket waivers, an arrangement must meet two requirements: (1) the remuneration and referrals “must be solely related to COVID-19 Purposes”; and (2) the remuneration, referrals, and/or conduct must fall within one or more of 18 specified blanket waiver categories.

The blanket waivers are notable in how broadly they define “COVID-19 Purposes.” An arrangement need not be tied to the direct provision of care to COVID-19 patients to further a COVID-19 purpose. Even an arrangement that responds to an indirect or downstream impact from the pandemic – for example, “[a]ddressing medical practice or business interruption due to the COVID-19 outbreak in the United States in order to maintain the availability of medical care and related services for patients and the community” – may promote a COVID-19 purpose. Given the extensive findings linking physician burnout to the pandemic, an arrangement intended to redress such burnout could advance one of the enumerated “COVID-19 Purposes.”

Of the 18 waiver categories, several apply to Stark Law exception requirements that may be pertinent to an arrangement to address physician burnout. In particular, the waivers suspend the dollar amount caps noted above with respect to the medical staff incidental benefits and nonmonetary compensation exceptions.

This means DHS entities could use these exceptions to provide more generous benefits to address pandemic-related burnout than would usually be permissible. CMS itself acknowledges this with some of the examples of scenarios that it describes as falling within the scope of the blanket waivers, including where “[a] hospital provides meals, comfort items (for example, a change of clothing), or onsite child care with a value greater than $36 per instance to medical staff physicians who spend long hours at the hospital during the COVID-19 outbreak in the United States.”

As beneficial as the blanket waivers may be to address physician burnout, DHS entities should be cognizant that they are not permanent fixtures of the Stark Law. By their terms, the blanket waivers remain in effect only as long as the PHE declaration regarding the COVID-19 pandemic remains in effect. As soon as the PHE determination terminates, so too will the blanket waivers; the usual limitations under the Stark Law and its exceptions will then be reinstated.

For now, the PHE declaration remains in effect through at least July 15, 2022, pursuant to HHS’ most recent renewal on April 16, 2022. According to a January 21, 2022 letter from HHS to state governors, moreover, before HHS terminates the PHE determination or lets it expire, it will provide states with 60 days’ prior notice.

Ensuring Initiatives Regarding Physician Burnout Are Stark Law Compliant

Hospitals and other DHS entities with physician workforces should work closely with their legal counsel and compliance staff to evaluate whether remunerative arrangements intended to respond to physician burnout concerns are properly designed to fit within a Stark Law exception. For arrangements where the medical staff incidental benefits or nonmonetary compensation exceptions apply, DHS entities should consider measures to track the remunerative benefits and ensure they are within the applicable dollar amount limits.

Meanwhile, DHS entities seeking to take advantage of the COVID-19 blanket waivers should:

  • Appropriately document: (1) how their proposals to remediate burnout further a “COVID-19 Purpose”; and (2) those benefits that exceed the dollar amount caps in the medical staff incidental benefits and nonmonetary compensation exceptions, as applicable;
  • Continue to monitor the status of the PHE declaration and be prepared to revert back to compliance with full Stark Law requirements upon its termination or expiration; and
  • Audit the usage of the blanket waivers as part of their compliance programs.


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