Summer time is coming to a
close as we prepare for the up-
coming orientation day for our
Section Officers for the 2014-
2015 year. First and foremost,
as I take over as Chair, I want
to thank Stephen Clay for step-
ping up to serve as our Chair
for 2013-2014. He has done a
fine job of leading our Section
and moving us forward. I hope
to be able to continue that pro-
gress and continue to grow the
membership and expand the
involvement of the members of
our Section. A special thanks
is also due Jenny Tyler Baker,
who has taken on the job of
editing and publishing this
Section newsletter. Great job,
Jenny!
At this summer’s Annual
Meeting in Sandestin, we had
the opportunity to hear from
State Insurance Commissioner
Mike Chaney on the imple-
mentation of the Affordable
Care Act in Mississippi. It
seems that we continue to hear
something about the Afforda-
ble Care Act almost every
week. With the constant ef-
forts in the U.S. House of Rep-
resentatives to repeal the Act,
I want to humbly suggest an
initial “legislative fix” for the
ACA: I think we should
change its name to The Never-
ending Story Act. Most of you
heard, no doubt, about the con-
flicting rulings from the D.C.
Circuit and the Fourth Circuit
recently over the legality of the
federal subsidies provided to
those who purchase coverage
through the federal insurance
exchanges – the D.C. Circuit
ruling the subsidies are unlaw-
ful and the Fourth Circuit rul-
ing that they are lawful. The
D.C. Circuit also recently
handed down another decision
rejecting an argument that the
ACA violated the Origination
Clause of the U.S. Constitu-
tion. The lawsuits just keep on
coming, including one soon ap-
parently from the House itself
against President Obama,
challenging some executive or-
ders issued to implement the
Act. As I say, it’s the never-
ending story.
Our Section hosted a broad-
ranging CLE event on July 17
at the Mississippi Bar Center
which we entitled “Hot Topics
in Health Care Law.” Stephen
Clay and I were speakers but I
also want to thank all our oth-
er presenters, including: Katie
Gilchrist, Jonathan Werne,
Joyce Hall, Dinetia Newman,
Jean Hess, Ray McNamara,
Bobby Dallas and Adam Kil-
gore. This CLE was a real suc-
cess thanks to the time and
efforts of all the speakers and
the help of Rene Garner at The
Mississippi Bar. We plan to
offer it on an annual basis. We
also want to offer “brown bag”
type one-hour CLE teleconfer-
ence events, so if you have any
ideas for topics, please feel free
to send them along to me at
Meanwhile, I look forward to
another exciting year for our
Section. Please welcome Jonell
Beeler and Julie Mitchell to
our Executive Committee as
they begin their terms of ser-
vice with our Section.
Message from the Chair
H
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Fall 2014 Volume 1, Issue 2
Bob Anderson, Chair
By Jonathan R. Werne, Member
Brunini, Grantham, Grower &
Hewes, PLLC
A hospital administrator ap-
proaches you and says, “The hos-
pital received two free tickets to
the upcoming black tie gala for
being a premier sponsor and I
would like to give the tickets to a
member of the Hospital’s medi-
cal staff. Can I do it that?” A mo-
ment later, the chief of staff
asks, “Can the hospital give the
medical executive committee
members Google Chromebooks
for use during their meetings?”
And as any good lawyer, you re-
spond to both of them, “It de-
pends.”
Under the physician self-referral
law, commonly referred to as the
“Stark Law,” a physician is pro-
hibited from making referrals for
certain services payable by Medi-
care to an entity with which the
physician (or the physician’s im-
mediate family member) has a
financial relationship. 42 U.S.
Code § 1395nn. Such entity is
also prohibited from presenting
or causing to be presented such
claims to Medicare (or billing
any individual, entity, or third
party payer) for the DHS. Id.
The Stark Law defines the term
“financial relationship” very
broadly and it includes any type
of direct or indirect ownership or
investment interest, or compen-
sation arrangement. 42 CFR
§ 411.354. The Stark Law also
establishes exceptions for certain
financial relationships. Id.
§ 411.357. Thus, if the require-
ments of a particular exception
are met, the general prohibition
will not apply and the physician
referral will be permitted.
For the purposes of the Stark
Law, the giving of free black tie
gala tickets or a Chromebook by
the hospital to a physician is a
“financial relationship.” Thus,
unless an exception applies and
its requirements are met, the
physician would be prohibited
from making a referral for cer-
tain services to the hospital that
gave him or her the tickets or
the Chromebook.
One of the possible exceptions
that may apply to the proposed
giving of the free black tie gala
tickets or a Chromebook is the
nonmonetary compensation ex-
ception. 42 CFR § 411.357(k).
The nonmonetary compensation
exception allows an entity (such
as a hospital) to provide a physi-
cian with items or services that
do not exceed a defined annual
aggregate threshold.
Id. § 411.357(k)(1). As the name
of the exception implies, an enti-
ty only permitted to provide a
physician with a nonmonetary
item; the entity cannot provide a
physician with cash or cash
equivalents. Although the Stark
Law does not specifically define
“cash equivalents,” the exception
prohibits an entity from provid-
ing gift certificates, stocks or
bonds, or airline frequent flier
miles to physicians. 63 Fed. Reg.
1,699. The exception originally
had an annual aggregate thresh-
old of $300.00. 66 Fed. Reg. 920.
Starting in 2004, CMS began to
adjust the threshold each year
for inflation based upon the con-
sumer price index. 69 Fed.
Reg. 16,112, 42 CFR § 411.357(k)
(2). For this year, the annual ag-
gregate threshold is $385.00.
CPI-U Updates, http://
go.cms.gov/X6BcZE.
A question that always arises
with this exception is how is the
value of the item or service pro-
vided to the physician deter-
mined? The value of the item or
service provided to the physician
is not the entity’s actual cost of
the item or service. 72 Fed. Reg.
51059. Instead, the value is the
amount the physician would
have paid to purchase the item
or service. Id. In the above exam-
ple, the value of the gala tickets
would be the actual cost to pur-
chase the tickets to the events.
The value would not be the
amount paid by the hospital to
sponsor the gala. In addition, the
value would not be zero since the
hospital received the tickets for
free for sponsoring the gala. For
the Chromebook, the value
would be the amount a physician
would have paid to purchase the
Chromebook from an electronic
store or an online retailer.
The nonmonetary exception only
protects compensation provided
to individual physicians. 66 Fed.
Reg. 921. An entity cannot use
the exception to provide a group
practice gift. Id. CMS has previ-
ously cautioned, “the exception
will not apply to gifts, such as
holiday parties or office equip-
ment or supplies, that are valued
A Review of the Nonmonetary Compensation Stark Law Exception
Volume 1, Issue 2 Health Law Section
at not more than [$385] per phy-
sician in the group, but are, in
effect given or used as a group
gift.” Id.
The physicians receiving the
item or services from the hospi-
tal cannot have solicited the item
or services from the entity.
42 CFR § 411.357(k)(1)(ii). The
gift from the hospital to the phy-
sician must be “a voluntary
transfer made without consider-
ation or compensation expected
or received in return.” 66 Fed.
Reg. 921. This prohibition on so-
licitation of the gift also includes
the physician’s practice, and its
employees and staff members.
42 CFR § 411.357(k)(1)(ii).
The exception also requires that
the compensation provided to the
physician cannot be determined
in any manner that takes into
account the volume or value of
referrals or other business gener-
ated by the referring physician.
42 CFR § 411.357(k)(1)(i). The
compensation may not violate
the Anti-Kickback Statute or any
federal or state law or regulation
that governs billing or claims.
Id. § 411.357(k)(1)(iii).
The nonmonetary compensation
exception does not specifically
require an entity to track the
items or services provided to a
physician. Although tracking of
the gifts is not specifically re-
quired by the exception, it is best
practices to do so.
The exception also provides a
“payback” option if a physician is
inadvertently provided items or
services in excess of the annual
aggregate threshold from a par-
ticular entity. 42 CFR § 411.357
(k)(3). This option may only be
used if the excess value provided
to the physician is no more than
50% above the annual threshold.
Id. § 411.357(k)(3)(i). In other
words, for 2014, the option would
only be permitted if the nonmon-
etary compensation the physi-
cian received from the entity was
less than $577.50 ($385.00 x
150%). In such a circumstance,
the physician must return the
excess nonmonetary compensa-
tion (or an amount equal to the
excess compensation) to the enti-
ty by the end of the calendar
year in which the excess non-
monetary compensation was re-
ceived or within 180 consecutive
days following the date the ex-
cess compensation was received
by the physician, whichever is
earlier. 42 CFR § 411.357(k)(e)
(ii). This option may only be once
every 3 years for a particular
physician. Id. § 411.357(k)(e)(iii).
Finally, the nonmonetary com-
pensation exception permits an
entity to provide its entire medi-
cal staff one local medical staff
appreciation event per year
(such as a holiday party).
42 CFR § 411.357(k)(4). Howev-
er, any gifts given to medical
staff during the medical staff ap-
preciation event must comply
with the requirements of the
nonmonetary compensation ex-
ception. Id. § 411.357(k)(4).
Returning to our two initial
questions, assuming the price of
the two gala tickets is $200, the
hospital administrator may give
the tickets to a physician. Again,
assuming the price of a Google
Chromebook is $350, the hospi-
tal may provide one to each of
the medical executive committee
members. The hospital would
then track the value of the tick-
ets and Chromebooks provided
to the respective physicians. The
hospital, however, cannot pro-
vide the gala tickets and the
Chromebook to the same physi-
cian. If the hospital inadvertent-
ly provided both items to a par-
ticular physician, since total val-
ue of the items provided to the
physician is less than $577.50 (in
this case, $550), the physician
could return one of the items to
the entity or pay the entity an
amount equal to the excess com-
pensation (i.e., $165.00) within
the time period allowed under
the nonmonetary exception.
A Review of the Nonmonetary Compensation Stark Law Exception,
cont’d
Volume 1, Issue 2 Page 3
Bob Anderson, chair of the Health Law Section, and
Stephen Clay, past chair of the Section.
Health Care Law is a constantly changing area
of the law. Whether lawyers are adjusting to
new responsibilities under HIPAA so as to avoid
an audit, trying to figure out what latest change
the Mississippi Legislature has made in areas
like provider appeals of Medicaid billing dis-
putes (which now will be heard in Chancery
Court), understanding what the employer man-
date means under the Affordable Care Act,
keeping up with the latest regulatory and en-
forcement developments which affect health
care clients, or simply trying to put together a
health care related transaction, there always
seems to be a new hot topic in health care law.
This CLE seminar covered some of these current
hot topics.
During the CLE Seminar, Health Law Section
Chair Stephen Clay offered an update on health
care law issues addressed in the 2014 Session of
the Mississippi Legislature. Attendees heard
from Dinetia Newman of Bradley Arant Boult
Cummings and Jean Hess of Horne LLP about
the HHS Office for Civil Rights and its responsi-
bility in enforcing the HIPAA privacy and secu-
rity regulations. Veteran medical malpractice
litigators Ray McNamara of Jones Walker and
Bobby Dallas of Sessums Dallas offered a 10-
year perspective on the impact of tort reform in
Mississippi. Katie Gilchrist of Adams and Reese
provided her insight on the employer mandate
under Obamacare while health care practition-
ers Joyce Hall of Watkins and Eager and Jona-
than Werne of the Brunini firm shared their
perspective on the current status of co-
management arrangements between doctors
and hospitals and the status of non-monetary
compensation under the Stark law. The Bar’s
General Counsel, Adam Kilgore, provided a
presentation on social media from the Bar’s per-
spective.
Hot Topics in Health Care Law – A CLE Briefing
Volume 1, Issue 2 Page 4
The Mississippi Bar
Health Law Section
P.O. Box 2168
Jackson, MS 39225-2168
Rene’ Garner
Section and Division Coordinator
Phone: 601-355-9226
Fax: 601-355-8635
Email: [email protected]
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We are on the
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Click here
Chair
Bob Anderson
US Attorneys Office
131 Clayton St
Montgomery, AL 36104-3429
Phone: (334) 551-1722
Fax: (334) 223-7418
Email: [email protected]
Vice Chair
Jeff Moore
Phelps Dunbar
P O Box 1220
Tupelo, MS 38802-1220
Phone: (662) 842-7907
Fax: (662) 842-3873
Email: [email protected]
Secretary
Jenny Baker
Tindell Law Firm
2200 25th Ave
Gulfport, MS 39501
Phone: (228) 896-8962
Fax: (228) 205-4457
Email: [email protected]
Past Chair
Stephen Clay
The Clay Firm
P O Box 217
Jackson, MS 39205-0217
Phone: (601) 353-0559
Fax: (601) 354-0597
Email: [email protected]
Members at Large:
Genie Thomas
General Counsel and Chief Compli-
ance Officer, Magee General Hospital
300 Third Avenue, SE
Magee, MS 39111
Phone: 601-849-7214
Email: [email protected]
Members at Large:
Jonell Beeler
Baker Donelson
P O Box 14167
Jackson, MS 39236-4167
Phone: (601) 351-2427
Fax: (601) 592-2427
Email: [email protected]
Members at Large:
Julie Mitchell
Mitchell Day Law Firm PLLC
618 Crescent Blvd Ste 203
Ridgeland, MS 39157-8664
Phone: (601) 707-4036
Fax: (601) 213-4116
Email: jbmitchell@mitchellday.com
Health Law Section 2014-2015 Executive Committee
Write for the
Health Law
Section Newsletter
The Health Law Section newsletter
is now accepting articles on health
law topics for publication in the
newsletter. If you have an idea for
an article, you may submit it to
Health Law Section Newsletter Edi-
tor Jenny Tyler Baker at
Please include a short description of
the article. The Health Law Section
Committee will consider your pro-
posal and will notify you of whether
your proposal has been accepted.
The committee reserves the right to
reject proposals. Please note that
when you submit your article for
publication in the newsletter, you
will be granting The Mississippi Bar
the nonexclusive right to publish
your article.
