The Weirdness of Remuneration

Remuneration. It is a weird word.

It almost sounds like reMOOneration, which I imagine is when a cow has acid reflux. Or MOONeration, an ideal description of giving multiple Medicare Outpatient Observation Notices (MOONs).

But remuneration is really “something of value.” The confusing term is used in both the Medicare Anti-Kickback statute and the Stark law to describe a benefit. The physician anti-self-referral law, or Stark, defines renumeration as including “any remuneration” (yes, that is a bit circular!) “directly or indirectly, overtly or covertly, in cash or in kind.” The Anti-Kickback Statute doesn’t even go this far.

So, what constitutes “value?”

The definition is important.

A hospital needs to know whether it is paying a kickback if it improves the turnaround time in its OR. This allows surgeons to do more surgeries. Is that renumeration? What if a nursing home replaces a crummy electronic health record with a new one, greatly improving the efficiency of a visiting physician? What if a clinic has current issues of magazines in the waiting room, rather than a 1965 issue of Highlights?

While there has not been an absolutely 100-percent definitive answer to the question, a case last year from a federal Court of Appeals offers some extremely helpful language, suggesting that none of those examples should be considered remuneration.

The case, Martin v. Hathaway, arose out of a dispute at Oaklawn Hospital in Michigan. A physician asserted that the hospital was improperly compensating, or providing renumeration, to another physician. The Court of Appeals rejected that argument, concluding that the law must be referring to money or something similar to money. The court analyzed possible definitions before concluding that considering everything of value as “remuneration” was too expansive:   

“Here is one other problem with the broader definition. It lacks a coherent endpoint. Consider the hospital that opens a new research center, purchases top-of-the-line surgery equipment, or makes donations to charities in the hopes of attracting new doctors. Or consider the general practitioner who refuses to send patients for kidney dialysis treatment at a local healthcare facility until it obtains more state-of-the-art equipment. Are these all forms of remuneration? Unlikely at each turn.”

This means that most actions that improve the delivery of care without an exchange of cash or a cash equivalent will be permissible. Of course, one can take that too far. I will close with two examples that may seem similar, but one has received a favorable advisory opinion, and the other resulted in a payment of millions of dollars.

Let’s say a hospital wants to provide a nurse practitioner to round on patients. The nurse practitioner will also serve as the first call for help, reducing the number of calls to the attending physician. Is this kosher?

According to Advisory Opinion 22-20, as long as the service is provided to all patients, regardless of the number of referrals from the attending physician, and there is either no bill for the service or the hospital submits the bill, it’s fine. But as Detroit Medical Center has learned in a pair of settlements, if the hospital is choosing specific physicians for this service, or permitting those physicians to bill for the hospital’s employees, the answer is quite different. As soon as the physician starts to bill, the hospital is now providing something akin to a cash equivalent. 

In essence, the 6th Circuit is adopting the words of singer Randy Newman: “It’s money that matters, hear what I say; It’s money that matters In the U.S.A.”

Generally speaking, improving the quality or efficiency of care will not be like offering cash, and shouldn’t be considered remuneration.