Compliance Issues in Hospital and Healthcare System Sports Sponsorships | Blogs | Health law today

Many hospitals, health systems, and other healthcare providers have seen benefits from sponsoring sports teams, stadiums, and sports tournaments. Considerations include general branding in the community, staffing, or a desire to associate the supplier with a beloved or high-quality local institution, such as a baseball or hockey team. While in some markets these sponsorships seem ubiquitous, vendors and their management teams negotiate each of these agreements separately, and there are a variety of terms, conditions and expectations that are built into these contracts, some that depend on the specific rules of the sport. league involved. Foley’s Health Care and Sports & Entertainment Groups have designed a series of training modules for health care providers and their boards considering these transactions.

For healthcare providers, considerations include not only business and marketing concerns, but also healthcare compliance and enforcement priorities that are not present in a manufacturing, entertainment, or beverage company considering a sports sponsorship agreement. Here is a brief overview of some of these issues and how health care providers deal with them.

1. Fraud and abuse issues

Virtually all healthcare providers entering into sports sponsorship agreements will need to ensure compliance with federal and state fraud and abuse laws, including the Stark Act, the Anti-Kickback Act and the prohibition by civil law on financial sanctions of “inducements to beneficiaries”.

The highest level of risk in this area (absent unique situations, such as team or stadium ownership by other healthcare providers or physicians) is related to the use various “benefits” that come with sponsorships. For larger sponsorships, these benefits often include preferred seating or access to a suite and hospitality, private meetings with athletes, gifts, and better food and alcohol. Providers should write compliance policies regarding the use of these benefits, including prohibitions on the provider using access to these benefits to reward or induce physicians or other referring providers. There is little risk if these people pay fair market value for such access, but once tickets or access are provided free of charge, fraud and abuse laws are implicated.

With respect to the Physician Self-Referral (“Stark”) Act, certain benefits provided to physicians and their immediate family members may be protected under the “non-monetary compensation” exception, which requires that the offer of tickets or access is not determined in a manner that takes into account the volume or value of referrals or other activities generated by the attending physician. Further, tickets or other benefits may not be solicited by the Physician or Physician’s office (including employees and staff members). But perhaps the most difficult aspect of the exception is that the value of tickets, food and other perks cannot exceed a fixed amount, which is adjusted annually. For 2022, this amount is $452 per year. If more than one ticket is provided, the value of the seat plus meals, beverages and other benefits can easily exceed this amount at most major sporting venues in the market.

A 2020 amendment to the Stark settlement introduced a new exception for “limited physician compensation,” allowing certain undocumented arrangements with physicians under which they are paid approximately $5,000 ($5,270 for 2022). While this may initially appear to be the solution to this compliance problem, the exception only protects compensation paid to the physician “for the provision of items or services provided by the physician to the entity.” In addition to compliance protections such as those addressed in the non-monetary compensation exception discussed above, such compensation must also be at fair market and commercially reasonable value. Therefore, a pure gift would seem unlikely to meet this exception. Of course, if the tickets or other benefits are treated as compensation for an item or service actually provided by the physician to the entity, he could meet this new exception, as well as other long-standing exceptions, such as “personal service” arrangements. .

In addition to Stark considerations, sponsoring vendors must take care to protect against federal and state anti-kickback (criminal) violations. These risks may arise if tickets, suite access or other benefits are provided to any referral provider free of charge or at reduced cost as an inducement or reward for referrals. This could include executives from other health care providers who could be considered referral sources, such as long-term care facilities or other community health care organizations. Unlike Stark Law, there is no “de minimis” exception to an anti-bribery violation.

Similar risks are present if the vendor offers to co-brand these sponsorships with other vendors without a proper assessment of the relative benefits, and an effort is made to allocate costs based on fair market value.

The converse of this compliance risk occurs when the vendor sells or leases its suite to other healthcare providers, vendors, pharmaceutical companies, or device manufacturers who seek to do business with the vendor. If suite access, tickets or other benefits are transferred above fair market value, anti-bribery laws are involved.

Finally, providers may wish to provide tickets or other benefits to patients and their families. Often this is done for genuinely charitable or voluntary purposes and should not be considered a high risk. But if they are provided as part of a marketing or patient solicitation effort, the “beneficiary inducement” prohibitions of civil monetary penalties law could be implicated. There are de minimis rules of thumb under this law, but the level of this protection is extremely low, with a maximum of $75/year.

2. Marketing and advertising issues

A health care provider should definitely promote their relationship with a sports team. However, a healthcare provider must know and follow all applicable federal and state laws governing marketing and advertising practices. In general, all sponsorship advertising must be truthful, not misleading and avoid making statements or promises. The promotional activities of healthcare providers are subject to the Federal Trade Commission Act and other general advertising rules and regulations enforced by the Federal Trade Commission (“FTC”). Basically, the FTC law prohibits unfair and deceptive acts or practices. In addition, the majority, if not all, of the states have enacted deceptive marketing practices laws or consumer protection laws with prohibitions similar to FTC rules and regulations. These laws are generally enforced by state attorneys general. Penalties for violating federal or state truth-in-advertising laws include steep civil fines.

It is recommended that you have your attorney review any advertising or marketing material before it is published to ensure compliance with these truth-in-advertising laws.

3. Reports on health insurance costs

Hospitals and other Medicare-certified institutional healthcare providers must submit an annual cost report to the Medicare Administrative Contractor. The cost report contains certain information about vendor operations, financial usage data, and costs and charges by cost centers. Certain costs must be included in the supplier’s cost report. Items that are not related to patient care are not considered “reasonable costs” that can be included in the provider’s cost report.

Entertainment, including tickets to sporting events and other entertainment, is specifically identified as a cost that may not be included in a healthcare provider’s cost report. Hospitals or healthcare providers should ensure that any fees or expenses incurred by the provider in connection with the sports sponsorship arrangement are not included in the provider’s cost report.

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