The Stark law provides that if a hospital has a financial relationship with a physician, the relationship must fit within a specific exception in the law.
Because the term “financial relationship” is so broadly defined in the Stark law, any arrangement where anything of value passes from a hospital to a physician could implicate the law. This would include expense reimbursement, indemnification, or covering expenses (including airfare, hotel and meals at seminars) commonly provided to medical staff leaders, when attending conferences at the request of the hospital.
The Stark law provides an exception permitting personal service arrangements. Those arrangements fit within the exception if the expense and any compensation is reasonable and the arrangement is committed to writing. That’s why having a written contract in the form of a letter agreement is essential when a physician leader is asked to attend a conference.
A letter agreement can be used to memorialize that a medical staff leader is performing personal services at the request of and for the purpose of advancing the mission of the hospital, in order to prevent an inadvertent violation of the Stark law.