TITLE: Business Courtesies to Physicians TYPE: Policy NUMBER: EFFECTIVE: 2/1/2012 REVISED: 12/16/2014 REVIEW:

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1 POLICY MANUAL: Purpose: To establish parameters and to provide guidance for the extension of business courtesies provided on behalf of USMD to Physicians or Immediate Family Members of Physicians that are potential referral sources to USMD. Scope: This policy applies to. and each service line / entity under the management or control of. (collectively, USMD ). Definitions: Physician a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor that is a potential referral source to USMD. The term Physician does not include any physicians who do not provide clinical services or order reimbursable items or services to USMD (e.g., physicians who provide non-clinical consulting or other leadership services to USMD but who do not provide clinical services or order reimbursable items or services). Immediate Family Member of a Physician a husband or wife; natural or adoptive parent, child, or sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild. USMD Compliance Committee ( CC ) the group appointed to assist the Chief Compliance Officer and provide support and feedback for developing priorities, identifying resources and implementing the Program. USMD Chief Compliance Officer ( CCO ) the high-level individual appointed to oversee the development and operation of the USMD Compliance Program. Policy: All business courtesies offered on behalf of USMD to Physicians or Immediate Family Members of Physicians that are potential referral sources to USMD must meet the guidelines stated in this Policy. Nothing in this Policy permits any business courtesy or other benefit that is understood by either party to be offered or provided as an inducement to refer patients or business or as a reward for such referrals, nor may a business courtesy be extended to a Physician or Immediate Family Member of a Physician who solicits such business courtesy or other benefit. 1. Non-Monetary Compensation Exception Page 1 of 5

2 POLICY MANUAL: Under the Non-Monetary Compensation Exception to the Federal Stark Law, USMD is permitted to pay compensation in the form of business courtesies to a Physician or an Immediate Family Member of a Physician by providing items or services (not including cash or cash equivalents) that do not exceed an aggregate of $392 in calendar year 2015, if all of the following conditions are satisfied. a) The compensation is not determined in any manner that takes into account the volume or value of referrals or other business generated by the referring Physician. b) The compensation is not solicited by the Physician or an Immediate Family Member of the Physician (or by the Physician s practice including employees and staff members). c) The compensation arrangement does not violate the Federal Anti-Kickback Statute, or any Federal or State law or regulation governing billing or claims submission. In order to avoid inadvertently exceeding the non-monetary compensation cap, an individual who proposes to provide any non-monetary benefit or compensation to any Physician or Immediate Family Member of a Physician shall obtain prior approval for such benefit from the Chief Compliance Officer (CCO) or his or her designee prior to extending such courtesy in order that USMD may determine the value of courtesies previously extended during the calendar year to ensure compliance with this exception. At times, such approval may be requested in writing for a category of expenses that are recurring in amount, location, attendees and business purpose. Approval for such requests must be in writing and maintained by the CCO. Such expenses would thus not need pre-approval. Upon the provision of any such courtesy to a Physician or Immediate Family Member of a Physician, the individual who has extended the courtesy shall report to the Chief Compliance Officer (CCO) or his or her designee the full name of the person to whom the courtesy was extended (whether a Physician, an Immediate Family Member of a Physician, or both), the immediate family relationship if any, of the recipient to any Physician, a description of the courtesy, the value of the courtesy, and the date on which the courtesy was extended. At times, the CCO may determine a category of expenses previously approved may not be required to have post-provision approval to the extent that they are not subject to tracking as outlined in Section Medical Staff Incidental Benefits Exception Under the Medical Staff Incidental Benefits Exception to the Federal Stark Law, USMD is permitted to pay compensation in the form of business courtesies to a Physician or an Immediate Family Member of a Physician by providing items or services (not including cash or cash equivalents) to a member of the USMD Medical Staff when the item or service is used on a campus of USMD, if all of the following conditions are met: Page 2 of 5

3 POLICY MANUAL: a) The compensation is offered to all members of the Medical Staff practicing in the same specialty (but not necessarily accepted by every member to whom it is offered) without regard to the volume or value of referrals or other business generated between the parties. b) Except with respect to identification of medical staff on a USMD website or in USMD advertising, the compensation is provided only during periods when the medical staff members are making rounds or are engaged in other services or activities that benefit USMD or its patients. c) The compensation is provided by USMD and used by the medical staff members only on a USMD campus. Compensation, including but not limited to, Internet access, pagers or two-way radios, used away from the campus only to access USMD medical records or information, or to access patients or personnel who are on a USMD campus, as well as the identification of the medical staff on a USMD website or in USMD advertising, meets the on campus requirement of this paragraph. d) The compensation is reasonably related to the provision of, or designed to facilitate directly or indirectly the delivery of medical services at USMD. e) The compensation is less than $33 with respect to each occurrence of the benefit (for example, each meal given to a Physician while the Physician is serving patients who are hospitalized must be less than $33). f) The compensation is not determined in any manner that takes into account the volume or value of referrals or other business generated between the parties. g) The compensation arrangement does not violate the Federal Anti-Kickback Statute, or any Federal or State law or regulation governing billing or claims submission. 3. Examples of Non-Monetary Compensation Required to be Tracked Except as otherwise provided herein, examples of items or services provided to Physicians or Immediate Family Members of Physicians on behalf of USMD that are required to be tracked on a consolidated USMD Business Courtesies Log include, but are not limited to, the following: a) A dinner at a restaurant or USMD s employee s home to celebrate a milestone for USMD such as the end of a special project, the launch of a new service, etc. b) Providing tickets to sporting events or other similar events such as theater and concerts, including pro rata allocation of the cost of any meal associated with the event. c) Payment for recreational events, such as fishing, boating, hunting and golfing, including a pro rata allocation of the cost of any meal associated with the event. d) CME seminars held off-campus and all CME seminars held on-campus if the value of the on-campus CME seminar is greater than $33 per invited physician per occurrence. e) Flowers or other gifts to recognize a special event, such as a birthday or other special occasion. f) Gifts, prizes and awards given on special days, such as Doctors Day. g) Holiday gifts given to a Chief of Staff in recognition of the time and energy expended on behalf of USMD. Page 3 of 5

4 POLICY MANUAL: h) Hosting holiday or other parties for medical staff members and their spouses or guests other than one (1) appreciation party per year as described in section 4 (d) below. i) Perishable items that are sent to a Physician s office when it is anticipated the Physician or an Immediate Family Member of a Physician will share in the enjoyment of the items. The value to each Physician in the practice is the total cost of the item divided by the number of persons who will enjoy the benefit of the items (i.e., total number of Physicians and employees in the practice). 4. Examples of Non-Monetary Compensation Not Required to be Tracked Except as otherwise provided herein, examples of items and services provided to Physicians and Immediate Family Members of Physicians on behalf of USMD that are not required to be tracked on a consolidated USMD Business Courtesies Log and do not count toward the $392 annual, non-monetary compensation limitation discussed above, include, but are not limited to, the following: a) Assuming compliance with the Medical Staff Incidental Benefits Exception discussed above and provided the value of same is less than $33 per item: i. Free or discounted modest meals (such as meals served in the physicians lounge or a hospital cafeteria), ii. Free or discounted parking provided at a USMD location where the Physician is iii. providing services, or Free or discounted computer / internet access provided at a USMD location where the Physician is providing services. b) CME seminars held on campus provided the value of the CME seminar is less than $33 per invited physician per occurrence, or compliance training held in the local service area regardless of cost; c) Hosting a party at a USMD campus to introduce the medical staff to a new senior employee of USMD; or d) One (1) local medical staff appreciation event (including a holiday party) per year so long as all members of the medical staff are invited. However, any gifts, prizes or awards provided in connection with the event are business courtesies as described in section 3. above and must be tracked accordingly. e) Meetings of owners, officers or governing boards of USMD and its affiliates at which company business is being conducted, provided that the location and related expenses of such meeting are reasonable and customary. 5. Cash and Cash Equivalents In no event can USMD provide a Physician or an Immediate Family Member of a Physician with cash or cash equivalents, such as gift certificates, under any of the above situations. Page 4 of 5

5 POLICY MANUAL: 6. Tracking Items and services which fall within the non-monetary compensation exception discussed in sections 1. and 3. above are required to be tracked using the consolidated USMD Business Courtesies Log. However, items and services which fall within the medical staff incidental benefits discussed in sections 2. and 4. above are not required to be tracked on the consolidated USMD Business Courtesies Log and do not count toward the $392 annual non-monetary compensation limitation. Amendments: This Policy shall be reviewed and modified, as necessary, no less than every two years or more frequently as directed by the USMD Board of Directors and/or CC. Audit Requirements: USMD will perform periodic reviews to determine compliance with the provisions of this policy. Results of the reviews will be presented to the. CEO, CCO, CC and/or the USMD Board of Directors Audit Committee for review, recommendation, follow-up and/or corrective action, as deemed necessary. Approvals: Corporate Compliance Committee: December 16, 2014 No changes will be made to this policy or any deviations authorized without the express written permission of the. Chief Executive Officer. Page 5 of 5