Kara Sears
The Stark Law is a set of United States federal laws that prohibit physician self-referral, specifically, a referral by a physician of a Medicare or Medicaid patient to an entity for designated health services if the physician has a financial relationship with that entity. The law applies to a wide range of services and financial relationships, and non-compliance carries severe penalties.
The law contains several exceptions, including in-office ancillary services, fair market value compensation, and bona fide employment relationships.
With the recent shift in focus towards value-based care and compensation, understanding the applicability of the Stark Law to Medicare Advantage plans is crucial for healthcare providers to ensure regulatory compliance and avoid legal repercussions.
| Characteristics | Values |
|---|---|
| What it prohibits | Physician self-referral, specifically a referral by a physician of a Medicare or Medicaid patient to an entity for the provision of designated health services ("DHS") if the physician (or an immediate family member) has a financial relationship with that entity |
| Referral | Any physician request for a service, item or good payable under Part B; a referral for a consultation and all the services ordered as a result of the consultation; and a prescription for a course of treatment using DHS |
| Designated health services | Clinical laboratory services, physical therapy services, occupational therapy services, radiology services, radiation therapy services and supplies, durable medical equipment and supplies, parenteral and enteral nutrients, equipment, and supplies, prosthetics, orthotics, and prosthetic devices and supplies, home health services, outpatient prescription drugs, inpatient and outpatient hospital services, outpatient speech-language pathology services |
| Financial relationship | Ownership, investment interest, and compensation arrangements |
| Exceptions | Physician services, in-office ancillary services, ownership in publicly traded securities and mutual funds, rental of office space and equipment, and bona fide employment relationship |
| Penalties | Denial of payment for DHS provided, refund of monies received by physicians and facilities for amounts collected, payment of civil penalties of up to $15,000 for each service that a person "knows or should know" was provided in violation of the law, and three times the amount of improper payment the entity received from the Medicare program, exclusion from the Medicare program and/or state healthcare programs including Medicaid, and payment of civil penalties for attempting to circumvent the law of up to $100,000 for each circumvention scheme |
What You'll Learn
What is the Stark Law?
The Stark Law, or the Physician Self-Referral Law, is a set of regulations that pertain to physician self-referral under current United States (US) federal law. The law prohibits doctors from referring patients to entities providing "designated health services" (DHS) covered by Medicare or Medicaid if the physician or their immediate family has a financial relationship with the entity. The term "referral" means a request for a specific service or a care plan that includes DHS. Financial relationships include ownership, investment interest, and compensation arrangements.
The Stark Law was initially enacted in 1992 but expanded in 1995. It was introduced by United States Congressman Pete Stark, who sponsored the initial bill. The law is designed to prevent conflicts of interest, overutilisation of services, and the creation of captive referral systems that limit competition.
DHS includes a range of services such as clinical laboratory services, physical therapy, occupational therapy, radiology, radiation therapy, durable medical equipment, home health services, prescription drugs, and hospital services.
The Stark Law contains several exceptions, including physician services, in-office ancillary services, ownership in publicly traded securities, rental of office space, and bona fide employment relationships.
Violations of the Stark Law can result in various penalties, including denial of payment for DHS, refunds of monies received, civil penalties, exclusion from Medicare and state healthcare programs, and additional fines for attempting to circumvent the law.
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What is the Anti-Kickback Statute?
The Anti-Kickback Statute (AKS) is a federal law that prohibits transactions intended to induce or reward referrals for items or services reimbursed by federal healthcare programs. It is a criminal statute that is primarily designed to protect federal healthcare program beneficiaries from the influence of money on referral decisions. The AKS covers a broad range of activities and applies to all medical providers who can arrange or recommend medical services.
The AKS prohibits anyone from knowingly and willfully offering, making, soliciting, or receiving any payment in return for referring an individual to another entity for the furnishing of any item or service reimbursed by a federal healthcare program. It also prohibits recommending or arranging for the ordering of any service reimbursed by a federal healthcare program. The AKS defines "remuneration" broadly to include any item of value, not just cash.
The AKS was first passed in 1972 to combat unethical practices by physicians who profited from the federal government by making unnecessary patient referrals in exchange for kickbacks. It has since been amended several times to strengthen its provisions and increase penalties for violations.
Violations of the AKS can result in significant penalties, including fines of up to $25,000, up to five years in jail, and exclusion from Medicare and Medicaid care programs.
While the AKS and the Stark Law both aim to limit the cost and corruption of medical decision-making, there are important differences between the two. The AKS is a criminal statute, while the Stark Law imposes non-criminal charges. The AKS also covers a broader range of activities and applies to all medical providers, while the Stark Law applies only to relationships with physicians and covers specific types of medical services.
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What are the penalties for violating the Stark Law?
The penalties for violating the Stark Law can be severe. They include:
- Denial of payment for the designated health services (DHS) provided
- Refund of monies received by physicians and facilities for amounts collected
- Payment of civil penalties of up to $15,000 for each service that a person \"knows or should know\" was provided in violation of the law, and three times the amount of the improper payment the entity received from the Medicare program
- Exclusion from the Medicare program and/or state healthcare programs including Medicaid
- Payment of civil penalties for attempting to circumvent the law of up to $100,000 for each circumvention scheme
The Stark Law is a strict liability statute, which means that proof of specific intent to violate the law is not required. The law prohibits the submission of claims in violation of the law's restrictions on referrals. Penalties for physicians who violate the Stark Law include fines as well as exclusion from participation in federal healthcare programs.
The False Claims Act (FCA) also comes into play when discussing Stark Law violations. Filing false claims may result in fines of up to three times the programs' loss plus $11,000 per claim filed. Each instance of an item or service billed to Medicare or Medicaid counts as a claim, so fines can add up quickly.
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What are the exceptions to the Stark Law?
The Stark Law prohibits doctors from referring patients to entities providing "designated health services" covered by Medicare or Medicaid if there is a financial relationship between the physician (or their immediate family) and the entity, except under specific circumstances. These designated health services include clinical lab services, physical and occupational therapy, durable medical equipment, imaging services, and more.
In-Office Ancillary Services
Doctor offices often provide ancillary services such as blood or imaging tests for patient convenience. These services often qualify for an exception to the Stark Law, as they are performed in the same building as the referring physician's office or in another centralized location. Other examples include prescription medications, lab services, and radiology.
Bona Fide Employment
This exception applies to compensation arrangements between a medical facility and a physician employee. The compensation must be reasonable and not related to the number of referrals made.
Indirect Compensation
This exception applies to the relationship between a doctor and a healthcare facility. Similar to bona fide employment, the compensation must be reasonable and not influenced by the number of referrals made.
Non-Monetary Compensation
Non-monetary compensation is allowed under a Stark Law exception, provided that the amount does not exceed $300 per year and is not based on the number of referrals provided.
Space and Equipment Lease
Physicians often share office space and equipment leases to save costs. This is permitted under an exception to the Stark Law, provided that certain additional requirements are met.
Academic Medical Centers
Physicians who are bona fide employees of an academic medical center, hold a valid state license, are members of the faculty, and provide clinical teaching services may be able to refer patients to the center even if they have a financial relationship with the school, as long as the center meets Stark Law criteria.
Doctor Incentive Plan
An incentive plan for physicians can be an exception, but it must not limit any necessary medical services to those who are eligible.
Charitable Contributions
Physicians can make charitable contributions under an exception to the Stark Law, provided that the donations are not based on the number of referrals received.
Other less common exceptions include compliance training, risk-sharing arrangements, professional courtesy, electronic health records, timeshare arrangements, and assistance to compensate a non-physician practitioner.
Conditions to Stark Law Exceptions
In addition to the specific requirements of each exception, most exceptions to the Stark Law must also meet several general conditions:
- Written agreement: The exception must be documented in a written agreement signed by all parties involved.
- Volume of referrals: Compensation based on the number or value of referrals may violate the Stark Law.
- Reasonableness: Compensation must be commercially reasonable, or it could result in legal trouble.
- Group practice: Some exceptions require medical offices to be part of a group practice.
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How does the Stark Law affect physicians?
The Stark Law, also known as the Physician Self-Referral Law, is a set of United States federal laws that prohibit physicians from referring patients to entities that provide "designated health services" (DHS) covered by Medicare or Medicaid if the physician or their immediate family has a financial relationship with that entity. This includes ownership, investment interest, or compensation arrangements. Physicians who violate the Stark Law may face fines and exclusion from participation in federal healthcare programs.
The law restricts referrals to DHS categories such as clinical laboratories, physical and occupational therapists, speech and language pathologists, radiology and imaging labs, and radiation therapists. It also covers non-coded categories like durable medical equipment, home healthcare providers, prosthetic devices, and outpatient prescription medications.
The Stark Law affects doctors of medicine, osteopathy, dental medicine, dental surgery, podiatry, and optometry, as well as chiropractors. The financial relationship in question can be an exchange of cash, services, or any other item of value.
There are several exceptions to the Stark Law, including physician services, in-office ancillary services, ownership of publicly traded securities and mutual funds, rental of office space and equipment, and bona fide employment relationships. However, these exceptions may change as the law is frequently updated and revised.
To comply with the Stark Law, physicians must ensure that their contracts with hospitals meet certain safe harbour requirements. These include a contract duration of at least one year, being in writing and signed by both parties, specifying aggregate payment in advance, and ensuring payment is reasonable and fair market value.
Given the complexity of the Stark Law and the severe penalties for violations, physicians are advised to seek legal counsel to ensure they understand the law's stipulations and how it applies to their practice.
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Frequently asked questions
The Stark Law is a set of United States federal laws that prohibit physician self-referral, specifically, a referral by a physician of a Medicare or Medicaid patient to an entity for designated health services if the physician (or an immediate family member) has a financial relationship with that entity.
Penalties for violations of the Stark Law include denial of payment for the designated health services provided, refund of monies received by physicians and facilities for amounts collected, civil penalties of up to $15,000 for each service, and exclusion from the Medicare program and/or state healthcare programs.
The Stark Law contains several exceptions, including physician services, in-office ancillary services, ownership in publicly traded securities and mutual funds, rental of office space and equipment, and bona fide employment relationships.
