The Stark law is a medical fraud and abuse law prohibiting medical practitioners from referring patients to a “fiscal relationship” for certain health care services that Medicare provides for.
The federal government interprets “financial relationship” broadly to include any direct or indirect ownership or investment interests of the referring physician and the referring physician.
The Stark Law, as opposed to the federal Anti-Kickback Statute, is not criminal law. The Department of Health and Human Services (“HHHS”) Office of the Inspector General (OIG) may however, take civil action against Stark Law infringers following the civil monetary penalties law.
Stark Law Fundamentals
The Stark Law mostly does the following.
- It prohibits a doctor from making referrals to an entity with which he or she has (or an immediate family member) a financial relationship (ownership, investment, or compensation) with certain designated health services payable by Medicare unless an exception applies.
- The above-described entity is prohibited from submitting or causing claims to Medicare (or billing for those services of a different individual, object, or third-party payer).
- It sets out some unique exceptions for financial ties between a doctor and an individual who do not pose a program or patient abuse risk.
Rigid Liability
The Stark Law is a strict liability statute that does not require proof of an individual physician’s specific intent to violate the law. Therefore, doctors who even accidentally or unknowingly make prohibited referrals to designated health services are still subject to civil penalties.
Physicians found to have knowingly and deliberately broken the Stark Law may be subject to increased sanctions in the form of a period of imposed debarment or exclusion from Medicare, Medicaid or any other federal health benefits programs.
Exceptions
There are many exceptions to Stark Law, each of which contains detailed requirements. There are many exceptions to which compensation paid to a doctor does not take account of the value or volume of referrals from a physician or other business between the parties to a gain-sharing agreement. Many exceptions often include a commercially acceptable contract and fair market value for reimbursement.
There are several exceptions to the Stark Law, which allow physicians to make referrals to federally covered designated health services under certain limited circumstances. Any of these variations are as follows.
- Ancillary Services Exception in the Office
A primary exception allows a group medical practice to make references for office supplementary services like laboratory services or radiology.
- An Exception to Fair Market Compensation
A second notable exception to the Stark Law provides for compensation for fair market value. The exemption from fair market value applies where a compensation agreement is written, specifies a time and compensation schedule that will be given, and comprises a commercially reasonable transaction. It is in line with the ‘safe harbors’ provided for in the Anti-Kickback Statute.
- The Exception of Indirect Payments
Another exception to Stark Law allows for indirect arrangements for compensation between a physician, and an entity where the payment received is fair value-for-money, does not take into account the value or the volume of referrals, and shall be established in writing and signed by the parties.
- Exception for Non-Monetary Purposes
This exception to Stark Law would apply for the payment of the non-monetary compensation of up to $300 per year to a physician if the doctor did not ask for compensation. The volume or value of the references is not considered.
Violations
Any provider or organization violating Stark must reimburse all medicare funds paid under the incorrect arrangement. It may also be subject to exclusion from the Medicare and liability under the False Claims Act.
Moreover, if a self-referral arrangement in violation of the Stark Act submits claims to government payers, the applications are regarded as false claims. The parties to the agreement could also be held liable to the False Claims Act.
Stark law whistleblowers pursuing these actions are eligible to recover up to 30 percent of the government. The penalties to be imposed under the False Claims Act are between $10,781 and $21,563.
Law Enforcement
Like most of the federal regulatory systems, the federal government is diligent in shutting out and harshly punishing violators of strong legislation as a form of general and precise dissuasion.
Given the severity of these penalties, the full understanding of which references are authorized and prohibited under the Stark Law and other federal statutes will be critical for all healthcare providers.
Legal counsel with a secure law experience can be invaluable in preventing violations by examining referral practices and doctors.
And if breaches occur, it is essential for medical litigators who have experience in HHS research and deal with the HHS Inspector General to resolve the allegations as quickly as possible and on reasonable and not overly punitive financial terms.