Understanding the Physician Self-Referral Law (Stark Law) | 42 U.S.C. § 1395nn

What is the Physician Self-Referral Law (Stark Law)?

The Physician Self-Referral Law, commonly referred to as the Stark Law (42 U.S.C. § 1395nn), is a key regulation that prohibits physicians from referring patients to receive certain healthcare services that are paid for by Medicare or Medicaid when the physician has a financial interest in the entity providing the service. This law is designed to prevent conflicts of interest and to ensure that medical decisions are made based on patient care, not financial incentives.

At Edmonds Law Office, we specialize in providing legal advice and guidance to healthcare providers and physicians to ensure compliance with the Stark Law, protecting your practice and your patients from violations and costly penalties.

The General Framework of the Stark Law

Financial Relationships and Their Impact on Referrals

Under the Stark Law, physicians and their immediate family members are prohibited from referring patients for "designated health services" (DHS) to entities with which they have a financial relationship. These financial relationships may include:

Ownership or investment interests: When a physician or their family member has a stake in an entity that provides designated health services.
Compensation arrangements: Payments for services or arrangements where physicians receive compensation for referring patients to specific providers.

If a physician has such a financial relationship with an entity, the law restricts them from referring patients to that entity for designated health services unless one of the law's many exceptions applies. Without an exception, the physician cannot refer patients to the entity, and the entity cannot bill for the referred services.

What are "Designated Health Services" (DHS)?

Common Types of Designated Health Services Under Stark Law

The Stark Law applies specifically to a range of healthcare services defined as designated health services (DHS). These services include:

Clinical Laboratory Services: Laboratory tests and diagnostic services performed for patients.
Physical Therapy, Occupational Therapy, and Outpatient Speech-Language Pathology Services: Therapies provided outside of a hospital setting.
Radiology and Imaging Services: Diagnostic imaging services such as X-rays, MRIs, and CT scans.
Radiation Therapy Services and Supplies: Treatments related to cancer therapy and other uses of radiation.
Durable Medical Equipment (DME) and Supplies: Equipment used in patient care, such as wheelchairs, oxygen supplies, etc.
Parenteral and Enteral Nutrients, Equipment, and Supplies: Nutritional products and equipment for feeding patients who cannot take food orally.
Prosthetics, Orthotics, and Prosthetic Devices and Supplies: Devices to replace or assist parts of the body, like artificial limbs or braces.
Home Health Services: Medical services provided in the home setting, including skilled nursing or physical therapy.
Outpatient Prescription Drugs: Medications prescribed for outpatient care.
Inpatient and Outpatient Hospital Services: Medical services provided within a hospital, whether as an inpatient or outpatient.

Exceptions to the Stark Law: When Can Referrals Be Made?

Common Stark Law Exceptions for Physician Referrals

While the Stark Law imposes strict limits on physician referrals, it does provide certain exceptions under which referrals may be permissible. Some common exceptions include:

In-office ancillary services: Referrals for services provided within the physician’s practice, as long as certain requirements are met.
Investment interests in publicly traded entities: If a physician has a financial interest in a public entity, this may qualify for an exception.
Employment relationships: When a physician is employed by an entity and receives compensation for services rendered, this arrangement may fall within an exception.
Personal service arrangements: If a physician has a personal service contract with an entity, the arrangement may meet the exception requirements.
Physician recruitment exceptions: Allowances for certain recruitment agreements, typically between hospitals and physicians, to encourage the physician to relocate or join a facility.

It’s essential for physicians and medical practice owners to ensure that their arrangements and referrals comply with these exceptions to avoid penalties and legal issues.

Consequences of Stark Law Violations

What Happens If You Violate the Stark Law?

The Stark Law includes significant penalties for violations, including:

Civil penalties: Physicians and entities found in violation of the Stark Law may face penalties of up to $15,000 per violation.
Refund requirements: Any claims submitted in violation of the Stark Law must be refunded.
Exclusion from federal healthcare programs: Violations may result in exclusion from participating in Medicare, Medicaid, and other federal healthcare programs, effectively blocking the practice from billing these programs.

Given the serious consequences, compliance with the Stark Law is critical for healthcare providers and their business operations.

How a Healthcare Lawyer Can Help You Navigate the Stark Law

Ensuring Compliance and Protecting Your Practice

At Edmonds Law Office, our Stark Law attorneys specialize in helping healthcare professionals navigate the complexities of the Physician Self-Referral Law. Our experienced team can assist with:

Analyzing financial relationships to ensure compliance with Stark Law requirements.
Evaluating exceptions and ensuring that your business relationships align with the law.
Drafting and reviewing contracts to prevent future violations of the Stark Law.

Ready to Ensure Stark Law Compliance?

Protect your practice and avoid costly penalties by ensuring compliance with the Stark Law. Contact our experienced Stark Law attorneys today to learn how we can help your medical practice stay compliant with federal regulations.