Healthcare Fraud: Compliance With The Stark Law

Healthcare fraud is a significant problem for the Federal government. The government funds medical care for vast numbers of people, but Federal agencies that review claims for services are constrained by budget restrictions that make it difficult to properly reviewing each claim. To protect Medicare and Medicaid, the two largest healthcare programs in the country, Congress passed a series of laws designed to prevent fraud. These laws can be used to punish hospitals, doctors, and others that overbill the government and defraud patients by subjecting them to heavy penalties.

Understanding anti-fraud statutes

The Stark Law, or the Physician Self-Referral Law, is one of many Federal fraud and abuse laws that govern doctors. Other important Federal laws include the False Claims Act and the Civil Monetary Penalties Law, as well as the Anti-Kickback Statute. These laws are enforced by agencies like the Department of Justice and the Department of Health and Human Services Office of Inspector General.

Each of the main fraud and abuse laws is designed to stop a particular behavior. The False Claims Act prohibits filing a fraudulent bill to Medicare and Medicaid. The Anti-Kickback Statute forbids individuals and entities from making referrals in exchange for something of value. In short, these laws regulate health care providers significantly, and, ultimately, you cannot avoid or dismiss them or the penalties they promise if the government discovers a violation.

The Stark Law

The Stark Law prohibits doctors from referring patients to receive designated health services from an entity in which the physician or an immediate family member has a financial relationship. The law, in effect, is trying to remove the financial incentive a physician may otherwise have to refer a patient for additional treatment.

For example, a doctor tells a patient he needs an expensive piece of medical equipment and refers him to a durable medical equipment supplier in which the doctor has an ownership interest. The patient may then wonder if the doctor ordered the equipment and referred him to a particular company because he needs the equipment or because the physician stands to profit.

These types of situations are toxic and erode the trust that a person should have with their doctor. The Stark Law tries to reorient the doctor-patient relationship into the treatment arena, rather than profit arena.

“Financial relationship” is broadly defined to include investment and ownership interests, as well as compensation arrangements. The Stark Law defines immediate family members to include parents and children, among other relationships. Designated health services are defined in a long list of services that includes clinical laboratory tests, DME and supplies, radiology, prosthetics, orthotics, and home health services. Parenteral and enteral nutrients, physical therapy, occupational therapy, speech pathology, inpatient and outpatient services, prescription drugs, and radiation are also included in the list.

Avoiding fraud in your healthcare practice

The Stark Law is a “strict liability” statute, which means the government does not need to prove you intended to violate the law to find you guilty. The government merely needs to establish that a physician made an inappropriate referral of a patient for a designated health service, unless an exception applies.

The first step towards compliance with the Stark Law is designing a program to implement, train, and review the actions of yourself and your practice. The same methodical procedures you may follow in treating a patient should be used when complying with anti-fraud laws.

As you can see, complying with these various laws, especially the Stark Law, is complex. You need to keep in mind your family, your job, your company, the services you recommend, the specialists to whom you refer, and more. Each of these decisions can fundamentally affect the rest of your career and that of your employees.

If you would like assistance remaining compliant with anti-fraud laws or need representation, contact the experts at Brown & Fortunato today. Our expert Healthcare Attorneys have experience in advising and representing healthcare practices with a variety of legal services. Call us at (806) 345-6300 Contact Us by email to learn more about our Practice Areas. You can also drop by our offices at 905 S. Fillmore Street, Suite 400, Amarillo, Texas to get more information about how we can help you.