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Understanding When The Stark Law Applies To Your Healthcare Practice

Friday, May 12th, 2017

Physicians have been confused about Stark Law and how it applies to them. Some believe the law applies to all fraud and abuse violations, but it is only relevant when it comes to particular healthcare services and Medicare beneficiaries. The law also applies indirectly to referrals of Medicaid beneficiaries, but for simplicity, we will only address referrals of Medicare patients in this article. To know whether or not you have violated the Stark Law, you need to understand what this statute addresses. The following will help you gain an understanding of the Stark Law and when it is applicable to your practice.

The basics of the Stark Law

The law is formally known as the Ethics in Patient Referrals Act, but is commonly referred to as the Stark Law. It applies when a physician makes a referral of a Medicare patient to healthcare provider with which the physician (or his or her immediate family members) have a financial interest and an exception to the law does not apply. The financial interest may be either a compensation relationship or an ownership interest. This law only applies to referrals for certain items and services, known as designated health services, payable by Medicare. These designated health services include imaging, radiation therapy, prosthetics, orthotics, home health, and more, and the government has promulgated a list of CPT codes that represent designated health services.

The Stark Law provides significant penalties for referrals made in violation of the law, including monetary penalties and potential exclusion from participation in federal healthcare programs, and prohibits the facility receiving the referral from billing Medicare for the designated health services provided in violation of Stark. Under the law, “referral” is broadly defined and does not require a physician to instruct a patient to select a specific provider. Further, the Stark Law is a strict liability statute, meaning that a provider does not have to intend to violate the law in order to be liable.

Stark Law Exceptions

Under the Stark Law, there are specific exceptions to the applicability of the law. However, to be protected by an exception, all the requirements of the exception must be met. The availability of an exception depends on the type of financial relationship between the referring physician (or his or her immediate family member) and the facility providing designated health services. Exceptions exist to cover internal relationships within a physician group, ownership in companies that are publically traded, rental of space and equipment, and the provision of designated health services in certain rural areas.

Analyzing Applicability of the Stark Law

To determine whether the law will be an issue in any situation, a physician must ask themselves three things. Is the service considered a designated health service? Is the patient a Medicare (or Medicaid) beneficiary? Do I or any members of my immediate family have a financial relationship with the facility to which I am referring the patient? If the answer to any of these questions is no, there is unlikely to be a violation of the Stark Law. You may have false claims issues or other violations, but without a “yes” answer to all three questions, you have not violated the Stark Law. Answering “yes” to all three questions does not automatically mean there is a Stark Law violation, but there might be.

If you are in need of an experienced attorney to help you stay compliant with the Stark Law, contact Brown & Fortunato in Amarillo, Texas. You can call us at (806) 345-6300 or stop by our offices at 905 S. Fillmore, Suite 400, in downtown Amarillo to learn more. You can also Contact Us by email for more information about our Practice Areas.

This information is subject to change. Please check for updates that are more recent than the published date of this article.