How Healthcare Practices Can Comply With the Stark Law

Friday, October 6th, 2017

Physicians should know the basics of complying with the Stark law. Although this law was originally passed in 1989, it has continued to be expanded. The regulations under the Stark Law can be tough to keep up with, but understanding the basics is essential for any healthcare practice.

What is the Stark Law?

The Stark Law outlaws physicians from referring Medicare or Medicaid patients for designated health services to an entity with which the physician (or an immediate family member) has a financial relationship. Exceptions can be made if certain criteria are met. Financial relationships include direct or indirect ownership or investment interests, and compensation arrangements.

A physician involved in any arrangement that may implicate the Stark Law should consult legal counsel as soon as possible. The Stark Law does not require a finding of intent, unlike anti-kickback laws. The consequences of violating the law are severe, including heavy fines and possible exclusion from Medicare and Medicaid.

What is a designated health service?

Under the Stark Law, designated health services include occupational therapy, physical therapy, and outpatient speech-language pathology services, and clinical lab services. Radiology services, durable medical equipment, and radiation therapy services and supplies are also included. Parenteral and enteral nutrients, equipment, and supplies are placed under designated health services, as well as orthotics, prosthetics, outpatient prescription drugs, home health services, and both outpatient and inpatient hospital services.

Are there exceptions to the Stark Law prohibitions?

There are several exceptions to the Stark Law. Each exception has a number of detailed requirements that must be met. One exception allows a physician to have an ownership or investment interest in a rural provider. This applies to designated health services furnished in a rural area by an entity that provides all, or at least 75 percent of its designated health services, to residents of a rural area.

Other exceptions have to do with rental of office space or equipment. Some of the requirements for these exceptions include a written agreement signed by the parties, with a rental term of at least 1 year. The space or equipment rented cannot exceed that which is reasonable and necessary for legitimate business purposes. The rental charges over the term must be consistent with fair market values, established in advance, and not determined in a way that takes into account the value or volume of any referrals or other business done between the parties.

Preventing Stark Law violations

Seeking a qualified healthcare attorney to review all business and referral arrangements first will drastically reduce the chances of a Stark Law violation happening.

Brown & Fortunato can help your healthcare practice avoid potential penalties under the Stark Law by reviewing your business referral relationships. Our team of Healthcare Attorneys has experience in advising and representing physicians and healthcare organizations. Give us a call at (806) 345-6300 or Contact Us by email to learn more about our Practice Areas. You can also visit us in person at 905 S. Fillmore, Suite 400 in Amarillo, Texas.