“It’s been complicated by people looking for the loopholes—scumbag-type physicians who are trying to get kickbacks and referral fees, aided by very smart attorneys who dream up these things.” – Rep. Pete Stark… on Stark Law. ✨⚖️💉💰✨
Ah! The infamous Physician Self Referral Law a.k.a. Stark Law (42 U.S.C. §1395nn; 42 C.F.R.§411.350 et seq.) – a source of much anxiety for physicians. Below, you’ll find a brief overview of Stark Law, followed by a quick and dirty guide (courtesy of Quarles & Brady, LLP for the Health Care Compliance Association) on identifying a Stark Law violation.
In a nutshell, Stark Law prohibits all physicians (not just scumbags) from referring certain designated health services (DHS) payable by Medicare to an entity with which the physician or an immediate family member has a financial relationship…unless, an exception applies. And this is the part where SMART lawyers come in. Folks, beware! Stark Law is a strict liability statute, which means ignorance of the law, good intentions, or bad counsel, does not exempt you from penalties. Furthermore, Stark Law may not impose criminal penalties, but its civil penalties, such as monetary penalties of up to $100,000 for “circumvention schemes,” are soul-crushing, enough.
To identify an arrangement that violates Stark Law, ask yourself the following four questions:
1. Is there a financial relationship between a referring physician (or the physician’s immediate family member) and the DHS entity?
2. Did the physician make a referral for the DHS? A referral by a physician for a DHS that is performed by the physician, is not a “referral.”
3. Is the referral made for the specific categories identified as DHS?
4. Lastly, is the DHS payable by Medicare? Note, that the Department of Justice and many courts, hold the position that Stark Law is applicable to Medicaid for the purpose of False Claim Act allegations.
An answer of “yes,” to any of these questions implies that Stark Law is violated, unless an exception applies. The exceptions are complicated, and begs the necessity of an attorney knowledgeable in Stark Law to review the arrangement, and help physicians identify the correct category of an applicable exception, if any.
In closing, since its enactment in 1989, the framework of Stark Law has lead to a voluminous body of interpretations and commentary that does not, necessarily, give physicians the liberty of indulging in business ventures or referring relationships without help from competent counsel. Like it or not, docs cannot do without them darn healthcare lawyers, if they want to legitimately grow their medical practice.