Understanding the Stark Law

The Stark Law, also known as the physician self-referral law, is a federal regulation governing physician referrals and healthcare practices. The Stark Law is specifically designed to mitigate conflicts of interest in, and financial abuses of, the healthcare sector based upon physicians’ referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which that physician, or an immediate family member, has a financial relationship - unless an exception applies.

Key Provisions of the Stark Law

• Prohibition of Self-Referral: Physicians are prohibited from referring patients for designated health services to entities with which such physicians or their immediate family members have a financial relationship.
• Designated Health Services (DHS): This includes services such as imaging, physical therapy, and laboratory services.
• Financial Relationships: This encompasses a broad swath of ownership interests and compensation arrangements between physicians and the entity providing Designated Health Services.
• Exceptions: The Stark Law provides a series of exceptions. Compliance with these exceptions allows lawful referrals and financial relationships.

Compliance and Penalties

Non-compliance with the Stark Law can result in severe penalties, including fines, exclusion from federal healthcare programs, and potential liability under the False Claims Act. It is essential for healthcare entities and physicians to establish compliance programs to avoid inadvertent violations. This is particularly the case when “inadvertent violations” are not typically “isolated” violations resulting in stacking liabilities.

Takeaway:

Understanding and adhering to the Stark Law is crucial for maintaining ethical standards and legal compliance in healthcare while establishing and administering viable income and reimbursement streams.

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