The purpose of the Stark law is to prohibit healthcare
providers from self-referrals. A self-referral occurs when a provider
refers a patient to an entity in which he or she has a financial interest,
such as an ownership or investment interest, or a compensation agreement.
Such practices may encourage over-utilization of services, limit competition
from other providers, and in addition, drive up healthcare costs.
Under Stark, a healthcare provider cannot refer a patient for certain
“designated health services” (DHS) that would be reimbursed by Medicare
or Medicaid. The list of DHS services covered under Stark include:
- Clinical lab services
- Physical therapy, occupational therapy, and speech-language pathology
- Radiology and other imaging services (including nuclear medicine)
- Radiation therapy services and supplies
- Durable medical equipment and supplies
- Prosthetics, orthotics, prosthetic devices, and supplies
- Parenteral and enteral nutrients, equipment, and supplies
- Home health services
- Outpatient prescription drugs
- Inpatient / outpatient hospital services
Exceptions: There are approximately 35 exceptions
that exist under Stark. The exceptions are grouped, and based on the
allowable types of interest a provider can legally posses with an entity.
For example, the set of general exceptions under Stark apply to both
“ownerships and compensation arrangement” prohibitions. The second set
of exceptions applies only to “ownership or investment” prohibitions.
The third set of exceptions applies to “other compensation arrangements.”
Needless to say, the exceptions included within Stark very complex.
A provider needs to thoroughly understand each exception, and match
it against all internal financial arrangements to determine if requirements
Penalties: No criminal proof is required to be found
guilty of a Start violation – Stark is a civil statute. However, violation
of the law can lead to stiff penalties ranging from $15,000 to $100,000,
denial of payment for prohibited transactions, and exclusion from the
Medicare and Medicaid healthcare programs. Additionally, healthcare
providers should note that a violation under Stark is considered a “false
claim,” and would therefore be subject to False Claim Act liabilities.
Compliance: In general, healthcare providers can better
prepare for compliance with the Stark law by considering the following
- Understand the penalties and risks associated with non-compliance
- Analyze whether the services rendered are payable to Medicare or
- Analyze the financial relationships (direct and indirect) and determine
if an exception exists
- Outline Stark statute provisions with your internal compliance program
including items such as sponsored compliance training, non-monetary
compensations to providers, and so forth.
Healthcare providers need to ensure that all internal financial transactions
are in compliance with both laws. Not surprisingly, the majority of confusion
revolves around the individual exceptions within each law. Make it a priority
to determine how exceptions apply to each of your internal billing arrangements.
Sometimes a violation is painfully obvious, and sometimes it’s not so
clear. Providers need to keep in mind that even if a violation occurs
without intent, strict penalties will still apply. Since the laws are
so complex and there are gray areas, do yourself a favor and retain a
legal expert who specializes in the laws. Costly legal fees will pale
in comparison to the fines, penalties, or other losses that could jeopardize
your business operations.
This article is designed to offer
an informative overview on the differences between the Anti-kickback and
Stark laws. For more precise advice on individual circumstances, seek
the appropriate legal counsel.
Back to Healthcare Compliance page