Stark Law


Definition/Introduction

Federal physician self-referral prohibition (42 USC 1395nn.), commonly referred to as the Stark law, is a set of regulations that pertain to physician self-referral under current United States (US) federal law. These statutes currently reside under the purview of Centers for Medicare & Medicaid Services (CMS) fraud and abuse laws. The Stark law was initially enacted in 1992 but expanded in 1995. These regulations limit the financial and business relationships which physicians may enter into. In its incipience, the Stark law applied to physician referral for clinical laboratory services but has since expanded to encompass "designated health services" or DHS. In general terms, the DHS refers to the health facility or institution that will perform physical and occupational therapies, clinical laboratory testing, radiology services, medical equipment, inpatient hospital services, outpatient prescription services, or home-health services.[1]

The term "referral" means a request for a specific or service by a physician for Medicare Part B services and/or a care plan that includes designated health services. Also, the term "financial relationship" includes investment interest, ownership, and compensation arrangements.

Issues of Concern

Broadly, the Stark law prevents a physician from referring patients to the DHS if there is a financial relationship between the physician and the healthcare entity, their immediate family member, and the healthcare entity. Under this law, financial relationships are defined as a physician or an immediate family member who have A) ownership or investment interest in the entity (ownership or investment is further described as equity or debt and includes any interest in a body that holds ownership or investment in the facility providing the designated health service, DHS) B) a compensation arrangement between the physician (or immediate family member) and the entity. Although the inclusion criteria seem fairly capacious and expansive, there are several notable exceptions to this set of laws. Several of the commonly encountered exceptions include:[2](This is a non-exhaustive list)

  • Referral to another physician of the same practice as the referring provider
  • Referral for in-office ancillary services including laboratory testing and radiological tests in which they are performed within the same location as the provider
  • Refer a patient to a family member for DHS in rural areas as designated by CMS
  • Referral to pre-paid organizational health services such as health maintenance organizations (HMOs)
  • Referral to academic medical centers, certain stipulations apply to the relationship between provider and academic center.
  • Referral for preventative services, including screening exams/tests and vaccines.
  • Equity in publicly-traded security as issued by a corporation  

Although there are many exceptions that curtail the application of this expansive law, the Stark law is a strict liability statute. This means that a defendant is liable for their actions without proof of specific intent to violate said law. Furthermore, this means that even though a physician may have inadvertently referred a patient for DHS with no intent to bolster the financial status of the healthcare entity providing the DHS, they would still be culpable. Given the similarity between CMS fraud and abuse laws, it is common for multiple CMS fraud and abuse laws to be infringed simultaneously, which can further implicate individuals and institutions.

However, the Stark law is distinguishable from other notable healthcare fraud and abuse laws, including the anti-kickback statute as well as the false claims act. Notable differences between the Stark law and anti-kickback statute include that the latter prohibits knowledge of a willful payment to induce patient referrals or generate business involving any item or service payable by Medicare, Medicaid, or other federal healthcare programs. The false claims act deals with the prohibition of fraudulent claims seeking payment from Medicare or Medicaid when a provider knows or should have had knowledge that submitted claims were false or fraudulent. It also goes on to mention that violation of Stark law or anti-kickback statute may also indicate violations of the false claims act.

The department of justice, CMS, and the department of health and human services oversees the enforcement of the Stark law. Recent enactment and amendments to the patient protection and affordable care act and the false claims act, leading to more stringent applications.

Clinical Significance

Although some physicians and medical practitioners have railed against the Stark law, making arguments that it impedes the efficient application of healthcare and further entrenches bureaucracy within health administration, it is an essential law. This statute prevents fraudulent and unnecessary testing, referrals, and medical services. Additionally, it prevents physicians from seeking further personal financial or equity gains regarding patient care which is a clear conflict of interest. These limitations impact clinical decision-making and healthcare delivery. Physicians and medical practitioners must understand the complexities and nuance of these regulations to provide high-quality and comprehensive care without committing infractions that could prove disastrous for their medical careers.  

Nursing, Allied Health, and Interprofessional Team Interventions

All members of the interprofessional healthcare team need to be aware of the Stak law and its ramifications. Everyone on the team needs to be empowered to voice concerns for potential violations, as this could adversely affect patient care and result in legal action.


Article Details

Article Author

Ryan Huttinger

Article Editor:

Narothama Aeddula

Updated:

4/3/2021 9:20:53 AM

PubMed Link:

Stark Law

References

[1]

Adashi EY,Kocher RP, Physician self-referral: regulation by exceptions. JAMA. 2015 Feb 3;     [PubMed PMID: 25580941]

[2]

Kapoor DA, Government regulations on physician self-referral. JAMA. 2015 May 19;     [PubMed PMID: 25988473]