The Stark Law Complications That Could Cost You Money

The Stark Law prevents physicians from referring their patients to medical practitioners or facilities whereby the physician, either directly or indirectly (via a family member), stands to gain financially.

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This law can be confusing, and many physicians do not fully understand the legislation. While many physicians believe the law to be an all-encompassing law for all fraud, false claims and anti-kickback issues, this is not the case. Stark’s Law is very specific and is only relevant in certain situations involving specified medical services, and only with patients who use Medicare.

Avoid Stark Law complications

If you are at all unsure whether or not you are contravening Stark’s Law, just ask yourself these three questions:

  1. Is the patient on Medicare?
  2. Do the medical services provided fall under the designated health services as specified in the act?
  3. Is there any financial relationship between you and the entity to which you referred the patient?

If you answered no to any one of these questions, then you have nothing to worry about. In order to contravene the Stark Law you would have to answer yes to all three questions. It’s a simple test, but one that could save you a lot of time, money and potential legal liability.

To further clarify a complicated matter, there are a few things you need to know:

  1. Not every Medicare issue pertains to the Stark Law.
  2. The law only applies to financial relationships between physicians—and their family members, as well as to the facilities to which they refer their Medicare patients.
  3. The law pertains to a particular set of designated health services determined by the CPT code (Current Procedural Terminology).

These services generally include:

  • Imaging, including MRI, CT, ultrasound, PET, and nuclear
  • Physical and occupational therapy
  • Radiation therapy
  • Home health
  • Outpatient prescription drugs
  • Parenteral and enteral nutrition
  • Durable medical equipment
  • Prosthetics, orthotics, and supplies
  • Clinical laboratory
  • All inpatient and outpatient hospital services.

Is It a Simple Black and White Issue?

No, it is not. There are numerous exceptions and circumstances that allow for some flexibility when it comes to Stark’s Law. Should you or a member of your family refer a patient to a facility that would under ordinary circumstances contravene the Stark’s Act, there are instances where this would be allowed, but the financial relationship would need to satisfy a long list of intricate exceptions.

Case Study 1

A physician owns an imaging center in a rural area. According to Stark’s Law, he cannot under ordinary circumstances refer patients to this center. Except, the center is located in a rural area, and because of that, doctors may refer Medicare patients to their own center.

Case Study 2

In another instance, a group of physicians were offered free assistance at the hospital where they refer their patients. The assistants were hospital-employed nurses and were happy to help out the doctors on their rounds and to help their patients, without additional compensation. This sounded pretty good to the doctors, but it turns out that they had to pay the nurses for their time or they would fall foul of Stark’s Law.

What Penalties Can Be Incurred?

There a number of basic penalties that can be issued for violations. People commonly refer to Stark’s as a “strict liability” law. This is because it can be contravened without any intention to do so. However, compliance with the law is mandatory for all physicians, and should one contravene the act, prohibitions and penalties can be applied.

These include:

  • Should a physician contravene the act with an unlawful referral, he will not be able to bill anyone. Not Medicare or Medicaid. Not the patient or any related third party.
  • In addition, any payment that might have been received for a prohibited referral, must be refunded.
  • Any Medicare or Medicaid payments made in lieu of a designated health service that was provided in violation of the Stark law will also be denied.

There are also various monetary penalties which Stark law violators can look forward to:

  • A fine of up to $15,000 per service may be applied to those organisations or individuals who submit claims that violate the law.
  • In addition, for those caught for “circumvention schemes”, which is when an individual sets out to break the law in clear contravention of the act, a penalty of $100,000 may be imposed.
  • Additionally, those caught contravening the act may be excluded from participating in both Medicare and Medicaid programs.

Don’t Say You Didn’t Know

Ignorance of the law is not an excuse to break it. If you are unsure whether you are breaking the law, check with a qualified lawyer, preferably one with experience in the field of Stark’s Law. At Coxwell, we have a stream of specialised and experienced lawyers, contact us to make an appointment.

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

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