Stark Law: Physician Self-Referral
The Stark Law prohibits physicians from referring Medicare or Medicaid patients for designated health services (DHS) to entities with which the physician or an immediate family member has a financial relationship, unless a specific exception applies. It is a strict liability statute, meaning violations occur regardless of intent. If the arrangement does not fit within an exception, the referral and resulting claims are prohibited.
Key Points
Strict liability: no intent required. If it doesn't fit an exception, it's a violation
Applies only to physician referrals (not other providers)
Covers only designated health services (DHS): clinical lab, imaging, DME, therapy, home health, hospital outpatient, and others
Financial relationships include ownership/investment interests AND compensation arrangements
Each claim submitted for a prohibited referral is a separate violation
Self-disclosure protocol allows voluntary reporting to CMS to reduce penalties
Key Areas
Definitions
Designated health services, financial relationships, referrals
Exceptions
In-office ancillary, employment, personal services, fair market value
Reporting Requirements
What entities must report to CMS
Sanctions
Penalties for violations, overpayment refunds
Key Provisions
Definitions
Defines all key terms: designated health services, financial relationship, referral, immediate family member, fair market value, and compensation arrangement. Start here.
Prohibition on Referrals
The core prohibition. No physician referral for DHS to an entity with which the physician has a financial relationship, unless an exception applies.
Financial Relationship, Compensation, and Ownership
Defines what constitutes a financial relationship. Two types: ownership/investment interests and compensation arrangements (direct and indirect).
Exceptions: Ownership in Publicly Traded Securities and Mutual Funds
Safe if the entity is publicly traded or the physician's interest is through a mutual fund.
Exceptions: Compensation Arrangements
The most-used section. Includes exceptions for employment, personal services, rental, isolated transactions, fair market value, and non-monetary compensation.