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Five things that will surprise you about Stark Law

Stark Law is a complex set of rules that has the main purpose of preventing physician self-referrals. More specifically, the rules attempt to prevent physicians from referring a Medicare or Medicaid patient to a medical facility that the physician (or the physician’s family member) has a financial interest in.

The reason self-referrals are prohibited is because they are believed to drive up health care costs by allowing physicians to benefit personally from their own referrals, such as for unnecessary testing. Self-referrals are also criticized for suppressing competition between providers.

Even if you already know these facts about the Stark anti-kickback statute, there are likely a few things that will surprise you including:

1. There are exceptions

There are many exceptions to the Stark Law, which are very complex. They often require gainsharing agreements to not factor in the number or value amount of a physician’s referrals, or other business generated, if the physician receives compensation. Additionally, they often require the compensation to be reasonable and at fair market value.

2. Many believe the rules are too complex

Concerns have been raised in recent years by both lawmakers and medical industry leaders that Stark Law is too complex, especially with the health care industry’s current transition from fee-for-service to value-based care. Some believe that a full repeal is necessary.

Physician organizations often rely on health care attorneys to provide them with guidance and make sure that their arrangements are in compliance with the rules.

3. There are common Stark Law violations

The most common violations of Stark Law are technical in nature, and often made by mistake. These include failing to accurately describe medical services provided, failing to provide documentation that supports fair market value, and failing to change the terms of a compensation agreement in writing when amount or duties change.

4. Stark Law violations are expensive

Even physicians and physician organizations that unknowingly violate Stark Law can be forced to pay tens of millions of dollars. That’s because provider organizations that violate the rules are forced to repay all Medicare funds that they took in under the improper arrangement. The provider could also be excluded from Medicare and face civil and/or criminal liability under the False Claims Act.

5. Enforcement has become aggressive

In the wake of the Affordable Care Act and its impact on the False Claims Act, federal entities including the Department of Justice, CMS, and the Department of Health and Human Services have been enforcing Stark Law rules more aggressively, as well as holding those in violation accountable.

Any physician or group practice being investigated for potential Stark Law violations should consult with an attorney well-versed in this area of law immediately.