Does Stark Law Apply to More Than Just Physicians?
Yes, while often associated with physicians, the Stark Law‘s prohibitions against referrals for designated health services extend beyond just the referring physician. The law’s reach includes the physician’s immediate family members and the entities these individuals or physicians may have financial relationships with.
Understanding the Nuances of Stark Law Applicability
The Stark Law, formally known as Section 1877 of the Social Security Act, is a federal law that prohibits a physician from making referrals for certain designated health services (DHS) payable by Medicare to an entity with which the physician (or an immediate family member) has a financial relationship, unless an exception applies. The implications of this law are far-reaching and impact more than just individual physicians. To truly understand “Does Stark Law Apply to More Than Just Physicians?” it’s crucial to dissect its components.
The Scope of “Physician” under Stark Law
While the term “physician” seems straightforward, Stark Law defines it specifically. It encompasses:
- A doctor of medicine or osteopathy
- A doctor of dental surgery or dental medicine
- A doctor of podiatric medicine
- A doctor of optometry
- A chiropractor
This definition clarifies the types of medical professionals whose referrals are subject to the law’s restrictions.
Defining “Immediate Family Member”
The Stark Law‘s prohibitions extend to the immediate family members of the referring physician. This definition includes:
- Husband or wife
- Natural or adoptive parent, child, and sibling
- Stepparent, stepchild, stepbrother, and stepsister
- Father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law
- Grandparent and grandchild
This expansive definition prevents physicians from circumventing the law by leveraging relationships with family members who may have financial interests in DHS entities. Understanding this aspect is vital in answering “Does Stark Law Apply to More Than Just Physicians?“
Financial Relationships and Designated Health Services (DHS)
A crucial element of the Stark Law is the concept of financial relationships, encompassing both direct and indirect compensation arrangements and ownership or investment interests. Designated Health Services (DHS) are services for which referrals are frequently made and include items such as:
- Clinical laboratory services
- Physical therapy, occupational therapy, and speech-language pathology services
- Radiology and certain other imaging services
- Radiation therapy services and supplies
- Durable medical equipment and supplies
- Parenteral and enteral nutrients, equipment, and supplies
- Prosthetics, orthotics, and prosthetic devices and supplies
- Home health services
- Outpatient prescription drugs
- Inpatient and outpatient hospital services
A financial relationship coupled with referrals for DHS triggers the Stark Law, unless an exception applies.
Entities Subject to Stark Law Scrutiny
The entities receiving referrals from physicians (or their immediate family) are also subject to scrutiny. This includes hospitals, clinics, laboratories, imaging centers, and any other provider of designated health services. If the physician (or their family) has a financial relationship with such an entity, any referrals from that physician to that entity become problematic under the Stark Law, absent an applicable exception.
Common Stark Law Exceptions
While the Stark Law is broad, several exceptions allow for certain financial relationships and referrals. Some common examples include:
- In-Office Ancillary Services Exception: Allows referrals for services furnished in the same building where the physician practices.
- Bona Fide Employment Exception: Permits compensation to employed physicians if the compensation is fair market value, not determined in a manner that takes into account the volume or value of referrals, and is commercially reasonable.
- Personal Services Arrangements Exception: Allows payments to physicians for services personally performed if specific requirements are met, including a written agreement and fair market value compensation.
- Rural Provider Exception: Allows certain referrals in rural areas where access to specialized services may be limited.
Understanding these exceptions is essential for navigating Stark Law compliance.
Consequences of Stark Law Violations
Violations of the Stark Law can result in severe penalties, including:
- Denial of payment for services rendered pursuant to a prohibited referral.
- Refund of amounts collected for services rendered pursuant to a prohibited referral.
- Civil monetary penalties (CMPs) of up to $15,000 for each service provided in violation of the law.
- CMPs of up to $100,000 for each arrangement that is designed to circumvent the Stark Law.
- Exclusion from participation in federal healthcare programs (e.g., Medicare, Medicaid).
The Importance of Compliance Programs
To avoid these severe penalties, healthcare organizations should implement robust Stark Law compliance programs. These programs should include:
- Regular training for physicians and staff on Stark Law requirements.
- Review of financial arrangements to ensure compliance with applicable exceptions.
- Auditing and monitoring of referral patterns to detect potential violations.
- Procedures for reporting and addressing suspected violations.
Frequently Asked Questions (FAQs)
If a physician’s spouse owns a medical supply company, can the physician refer patients to that company?
Generally, no. The Stark Law considers the physician’s immediate family members, including spouses, and their financial relationships. Therefore, referring patients to a medical supply company owned by the physician’s spouse would violate the Stark Law, unless an exception applies.
Does the Stark Law apply to referrals for services paid for by private insurance?
No, the Stark Law specifically applies to referrals for designated health services that are payable by Medicare. However, many states have similar “mini-Stark” laws that may apply to private insurance.
Can a physician receive a bonus based on the overall profitability of the practice if they refer patients for DHS within the practice?
It depends. Under the Bona Fide Employment Exception, a physician’s compensation, including bonuses, cannot be directly tied to the volume or value of their referrals. The compensation must be fair market value and commercially reasonable even absent the referrals.
Is it a Stark Law violation if a physician invests in a publicly traded pharmaceutical company?
Probably not. The Stark Law focuses on ownership or investment interests in entities that provide designated health services. Investing in a publicly traded pharmaceutical company would generally not trigger Stark Law unless the physician is in a position to directly or indirectly influence referrals to the pharmaceutical company and the drug is considered a DHS.
What is the difference between the Stark Law and the Anti-Kickback Statute (AKS)?
The Stark Law is a strict liability law, meaning intent to violate is not required for a violation to occur. It focuses on referrals for designated health services. The Anti-Kickback Statute (AKS), on the other hand, requires intent to induce or reward referrals and covers a broader range of healthcare services and items. AKS also applies to all payers, not just Medicare.
Can a physician lease office space from a hospital and still refer patients to that hospital for DHS?
Potentially, yes, if the lease arrangement meets a Stark Law exception, such as the Fair Market Value exception. The lease terms must be in writing, the rent must be fair market value, and the arrangement must be commercially reasonable even in the absence of referrals.
If a physician donates money to a hospital, does that create a Stark Law issue?
Not necessarily. A simple donation, without any quid pro quo, typically doesn’t create a Stark Law issue. However, any benefit received in return for the donation could potentially trigger Stark Law concerns.
Are there any exceptions to the Stark Law for Accountable Care Organizations (ACOs)?
Yes, there are several Stark Law waivers and exceptions specifically designed to facilitate the participation of physicians in Accountable Care Organizations (ACOs) and other value-based payment arrangements. These waivers are designed to promote coordinated care and improve quality while avoiding technical violations.
What are some best practices for ensuring Stark Law compliance within a large medical group?
Best practices include: conducting regular audits of financial arrangements; providing ongoing training to all physicians and relevant staff; implementing a clear process for reporting and investigating potential violations; and designating a compliance officer responsible for overseeing Stark Law compliance.
Can a physician refer patients to a physical therapy practice that is partially owned by his brother-in-law?
Likely, no. Since the brother-in-law is an immediate family member, any ownership interest he has in a physical therapy practice would trigger the Stark Law prohibitions, absent an applicable exception.
Does the Stark Law apply to services provided free of charge?
Generally, no. The Stark Law focuses on referrals for services that are payable by Medicare. If a service is provided free of charge, it is not payable and therefore not subject to Stark Law restrictions.
What should a physician do if they suspect a Stark Law violation?
The physician should immediately report their concerns to the organization’s compliance officer or legal counsel. A thorough investigation should be conducted, and if a violation is confirmed, the organization should take appropriate corrective action, which may include self-disclosure to the Centers for Medicare & Medicaid Services (CMS).