How Can You Avoid Stark Law Violations?

There are several federal laws that physicians and health care organizations must follow, one being the Stark Law. Stark Law forbids physicians from referring Medicare and Medicaid patients to receive designated health services (DHS) from entities the physician (or an immediate family member) has a financial relationship with. The law also prohibits the DHS from submitting Medicare claims for services that resulted from an illegal referral.

There are many terms and definitions that you must familiarize yourself with when discussing the Stark Law, as the DHS and financial relationships addressed are broad. To ensure there is no Stark Law violation, a physician or health care organization must evaluate all economic benefits they receive from DHS. They would also need to find whether they meet any of the complicated exceptions.

For the Stark Law, a financial relationship includes the following:

• Ownership: If a physician owns a DHS, such as an imaging center for CAT scans and MRIs, referring their Medicare and Medicaid patients to that owned provider is prohibited.
• Investments: If a physician has invested in a DHS, they are forbidden from referring their Medicare and Medicaid patients to that provider.
• Compensation: Physicians are forbidden from referring their Medicare and Medicaid patients to any DHS in return for compensation.

Here are some DHS that fall under the Stark Law:

• Imaging services, such as MRI, CT, or ultrasound.
• Clinical laboratory services.
• Outpatient prescription drug services.
• Physical or occupational therapy.
• Medical equipment and supplies.
• Inpatient and outpatient hospital services.
• Radiation therapy.
• Home health services.
• Prosthetics, orthotics, or prosthetic devices.

There are many policies and procedures available to medical practices to help them remain compliant with both the Stark Law and the similar Anti-Kickback Statute (AKS). Under the guidance of the Department of Health and Human Services’ Office of Inspector General (OIG), one of three federal departments that enforce medical fraud laws, a physician or a health care organization can implement effective compliance programs that include written policies and procedures, as well as standards of conduct. Other key elements of an effective compliance program include:

• Risk assessment: Risk assessment helps identify potential compliance issues. Identifying compliance problems and correcting them beforehand helps prevent any potential violations.
• Conflicts of interest: Physicians and health care systems can establish a process that identifies all potential conflicts of interest and report them. Physicians, tenured or newly hired, must disclose all financial interests or ownership of services to regulated authorities. There can also be an implemented program that reviews a provider’s financial relationship with any medical manufacturers or other designated health services.
• Compensation arrangements: Compensation arrangements must be consistent with fair market value. Providers should be monitored and verified that they are a legitimate service.
• Tracking time and activities: Potential compliance issues can occur when tracking a provider’s time and activities through paper trails or outdated programs. A time-tracking application can monitor a provider’s time and activities, as well as simplify reporting and creating an audit trail.

More elements of an effective compliance program include:

• Following written policies, procedures, and standards of conduct.
• Training and education.
• Utilizing a compliance officer or committee.
• Perform internal monitoring or auditing.
• Enforcing policies and standards of conduct through discipline.
• Responding to detected offenses and taking corrective action.

Another way to avoid Stark Law violations is to enlist a lawyer who can go over any detail of a physician’s relationship and can assist in structuring them correctly. This, combined with following the policies and procedures outlined by the OIG, can help keep a practice compliant with federal law.

There are two types of violations under the Stark Law:

• Substantive: A substantive violation of the Stark Law occurs when physicians or a health care organization refers patients to a DHS with whom they have a financial relationship with. Simply abiding to the law can help avoid a substantive Stark Law violation.
• Technical: A technical violation of the Stark Law is more complicated, as these types of violations occur usually from an unintentional error. Technical violations focus more on the paperwork of the referral relationship, such as paperwork not being filled out correctly.

The AKS and Stark Law

Similar to the Stark Law but with distinct differences, the AKS prohibits offering, paying, or receiving anything of value to reward patient referrals. The AKS also forbids generating any federal health care program business involving services payable by any federal health care programs. An example of a Stark Law violation would be a physician referring Medicare patients to a physical therapy program they have invested in. While an example of an AKS violation is when a physician is receiving cash payments for referring a patient to a physical therapy program.

There are other differences between the AKS and Stark Law:

• The AKS is both a criminal and civil statute, while the Stark Law is only a civil statute.
• The Stark Law is specifically for physicians referring Medicare and Medicaid patients to designated health services, while the AKS forbids referrals from any source paid for by either Medicare or any other federal health care.
• There is no requirement to prove a physician’s intent should they violate the Stark Law, otherwise known as a strict liability statute. The AKS requires proof of intent should there be a violation.
• The Stark Law has mandatory exceptions, such as the fair market value compensation exception, while the AKS only has voluntary protections for certain business practices.

There are differences in the penalties between the two fraud laws, with anti-kickback laws carrying more severe penalties because the AKS is both a civil and criminal statute. Although penalties for violating the Stark Law are less severe, they can still be substantial.

Stark Law Exceptions

To avoid a Stark Law violation, should a physician have a financial relationship with a DHS, an exception must be met, and there are several exceptions. They address different types of referrals, such as the following:

• Within a group practice with other physicians.
• In-office ancillary services.
• Academic medical centers.
• Preventive screening tests, immunizations, or vaccines.
• Within prepaid health plans.
• Intra-family rural referrals.

There are other exceptions in regard to financial relationships, including:

• Office space or equipment rental: When one physician rents office space or equipment to another.
• Personal service arrangements: One of the most widely used Stark Law exception, this is when a health system contacts with an individual physician as an independent contractor.
• Physician recruitment: This is for when a hospital compensates a physician for relocating their practice to an area serviced by the hospital.
• Payments by a physician: This is an exception that is applicable when a physician is making a payment to another entity, such a physician making a payment to a laboratory in exchange for clinical services.
• Professional courtesy: This exception applies when the provision of free or discounted health care items to a physician or immediate family member occurs.
• Charitable donations: This exception applies when a physician is donating to another entity, particularly a donation to an entity that is exempt from taxation under the Internal Revenue Code.
• Non-monetary compensation: This is when a physician receives something that is not monetary, such as a door prize or a dinner. The compensation must not be determined bases on the value or volume of referrals.

Philadelphia Physician Lawyers at Sidney L. Gold & Associates, P.C. Help Physicians With Stark Law Violations

If you have questions or need help regarding a Stark Law or AKS violation, then contact one of our Philadelphia physician lawyers at Sidney L. Gold & Associates, P.C. Our knowledgeable and experienced legal team will help protect you, your career, and your reputation. Call us at 215-569-1999 or fill out our online form for a free consultation and to learn more today. Located in Philadelphia, we proudly serve clients in Southeastern Pennsylvania, including Wilkes-Barre, Scranton, Northeast Philadelphia, Bucks County, Chester County, Delaware County, and Montgomery County.