What Are Some Exceptions to the Stark Law?

The Stark Law regulates the type of referrals doctors can make if they bill for Medicare or Medicaid. Often referred to as a self-referral law, the Stark Law prohibits doctors from referring Medicare or Medicaid patients to a practice where the referring doctor has a financial relationship. Even honest mistakes and violations of this law can result in tens of thousands of dollars in fines.

Physicians and health care professionals must ensure absolute compliance with this law. Reviewing your contracts, services, and referral sources is necessary to ensure your office is not violating any piece of the Stark Law.

Any physician who makes a referral for designated health care services can potentially violate the Stark Law. Designated health care services commonly include:

• Hospital services.
• Prescription medications.
• Medical supplies.
• Occupational therapy.
• Physical therapy.
• Clinical lab work.
• Prosthetics.
• Orthotics

Any medical professional attempting to transact in the health care field where they could receive profit could be in violation of the Stark Law.

While the Stark Law is strictly enforced, there are exceptions. An exception will most likely be allowed if it is in the best interests of the patient.

In-Office Ancillary Services

Doctor offices often provide more than simply exam services. This is for patient convenience, so if they need a blood or imaging test, that may be offered onsite to do while the patient is already present. These ancillary services often qualify for an exception to the Stark Law. Additional examples include prescription medications, lab services, and radiology.

Physician Services

Under the Stark Law, physicians are generally not allowed to provide a referral to another doctor in the same group practice. However, contractor physicians do not fall under this prohibition, making them an exception to the law. Compensation paid under a personal service agreement must be written and signed by both parties and be valid for at least one year.

Bona Fide Employment

A bona fide employment exception applies to compensation arrangements between a medical facility and a physician employee. To apply, the compensation must be reasonable and not related to the number of referrals made.

Indirect Compensation

Indirect compensation is an exception to the Stark Law. This relationship exists between a doctor and a health care facility. The compensation must be reasonable and not take into account the number of referrals made.

Non-Monetary Compensation

Non-monetary compensation is allowed under a Stark Law exception, provided that the amount of compensation does not exceed $300 per year. The compensation amount must also not take into account the number of referrals provided.

Rural Referral

Patients living in rural areas often have fewer health care options. Doctors are allowed to refer patients to a practice where they have a financial stake if there is no other provider within 25 miles.

Space and Equipment Lease

Some buildings house more than one office. To share space and save on costs, physicians often share leases. This is allowed under an exception to the Stark Law, as long as certain additional requirements are met.

Academic Medical Centers

Normally, doctors could not make referrals to an academic medical center if that doctor has a financial relationship with the school. However, if all of the following conditions are met, the doctor may be able to make referrals under an exception to the Stark Law:

• The physician is a bona fide employee of the academic medical center.
• The doctor has a valid state license in the state where the medical center is located.
• The doctor is a member of the academic medical center faculty.
• The physician provides clinical teaching services and is paid for those services.
• The academic medical center meets the Stark Law criteria.

Doctor Incentive Plan

An incentive plan for physicians can be an exception to the Stark Law. However, the incentive plans must not limit any necessary medical services to those who are eligible for such services.

Doctor Recruitment

Hiring and keeping high-quality physicians is a challenge for many offices and hospitals. Medical facilities can pay doctors to join their staff under a Stark Law exception if all of the following conditions are met:

• The agreement is in writing.
• The agreement does not require the doctor to refer patients to the hospital.
• The amount paid to the doctor is not related to the number of referrals made.
• The physician is allowed to establish staff privileges at other hospitals.

Charitable Contributions

A physician can make charitable contributions. Under an exception to the Stark Law, the donation cannot be based on the number of referrals received.

Other Compensation Exceptions

Above are some of the most common exceptions to the Stark Law. That list is by no means exhaustive. Here are some additional exceptions to the Stark Law:

• Compliance training.
• Risk-sharing arrangements.
• Professional courtesy.
• Retention payments.
• Electronic health records.
• Timeshare arrangement.
• Assistance to compensate a non-physician practitioner.
• Incidental benefits to medical staff and personnel.

What Are Conditions to Stark Law Exceptions?

Some of the exceptions above may have additional requirements specific to that particular exception. Ultimately, the exceptions are in place to ensure high-quality patient care. To that end, most exceptions to the Stark Law must also meet all of the following requirements:

• Written agreement: All Stark Law exceptions must be in writing. Both the doctor and the provider must sign the agreement. Except in the case of a bona fide employment exception, every Stark Law exception must be a written agreement signed by all parties involved.
• Volume of referrals: When compensation is based on the value of or the number of referrals provided, a doctor can expect to find themselves under investigation of violating the Stark Law. If a doctor’s compensation is based on referrals made, both the doctor and the provider could be in violation of the law.
• Reasonable: Compensation must also be commercially reasonable, otherwise it could be a violation of the Stark Law. Payments that exceed a reasonable amount will put the provider and doctor in potential legal trouble.
• Group practice: To meet certain Stark Law exceptions, medical offices must be a group practice. A group practice would allow for physician services and in-office ancillary services exceptions.

What Are Penalties for Stark Law Violations?

The penalties for a Stark Law violation are extreme. The most common penalties include:

• Reimbursement request denial from both Medicare and Medicaid.
• Doctors in violation of the Stark Law may be required to reimburse both Medicare and Medicaid up to three times the amount of services.
• A penalty of up to $15,000 per service per violation.
• A penalty of up to $100,000 per illegal arrangement.
• Criminal penalties.

These fines and penalties are not minor. A doctor in violation of the Stark Law could risk their practice and medical career. Before settling into any referral agreement, have it reviewed by trusted legal counsel to ensure you are not violating the Stark Law.

Philadelphia Health Care Attorneys at Sidney L. Gold & Associates, P.C. Will Make Sure Your Rights Are Protected

Physicians have plenty of regulatory and legal hurdles to face over their career. The Stark Law is one of the most complex and confusing regulations you may face. However, some can benefit your practice, and knowing how to implement them can be advantageous. Speak with one of our experienced Philadelphia health care attorneys at Sidney L. Gold & Associates, P.C. today to learn your rights and how we may be able to help you protect them. Call us at 215-569-1999 or contact us online to schedule your free consultation. Located in Philadelphia, we proudly serve physicians in Southeastern Pennsylvania, including Wilkes-Barre, Scranton, Northeast Philadelphia, Bucks County, Chester County, Delaware County, and Montgomery County.