The Stark Physician Self-Referral Law

The Stark law prohibits physicians from referring Medicare or Medicaid patients for certain designated health services (“DHS”) to an entity with which the physician (or the physician’s immediate family member) has a financial relationship.

If a physician violates the Stark law, the government can impose penalties of up to $100,000 per arrangement.  The Stark law also prohibits the presentment of a claim for payment for noncompliant relationships.  Thus, a violation of the Stark law can also lead to violations of the False Claims Act where claims from a tainted relationship were knowingly presented for payment or tainted payments are knowingly retained.

Because of these potentially harsh penalties and because the Stark law is a strict liability statute, it is very important that physicians and providers doing business with physicians take this law into account when structuring business relationships.

Some types of relationships that should be examined include:

  • Group practice relationships that involve referrals for ancillary services and the division of profits

  • Contractual arrangements between physicians and entities that rely on the physician for referrals

  • Marketing relationships

  • Space or equipment leases with physicians

  • Medical director agreements

  • Consulting agreements

  • Recruitment agreements

  • Referrals for ancillary services to a group practice or testing entity with which the physician has a relationship

  • Electronic health record subsidies

  • Payments and other relationships associated with accountable care organizations.

While there are many exceptions to the Stark law, they are very specific and all technical elements must be met.

Providers also need to be aware of state laws that are similar to Stark, but might not have the same exceptions or definition of designated health services.  State self-referral prohibitions often apply to all payors and are not limited to Medicare or Medicaid referrals.

We regularly assist clients to analyze and examine business relationships such as those set forth above for compliance with the Stark law and relevant state laws.  We are also available to counsel providers on the use of the Self-Referral Disclosure Protocol (SRDP), which was implemented as part of the Affordable Care Act as a means for providers to self-report violations and resolve overpayment liability.