What Actions can Cause Stark Law Violations?

There are many duties that are time-consuming for practicing physicians. It can be difficult to balance patient care, work with colleagues, and other job duties. While trying to balance everything, there are certain issues that pertain to medical practice that must be always considered and kept in mind, like avoiding Stark Law violations.

Stark Law violations occur when a physician refers a Medicare or Medicaid patient to an entity, such as a practice or hospital, for designated health services to whom the referring physician or an immediate family member has a financial relationship. Financial relationship can include ownership, investment, or compensation. If a doctor’s spouse holds equity at a blood testing site, referring patients for bloodwork can be considered a violation. That is one of many examples of this type of violation.

According to the Centers for Medicare & Medicaid Services (CMS), these are the procedures that fall under the umbrella of designated health services:

• Clinical laboratory services.
• Physical therapy services.
• Occupational therapy services.
• Outpatient 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.

What is the Purpose of Stark Law?

The main goal of the Stark Law is to mitigate opportunities to overuse medical services. Doctors cannot receive kickbacks from service providers for referrals nor can there be any attempts at clandestine remuneration through alternate channels. Keeping financial considerations out of determining the proper course of action helps maintain the focus on patients and reduces the chance of fraud, which costs doctors, health care providers, and taxpayers millions annually. It also allows for more fair competition in all markets and regions.

How Does Stark Law Vary from the Anti-Kickback Statute?

There are two major areas that differentiates Stark Law from ant-kickback laws. The Stark Law has a wider scope of prohibited financial relationships. It also does not require provable intent in the issuance of referrals to trigger a violation. However, this also creates a stronger burden of proof required for an accusation to become a violation.

There are some other significant differences between the two laws. While the Anti-Kickback Statute (AKS) covers all medical providers able and willing to prescribe and arrange medical services, the Stark Law only covers physicians. The AKS overs all medical items and services that may be paid for by a federally run health care program. Stark Law has a more tailored list of prohibited services, and this only affects the referrals that do not qualify under the given exceptions. The AKS requires intent of action, which includes something of valued being offered in exchange for new or increased referrals. The Stark Law offers liability without fault and has the broader range of interdicted financial relationships.

Some actions that violate these laws include:

• Doctors receiving salaries or consulting fees from hospitals, dialysis centers, nursing homes, drug companies, or other medical entities for jobs or titles involving less or no work in exchange for patient referrals.
• Various medical facilities or companies offering equity in new ventures, distributorships, surgical centers, or other investment opportunities at favorable financial terms contingent upon referrals, especially if the terms become increasingly favorable with more referrals.
• Hospitals and other facilities linking salaries or bonuses for employed physicians to the number of tests, X-rays, and other billable procedures ordered.
• Hospitals and other health care providers buying out private practices at inflated rates contingent upon doctors continuing their work at the purchased practice and referring patients to the purchasing providers.
• Hospitals offering lower-cost services to reduce overhead expenses to physicians, including administrative or clinical staff access, deals on office space rent, or other options.

Some other examples would violate the AKS but would not fall under the purview of Stark Law because they do not involve physicians. Stark Law violations must include a doctor.

What are Some Exceptions to Stark Law Violations?

There are some exceptions to Stark Law statutes. These allow for certain actions and financial arrangements to occur. These also differ from the safe harbor exceptions in the AKS. The Stark Law exceptions include:

• Receiving courtesy health care services for free or discounted rates at an employer for the employee or their immediate family.
• Directing patients to in-house ancillary services, like X-rays or tests by someone in the same group practice or within the same building.
• Compensation or employment agreements for goods or services with fair-market values.
• Limited non-monetary compensation benefits, capped at $300 in value, like gifts.
• Personal service arrangements.
• Bona fide employment relationships.
• Certain rentals of office space or equipment.

It is very important to know that these exceptions come with multiple elements that must be met. If one of these qualifiers is not met, a Stark Law violation has occurred. It is incredibly important that any physicians attempting to fit their actions or arrangements into one of these exceptions know all the applying elements and make sure their actions can withstand scrutiny.

For example, the “in-office ancillary services exception” requires that referring physicians that are requesting certain diagnostic testing, like CT scans, MRIs, or PET, must provide the patient with written notification that the referral will keep the patient within the doctor’s health care system or office. The notice must state the patient is not obligated to use that facility. The patient must also be provided with at least five facilities outside the physician’s practice within a 25-mile radius or all facilities if less than five exist. Along with the names, the facility’s address and phone number will be included in the written notice. This is one example of the level of detailed disclosure a physician must use in order to avoid a Stark Law violation.

Stark Law and the Pandemic

While it may be temporary, the federal government has provided blanket waivers to the Stark Law in response to the Coronavirus (COVID-19) pandemic. This has allowed doctors to do more in-house referrals to help patients limit travel and exposure while COVID-19 levels pose a widespread public health risk. The waivers also cover a variety of exceptions to rents, reimbursement rates, non-monetary compensation, referral rules, among other things.

These exceptions have facilitated increased focus on patient care and attempted to help physicians with the increased pressure of the ongoing pandemic. It is important to remember that these waivers and exceptions are temporary and will likely end when the government formally declares the public health crisis over. However, doctors taking advantage of these waivers may get further insight and clarification on what to do in the future to avoid Stark Law violations.

Philadelphia Physician Lawyers at Sidney L. Gold & Associates, P.C. Defend Physicians Against Stark Law Violation Charges

Understanding the complexities of Stark Law violations may be difficult, but a lawyer can provide assistance. The Philadelphia physician lawyers at Sidney L. Gold & Associates, P.C. can assist you with any legal complications involving potential Stark Law violations. Call us at 215-569-1999 or contact us online for a free consultation. Based in Philadelphia, we serve clients throughout Wilkes-Barre, Scranton, northeast Philadelphia, Bucks County, Chester County, Delaware County, and Montgomery County.