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What is the Stark Law and why is it a focus for enforcement agencies?

On Behalf of | Aug 23, 2021 | Healthcare Law

Medical professionals strive to provide the care and attention their patients require while remaining compliant with numerous statutes and regulations. Providers face strict penalties if they violate any regulation. Allegations of fraud can ruin a reputation and a criminal conviction can destroy an entire practice.

Enforcement agencies focus a significant amount of attention on uncovering fraud and financial impropriety. There are two main federal statutes that focus on improper financial recovery: the Anti-Kickback Statute and the Physician Self-Referral Law. The Physician Self-Referral Law (commonly referred to as the Stark Law), has recently undergone a significant update, however, to eliminate confusion.

The focus of the law was deemed outdated

Since the Stark Law’s inception in 1989, the health care industry has evolved. Officials designed the law to prohibit physicians from referring patients for certain designated health services to any entity in which they shared a financial relationship. This financial relationship could include any type of direct or indirect ownership or investment interest held by the referring medical professional. This restriction on financial relationship extends to the physician’s immediate family members.

While the law was created to address a legitimate issue – the possibility that profits might influence a care provider’s recommendations rather than what was in the best interests of the patient – changes in the billing system and the financial inner-workings of Medicare have evolved.

The Centers for Medicare & Medicaid Services (CMS) has updated the Stark Law in three main ways, including:

  • Finalizing permanent exceptions: While exceptions had already existed within the Stark Law framework, the new final rule has finalized several exceptions to permit certain value-based arrangements.
  • Donation of cybersecurity technology: In the past, a hospital often had to choose between providing cybersecurity software to physicians at a reduced fee or risking the integrity of their data. This exception allows for the donation of certain cybersecurity software to protect the privacy of all parties.
  • Clarity and guidance: Providers in the past had spent significant sums of money to ensure their compliance with the Physician Self-Referral Law. The CMS has created a rule that clarifies terminology and provides guidance to medical professionals.

The Stark Law is a strict liability statute. This means that proof of intent to violate the law is not a requirement – only proof that the physician overstepped the boundaries of the statute. A physician who makes referrals for prohibited health services faces severe penalties in the complicated arena of healthcare law. It is crucial that a physician truly understands the Stark Law and the steps needed to ensure compliance to avoid serious consequences.