Stark Law, or the Physician Self-Referral law, is a civil law that restricts physician self-referrals, including by family. Anyone who has close familial ties with a physician and could have a financial stake in their practice cannot refer a Medicare or Medicaid patient to that physician for designated health services (DHS). A number of services count as DHS, from inpatient and outpatient hospital services to physical therapy services.
There are many exceptions to Stark Law. These exceptions are complex and specific to the scenarios they address.
Stark Law is a strict liability statute, meaning that the federal government doesn’t have to prove that you intended to break the law to prosecute you. If a health care provider is caught violating Stark Law, there is no risk of jail time because it is a civil law. However, the penalty fees can be devastating.
Whatever claims a physician filed and was paid for must be paid back. A provider is issued civil monetary penalties of up to $23,863 for each service in violation of Stark. Here’s where it matters whether the law was intentionally violated: if the Office of Inspector General (OIG) discovers that a provider tried to get around the law (known as “circumvention schemes”) or knew they were in violation, they could be charged up to three times the original penalties, plus a fine of up to $100,000. Some health care organizations are found to have hundreds of illegal arrangements, leading to fines of hundreds of millions of dollars. Providers can also be excluded from participating in CMS programs.
Wait, so how does this connect to physician contracts?
You must understand Stark Law if you are working with physician compensation arrangements, because strong documentation that your organization’s arrangements are within Stark Law regulations is the best way to ensure that you will never find yourself in the OIG’s bad books.
A short list of how to stay out of trouble:
- Contracts should outline the relationship with the physician
- Be specific about services provided by the physician in the contract
- Document non-monetary compensation
- Set rates at fair market value (FMV)
- Don’t pay for referrals! It is illegal under the Anti-Kickback Statute – learn more here.
- Audit your contracts
We hope this simplified breakdown of Stark Law and its implications in physician contracting improved your understanding of the government’s involvement in how physicians are paid. If you want to learn more, check out these resources.
If you have further questions about how to structure physician contracts and document compliance, we would love to talk to you. Email us at info@mdranger.com.
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