What is the Stark Law?

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What is the Stark Law?

Congress enacted the Stark Law as part of the Omnibus Budget Reconciliation Act of 1989. The Stark Law, 42 USC Section 1395nn, also referred to as the Physician Self–Referral Law, has certain prohibitions when a physician or member of his or her immediate family has a direct or indirect financial arrangement or relationship with an entity:

(1) First, the physician may not make a referral to an entity that provides certain designated health services covered by the Medicare program or any other federal heathcare payor program; and

(2) Second, the entity may not present or cause to be presented any claim to Medicare or other federal healthcare payor program for any such services following any such referral.

The law defines a financial relationship, to include a direct or indirect compensation arrangement with an entity that furnishes certain health care services.   A compensation arrangement can consist of any arrangement involving remuneration, direct or indirect, between a physician and the entity.

The Stark Law is intended to prohibit fraudulent behavior by physicians, but also recognizes that certain business relationships between physicians and health care entities are both cost effective and beneficial to patient care.  As a result, the Centers for Medicare and Medicaid Services (“CMS”) have identified certain legitimate and common financial arrangements within the healthcare services marketplace that are legal and constitute exceptions to the Stark Law.

In later posts I will discuss some of the most common exceptions.  If you have any questions about the Stark Law, feel free to contact us for a free confidential consultation.