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The Physician Self-Referral Law, commonly referred to as the Stark Law, is a federal law passed in 1989 that prohibits healthcare providers from referring Medicare and Medicaid patients for “designated health services” to entities with which the provider has a financial relationship. This includes physician practice management companies, such as those that employ new physicians and offer administrative outsourcing.
In essence, the Stark Law prevents stark law violations by prohibiting healthcare providers from receiving payments from referrals if there is an existing financial relationship.
The Stark Law can be complex to understand, but its purpose is simple: to prevent overutilization of designated health services and kickbacks associated with referrals among healthcare providers. The law applies to all Medicare and Medicaid providers, including hospitals, physician clinics, nursing homes, laboratories, and other medical facilities. It also applies to individual physicians who refer Medicare or Medicaid patients for designated health services.
Due to the complexity of the law and the various scenarios that can include safe harbor stipulations, understanding the violations can be a challenge. Here are nine frequently asked questions related to Stark Law violations:
Violating the Stark Law generally carries serious consequences. Depending on the nature of the violation, sanctions may include civil and administrative penalties, revocation of Medicare or Medicaid licensure, exclusion from participation in Medicare or Medicaid programs, and criminal charges.
Five basic elements, if they are present at the same time, will show a transaction violates the Stark Law:
Civil penalties range from $15,000 per claim up to $100,000 per claim with an additional assessment of up to three times the amount of damages sustained by the federal government. The False Claims Act can also be used to assess treble damages plus fines from $5,500 to $11,000 for each false claim submitted.
Since the Stark Law took effect, there have been sufficient violations to determine a pattern of the more common scenarios:
Looking for Specific examples? Take a look at our blog: Stark Law Violations | 9 Expensive Examples
Yes, the Stark Law does provide a number of exceptions referred to as "safe harbors". These are situations in which financial relationships between healthcare providers and entities to which they refer patients may exist.
A safe harbor can be established if payments made by the referring entity are:
Safe harbors also exist for certain leases and recruitment arrangements. Compliance with these specific requirements will avoid any potential violations of the Stark Law.
For more information on Stark Law and ensuring compliance, consider this resource:
Yes, individuals can be held personally liable for Stark Law violations. The law applies to people as well as organizations and entities, including those that are self-employed. Individuals can be held liable for submitting false claims or making prohibited referrals within the scope of the law and may be subject to civil penalties, fines, and other legal consequences.
In addition to any financial liability they may incur, individuals may also face reputational damage due to their involvement in a Stark Law violation. For this reason, it is important for all healthcare providers to understand the requirements of the law and how they apply to any arrangements with parties outside of their organization.
There are several complex steps involved when you have discovered a Stark Law violation and plan to report it to the appropriate authorities:
Healthcare organizations must remain compliant with the Stark Law in order to protect their patients and avoid potential legal penalties. As such, there are a number of steps that healthcare organizations should take to ensure compliance:
Regularly review and update these policies to reflect changes in the law and industry best practices.
By following these steps, medical organizations can enhance their compliance efforts and reduce the risk of Stark Law violations. However, it is important to note that legal advice should always be sought to address the specific circumstances and complexities of each organization's compliance requirements.
The Stark Law is a strict liability statute, meaning that a violation can occur even without any criminal intent. This means that medical organizations must be aware of the requirements regardless of the intentions of their employees or contractors. The intent requirement comes into play when interpreting specific regulations and penalizing violations – if an organization has not taken sufficient steps to address potential violations, they may still face significant penalties.
Organizations must have adequate policies and procedures in place to ensure compliance with the Stark Law. Regular review and training should also be conducted to ensure that all personnel understand the organization’s expectations and obligations with respect to Stark Law compliance. Organizations should keep detailed records of their compliance efforts in order to demonstrate that steps were taken to avoid violating the law, even if it was not possible to prevent all violations from occurring.
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