{"id":355797,"date":"2018-09-05T17:09:30","date_gmt":"2018-09-05T22:09:30","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/healthcare\/medicare-medicaid\/the-stark-law-and-doctor-referrals.html"},"modified":"2024-04-01T08:15:10","modified_gmt":"2024-04-01T13:15:10","slug":"the-stark-law-and-doctor-referrals","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/healthcare\/medicare-medicaid\/the-stark-law-and-doctor-referrals.html","title":{"rendered":"The Stark Law and Doctor Referrals"},"content":{"rendered":"\n<div class=\"wp-container-core-columns-is-layout-9d6595d7 fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30\">\n    \n    <div class=\"fl-page-articles fl-section-main fl-section-main-full-width\">\n        <h1 class=\"fl-no-margin-top\">The Stark Law and Doctor Referrals<\/h1>\n<section class=\"fl-gutenberg-byline\">\n    <div class=\"fl-gutenberg-byline-content\">\n                    By <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/melissa-mccall-j-d\/\">Melissa McCall, J.D.<\/a> | Legally reviewed by <a\n                href=\"https:\/\/www.findlaw.com\/company\/our-team\/susan-richmond-esq\/\">Susan Mills Richmond, Esq.<\/a>\n                | Last updated\n        <time>\n                            April 01, 2024\n                    <\/time>\n    <\/div>\n\n    \n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-legally-reviewed\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Legally Reviewed\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>This article has been written and reviewed for legal accuracy, clarity, and style by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with <a href=\"https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html\">our editorial standards<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n\n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-fast-checked\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Fact-Checked\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>The last updated date refers to the last time this article was reviewed by FindLaw or one of our <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html\">contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please <a href=\"https:\/\/lawyers.findlaw.com\/?fli=bylinelink\" target=\"_blank\" rel=\"noopener\">contact an attorney in your area<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n<\/section>\n<p>The&nbsp;Stark&nbsp;Law, or the Physician Self-Referral Law, is a collection of federal&nbsp;anti-fraud&nbsp;regulations prohibiting physicians from engaging in self-referrals.&nbsp;<a href=\"https:\/\/codes.findlaw.com\/us\/title-42-the-public-health-and-welfare\/42-usc-sect-1395nn.html\" target=\"_blank\" rel=\"noopener\">The Stark Law<\/a>&nbsp;prohibits hospitals and other healthcare entities from billing Medicare or Medicaid for some services referred by doctors under certain circumstances.&nbsp;<\/p>\r\n<p>It is one of several&nbsp;<a href=\"https:\/\/oig.hhs.gov\/compliance\/physician-education\/fraud-abuse-laws\/\" target=\"_blank\" rel=\"noopener\">federal laws<\/a>&nbsp;designed to&nbsp;<a href=\"https:\/\/www.findlaw.com\/healthcare\/medicare-medicaid\/what-is-medicare-fraud.html\">deter abuse of federal health care programs<\/a>, including the Anti-Kickback Statute (AKS) and the&nbsp;<a href=\"https:\/\/www.findlaw.com\/employment\/whistleblowers\/what-is-the-false-claims-act.html\">False Claims Act<\/a>&nbsp;(FCA).<\/p>\r\n<h2>Stark Law History<\/h2>\r\n<p>The history of the Stark Law goes back to 1988.&nbsp;Peter Stark first proposed legislation to regulate physician self-referrals. Parts of that original bill addressing Medicare laboratory fraud were&nbsp;codified into law at&nbsp;<a href=\"https:\/\/codes.findlaw.com\/us\/title-42-the-public-health-and-welfare\/42-usc-sect-1395nn\/\" target=\"_blank\" rel=\"noopener\">42 U.S.C. 1395nn<\/a>. (Section 1877 of the Social Security Act).&nbsp;<\/p>\r\n<p>Congress expanded the Stark Law in the Omnibus Budget Reconciliation Act of 1993 to include Medicaid and designated health services other than clinical laboratories.<\/p>\r\n<p>The&nbsp;<a href=\"https:\/\/www.cms.gov\/\" target=\"_blank\" rel=\"noopener\">Centers for Medicare &amp; Medicaid Services<\/a>&nbsp;(CMS) have expanded the Stark law through final rulemaking and promulgating final rules.<\/p>\r\n<h2>Understanding the Stark Law<\/h2>\r\n<p>The Stark Law is a&nbsp;<a href=\"https:\/\/dictionary.findlaw.com\/definition\/liability.html\" target=\"_blank\" rel=\"noopener\">strict liability<\/a>&nbsp;federal law that regulates physician self-referral. This means this law does not require specific intent to defraud the federal government. Physician self-referral occurs when the following two things&nbsp;occur:<\/p>\r\n<ul>\r\n<li>A physician steers a patient to a service or product (designated health services)<\/li>\r\n<li>The physician or one of their immediate family members has a financial interest in the service or product<\/li>\r\n<\/ul>\r\n<h3>Medical decision-making<\/h3>\r\n<p>Proponents of this law believe that physician self-referral harms patients because it hampers medical decision-making. Healthcare professionals should make patient referrals based on patient needs, not on their financial interests.<\/p>\r\n<p>Specifically, the Stark law prohibits referrals to other physicians or entities where the following apply:<\/p>\r\n<ul>\r\n<li>The referral is for designated health services<\/li>\r\n<li>The services are payable by Medicare or&nbsp;<a href=\"https:\/\/www.findlaw.com\/healthcare\/medicare-medicaid\/medicaid-overview.html\">Medicaid<\/a><\/li>\r\n<li>The physician or their immediate family member has a financial interest (direct or indirect) in the referral<\/li>\r\n<li>No safe harbor exemption applies<\/li>\r\n<\/ul>\r\n<h2>Financial Relationships<\/h2>\r\n<p>The Centers for Medicare and Medicaid Services (CMS) defines&nbsp;<a href=\"https:\/\/www.cms.gov\/medicare\/regulations-guidance\/physician-self-referral?redirect=\/physicianselfreferral\/\" target=\"_blank\" rel=\"noopener\">financial relationships<\/a>&nbsp;as follows:<\/p>\r\n<p style=\"margin-left: 40px;\"><i>A financial relationship may be an investment or ownership interest in the entity or a compensation arrangement with the entity.<\/i><\/p>\r\n<p>Here is an example of a financial relationship:<\/p>\r\n<p>A physician employed at a hospital receives a performance bonus based on the number of non-invasive procedures ordered at the hospital. This scenario is an example of a physician&#8217;s conflict of interest that threatens patient care because it opens the door to a decision based on the physician&#8217;s financial interests.<\/p>\r\n<h3>Immediate Family Members<\/h3>\r\n<p>Physician self-referral laws also apply to their immediate family members. Immediate family members include, but are not limited to, the following:<\/p>\r\n<ul>\r\n<li>Spouses<\/li>\r\n<li>Birth\/adoptive parents<\/li>\r\n<li>Children<\/li>\r\n<li>Siblings<\/li>\r\n<li>Step-parents\/Step-children<\/li>\r\n<li>In-laws<\/li>\r\n<li>Grandparents and grandchildren<\/li>\r\n<\/ul>\r\n<p>A significant reason for forbidding this type of doctor referral is to eliminate physician&nbsp;<a href=\"https:\/\/dictionary.findlaw.com\/definition\/conflict-of-interest.html\" target=\"_blank\" rel=\"noopener\">conflicts of interest<\/a>, which&nbsp;threaten patient care. Instead of using a patient&#8217;s medical needs or a doctor&#8217;s expertise as a basis for care, the referring physician&#8217;s financial interest informs the decision.<\/p>\r\n<h2>Designated Health Services<\/h2>\r\n<p>The physician self-referral prohibition only applies to the following&nbsp;<a href=\"https:\/\/www.cms.gov\/medicare\/regulations-guidance\/physician-self-referral?redirect=\/physicianselfreferral\/\" target=\"_blank\" rel=\"noopener\">designated health services<\/a>:<\/p>\r\n<ul>\r\n<li>Clinical laboratory services<\/li>\r\n<li>Outpatient prescription drugs<\/li>\r\n<li>Speech-language pathology services<\/li>\r\n<li>Physical therapy<\/li>\r\n<li>Radiology and imaging services<\/li>\r\n<li>Occupational therapy<\/li>\r\n<li>Radiation therapy services and supplies<\/li>\r\n<li>Home health services<\/li>\r\n<li>Prosthetics, orthotics, and prosthetic devices and supplies<\/li>\r\n<li>In-patient and outpatient hospital services<\/li>\r\n<li>Durable medical equipment and supplies<\/li>\r\n<\/ul>\r\n<p>If the physician gains financial&nbsp;benefits&nbsp;from the referral, they&nbsp;risk&nbsp;a Stark Law violation.&nbsp;The&nbsp;incentive of the physician&nbsp;to increase their financial gain is being placed before the needs of the patient.<\/p>\r\n<h2>Stark Law Exceptions<\/h2>\r\n<p>One exception to the doctor self-referral prohibitions in the Stark Law is when physicians order lab work or radiology for their in-office lab. In addition, the Stark Law exempts bona fide employment relationships involving the physician&#8217;s compensation under specific conditions. For example, a bona fide employment relationship exists where the compensation:<\/p>\r\n<ul>\r\n<li>Is commercially reasonable<\/li>\r\n<li>Doesn&#8217;t exceed fair market value<\/li>\r\n<li>Is determined in advance<\/li>\r\n<li>Is not determined by the volume or value of the referrals<\/li>\r\n<\/ul>\r\n<p>The Stark Law applies&nbsp;to federal health care programs, like Medicare or Medicaid. It&nbsp;does not apply to private insurance.<\/p>\r\n<h2>Stark Law Violations And Enforcement<\/h2>\r\n<p>Doctor referrals under the Stark Law aren&#8217;t considered criminal acts. However, anyone who violates the Stark Law can face civil penalties.&nbsp;<a href=\"https:\/\/www.asahq.org\/quality-and-practice-management\/managing-your-practice\/timely-topics-in-payment-and-practice-management\/anti-kickback-statute-and-physician-self-referral-laws-stark-laws#:~:text=Possible%20penalties%20for%20violating%20the,Stark%20Laws)%20(See%2042%20U.S.C.\" target=\"_blank\" rel=\"noopener\">Penalties for Stark law violations<\/a>&nbsp;include the following:<\/p>\r\n<ul>\r\n<li>Denial of payment for services<\/li>\r\n<li>Refund of payments<\/li>\r\n<li>Fines of $15,000 for each claim submitted, plus two times&nbsp;the reimbursement claimed<\/li>\r\n<li>$100,000 civil monetary penalty for each arrangement considered to be a circumvention scheme<\/li>\r\n<li>Exclusion from Medicare and Medicaid programs<\/li>\r\n<\/ul>\r\n<p>The following federal agencies enforce the Stark Law:<\/p>\r\n<ul>\r\n<li><a href=\"https:\/\/www.hhs.gov\/\" target=\"_blank\" rel=\"noopener\">U.S. Department of Health and Human Services<\/a>&nbsp;(HHS)&nbsp;<\/li>\r\n<li><a href=\"https:\/\/oig.hhs.gov\/\" target=\"_blank\" rel=\"noopener\">Office of Inspector General<\/a>(OIG)<\/li>\r\n<li>Centers for Medicare &amp; Medicaid Services<\/li>\r\n<\/ul>\r\n<p>Violations of the Stark Law are taken very seriously.<\/p>\r\n<h2>Get Legal Help<\/h2>\r\n<p>Healthcare providers who violate the Stark Law compromise patient care. You should speak to a healthcare attorney if you believe you have experienced a Stark Law violation. They are experts in health care law and can give you sound legal advice.&nbsp;<\/p>\r\n<p>Consider consulting with&nbsp;an experienced&nbsp;<a href=\"https:\/\/lawyers.findlaw.com\/health-health-care-law\/?fli=dcta\" target=\"_blank\" rel=\"noopener\">healthcare&nbsp;attorney<\/a>.<\/p>\r\n<div class=\"was-this-helpful\">\n    <div\n            class=\"was-this-helpful__question-container\"\n            aria-labelledby=\"was-this-helpful__question\"\n            role=\"group\"\n    >\n        <span\n                id=\"was-this-helpful__question\"\n                class=\"was-this-helpful__question fl-text-lg-bold\"\n        >Was this helpful?<\/span>\n        <button\n                class=\"was-this-helpful__button fl-text-sm\"\n                aria-label=\"Yes\"\n                value=\"yes\"\n        >\n            <span class=\"was-this-helpful__button-text fl-text-bold\">Yes<\/span>\n            <i class=\"was-this-helpful__button-icon\">\n                <svg width=\"22\" 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11.0745 20.2154 11.4432C19.7859 11.8119 19.236 12.01 18.67 12H16M9.00003 14V18C9.00003 18.7956 9.3161 19.5587 9.87871 20.1213C10.4413 20.6839 11.2044 21 12 21L16 12V0.999995H4.72003C4.2377 0.994543 3.76965 1.16359 3.40212 1.47599C3.0346 1.78839 2.79235 2.22309 2.72003 2.7L1.34003 11.7C1.29652 11.9866 1.31586 12.2793 1.39669 12.5577C1.47753 12.8362 1.61793 13.0937 1.80817 13.3125C1.99842 13.5313 2.23395 13.7061 2.49846 13.8248C2.76297 13.9435 3.05012 14.0033 3.34003 14H9.00003Z\"\n                              stroke=\"#666666\" stroke-width=\"2\" stroke-linecap=\"round\" stroke-linejoin=\"round\"\/>\n                    <\/g>\n                    <defs>\n                        <clipPath id=\"clip0_604_3423\">\n                            <rect width=\"22\" height=\"22\" fill=\"white\"\/>\n                        <\/clipPath>\n                    <\/defs>\n                <\/svg>\n            <\/i>\n        <\/button>\n    <\/div>\n    <span class=\"was-this-helpful__taken-action 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fa-check\"><\/i>\n        <p class=\"was-this-helpful__thank-you-message-text\" aria-live=\"polite\"><\/p>\n    <\/div>\n<\/div>\n\n\n    <\/div>\n    \n    <div class=\"fl-section-sidebar\">\n        <div class=\"fl-editors-summary\" data-testid=\"fl-editors-summary\">\n    \n    <div class=\"fl-editors-summary-content\" data-testid=\"fl-editors-summary-content\">\n                    <h2>Can I Solve This on My Own or Do I Need an Attorney?<\/h2>\n                <div class=\"fl-editors-summary-content-main\" data-testid=\"fl-editors-summary-content-main\">\n            \n        <\/div>\n        <ul class=\"fl-list-style-none\">\n                            <li data-testid=\"fl-editors-summary-content-item\">\n                    <i class=\"fa fa-check medium fl-editors-summary-content-item-icon\" aria-hidden=\"true\"><\/i>\n                    Medicare and Medicaid issues can often be handled on your own\n\n                <\/li>\n                            <li 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<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>The Stark Law was created to protect against physicians endangering patients by using self-referrals to put financial gain before the patient&#8217;s needs. 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