Physician Self-Referral Law – also known as the “Stark Law”

Physician Self-Referral Law - also known as the "Stark Law"

Arizona doctors must operate under a myriad of laws and regulations that govern more than how medicine must be practiced. Doctors must adhere to billing regulations, restrictions on prescribing medication, and rules on proper patient referrals within and outside of their practice.

One of the most significant and expansive federal laws regulating physician referrals prohibits physician self-referral.

Physician Self-Referral Law – also known as “Stark Law”

Stark Law, so named after U.S. Representative Fortney H. “Pete” Stark who co-sponsored the bill, is a federal law that prohibits physician self-referral when the physician has a financial relationship with the entity to which he or she is referring (if the physician stands to make money off of the referral). 42 U.S.C. § 1395nn. The law applies also when the physician has an immediate family member who has a financial relationship with the referral entity.

Specifically, the law prohibits a physician from making referrals for certain designated health services payable by Medicare or Medicaid to an entity with which the physician, or an immediate family member, has a financial relationship, unless an exception applies. An ownership interest, investment, or compensation structure may constitute a “financial relationship” under the law.

The public policy of the law is to address the concern that doctors may be more likely to order tests if they have a financial stake in those tests being given to patients.

The following are designated health services that fall under the purview of the physician self-referral law:

  • Clinical laboratory services.
  • Physical therapy services.
  • Occupational therapy services.
  • Outpatient speech-language pathology services.
  • Radiology and certain other imaging services.
  • Radiation therapy services and supplies.
  • Durable medical equipment and supplies.
  • Parenteral and enteral nutrients, equipment, and supplies.
  • Prosthetics, orthotics, and prosthetic devices and supplies.
  • Home health services.
  • Outpatient prescription drugs.
  • Inpatient and outpatient hospital services.

Broad Scope of Stark Laws

From its inception in 1989, the law and its corresponding regulations have significantly expanded. Between 1992 and 2007 proposed rules were finalized in three stages, commonly referred to as Stark I, Stark II, and Stark III. The Centers for Medicare & Medicaid Services has published a number of regulations interpreting the physician self-referral statute and final rules that affect physician self-referral.

The broad scope of physician self-referral regulations makes complying with the law difficult for even the most diligent and well-intentioned physician. Further, the physician’s intent is not considered in the determination of whether the law was violated.

The physician self-referral law can carry hefty civil penalties, including denial of payment for designated health services, requirement to refund certain claims, civil money penalty of not more than $15,000 for each service “that such person knows or should know is for a service for which payment may not be made” under the Stark Law, and/or exclusion from government funded health care programs and civil money penalty of not more than $100,000 for each “arrangement or scheme” carried out with the purpose of circumventing the prohibition on physician self-referral (such as a cross-referral arrangement). 42 U.S.C. § 1395nn(g).

The vast scope of Stark Laws put all physicians at risk of running afoul on the statutes. If you are facing penalties for Stark Law violations it is critical that you consult with an experienced defense attorney immediately.

As a former health care fraud prosecutor with the United States Attorney’s Office, Ashley D. Adams understands the government’s tactics and knows how to establish the best possible defense for your case.  We have the experience and the resources to protect your rights and defend you against aggressive prosecution.

Contact us or call now (480) 219-1366 for a consultation.

The attorneys at Ashley D. Adams, PLC handles federal criminal cases throughout the United States, including Arizona, Oklahoma, Utah, and California.