Stark Law / Anti-Kickback / Fraud & Abuse Lawyers

When conducting business, health care providers must navigate many complicated regulations, such as the federal physician self-referral prohibition (commonly known as the Stark law), the federal Anti-Kickback Statute, and myriad state fraud and abuse statutes that may or may not mirror the federal rules. Entrepreneurial health care businesses may be further restricted by corporate practice of medicine prohibitions, fee-splitting prohibitions, notice requirements, Medicare conditions of participation or certification requirements and billing rules (such as the Anti-Markup rule). At Wachler & Associates, we have been helping providers navigate these difficult areas of the law for over 35 years. We have completed Stark and other regulatory analyses for many types of providers, such as group practices, hospitals, physician-hospital organizations, physician organizations, physician owned distributorships, equipment leasing companies and diagnostic testing facilities to name a few. Whatever your healthcare business venture may be, our attorneys can help you recognize the potential regulatory pitfalls so that you can plan and conduct your business in compliance with health care fraud and abuse laws such as the Stark regulations and the Anti-kickback statute.

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Stark Law Overview

The physician self-referral prohibition, commonly known as the Stark law, is a complex set of regulations that has constantly expanded since its initial publication in 1995. At that time, Stark only applied to clinical laboratory services. Now, Stark applies to a large number of services (referred to as the “Designated Health Services” or “DHS”) as well as virtually any financial relationship between a physician and the entity performing or billing for the DHS. In short, physicians are prohibited from referring DHS payable by Medicare or Medicaid to any entity with which the physician (or an immediate family member) has a financial relationship unless an exception is met. If no exception exists, severe penalties exist including denial of payment, refund of payment, imposition of a $15,000 per service civil monetary penalty and imposition of a $100,000 civil monetary penalty for each arrangement considered to be a circumvention scheme.

Our experienced health care attorneys can help you analyze whether the Stark law applies to your relationships and whether there is an exception available. If there is an exception available, we can help you to structure your contracts, procedures and policies to comply with Stark. We recommend that you revisit this analysis on at least a yearly basis (if not more frequently) to make sure that your relationships, the DHS you perform and the law have not changed in a way that has rendered you out of compliance.

Most situations that potentially implicate the Stark laws must also be analyzed under the Anti-kickback statute and other health care regulations. The Anti-kickback statute provides criminal penalties for individuals or entities who knowingly and willfully offer, pay, solicit or receive remuneration in order to induce business payable by Medicare or Medicaid. A violation of the anti-kickback statute could result in fines of up to $25,000, imprisonment of up to five years, or both. In addition, a violation could result in exclusion from the Medicare program.

There are many other laws, both federal and state, which create potential liability for providers and other health care businesses including state anti-kickback statutes, state self-referral prohibitions (similar to the federal Stark regulations, but often applicable to all forms of payors). Health care businesses and providers also must be aware of the corporate practice of medicine prohibitions that exist in many states and specific Medicare rules that apply to different types of providers. Some examples of Medicare rules that can cause problems for health care businesses include the Anti-Markup Rule, conditions of participation for various entities and performance, licensure or certification standards.

Whether you are addressing these issues during business planning or whether you have a specific concern, our experienced attorneys can help you understand and comply with these many complicated health care regulations.

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Frequently Asked Questions

For a list of frequently asked questioned relating to Stark and other fraud and abuse issues, please click here.

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Outside Resources

For more information, please see CMS’s overview located here.

For information on the Anti-Kickback Statute and the HHS OIG’s Advisory Opinions, see:

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If you have any questions regarding Stark, the Anti-Kickback Statute, the Anti-Markup Rule or related issues, please contact Andrew Wachler at 248-544-0888 or through our website.

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Our attorneys have written extensively on Stark and related issues. For a complete list of our firm’s articles, please click here.

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The attorneys of Wachler & Associates have spoken frequently on Stark and related issues. For a complete list of Wachler & Associates speaking engagements, please click here.

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Frequently Asked Questions Relating to Stark/Fraud and Abuse

What exactly does Stark ban?

In short, physicians are prohibited from referring DHS payable by Medicare or Medicaid to any entity with which the physician has a financial relationship unless an exception is met.

What are the penalties for violating Stark?

Penalties for violating Stark can be severe. They include denial of payment, refund of payment, imposition of a $15,000 per service civil monetary penalty and imposition of a $100,000 civil monetary penalty for each arrangement considered to be a circumvention scheme.

Who qualifies as a “physician” subject to Stark?

The Phase I final regulations define “physician” as a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor.

Who qualifies as an “immediate family member” subject to Stark?

The term “immediate family member” is defined broadly to mean a husband or wife; birth or adoptive parent, child or sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild.

What is DHS?

The term DHS refers to “Designated Health Services”. This is certain services (including some types of equipment, supplies and drugs) to which the physician-self referral prohibition applies. The following items or services are DHS:

  1. Clinical laboratory services.
  2. Physical therapy services.
  3. Occupational therapy services.
  4. Outpatient speech-language pathology services.
  5. Radiology and certain other imaging services.
  6. Radiation therapy services and supplies.
  7. Durable medical equipment and supplies.
  8. Parenteral and enteral nutrients, equipment, and supplies.
  9. Prosthetics, orthotics, and prosthetic devices and supplies.
  10. Home health services.
  11. Outpatient prescription drugs.
  12. Inpatient and outpatient hospital services.

CMS publishes a list of CPT codes that are considered DHS to aid providers in complying with Stark. This list is available here.

What constitutes a “referral” for purposes of the Stark ban?

Stark broadly defines “referral” to include a request by a physician for an item or service payable under Medicare or Medicaid (including the request by a physician for consultation with another physician and any test or procedure ordered or performed by such other physician), or a request by a physician for the establishment of a plan of care that includes the provision of a DHS. The definition of “referral,” does not include services personally performed by a referring/ordering physician (but not services furnished by employees of, or other members of the same group practice as, the ordering physician). Accordingly, physicians who personally perform the DHS that they order for their patients can structure arrangements without worrying about potential Stark violations.

What constitutes a “financial relationship” for purposes of Stark?

A “financial relationship” is defined to include either a direct or indirect ownership or investment interest in an entity through equity, debt or other means, or a direct or indirect compensation arrangement with an entity.

What exceptions are available?

There are numerous exceptions to Stark, including the In-Office Ancillary Services Exception, the Whole Hospital Exception (which was significantly impacted by the Affordable Care Act ), the Bona Fide Employment Exception, and many more. Each exception has a number of elements which much be strictly complied with in order for the exception to be met. If one of these elements is not met, there will be a Stark Law violation. This means it is incredibly important for providers to seek assistance to analyze and understand every aspect of the exception if the provider is accepting referrals from a physician with whom the provider has a financial relationship.

Does Stark require notification be provided to patients if a physician has a financial relationship with a provider?

If a physician is referring certain diagnostic testing (MRI, CT and PET) under the In-Office Ancillary Services Exception, the physician must provide written notification to the patient at the time of the referral. This notification must clearly state that the patient is not obligated to receive these services at the facility which with the physician has a financial relationship. The notice must also list at least five facilities located within a 25-mile radius of the office. If there are fewer than five suppliers in the 25-mile radius, you must list all suppliers within the radius and include the name, address, and phone number of the supplier. The list cannot include hospitals as one of the five facilities but it can list hospitals in addition to the five facilities.

Is there a process for obtaining clarification concerning whether an arrangement falls outside of the Stark ban or meets an exception to the ban?

CMS has established an advisory opinion process under which parties to an arrangement can obtain a written determination from CMS concerning whether the arrangement constitutes a “financial relationship” under Stark II and whether the arrangement meets and exception.

If I have violated Stark, what are my options?

The Affordable Care Act amended federal law to require any person that has received an overpayment, to both report and return the overpayment and notify the entity to whom the overpayment was returned in writing of the reason for the overpayment. The overpayment must be reported and returned either within 60 days of the identification of the overpayment or the date any corresponding cost report is due, if applicable.

An entity that retains an overpayment after this window may be liable under the False Claims Act (31 U.S.C. §3729). This may lead to large civil monetary penalties, treble damages and exclusion from the federal health care programs as well as any state health care programs.

In lieu of returning the entire overpayment, the Centers for Medicare and Medicaid Services (“CMS”) has also published a Medicare self-referral disclosure protocol as required by the Affordable Care Act. Under this protocol, providers are able to self-disclose Stark violations and CMS may reduce the amount owing for the violation.

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