Stark Law

Topics: Stark Law, Medicine, Hospital Pages: 10 (2981 words) Published: September 12, 2008
Introduction 1
History of Stark Law2
Key Concepts3
General Prohibition Under Stark Law3
Financial Relationships4
Stark Law vs. Anti-kickback Statutes4
Enforcement of Stark Law5
Compliance with Stark Law6
Examples of Problems6
Compliance Plan7
Risk of Not Making Repayments8
Physician Recruitment9


On July 17, 2003 a California Grand Jury filed an indictment against Barry Weinbaum; Tenet Healthsystem Hospitals, Inc.; and Alvarado Hospital Medical Center, Inc. stating the defendants “did knowingly and intentionally conspire with each other and others… to commit offenses against the United States” by soliciting and receiving remunerations and offering and paying remunerations (US v. Weinbaum, Tenet Healthsystem Hospital Inc. and Alvarado Hospital Medical Center, Inc.). Monday, February 13, 2006: Iowa Methodist Hospital Settles Fraud Claim. “An Iowa lawsuit alleging that Iowa Methodist Hospital pressured physicians to use specific pacemakers in order to get rebates from the manufacturer has been settled…” (MedLaw). Both of these cases are examples of the enforcement of Stark Law and Anti-kickback statutes. The regulations were designed to “curb fraud and abuse and excessive spending in governmental health care programs” (Brooks). Stark Law or the self referral law prohibits physician from referring Medicare patients for certain health care services to entities with which the physicians or their immediate family members have a financial relationship. The financial relationship can be either an ownership interest or a compensation arrangement (HHS News). The federal anti-kickback statutes makes it a crime to knowingly solicit, receive, offer or pay any remuneration in exchange for referrals for which payment may be made under a federal health care program such as Medicare or Medicaid (Sarraille). The purpose of the anti-kickback statute is t o ensure that the medical referral decision is made with the patient’s best interest in mind, and to prevent inflation of the cost of medical treatment by the payment of referral fees and the referral of patients for care they do not need (US v. Weinbaum et. al ). The physician self-referral laws and regulations were implemented to close loopholes in financial relationships between physicians and entities to which they referred. Various studies and research has been conducted which supports a correlation between increased utilization of services to those entities to which the physician had financial ties (Brooks).

History of Stark Law

In the late 1980’s Representative Fortney “Pete” Stark lead the movement in Congress to address self-referrals by physicians. In 1989, the original Stark law known as “Stark I” was enacted by Congress. This law, section 1887 (a) of the Social Security act prohibited physician referrals under Medicare for clinical laboratory services when the referring physician has a financial relationship with the lab unless certain regulatory exceptions are met. The Omnibus Budget Reconciliation Act of 1993 expanded the prohibited referrals to 10 additional designated health services and encompassed Medicaid. The expansion of the law became known as “Stark II.” The additional services are as follows: 1.Physical Therapy

2.Occupational Therapy
3.Radiology (including MRI, CT scans, and ultrasound services) 4.Radiation Therapy services and supplies
5.Durable Medical Equipment and supplies
6.Parental and enteral nutrients, equipment and supplies
7.Prosthetics, orthotics and prosthetic devices and supplies 8.Home Health services
9.Outpatient prescription drugs
10.Inpatient and outpatient hospital services
The Balanced Budget Refinement Act of 1999 added coordinated care plans offered by Medicare + Choice organization...
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