ADVOCATE

The Federal Stark law prohibits physicians from referring Medicare/Medicaid beneficiaries to an entity in which they (or an immediate family member) have a financial relationship for designated health services (“DHS”), unless an exception applies. DHS include: clinical lab; physical therapy; occupational therapy; radiology (including, MRI, CAT scans, and ultrasounds); radiation therapy and supplies; DME and supplies; parenteral and enteral nutrients, equipment and supplies; prosthetics, orthotics, and prosthetic devices and supplies; home health services; outpatient prescription drugs; and inpatient and outpatient hospitalization services. In addition, physicians should also be mindful that the Centers for Medicare and Medicaid Services (“CMS”) issued a proposed rule to amend the Stark regulations effective January 1, 2006 to include diagnostic and therapeutic nuclear medicine, including PET scans, to the list of DHS.

Physicians must keep in mind that they cannot ignore Stark, as nearly every financial relationship between physicians and entities that furnish designated health services (“DHS”) implicate the law. Violations of the Stark law have substantial consequences for all parties involved, regardless of the intent of the parties. Sanctions include denial of payment for DHS claims, civil monetary penalties ($15,000 for each claim submitted plus two times the reimbursement claimed), and exclusion from Medicare and Medicaid. In addition, parties who enter into circumvention schemes are subject to a civil monetary penalty of up to $100,000 per scheme.

Group practices are well advised to document their compliance with Stark. Documentation supporting compliance is particularly important in today’s health care environment, which has had an increase in Federal False Claims litigation and investigations stemming from Qui Tam whistleblowers utilizing technical violations of the Stark law as a predicate for False Claims Act violations.

Application of Stark in the Group Practice Setting