Healthcare providers, particularly physicians and hospitals, regularly engage in business arrangements that may implicate the federal self-referral law, known as the Stark Law. Recent changes to the Stark Law, including changes to the whole hospital exception, disclosure requirements for certain imaging services and under arrangements issues, each require careful consideration from providers. Providers have multiple targets on their backs as enforcement actions for Stark Law violations may be initiated by the U.S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS), HHS Office of Inspector General (OIG), U.S. Department of Justice (DOJ) and whistleblowers in False Claims Act litigation. In 2011, healthcare fraud enforcement efforts on the whole recovered nearly $4.1 billion. In this aggressive enforcement environment, healthcare providers should scrutinize their business relationships for compliance with the Stark Law. To that end, the following A to Zs of Stark compliance provide an overview of the law and identify key issues that healthcare providers face.
A- Any benefit offered to a physician or immediate family member potentially implicates Stark
B- Benefits include financial relationships ranging from compensation to ownership/investment interests
C- Cannot refer Medicare or Medicaid patients for designated health services without an exception if a financial relationship exists
D- Designated health services (DHS) include most ancillary services, post-acute services, including home health and durable medical equipment and inpatient and outpatient hospital services
E- Exceptions are available for compensation arrangements and ownership/investment interests
F- Fair market value compensation is required for all financial relationships
G- Group practices need to be evaluated for compliance
H- Have all arrangements reviewed/evaluated
I- "Immediate family members" include spouses, parents, children, siblings, in-laws, grandparents and grandchildren, among others
J- Justify all payments for items or services as fair market value
K- Kickback law violations also might apply when Stark is violated
L- Liability for violations for each claim includes civil monetary penalties of up to $15,000, three times the claim amount, and exclusion
M- Medicare and Medicaid referrals are the only referrals prohibited by statute
N- No intent is required for a violation
O- Only financial arrangements that meet an exception escape liability
P- Physicians subject to Stark include MDs, DOs, DDSs, podiatrists, optometrists and chiropractors
Q- Question whether terms are commercially reasonable for each arrangement
R- Referral of Medicare patients is prohibited if it involves DHS unless an exception is applicable
S- Self-disclosure is an avenue for resolving potential liability
T- Terms of at least one year are required for most leases and other contracts
U- Unless an arrangement meets every component of the exception, the referral will be prohibited
V- Volume or value payments for items or services are prohibited
W- Written agreements are required for most exceptions
X- "X-pired" contracts fail to comply, and expose parties to sanctions
Y- You need a general understanding of the law to avoid liability
Z- Zillions of dollars may be at stake!
These A to Zs provide a starting point for providers to evaluate their Stark Law compliance. Because the Stark Law is a strict liability statute, each unique arrangement should be closely evaluated to avoid an unintentional violation of the law that could result in a significant penalty. Not only is it important to consider the Stark Law when entering into a new arrangement, but compliance reviews should be conducted periodically to ensure that the arrangement is implemented as planned.
If you need assistance with Stark Law issues, please contact Donna S. Clark at dclark@bakerlaw.com or 713.646.1302 or Darby C. Allen at dallen@bakerlaw.com or 713.646.1311.
