Stark Law

A federal law that prohibits physicians from referring patients for designated health services to entities with which the physician or an immediate family member has a financial relationship, unless an exception applies.

The Physician Self-Referral Law, commonly known as the Stark Law, is one of the most important compliance regulations in healthcare. Named after Congressman Pete Stark, the law prevents physicians from referring patients to entities where they or their family members have a financial interest. The law covers designated health services (DHS), which include clinical laboratory services, physical therapy, occupational therapy, radiology, radiation therapy, durable medical equipment, home health services, outpatient prescription drugs, and inpatient and outpatient hospital services. Stark is a strict liability law, which means intent does not matter. If you have a financial relationship with an entity and you refer patients there without meeting a specific exception, you have violated the law regardless of whether you intended to do anything wrong. This is different from the Anti-Kickback Statute, which requires proof of intent. There are numerous exceptions to the Stark Law that allow common business arrangements. The in-office ancillary services exception allows physicians to refer within their own group practice for certain services performed in the group's office. The employment exception covers employed physicians. The rental exceptions cover fair-market-value lease arrangements. During credentialing, some payer applications include questions about your compliance with the Stark Law and the Anti-Kickback Statute. They want to know whether you have any financial arrangements that could create conflicts of interest. Stark Law violations can result in denial of payment, refund of amounts collected, civil monetary penalties up to $15,000 per service, exclusion from federal healthcare programs, and False Claims Act liability of up to three times the damages. Take it seriously. If you have any ownership interests, investment interests, or compensation arrangements with entities you refer to, have a healthcare attorney review them for Stark Law compliance.