The Stark Law – Be Careful Who You Give To

Questions about the Stark Law

Named after U.S. Rep. Pete Stark, the Stark law is also known as the physician-referral law, or the kick-back law

Healthcare Compliance Solutions Inc. (HCSI) recently received this question from a client regarding the Stark Law (Names and places have been changed in this example):

Hello,

Would any of the following violate the Stark Law? Our doctors here at Ophthalmology Associates of Kansas City (OAKC) purchase two NFL season football ticket package for our employees. Sometimes there are tickets left over.

Is it against Stark Laws if:

1.      OAKC doctors give tickets to an employee working at Topeka Optometry Center (TOC) when one of their employees has been extra helpful to us?

2.   An OAKC doctor gives tickets to a TOC employee for a raffle.

3.   OAKC donates the tickets anonymously to TOC?

(Note: Sometimes TOC refers patients to us for surgery).

Thank you for taking the time to read this email.

Lynn B. Jones

Ophthalmology Associates of  Kansas City

We answered their questions by sharing a quote from the website of one of the thousands of law firms trolling for clients who might be willing to blow the whistle on a doctor's best intentions. Both the lawyer and the whistleblower get money for “turning in” doctors. Here is their pitch:

“Learn your rights as a first-to-report whistleblower. You may be entitled to a substantial cash reward. Doctors often try to skirt the law by offering ‘bennies’ to entities who have the potential to favor their services. We have seen many attempts to get around the anti-kickback laws, e.g., Stark Law, including:

• Free lunches to office staff;
• Golf outings;
• Sporting event tickets and hard to get concert seats;
• Etc.

Call this Law Firm for a free, confidential analysis (phone #).”

Overall the original concept of the Stark Law was to protect Medicare patients from being taken advantage of by physicians or organizations who might stand to benefit from referrals for testing, or bribes and kickbacks that might appear to financially benefit a specific physician or other health-care entity.

So what do you do to keep your doctors and clinic safe in your three scenarios:

• Because your doctors get referrals from TOC, unfortunately, that is a fairly clear indication that it violates the Stark Law to give them tickets.
• See #1. It may seem casual and no big deal to say “Yea,we’ve got extra tickets to the game, just come pick ‘em up.” But there’s always the danger of a disgruntled whistleblower that “heard Billy got free tickets to the game from Dr. Jones.”
• If there is a way for OAKC to donate the tickets anonymously you are okay. The challenge is that TOC already knows you have given them tickets. Would they know it is you, even if a third party donated them? You would have to work that out carefully.

A safe rule of thumb to help you steer clear of Stark laws:

Don’t take or give anything of value to entities where there is a potential to benefit one or both of you.

Additional Stark Law and related information:

The High Cost of Stark Law Violations

Anti-kickback & Stark Compliance Information

Don't Write Off Patient Copays

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The High Cost of Stark Law Violations

Physician Self-Referrals or Stark Law Violations

The Stark Law generally prohibits physicians from referring patients for Designated Health Services to facilities in which the physician or an immediate family member has a financial interest.

A “financial interest” is defined broadly to include an ownership interest, investment interest, or compensation arrangement.  It covers both direct relationships and indirect benefits, such as when a hospital provides a physician with below-market rent for office space.

The Designated Health Services (DHS) covered by the Stark statute include: 

• Clinical laboratory services
• Physical therapy services
• Occupational therapy services
• Outpatient speech-language pathology services
• Radiology and certain other imaging services
• Radiation therapy services and supplies
• Durable medical equipment and supplies
• Parenteral and enteral nutrients, equipment, and supplies
• Prosthetics, orthotics, and prosthetic devices and supplies
• Home health services
• Outpatient prescription drugs
• Inpatient and outpatient hospital services

The Stark law also prohibits anyone from billing Medicare or Medicaid for services provided as a result of a self-referral.  Any such claim for reimbursement is considered a “false claim” under the False Claims Act.

Several exceptions to the general rule exist, including physician services, in-office ancillary services, ownership in publicly traded securities and mutual funds, rental of office space and equipment, and bona fide employment relationships.

Examples of Stark Law Violations

Part-Time and Consulting Contracts with Referring Physicians
A jury has found that Tuomey Healthcare System in Sumter, S.C., violated the Stark Law by paying doctors in ways that rewarded them financially for referring patients to the hospital.  The jury found that more than 20,000 Medicare claims were tainted by the illegal compensation arrangements.  

Incentive Payments to Doctors
Freeman Health System agreed to pay $9.3 million to resolve allegations that it knowingly provided incentive pay to physicians who referred patients to the hospital system.  The settlement resolves claims by the U.S. government that such incentive payments violated the False Claims Act and the Stark Law.  

Physician Office Leases
HCA Inc. agreed to pay $16.5 million to settle claims that it violated the False Claims Act and the Stark Statute by entering into favorable leases with physicians who referred patients to the hospital. The whistleblower who brought the case will receive 18.5% of the settlement as a reward, or more than $3 million.