What is the Physician Self-Referral Law?
The Physician Self-Referral Law, also known as the Stark law, is a federal law that prohibits certain referrals made by physicians. If a physician (or an immediate family member) has a ownership, investment, or compensation arrangement with an entity, then:
- The physician may not refer patients to that entity for designated health services; and
- The entity may not submit claims or bill for improperly-referred designated health services.
What Items or Services Are Covered by the Stark Law?
Under section 1877 of the Social Security Act (42 U.S.C. § 1395nn), there are 12 categories of items or services identified as designated health services:
- Clinical laboratory services;
- Physical therapy services;
- Occupational therapy services;
- Radiology services, including magnetic resonance imaging (MRI), computerized axial tomography scans, and ultrasound 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; and
- Outpatient speech-language pathology services.
The Centers for Medicare & Medicaid Services (CMS) annually updates a list of CPT/HCPCS codes for all items and services that fall within categories 1-5 and 12. To access the current list, please visit CMS’s website: https://www.cms.gov/medicare/regulations-guidance/physician-self-referral/list-cpt-hcpcs-codes.
Are “Self-Referrals” Ever Allowed?
While the Physician Self-Referral Law is worded broadly and covers many financial relationships, arrangements that satisfy a statutory or regulatory exception are generally not subject to Stark liability.
The full list of statutory exceptions can be found here: 42 U.S.C. § 1395nn(b)-(e).
For regulatory exceptions, see 42 CFR Part 411 – Subpart J.
These exceptions can be difficult to navigate. Qualified counsel can help providers determine whether a particular practice might be prohibited or covered by a Stark exception.
What Are the Penalties for Stark Violations?
Under the Physician Self-Referral Law, violations can result in substantial fines and exclusion from federal healthcare programs. Submitting a claim or billing for an improperly-referred service may trigger a civil monetary penalty (CMP) of up to $15,000 per service, with additional penalties for each improper claim. Additionally, individuals who participate in a “circumvention scheme”—an arrangement primarily designed to facilitate prohibited referrals—may face a CMP of up to $100,000 per scheme.
CMPs may be accompanied by assessments and program exclusion.
The Stark law itself only authorizes the government to pursue administrative penalties—CMPs, assessments, and federal program exclusion. However, the fact that a claim is made in violation of the Stark law may also render it a “false” or fraudulent claim. Thus, Stark violations can also result in criminal exposure or civil liability under the False Claims Act. A very broad federal law, the False Claims Act also permits private lawsuits brought by whistleblowers (e.g., ex-business partners).
Notably, neither the Stark Law nor the civil provisions of the False Claims Act requires the government to prove defendants’ specific intent to violate the law, unlike the criminal False Claims Act provisions.
Chicago-Based Stark Violation Defense
For more information about the Physician Self-Referral Law, or to discuss how Pavalon Law can help you, please call (312) 815-2683 or email info@pavalon.com today.