Stark law myths

The Stark Amendments were created to prevent physicians from referring federally funded patients to a laboratory (Stark I) or more generally to a designated health service (Stark II) in which physicians or their immediate families have a financial interest. These amendments, in conjunction with the False Claims Act and the Anti-Kickback Statute, were intended to inhibit the billing and provision of unnecessary services and procedures of federally funded patients.

 

In an effort to foster increasing collaboration between physicians and healthcare organizations, Congress has provided at least 20 exceptions to Stark in order to allow diversification of healthcare services in an era of decreasing reimbursement and increasing overhead/costs that has eroded margins and threatened patients' access to essential healthcare services.

 

On August 1, the Office of Inspector General (OIG) announced additional exceptions to the Anti-Kickback Statute allowing physicians to accept donated technology from health plans and hospitals to help them convert to electronic health records.

 

Unfortunately, due in part to the complexity of Stark and the potential civil penalties levied by the OIG, many in the industry have shied away from legitimate commercial arrangements out of a misplaced fear of Stark's broad reach, thus causing unintentional barriers to effective collaboration between physicians and healthcare organizations.

 

In an effort to reduce these barriers, the following are some common Stark myths:

 

MYTH #1: Joint Ventures are not permitted under Stark

 

Although Stark makes most physician-hospital joint ventures untenable, it does not prohibit physician-hospital joint ventures for non-designated health services, such as free standing ambulatory surgery centers (ASCs).

 

MYTH #2: Gainsharing is not permitted under Stark

 

While there is no specific Stark exception that addresses gainsharing (sharing compensation based upon productivity gains), such arrangements can be structured so as to conform to the "catch-all" fair market value exception.

 

MYTH #3: Subsidies for physician liability coverage is not permitted under Stark

 

Stark expressly permits malpractice subsidies for obstetricians in rural areas, and such subsidies can also be included on "fair market" terms in authorized recruitment agreements and personal services agreements.

 

MYTH #4: Physician recruitment support is not permitted under Stark

 

Stark expressly permits legitimate recruitment and retention agreements within certain parameters.

 

MYTH #5: Professional Courtesy is not permitted under Stark

 

Professional courtesies may be permitted in an even-handed way pursuant to board approved policy.