Question

1. What is the Stark Law?

1. When was it passed?
2. What led to it?
3. What are the key provisions of it?
4. How does it relate to Medicare/Medicaid?

Answer 1

Stark law prohibits physicians from referring any patient for any “designated health service" whose expenses would be payable by Medicare/Medicaid from the entities with which the physician itself or an immediate family member has financial relationship, unless exception applies.

1. In 1989 Ethics in Patient Referrals Act was passed, also known as Stark Law because its initial bill was passed by Rep. Pete Stark, a Democrat from California.
2. Under FFS model, the physicians are provided more financial incentives for providing more services. Because of which the physicians having financial interest in entities began self-referring patients and raised their incentives which extend to ordering tests, referring and procedures. In 1980s this issue gained attention and found that there had been over utilization of services and increase health care costs.
3. Key provisions of Stark Law:

1. If any physician accidentally or willfully violates stark law he will be subject to civil penalties
2. Exceptions

1. Physicians can make referrals for in office-ancillary services such as radiology and laboratory services.
2. Where a fair market value compensation arrangement in writing and there is reasonable transaction.
3. Compensation received by physician is of fair market value and is set in writing without considering the volume of referrals.
4. Non-monetary compensation up to certain limit without considering the volume of referral.

3. It comes under scope of Anti - Kick back statue which applies to Medicare and all federal programs while     Stark law is limited to designated health services.

4. Medicare and Medicaid are federal and state run programs to provide health care services to old and poor people. Under Stark law, physicians are prohibited from referring patients for health which is payable by these government entities.