123s of Stark and Anti-Kickback

August 29, 2016

Physicians are faced with serious regulatory challenges and must understand the substantial restrictions upon entering into a financial relationship if conducting a health care arrangement.  While some physicians do not know that these rules exist, others are aware of the rules but are confused by the federal laws.  It is important to understand the 2 most common federal financial regulations are the Physician Self-Referral Act (commonly known as the Stark Law) and the Anti-Kickback Statute.  Other regulatory laws also affecting a physicians are the Civil Monetary Penalties Law, Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH), and the Physician Payments Sunshine Act.  This article is not a comprehensive discussion of the laws and regulations affecting physicians or the practice of medicine. Instead, this article concentrates on a brief understanding of the Stark Law and the Anti-Kickback Statute.

Stark Law vs. Anti-Kickback Statute – It is important to understand that the Stark Law and Anti-Kickback Statute each regulate similar conduct but in different ways.  Stark Law focuses upon only the physician financial relationships whereas the Anti-Kickback Statute has a broader focus of involving all financial relationships with health care providers.

Stark Law specifically prohibits a physician from making referrals for any of the 12 designated health services (detailed in the statute) to an entity with which the physician (or an immediate family member of the physician) has a financial relationship, unless a specific exception applies. For the exception to apply, the arrangement must meet every element of the exception.  Failure to meet one element makes the entire transaction illegal under Stark. It is important to note that Stark Law’s prohibition on referrals is limited to referrals for any designated health service that may be payable in whole or in part by Medicare or Medicaid, whether as a primary payer or secondary payer.

The Anti-Kickback Statute specifically prohibits anyone from knowingly and willfully offering or paying on the one hand, or soliciting or receiving on the other hand, any remuneration to induce or in return for (1) referring an individual to a person for the furnishing or arranging for the furnishing of any item or service payable in whole or in part by a federal health care program or (2) purchasing, leasing, ordering, or arranging for, or recommending purchasing, leasing, or ordering any good, facility, service, or item payable under a federal health care program. The statute broadly defines remuneration as the transfer of anything of value, in cash or in kind, directly or indirectly, overtly or covertly.  The Anti-Kickback Statute is both a civil and a criminal statute that offers enforcement authorities a choice of seeking civil or criminal enforcement remedies.  The Office of Inspector General (OIG), of the Department of Health and Human Services, has created a number of regulatory safe harbors to assist in the design of a compliant transaction.  Unlike the Stark exceptions, failure to meet one element of a safe harbor does not make the arrangement per se illegal.  However, any financial arrangement that fails to meet one or more safe harbor elements can be deemed suspect by the OIG and may face the scrutiny of the federal government.

Clearly, physicians face other liabilities and regulations when entering into health care financial transactions, but the gate keepers’ laws that must be examined before starting any arrangement are the Stark Law and Anti-Kickback Statute.  To learn more about these regulations,  contact us at info@byrdadatto.com.

ByrdAdatto Founding Partner Bradford E. Adatto

Bradford E. Adatto

Brad decided to become a lawyer during sixth-grade Career Day, when he promised to represent his best friend, a future doctor. A few decades later, he started his own law firm that focused on representing health care and corporate clients.

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