123s of Physician Office Laboratories

May 2, 2022

Physician office laboratories (POLs) can be an asset to both the doctor and the patient. Usually providing common tests such blood counts, urinalysis, pregnancy, fecal occult blood, and cholesterol levels, they help the doctor to manage their patient more efficiently and offer in-office convenience to the patient who needs testing.

However, a doctor considering setting up such a laboratory must keep several important laws in mind.

Stark and the Anti-Kickback Statute


The Physician Self-Referral Law (Stark) prohibits a doctor from referring a Medicare patient to an entity with which they or their immediate family member has a financial relationship.

This law does not, however, prevent a doctor from operating a laboratory in their office if they come under an exception. The most common one allows a practice to provide clinical laboratory testing as an “in-office ancillary service”. In other words, if the test is one that your doctor needs as part of your care, Stark will allow them to perform it in their office. Most POLs are set up to come under this.

Anti-Kickback Statute (AKS)

The Anti-Kickback Statute (AKS) prohibits offering, soliciting, paying, or receiving anything of value to induce or reward referrals for items or services that are reimbursed by a federal health care program. It will apply even if only one purpose of the transaction is the kickback. Unlike Stark, which carries civil financial penalties, the AKS is a criminal statute.

Like Stark, though, the AKS does have some exceptions. “Safe harbors” are arrangements that are considered to be unlikely to result in fraud or abuse. The Office of Inspector General (OIG) can also evaluate arrangements on a case-by-case basis. A POL set-up should therefore only be done after an AKS analysis.

Avoiding risky schemes

Of course, most physicians considering a POL have no intention of engaging in fraud or abuse. The problems come in when a model is touted to them that sounds too good to pass up.

Joint ventures

Investment models

State fee-splitting laws

Medical Necessity

Clinical Laboratory Improvement Amendments of 1988 (CLIA)

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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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