stark laws healthcare

Many compliance violations in healthcare arise from financial conflicts of interest, particularly when providers get kickbacks or achieve financial gain from their referral services. With the establishment of Stark Law in healthcare, physicians and their organizations can see legal and economic repercussions for such “self-referrals.”

Understanding Stark Law or Designated Health Services

Designated health services (DHS) under Stark Law ensures physicians don’t receive financial gain from referring services. More specifically, this federal statute makes it illegal for providers to refer Medicare patients for any treatment services with which that provider has a financial relationship or interest. This law also covers the referring physician’s immediate family members. By removing this potential conflict of interest, doctors are more incentivized to act in a patient’s best interest.

Stark law DHS covers the following service categories that affect the delivery of care or efficacy of patient outcomes:

  • Clinical laboratory services
  • Durable medical equipment and supplies
  • Home healthcare
  • Occupational therapy
  • Outpatient prescription drugs
  • Parenteral and enteral nutrients, equipment, and supplies
  • Physical therapy
  • Prosthetics, orthotics, and prosthetic devices and supplies
  • Radiation therapy
  • Radiology services

Compliance officers and other healthcare leaders should also be aware of recent updates to Stark law:

  • Consolidated Appropriations Act of 2023: Exceptions allowing hospitals and healthcare providers to improve mental health services for physicians.
  • Centers for Medicare and Medicaid (CMS): Waiver (applied retroactively) from March 1, 2020, through May 11, 2023, for physician owners of independent freestanding emergency departments serving Medicare patients during the COVID-19 pandemic.
  • CMS Updates in 2023: Voluntary self-referral disclosure laws.

Legal Consequences for Violating Stark Laws in Healthcare

The Office of Inspector General (OIG), through the U.S. Department of Health and Human Services, enforces the Stark Law. The OIG has the authority to pursue civil action against physicians who violate this statute, and monetary penalties can be $10,000 to $50,000 per violation. Other consequences can include exclusion from federal healthcare programs like Medicare and Medicaid, loss of reimbursements, legal costs, and reputational damage.

Maintaining Compliance With Designated Health Services Under Stark Law

As a compliance officer, you have an essential role in ensuring your organization delivers quality and ethical care that serves the best interests of patients and their families. Here are several strategies for ensuring your entity complies with Stark Law DHS.

Open Communication

Problems won’t go away if you ignore them. If issues related to Stark Law DHS arise, it’s best to facilitate an open and honest conversation with all involved parties to prevent complications or possible regulatory violations. Open discussions can foster a greater understanding of the law and the factors contributing to potential problems.

Ongoing Training

Comprehensive training on Stark Laws in healthcare and other compliance regulations ensures ethical behaviors and the avoidance of monetary and civil penalties. Healthcare providers, administrators, staff, and other professionals need a clear understanding of the law and to be informed of updates to those statutes. Training should also include prohibited activities, how to identify and avoid violations, protocols for reporting incidents, and consequences for violations.

As with all healthcare compliance regulations, those pertaining to Stark Law DHS undergo constant updates. Periodic training must include all these changes and their implications for healthcare practice. With support from a compliance services provider, your employees can access their training through a centralized training management tool that stores all required modules, tracks progress, and sends reminders about annual refresher courses.

Compliance Software

Ensuring proper training and managing compliance is easier if you have a comprehensive software package to streamline your workflow. In addition to training management, compliance software can perform several functions:

  • Alert you to updates to Stark Law and other healthcare regulations
  • Automate administrative tasks
  • Store and share documents
  • Provide regulatory information that employees can access
  • Create compliance reports
  • Streamline risk assessment and management
  • Offer a mechanism for incident reporting
  • Monitor compliance and violations

Support from Compliancy Group can help your organization adhere to important regulations and avoid costly penalties. Contact us today to learn how our compliance software and other services can help your organization stay on top of Stark Law in healthcare and other regulations.

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