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What is Stark Law and How Do I Avoid Self-Referrals?

Healthcare laws can be extremely complex, and navigating these legal considerations as a small to medium sized medical practice can be difficult. Stark law is a law that can result in hefty violations for physicians and medical practitioners if violated, so understanding the law in its entirety is vital to preventing legal issues that may arise as a result. As an insurance agency with roots in the medical field, Unity Insurance, formerly MedChi Insurance Agency, understands the complexities of medical laws including Stark law. Here, our team of qualified insurance professionals provide an overview of Stark law, and how to avoid self-referrals when providing assistance to patients. 

Understanding the Basics of Stark Law

The Physician Self-Referral Law, commonly known as Stark law, prohibits physicians from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. These designated health services (DHS) include, but are not limited to, clinical laboratory services, occupational and speech therapy, radiology and radiation therapy, prosthetics and orthotics, home health services, outpatient prescription drugs and inpatient or outpatient hospital services. 

It is also important to note that Stark law is known as a strict liability statute, which means proof of intent to violate the law is not required. If found in a breach of Stark law, a physician may be required to refund payments made by Medicare or Medicaid. In more serious cases, physicians may be penalized monetarily, and ultimately be prohibited from participating in federal healthcare programs such as Medicare and Medicaid.

Be Aware of Stark Law Exceptions in Healthcare Practices

While Stark law can be difficult to understand in its entirety, it is important to note that there are exceptions to this law, and if you fall under one of these categories, you should be considered compliant with Stark law. For example, in-office ancillary services, such as radiology or lab services offered within the same practice are allowed. Additionally, the fair market value exception allows for physicians to have a compensation agreement in writing, with a commercially reasonable transaction that meets the “safe harbors” under the Anti-Kickback Statute. Finally, the indirect compensation exception and non-monetary exception both allow physicians to have an arrangement with another entity if the physician receives indirect compensation or non-monetary compensation of up to $300 per year if the physician didn’t solicit the compensation and the agreement has been signed by both parties. While these exceptions allow some leeway in navigating Stark law, there is a fine line that physicians walk when participating in these practices, which may lead to future legal repercussions if not handled with extreme caution. 

Obtain Medical Regulatory Violations Insurance Coverage

One of the best things you can do to protect yourself from legal issues surrounding Stark law is to get medical regulatory violations insurance coverage through a professional organization, such as Unity Insurance. Consulting with a team of professionals that has extensive experience in insurance for medical practices can provide you with comfort and ease as you move through your day-to-day transactions with patients. As a healthcare provider, your first priority is to keep your patients safe and healthy. In a tumultuous time like this, many healthcare providers are stretched thin trying to handle the overwhelming volume of patients coming to see them. Taking the time to proactively obtain comprehensive specialty insurance coverage allows you to focus on taking care of your patients while remaining compliant and protected from legal issues surrounding the healthcare field. 

Consult With the Medical Regulatory Violations Insurance Providers at Unity Insurance

At Unity Insurance, we have a history of providing comprehensive insurance solutions to healthcare providers in Maryland. With decades of experience researching the healthcare system across the Mid Atlantic, our team has extensive capabilities to help protect you in all areas of business insurance coverage. Complicated laws such as Stark law can harm a healthcare practice significantly if they are not protected, leading to monetary losses and long-term consequences in the medical field. Let Unity Insurance protect your business with our medical regulatory violations and organizational professional liability coverage. To learn how we can assist you, contact our Baltimore office today