The Stark Law has become increasingly convoluted over the years due to complicated regulations, restrictions on historically acceptable professional practices, and the inability in many instances for physicians, healthcare facilities, and other healthcare providers to know whether they are actually in compliance – even after legal consultation.
History
The Stark Law was enacted by Congress in 1989 as the Ethics in Patient Referrals Act. The initial intent was to prohibit physicians from referring Medicare patients to clinical labs in which the physician had some financial relationship, including an ownership interest. The law was later expanded and now prohibits physicians from referring Medicare patients to an entity that provides eleven specific kinds of services (referred to as “designated health services”) if the physician or a family member has a financial relationship with the entity. The “financial relationship” includes not only ownership or investment interests, but also compensation arrangements. If a physician makes such a prohibited referral, the entity may not submit a claim for reimbursement to Medicare for the services provided.
Convoluted Progression
As time has gone on, however, additional regulations and regulations have been heaped on, making it very difficult of physicians, healthcare facilities, and other healthcare providers to truly understand whether or not they are in compliance with the law.
Interestingly, the main author of the initial legislation, former Representative Pete Stark, noted in 2013 that he would actually be in favor of repealing the law. According to Congressman Stark, the initial purpose of the law was to stop those healthcare providers with bad intentions, not muddy the waters for all healthcare providers. He stated, “Those complications were added by high-priced lawyers who tried to build loopholes for their clients. The original law was pretty simple. Basically it says anyone who takes a bribe or a split or a commission or a kickback in exchange for referring services gets five years or a $50,000 fine.”
Therefore, the current Stark Law has gotten away from its initial intent (which sounds a lot like current Anti-Kickback Statutes) and has moved toward a behemoth of a law with spokes of regulations and rules that inhibit innovation and provide penalties that are largely disproportionate to the prohibited activity.
Additionally, some of the definitions and descriptions of arrangements have absolutely no bearing on the practice of medicine or Medicare reimbursement principles, resulting in difficulty for physicians to understand the rules and apply them to their own medical practice. As an example, think of the word “referral.” It includes the typical physician referrals but also includes ordering designated health services, or certifying the need for designated health services for which payment may be made under Medicare Part B. A referral would not be considered prohibited if it is made for items or services that are not one of the “designated health services” mentioned above. Included in the “designated health services” category are: hospital inpatient and outpatient services, as well as home health services, clinical laboratory services, and durable medical equipment and supplies.
The definition of “immediate family member” is extraordinarily broad, including a spouse; birth or adoptive parent, child, or sibling; stepparent, stepchild, stepbrother or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild. The definitions of “group practice” and “in office ancillary services” are even more specific, covering details about office buildings, suite numbers, hours of operation, numbers of patient encounters, full-time and part-time physicians, independent contractors, internal referrals, supervision of personnel, billing name, markups, and on and on.
The Industry Continues to Evolve
Industry in 2016 is vastly different from the Industry of 1989. In 1989, most medicine was fee-for-service, whereas today, we focus more on value-based reimbursement. Not only has the underlying assumption of the Stark Law (that physician investment leads to illicit profits) not been proven to be true, but today, other laws (i.e., the Medicare anti-kickback statute) and medical ethics codes, address potential egregious conduct by practitioners.
The benefits that this law potentially provides are now outweighed by innovation, patient satisfaction, patient convenience, and benefits that could be provided without it.