What is the Stark Law?

Federal Stark law applies alongside anti-kickback law to create strict civil penalties for any physician who makes a “self-referral.”  Specifically, the law bars a physician from referring a Medicare or Medicaid patient to receive any designated health care service from any person or entity with which the physician has a financial relationship.  This relationship could be an ownership interest, investment interest, or structure compensation agreement.

Unlike anti-kickback laws, Stark is a strict-liability statute, meaning that any violation, whether intentional or not, leads to liability.

The parameters of the Stark law include specific carve-outs that allow medical providers to enter mutually-beneficial transactions with impunity.  These carve-outs are known as “safe harbors” and are detailed and complex. To avoid potential violations, health care providers should review all transactions carefully with the aid of experienced counsel.

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