Stark Law Overview for Medical Offices

Stark Law Overview

The Stark Law sounds cool because because it has the name Stark in it. Don’t be mistaken, this law has nothing to do with Tony Stark or Iron Man. But that doesn’t mean we can’t pretend it does.

As you probably know, Tony Stark is a genius, billionaire, playboy, philanthropist. He made his billions in the business of weapons and armory. As a good businessman, you can probably imagine that he would think “I’ve sold you some missiles, why don’t I also sell you a drone to deliver them?” Great idea, right? Right!

What if a health care provider thinks similarly? “I’m already treating physical therapy patients, maybe I should also start a durable medical equipment supplier and send them there too!” Great idea, right! No! At least not without taking a close look at Stark Law.

Stark Law’s Prohibition

Stark Law states that a physician cannot make a referral to an entity that furnishes certain designated health services (DHS) paid for by Medicare or Medicaid if the physician (or an immediate family member) has a financial interest in that entity. You also cannot present a claim for payment for any services as a result of an improper referral.

Practical Reasons Why You Should Care About Stark Law

I’ve seen many health care providers essentially brush legal issues such as Stark Law under the rug. There are, however, several practical reasons for expending some time and resource to following this law:

  1. It’s the law and you want to be a law abiding citizen.
  2. Failing to follow Stark Law can result in substantial fines and penalties.
  3. You don’t want to end up in the slammer.
  4. Unaddressed Stark Law problems can jeopardize your potential business deals.

Doing the Analysis

The remaining sections of this resource will cover the elements of Stark Law and what you need to look at when you are evaluating a Stark Law question. The evaluation can be time consuming, complex, and technical. But it can be done!