Stark law, originally enacted in 1989 to curb physician self-referrals, but decades later, many physicians argue the law has calcified into a rigid framework outdated to the way modern healthcare actually works.
Designed to protect patients from conflicts of interest, the law was a response to a fee-for-service world rife with potential abuse. Esme Singer, MD, chief medical officer of Philadelphia-based Temple Faculty Physicians at the Lewis Katz School of Medicine, told Becker’s, the law now seems “misaligned and antiquated given how care is delivered and reimbursed today.”
When Stark was introduced by U.S. Rep. Pete Stark, D.-Calif., Dr. Singer said, virtually all of healthcare ran on fee-for-service — a model with significant room for abuse, and thus a legitimate target for reform. But the landscape has fundamentally shifted.
“Now things are less fee-for-service and more value-based or episodic-care-based,” she said. “So health systems can’t really benefit from financial gain for each individual service. It’s more about being efficient and achieving higher quality care. And we know higher quality isn’t driven by doing more — it’s driven by being targeted and thoughtful about what you do.”
In that context, Dr. Singer argues, Stark law is not applicable to how health systems operate today.
“We want to be efficient and thoughtful with care,” she said. “We’re not looking to just do more services and think that creates value for patients or improves quality.”
One of the law’s most significant features is that it is a strict liability statute, meaning intent is irrelevant. A referral arrangement that violates Stark triggers penalties regardless of whether anyone acted in bad faith. Dr. Singer believes that’s where reform should begin: with a good-faith standard.
“If you can prove it was done in good faith — or the process is structured to address what patients need in a timely way, without the incentive being some kind of fee-for-service reward — then I don’t see why we need to focus so heavily on Stark clauses,” she said. “We’re trying to help patients and navigate them to the best and quickest care possible. If we can show that a program or process is designed to achieve that, I don’t think it’s worth creating another layer of administration just to satisfy this law.”
The stakes for breaking Stark are severe. Penalties include denial of payment for designated health services provided through prohibited referrals, mandatory refund of improper payments, civil monetary penalties of up to $15,000 per service, fines of up to $100,000 for schemes designed to circumvent the law, and exclusion from Medicare and Medicaid participation.
The concern extends beyond financial exposure. Some independent and employed physicians describe Stark as a law originally designed to prevent conflicts of interest that now paradoxically entrenches system-based referral expectations and intensifies scrutiny of referral patterns.
Niazy Selim, MD, a private practice gastrointestinal surgeon in Lake Charles, La., told Becker’s that the current healthcare environment leaves physicians practicing “with their backs against the wall,” amid consolidation pressures and mounting administrative burdens on all sides.
For others, the deepest frustration lies in the double standard where insurance companies and private equity firms are free to acquire physician practices and profit from healthcare ownership, while physicians themselves are barred by Stark from owning or referring to entities in which they hold a financial interest.
“We’ve created a system where for-profit entities can have healthcare ownership,” Marc Greenberg, MD, an orthopedic surgeon in Baltimore, told Becker’s. “But the people who took an oath to serve the patient — who’ve shown a commitment to caring — can’t.”
What began as a targeted anti-kickback safeguard has since grown into a sprawling, often opaque statute, one that generates legal costs even for physicians acting in good faith.
“Every time they want to do something non-standard, they have to go to their lawyers,” he said. “That creates cost — again, even when their intent isn’t bad. But the law doesn’t care about intent. Just each occurrence.”
