Becker’s has reported on two physicians groups who have faced allegations they have violated Stark law in the last week.
Here’s what you need to know:
Gulfcoast Eye Care, operating as Pinellas (Fla.) Eye Care, agreed to a $615,000 settlement to resolve allegations of violating the Stark law and False Claims Act through a complex referral and billing arrangement.
Federal authorities alleged the practice improperly referred patients for diagnostic services — specifically, transcranial doppler ultrasounds — to a third-party provider with whom it had a compensation relationship based on volume or value of referrals, a direct violation of the Stark law. Physicians at Gulfcoast Eye allegedly received financial benefit by contracting with the third-party provider to perform high volumes of unnecessary TCDs, which were subsequently billed to Medicare and Medicaid.
Furthermore, providers allegedly fabricated diagnoses, including conditions such as cerebral artery occlusion and stenosis, to support claims reimbursement. The government asserted that these referrals lacked medical necessity and were influenced by improper financial incentives, breaching both Stark law prohibitions and the Anti-Kickback Statute.
According to a statement from the eye care group, the decision to offer TCD testing was guided by a third-party medical vendor, who provided documentation — including legal opinions and Medicare references — supporting its clinical relevance and billing appropriateness. Wen a Medicare audit raised concerns about the reimbursement process for TCD testing, they immediately discontinued the service and took steps to ensure full compliance.
Community Health System in Fresno, Calif., and its affiliated entity, Physician Network Advantage, will pay $31.5 million to settle allegations of systematic Stark law violations involving improper inducements for physician referrals. The federal government claimed that CHS structured a program through PNA that conferred valuable benefits to community physicians in exchange for patient referrals to CHS facilities, including Community Regional Medical Center and Clovis Community Medical Center.
These benefits included:
- Access to an exclusive PNA physician lounge stocked with high-end wine, liquor, cigars and gourmet meals
- Subsidized EHR technology and office equipment
- Bonuses mischaracterized as clinical integration payments, allegedly designed to reward volume or value of referrals.
These arrangements, according to the settlement, violated the Stark law’s prohibition against hospitals offering financial relationships with referring physicians unless a valid exception applies. In this case, the government found the relationships failed to meet any safe harbors due to the inducement nature of the benefits.
