Stark law: Where it stands and where it's headed 

Stark law, which prohibits physicians from making referrals for many Medicare-payable services to an entity if the physician or immediate family member has a financial relationship with it, has seen a year of changes and updates to policy exceptions and statutes. 

Stark law is a strict liability statute, which means it does not require proof of intent to violate the law. Additionally, physicians potentially face a $15,000 fine for each service in violation of Stark law, plus additional civil penalties of up to $100,000, according to a report from The National Law Review, making it critical that physicians, ASCs and other providers keep a sharp eye on changes. 

CMS has taken increasing steps to address violations. In 2022, CMS settled a record 104 Stark law self-disclosures, totaling more than $9.2 million — nearly quadruple the number of settlements in 2021. This could mean "CMS is working to review a greater number of self-disclosure submissions annually, which may reduce the backlog or the time it takes to have a self-disclosure reviewed.," according to an article published by JDSupra

Some groups recently have been under fire with Stark law compliance, most notably its restriction on compensation arrangements based on volume or referral value. 

Indianapolis-based Community Health Network agreed to pay the U.S. $345 million to resolve allegations of knowingly submitting claims to Medicare for services that were referred in violation of the Stark law. The Justice Department alleged that the compensation the health system paid to its cardiologists, cardiothoracic surgeons, vascular surgeons, neurosurgeons and breast surgeons was above fair market value.

Additionally, Steward Health Care and Steward Medical Group, both based in Dallas, were recently accused of violating Stark law, allegedly paying a cardiologist nearly $4.9 million in incentive compensation. 

Some states updated their Stark law requirements in 2023. In July, for example, Florida passed a law amending supervision stipulations. The new legislation removes a direct supervision requirement in which the law's referral exception applied only if services were being provided under the supervision of the referring provider. 

The laws are being shifted at the federal level as well. The Consolidated Appropriations Act of 2023 updated exceptions to Stark law to allow hospitals and healthcare providers to improve mental health services for physicians. 

Many physician leaders are hopeful about the new law, which issues a new exception for physician wellness programs offered by healthcare entities, including ASCs.

"The recent exemption in the Stark law for health systems and hospitals to be able to provide mental health services to physicians is what I have my eye on," Joseph Sewards, MD, chair of orthopedic surgery and sports medicine at Philadelphia-based Temple University, told Becker's. "I don't know of any hospital that was withholding those essential services for fear of violating Stark, but anything that removes any barriers to access mental health services for physicians is a huge step."

In June, CMS added a Stark law waiver for physician owners of independent freestanding emergency departments that served Medicare patients during the COVID-19 pandemic. And in January, CMS updated its voluntary self-referral disclosure laws including an updated version of the self-referral disclosure protocol form, an updated physician information form and a new group practice information form. 

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