TO IMPROVE PATIENT ACCESS TO HIGH-QUALITY HEALTHCARE OUTCOMES AT LOWER COSTS, THE FEDERAL HEALTH FRAUD LAWS NEED TO BE CHANGED AND SIMPLIFIED Part 2

Abstract

EDITOR'S NOTE: This article is Part 2 of a 3-Part series.

STARK LAW

Stark was passed to prevent self-dealing in referrals that benefit the healthcare provider and his/her family.[1]  Under Stark, 42 U.S.C. Section 1395nn:

 (a)       Prohibition of certain referrals

             (1)       In general

             Except as provided in subsection (b) of this section, if a physician (or an immediate family member of such physician) has a financial relationship with an entity specified in paragraph (2), then—

             (A)      the physician may not make a referral to the entity for the furnishing of designated health services for which payment otherwise may be made under this subchapter, and

             (B)       the entity may not present or cause to be presented a claim under this subchapter or bill to any individual, third party payor, or other entity for designated health services furnished pursuant to a referral prohibited under subparagraph (A).[2]

Stark, like the AKS, imposes a strict liability standard in assessing whether or not the financial arrangement involved is in violation of the law.[3]  Moreover, Stark also applies to the acquisition of healthcare services practices by other providers or entities.[4]  Much like the AKS safe harbors and the OIG, Stark gives authority to the HHS Center for Medicare & Medicaid Services ("hereafter, CMS") to issue Advisory Opinions (hereafter, "AOs") to clarify and identify exceptions to Stark that are permissible under the law.[5]

Stark applies generally to "a financial relationship of a physician (or an immediate family member of such physician)[6]  There are, however, different sets of exceptions to Stark within the law, the first being categorized as "general exceptions to both ownership and compensation arrangement prohibitions."[7]  The exceptions include the following: (1) healthcare services for "another physician in the same group practice;"[8] (2) in office services "other than durable medical equipment;"[9] (3) prepaid plans under five different provisions in other laws;[10] (4) "other permissible exceptions;"[11] and (5) electronic medication prescribing.[12]

Another set of exceptions to Stark fall under "general exception related only to ownership or investment prohibition for ownership in publicly traded securities and mutual funds" (emphasis added).[13]  These exceptions allow for investment in publicly-traded entities either available for sale to the public or traded on stock exchanges.[14]

The third set of exception to Stark fall under the heading "additional exceptions related only to ownership or investment prohibition" (emphasis added).[15]  These exceptions include Puerto Rican hospitals, rural healthcare providers, and hospital ownership in specific circumstances.[16]

The fourth set of exceptions to Stark relate to "other compensation arrangements.[17]  These arrangements include equipment and office space rent,[18] employment relationships,[19] personal services,[20] "remuneration unrelated to the provision of designated health services,"[21] "physician recruitment,"[22] "isolated transactions,"[23] "certain group practice arrangements with a hospital,"[24] and "payments by a physician for items and services," all under certain circumstances as specified under Stark.[25]

The statute then goes on to discuss certain reporting requirements,[26] and then the sanctions for violating the Stark law.[27]  Sanction may include the following: (1) reimbursement denial,[28] (2) mandatory refunds,[29] (3) civil monetary penalties (up to $15,000 for improper claims and up to $100,000 for circumvention schemes),[30] (4) exclusion from participating in government payor systems,[31] and (5) daily penalties up to $10,000 for failure to meet reporting requirements under the law.[32]

[1] Kathy H. Butler, Stark Law Reform: Is It Time?, 18 J. Health Care Compliance 5-6 (2016).

[2] Stark Law, 42 U.S.C.A. § 1395nn (West 2010).

[3] Corbin Santo, Walking A Tightrope: Regulating Medicare Fraud and Abuse and the Transition to Value-Based Payment, 64 Case W. Res. L. Rev. 1377, 1390 (2014).

[4] Lynn Gordon, Payors Acquiring Physician Practices: Purchase Price Limitations and Other Stark & Anti-Kickback Rules of the Road, Health Law., April 2014, at 24, 24 (2014).

[5] Corbin Santo, Walking A Tightrope: Regulating Medicare Fraud and Abuse and the Transition to Value-Based Payment, 64 Case W. Res. L. Rev. 1377, 1390 (2014).

[6] Stark Law, 42 U.S.C.A. § 1395nn(a)(2) (West 2010).

[7] Stark Law, 42 U.S.C.A. § 1395nn(b) (West 2010).

[8] Stark Law, 42 U.S.C.A. § 1395nn(b)(1) (West 2010).

[9] Stark Law, 42 U.S.C.A. § 1395nn(b)(2) (West 2010).

[10] Stark Law, 42 U.S.C.A. § 1395nn(b)(3) (West 2010).

[11] Stark Law, 42 U.S.C.A. § 1395nn(b)(4) (West 2010).

[12] Stark Law, 42 U.S.C.A. § 1395nn(b)(5) (West 2010).

[13] Stark Law, 42 U.S.C.A. § 1395nn(c) (West 2010).

[14] Stark Law, 42 U.S.C.A. § 1395nn(c)(1) (West 2010).

[15] Stark Law, 42 U.S.C.A. § 1395nn(d) (West 2010).

[16] Stark Law, 42 U.S.C.A. § 1395nn(d)(3) (West 2010).

[17] Stark Law, 42 U.S.C.A. § 1395nn(e) (West 2010).

[18] Stark Law, 42 U.S.C.A. § 1395nn(e)(1) (West 2010).

[19] Stark Law, 42 U.S.C.A. § 1395nn(e)(2) (West 2010).

[20] Stark Law, 42 U.S.C.A. § 1395nn(e)(3) (West 2010).

[21] Stark Law, 42 U.S.C.A. § 1395nn(e)(4) (West 2010).

[22] Stark Law, 42 U.S.C.A. § 1395nn(e)(5) (West 2010).

[23] Stark Law, 42 U.S.C.A. § 1395nn(e)(6) (West 2010).

[24] Stark Law, 42 U.S.C.A. § 1395nn(e)(7) (West 2010).

[25] Stark Law, 42 U.S.C.A. § 1395nn(e)(8) (West 2010).

[26] Stark Law, 42 U.S.C.A. § 1395nn(f) (West 2010).

[27] Stark Law, 42 U.S.C.A. § 1395nn(g) (West 2010).

[28] Stark Law, 42 U.S.C.A. § 1395nn(g)(1) (West 2010).

[29] Stark Law, 42 U.S.C.A. § 1395nn(g)(2) (West 2010).

[30] Stark Law, 42 U.S.C.A. § 1395nn(g)(3-4) (West 2010).

[31] Stark Law, 42 U.S.C.A. § 1395nn(g)(3-4) (West 2010).

[32] Stark Law, 42 U.S.C.A. § 1395nn(g)(5) (West 2010).