Eye Care Leaders’ Quick-Start Guide to Stark

We get it. The mere mention of the Stark Law is enough to drive you stark raving mad.

Eye care leaders frequently encounter Stark’s regulatory maze as they navigate compensation arrangements, consulting contracts, leasing, in-office ancillary services, investment opportunities, and other business deals.

If you want a very-boiled-down-to-the-basics, quick-reference guide to Stark loaded with links to more information, we’ve got you covered here. For a risk analysis of business deals that may trigger Stark, you should consult an attorney. Stark is one more regulation that keeps health care lawyers in business.

Why This Madness?

The Stark mess starts with Congress. More than two decades ago, legislators had some good intentions. They wanted to prevent conflicts of interest in medical decision making involving Medicare and Medicaid beneficiaries.

Starting with clinical labs, Congress began to pass laws prohibiting physicians from referring patients to designated health services in which they or their family members had an ownership interest.

Here is the current DHS list — Stark jargon for designated health services, which you can also look up by yearly CPT® code updates.

  • Clinical laboratory services.
  • Physical therapy services.
  • Occupational therapy services.
  • Outpatient speech-language pathology services.
  • Radiology and certain other imaging services.
  • Radiation therapy services and supplies.
  • Durable medical equipment and supplies.
  • Parenteral and enteral nutrients, equipment, and supplies.
  • Prosthetics, orthotics, and prosthetic devices and supplies.
  • Home health services.
  • Outpatient prescription drugs.
  • Inpatient and outpatient hospital services.

Where are ASCs on this list?

They’re not there. The Stark law does not apply to ASCs.

Why Does All This Sound Like A Bad Science Fiction Sequel?

Stark’s oddly symbolic name comes from former Rep. Fortney ‘Pete’ Stark (D., Calif.), a co-sponsor of the initial legislation in the late 1980s and early 1990s who is now retired.

Fun Fact #1: Pete Stark takes exception to all the exceptions in Stark and has said he would not vote for the legislation as it is today.

Fun Fact #2: Pete Stark is now 86. When he visits the doctor and hears his namesake law mentioned, “I just look the other way and pretend that I had a lot of cousins,” reports The Wall Street Journal.

You see all the wacky Roman numerals because Congress has added to and revised this law multiple times. And the legislation has been so complicated that regulators have scrambled to write rules that interpret and enforce the laws. So the regulations have appeared as Stark Phase I, Phase II, and Phase III.

Tip: Don’t hold your breath for Phase IV. The rule making has slowed down.

And the Exceptions?

There are tons of them, including exceptions for bona fide employment, personal services arrangements, in-office ancillary services, and non-monetary compensation. That’s why most business deals that involve physicians need a flock of health care attorneys to review them.

What Are the Penalties? Stark is not a criminal statute, which means you won’t go to jail if you break only this law. It’s a civil statute that CMS enforces. If you violate Stark, you could face civil monetary penalties and exclusion from Medicare and other federal health programs.

Why All the Stark Stress?

Because the regulation phase dragged on for so long, its taken awhile for Stark enforcement to get going. But cases like 2015’s Tuomey and 2014’s Halifax show that regulators are keen to couple Stark with the False Claims Act to amp up fraud recoveries, observes attorney Wayne Miller. “What might be seen as a technical violation can lead to huge liabilities per provider,” he explains.

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