The Health Record – Healthcare Law Insights, Issue 1, May 2024 | Spilman Thomas & Battle, PLLC

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“As a result, from 2021 to 2023, self-disclosures rose from 27 to 176 – a 552% increase.”

Why this is important: Recent and dramatic increases in enforcement of the Stark anti-referral law in both frequency and severity, exacerbated by the shift to a corporate and private equity ownership model in an increasing volume of healthcare practice and system acquisitions, are having the effect of disrupting the orderly provision of competent care and exercise of independent medical judgment by healthcare providers. 

Stark is the common name for the Physician Self-referral Law (42. U.S.C. §1395), which prohibits doctors from referring patients receiving Medicare or Medicaid benefits to entities with an existing financial relationship to the referring physician. A financial relationship includes an ownership interest as well as any compensation arrangement, and accordingly, physicians encounter numerous risks of violating Stark in their practice. Furthermore, Stark is a strict liability statute, and does not require intent to violate the law. Penalties include fines and exclusion from federal healthcare programs, such as a refund of all Medicare receipts at issue (multiplied by up to three under a False Claims Act case), and fines of $15,000 for each service in violation, with a fine for deliberate violation of $100,000. The False Claims Act allows whistleblowers to come forward with information regarding Stark violations, and even allows them to file qui tam lawsuits on behalf of the government if they have knowledge of false claims. The qui tam reward is between 15-30 percent of the amount recovered, providing an additional incentive for whistleblowers to report Stark violations.

Stark was updated in 2020 with the stated purpose of relieving administrative burdens on reporting physicians and system participants. The Centers for Medicare & Medicaid Services again revised the Stark protocol in 2023 to streamline self-disclosures under the Self-Referral Disclosure Protocol (SRDP), issued under authority of §6409(a) of the Affordable Care Act. 

Physicians are noting that strict compliance with Stark in today’s corporate and PE-owned practice environments may introduce conflicting incentives, as systems are reducing salary, increasing incentive and production-based compensation, and interfering in prior authorizations. As the ownership and, potentially, management of healthcare practices becomes increasingly concentrated in for-profit corporations and private equity portfolios, the pressures to increase revenues and profits on physicians increases Stark risks greatly. — Anthony L. Huber

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