The Stark Basics for Medical Practices

The Stark Basics for Medical Practices

Published: August 31st, 2016

The Stark Law can be a source of confusion for a lot of medical practices and rightfully so.  It was enacted in 1989, but has since been expanded upon and revised several times, with additional phases added much later. In its simplest form, the Stark Law prohibits a physician from making referrals for certain healthcare services for Medicare patients, if the physician (or a family member) has a financial relationship with that entity (ownership, investment or compensation) unless an exception applies.

The following items or services are DHS:

  • 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

The Stark Law contains several exceptions which include physician services, in-office ancillary services, rental of office space and equipment, employment relationships, joint ventures in rural areas, ownership in publicly traded securities and mutual funds, financial relationships with hospitals, etc. Some of these are more complicated than others.

Penalties for a Stark Law violation include:

  • Payment denial
  • Refund of payment received
  • Penalties of up to $15,000 for each violation
  • Three times the amount of wrongful payment received from Medicare
  • ·       Exclusion from the Medicare/Medicaid
  • Payment of up to $100,000 for each attempt to circumvent the Stark Law

The following questions are helpful indicators to determine if a provider is in violation of the Stark Law:

  • Are the patients in question using Medicare?
  • Are any of the services in question designated health services?
  • Does the entity have a financial relationship with the referral?

If the answer to any of these is "no," the entity is not in violation of the Stark Law. If you or your medical office has a question regarding the Stark Law, contact the experts at MedSafe at 1-888-MEDSAFE or visit our website at