What Is Stark Law?
The Stark Law (42 USC 1395nn) is a federal civil statute prohibiting physicians from referring Medicare or Medicaid patients for designated health services to entities with which the physician (or an immediate family member) has a financial relationship, unless an exception applies.
- Self-disclosure under the CMS SRDP can dramatically reduce exposure for technical violations.
Stark Law
Also known as: Physician Self-Referral Law; 42 USC 1395nn; Stark
The Stark Law (42 USC 1395nn) is a federal civil statute prohibiting physicians from referring Medicare or Medicaid patients for designated health services to entities with which the physician (or an immediate family member) has a financial relationship, unless an exception applies.
Definition
Stark applies strict-liability civil penalties (no intent required) to physician referrals for 11 categories of designated health services (DHS) including clinical lab, imaging, PT/OT, DME, home health, and inpatient/outpatient hospital services. Penalties include denial of payment, refund obligations, civil monetary penalties up to approximately $30,517 per service (2024 figures), and exclusion. Numerous regulatory exceptions (42 CFR 411.355-357) protect arrangements such as in-office ancillary services, fair-market-value compensation, employment, personal services, and rental of office space, each with strict element-by-element requirements. The 2020 final rule introduced new value-based exceptions and clarified group practice rules.
Example
A physician who owns 25% of an imaging center cannot refer Medicare patients to that center unless the in-office ancillary services exception or another applicable exception is fully met. A physician spouse owning a DME supplier creates the same prohibited financial relationship.
Common Misconceptions
Stark is strict liability — intent is irrelevant. Many practices believe a 'good faith' arrangement is enough; it is not. Every element of a Stark exception must be satisfied. Stark applies only to physician referrals for DHS payable by Medicare/Medicaid; the AKS, by contrast, applies to all referral sources and all federal program services.
Practical Application
Practices should map every physician financial relationship (employment, ownership, leases, medical-director agreements) against the Stark exceptions, with written contracts of at least one year, documented fair-market-value support, and signed-and-dated execution before any referrals begin. Self-disclosure under the CMS SRDP can dramatically reduce exposure for technical violations.
Related Terms
Anti-Kickback Statute
The Anti-Kickback Statute (42 USC 1320a-7b(b)) is a federal criminal law prohibiting the knowing and willful offer, payment, solicitation, or receipt of any remuneration to induce or reward referrals of items or services payable by a federal health care program.
Read definition arrow_forwardFalse Claims Act
The False Claims Act (31 USC 3729-3733) is a federal law imposing civil liability on any person who knowingly submits, or causes to be submitted, a false or fraudulent claim for payment to the U.S. government, with treble damages plus per-claim civil penalties.
Read definition arrow_forwardWhere This Applies on MedPrecision
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