Chapter 2 Fraud and Abuse: Stark/Physician Self-Referral and Anti-Kickback Learning Objectives Physician Self-Referral (Stark) Law and Anti-Kickback Statute (AKS) Services, individuals, organizations, and transactions affected by these laws. Specific behaviors prohibited. Exceptions and “safe harbors” for avoiding liability. Anticipating and preventing violations. Physician Self-Referral Law (Stark) Initial law (Stark I) sponsored by Congressman Pete Stark enacted in 1989 and applied only to clinical laboratory services. Omnibus Budget Reconciliation Act of 1993 (Stark II) expanded law to additional 10 types of clinical services. Patient Protection and Affordable Care Act of 2010 added restrictions on physician-owned hospitals and required the issuance of a self-referral disclosure protocol. Stark Prohibition “... If a physician (or an immediate family member of such physician) has a financial relationship with an entity ..., then 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 Medicare (also applicable to Medicaid). (underlining added). “Physician” The person making the referral may be a(n) MD Osteopath Dentist Podiatrist Optometrist, or Chiropractor “Immediate family member” Besides the referring physician herself, this person may be a spouse; parent, child, or sibling (by birth or adoption); stepparent, stepchild, step-brother, or step-sister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; or spouse of a grandparent or grandchild. “Entity” The entity with which there is a financial relationship must be one that bills CMS for designated health services (DHS) or that furnishes all or most of the components of the DHS. This includes the person or entity that actually performs the DHS, or presents a claim for DHS services to the Medicare program. 7 “Financial relationship” Direct or indirect ownership of an entity: Equity stock, interest in a limited liability company, holding debt in an entity. Direct or indirect compensation from an entity: Physician’s compensation from an entity, lease between physicians and health care facilities, medical director agreements, and independent contract with physicians. “Designated health services” (I) 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. “Designated health services” (II) 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. Penalties for Stark Violations Payment for services in response to prohibited referral must ...

1. Chapter 2
Fraud and Abuse: Stark/Physician Self-Referral and Anti-
Kickback
Learning Objectives
Physician Self-Referral (Stark) Law and Anti-Kickback Statute
(AKS)
Services, individuals, organizations, and transactions affected
by these laws.
Specific behaviors prohibited.
Exceptions and “safe harbors” for avoiding liability.
Anticipating and preventing violations.
Physician Self-Referral Law (Stark)
Initial law (Stark I) sponsored by Congressman Pete Stark
enacted in 1989 and applied only to clinical laboratory services.
Omnibus Budget Reconciliation Act of 1993 (Stark II) expanded
law to additional 10 types of clinical services.
Patient Protection and Affordable Care Act of 2010 added
restrictions on physician-owned hospitals and required the
issuance of a self-referral disclosure protocol.
Stark Prohibition
“... If a physician (or an immediate family member of such
physician) has a financial relationship with an entity ..., then
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 Medicare (also applicable to

2. Medicaid). (underlining added).
“Physician”
The person making the referral may be a(n)
MD
Osteopath
Dentist
Podiatrist
Optometrist, or
Chiropractor
“Immediate family member”
Besides the referring physician herself, this person may be a
spouse;
parent, child, or sibling (by birth or adoption);
stepparent, stepchild, step-brother, or step-sister;
father-in-law, mother-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law;
grandparent or grandchild; or
spouse of a grandparent or grandchild.
“Entity”
The entity with which there is a financial relationship must be
one that bills CMS for designated health services (DHS) or that
furnishes all or most of the components of the DHS.
This includes the person or entity that actually performs the
DHS, or presents a claim for DHS services to the Medicare
program.
7

3. “Financial relationship”
Direct or indirect ownership of an entity:
Equity stock, interest in a limited liability company, holding
debt in an entity.
Direct or indirect compensation from an entity:
Physician’s compensation from an entity, lease between
physicians and health care facilities, medical director
agreements, and independent contract with physicians.
“Designated health services” (I)
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.
“Designated health services” (II)
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.
Penalties for Stark Violations
Payment for services in response to prohibited referral must be
returned.
Civil Monetary Penalty of up to $15,000 for each non-compliant
service.
Providers in the transaction may be excluded from participation

4. in Medicare and Medicaid.
Civil assessment of up to 3x the amount reimbursed.
Possible simultaneous False Claim Act liability.
Exceptions to Stark Prohibitions
The Stark law includes 35 exceptions to its prohibitions, with
some common requirements.
Arrangement in writing, signed by the parties, and specifying
the space or services covered.
Compensation set in advance and at FMV.
Compensation not related to referral volume.
Arrangement commercially reasonable.
Must serve legitimate business purpose.
Exceptions to Stark Law Prohibitions – Common Examples
Ownership in publicly traded securities and mutual funds
In-office ancillary services
Rental of office space or equipment
Personal service arrangements
Bona fide employment relationship
Certain arrangements with hospitals
Physician recruitment
Reducing Risks of Stark Violations
Watch for non-monetary compensation.
Establish effective internal controls.
Legal/financial reviews of physician contracts.
Centralized physician contract approval.
Formal A/P check before physicians paid.
Services, compensation, and space allocations involving
physicians are monitored.

5. Anti-Kickback Statute (AKS)
Originally enacted as a criminal law in 1972 to protect patients
and federal health care programs from fraud and abuse.
In 1987, civil penalties and “safe harbors” were added.
Problems With Kickbacks
They encourage referrals based on monetary reward to the
referral source rather than the medical need of the patient.
They lead to the overutilization of resources.
This subjects patients to unnecessary procedures that may pose
clinical risks of their own.
Public and private payors bear the cost of the unnecessary
services.
Anti-Kickback Statute Prohibitions
The AKS prohibits anyone from offering a kickback, paying a
kickback, or receiving a kickback in return for the delivery of
health care services.
2006 - Lincare Settles Probes for $12 Million Clearwater, Fla. -
Respiratory giant Lincare Holdings has agreed to pay more than
$12 million to settle ongoing kickback and reimbursement
allegations

6. 2013 - Dialysis giant DaVita HealthCare Partners Inc. has set
aside $300 million to settle criminal and civil anti -kickback
investigations, a sign the company could soon pay a price after
years of fighting allegations about its relationships with
doctors.
Read more: Denver-based DaVita sets aside $300 million to
settle kickback probes - The Denver
Posthttp://www.denverpost.com/ci_23210434/denver-based-
davita-sets-aside-300m-settle-kickback#ixzz33U7jAi6C
2013 - Federal authorities have arrested Edward Novak, owner
and CEO of Sacred Heart Hospital in Chicago, along with the
hospital's CFO and four physicians, for allegedly participating
in a kickback scheme, according to a Chicago Tribune report.
“Agents from the Federal Bureau of Investigation raided the
119-bed hospital this morning as part of a criminal probe,
according to the report. The alleged scheme involves physicians
receiving more than $225,000 in cash and other forms of
payment for referring Medicare and Medicaid patients to Sacred
Heart, according to the report.
Sacred Heart Executive Vice President and CFO Roy Payawal
was also arrested this morning. Mr. Novak and Mr. Payawal
allegedly attempted to conceal bribes made to physicians by
masking them as fake rental payments and ghost contracts,
according to the report.
Federal authorities have seized roughly $2 million in Medicare
reimbursement payments the hospital allegedly received as a
result of the alleged scheme. The money was in various bank
accounts, according to the report. All six defendants were
scheduled to appear for hearings today at the Dirksen U.S.
Courthouse in Chicago.”
17

7. “Knowingly and willfully”
Acts with a bad purpose, with knowledge that the conduct
violates some law.
Actual knowledge of an AKS violation or specific intent to
violate the AKS is not necessary for a conviction.
Payment for referrals need be only one purpose of a business
arrangement; other legitimate purposes do not avoid violation.
“Remuneration”
Payment to the physician may take any form, including a
kickback, bribe, or rebate.
Payment may be in cash or in kind; anything of value may
create a violation.
“Federal health care program”
The AKS is violated only if the kickback is intended to
encourage a referral for services or products that will be
reimbursed through a Federal health care program.
This includes Medicare, Medicaid, TRICARE (active military),
Veterans Administration (military veterans), Indian Health
Service, Public Health Service, and state Children’s Health
Insurance Programs (CHIP).
Penalties for Violation of AKS
Civil monetary penalties of up to $50,000 per violation.
Civil assessments of up to 3x the amount of the kickback.
Provider exclusion from federal health care programs.
Potential False Claims Act liability.

8. Criminal penalties of up to $25,000 per violation and maximum
five-year prison term.
Exceptions to AKS Prohibitions
Properly disclosed discounts or price reductions.
Payments to bona fide employees.
Certain payments to group purchasing organizations.
Waivers of Medicare coinsurance for certain individuals.
Certain risk-sharing arrangements with managed care
organizations.
AKS “Safe Harbors”
If a payment arrangement fits within a safe harbor, it is free
from AKS liability. If it does not, it does not automatically
violate the AKS. It will be examined more closely.
Common characteristic of safe harbors is commercially
reasonable services being exchanged for fair market value
(FMV) prices.
Total compensation set in advance and documented in a one-
year written agreement signed by the parties.
Safe Harbor Examples
Investment Interests
Space or Equipment Rental
Sale of Practice
Referral Services
Warranties
Employees
Group Purchasing Organizations
Waiver of coinsurance and deductible.

9. Reducing Risk of AKS Violations (I)
Eliminate risk by placing the arrangement or transaction within
a safe harbor.
Look for these risk factors: over-utilization of resources,
increased program costs, adverse effects on care quality,
reduced freedom of patient choice, compromised medical
decision-making, and unfair competition.
Reducing Risk of AKS Violations (II)
Systematically record and track all contracts.
Rigorous documentation of FMV of payments.
Need for arrangement is justified and well documented.
Be able to show that services being reimbursed were actually
provided.
Implement all 7 components of a mandatory compliance
program.
Questions ?
Reflection 2 – Health Promotion and Maintenance
Top of Form
Bottom of Form
Assignment Content
1.
Top of Form
Core Clinical Objective
Integrate knowledge of expected growth and development,
health promotion and prevention strategies to achieve optimal
health.

10. Student Success Criteria
View the grading rubric for this reflection by selecting the
“This item is graded with a rubric” link, which is located in the
Details & Information pane.
Activity Statements
· Integrate knowledge from the arts, sciences, and humanities
into nursing practice.
· Apply behavioral change strategies to promote health and
manage illness.
Reflection Questions
· How is the foundational knowledge of the arts, sciences, and
humanities used to examine the impact of behavioral changes
and promote health and wellness?
· How did you use information and communication technologies
with preventive care during your practicum experience and what
would you do to impact your practice?
Instructions
Please review the grading rubric before beginning your
reflection on the above core clinical objective. Make sure to
answer the reflective questions thoroughly with substantial
reference to your practicum experience.
Bottom of Form
1
Reflection 2 – Health Promotion and Maintenance
Core Clinical Objective
Integrate knowledge of expected growth and development,

11. health promotion and prevention strategies to achieve optimal
health.
Student Name
Reflection 2 – Health Promotion and Maintenance
In this reflection, you are to look at how you met the core
clinical objective: Integrate knowledge of expected growth and
development, health promotion and prevention strategies to
achieve optimal health.
Remember we want to answer the below bolded questions from
a leadership lens. Often the leadership perspective is looking
from things not as a bedside nurse but rather how you can
support the bedside nurse.
Use the reflective questions found in the course practicum
folder embedded in each reflection instructions to prepare you
for your precepted immersion.
Activity Statements and Reflection Questions
1. Integrate knowledge from the arts, sciences, and humanities
into nursing practice.
Tell me at least 1 example from your practicum that meets the
above activity statement.
How did you see your leader meet the above statement:
a. As a leader, how did you use knowledge from the arts within
your clinical immersion?
a. See this link for a definition of arts and nursing
b. As a leader, how did science enhance your nursing leadership
approach in this practicum?
a. See this link for a definition of science and nursing
c. As a leader, how did you see your preceptor apply humanities
(share a specific focus) to their practice?
a. 2 Articles linked here and here to get you started thinking
about humanity's connection to healthcare.
1. Apply behavioral change strategies to promote health and
manage illness.

12. Tell me at least 1 example from your practicum that meets the
above activity statement.
How did you see your leader meet the above statement:
a. As a leader, how did you use information and communication
technologies with preventive care during your practicum
experience?
b. How will you as the leader ensure behavioral change
strategies are effective and will have longevity?
Here are some great tools used to enhance strategies as leaders:
1.
ttps://www.ahrq.gov/teamstepps/instructor/essentials/pocketguid
e.html#barriers
2.
https://www.ahrq.gov/teamstepps/instructor/essentials/pocketgui
de.html#feedback
3.
https://www.ahrq.gov/teamstepps/instructor/essentials/pocketgui
de.html#tool
References
Reflection 2 – Health Promotion and Maintenance
Core Clinical Objective
Integrate knowledge of expected growth and development,
health promotion and prevention strategies to achieve optimal

13. health.
Student Name
Reflection 2 – Health Promotion and Maintenance
In this reflection, you are to look at how you met the core
clinical objective: Integrate knowledge of expected growth and
development, health promotion and prevention strategies to
achieve optimal health.
Remember we want to answer the below bolded questions from
a leadership lens. Often the leadership perspective is looking
from things not as a bedside nurse but rather how you can
support the bedside nurse.
Use the reflective questions found in the course practicum
folder embedded in each reflection instructions to prepare you
for your precepted immersion.
Activity Statements and Reflection Questions
1. Integrate knowledge from the arts, sciences, and humanities
into nursing practice.
Tell me at least 1 example from your practicum that meets the
above activity statement.
How did you see your leader meet the above statement:
a. As a leader, how did you use knowledge from the arts within
your clinical immersion?
a. See this link for a definition of arts and nursing
b. As a leader, how did science enhance your nursing leadership
approach in this practicum?
a. See this link for a definition of science and nursing
c. As a leader, how did you see your preceptor apply humanities
(share a specific focus) to their practice?
a. 2 Articles linked here and here to get you started thinking
about humanity's connection to healthcare.
1. Apply behavioral change strategies to promote health and
manage illness.
Tell me at least 1 example from your practicum that meets the

14. above activity statement.
How did you see your leader meet the above statement:
a. As a leader, how did you use information and communication
technologies with preventive care during your practicum
experience?
b. How will you as the leader ensure behavioral change
strategies are effective and will have longevity?
Here are some great tools used to enhance strategies as leaders:
1.
ttps://www.ahrq.gov/teamstepps/instructor/essentials/pocketguid
e.html#barriers
2.
https://www.ahrq.gov/teamstepps/instructor/essentials/pocketgui
de.html#feedback
3.
https://www.ahrq.gov/teamstepps/instructor/essentials/pocketgui
de.html#tool
References