Do you know the key elements of Stark Law? Learn best practices for integrating Stark compliance into hospital physician contracting programs.

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Stark Law and Physician Contracting
A MD Ranger On-Demand Webinar

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Objectives
• Stark Law basics
• Review penalties for non-compliance
• Strategic and tactical best practices for building Stark
compliance into physician contracting

3. First thing’s first: call your attorney
• MD Ranger doesn’t give legal advice
• Stark Law is complicated
• All matters regarding potential Stark violations (or
questions) should go to your counsel under privilege
• Intent is irrelevant
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4. Twenty-some years ago…
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5. The government needs to protect itself
from fraud and abuse
• Physician Self Referral Law, commonly referred to as
“Stark Law” enacted
• Section 1877 of the Social Security Act, 42 U.S.C.
1395.nn
• Consists of original statute (Phase I, 1989)
• Phase II into effect in 1996
• Phase III throughout the 2000’s
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6. Stark Law in a “nutshell”
• Restricts physician referrals
• A physician (or a physician’s immediate family
member) who has a direct or indirect financial
relationship with an entity that provides “Designated
Health Services” (DHS), cannot refer patients
(Medicare/Medicaid) to that entity for DHS, and the
entity cannot submit a claim for services unless the
financial relationship is within a Stark exception.
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7. There’s a lot going on there!
• What’s immediate family?
• What’s a direct financial relationship? What’s an
indirect financial relationship?
• What qualifies as DHS?
• What are Stark Law exceptions?
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8. All in the family (literally)
• Defined as immediate, which is:
• Spouse
• Parent
• Child
• Sibling
• Stepparent
• Stepchild
• Stepsiblings
• In-laws (parents and siblings)
• Grandparents
• Grandchildren
• Spouse of grandparents and grandchildren
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9. Defining financial relationships
• Any type of investment, ownership, or compensation
arrangement between the referring physician and the
DHS entity is a financial relationship under Stark
• Includes stock ownership, partnership interest,
rentals, personal services contract, salary, etc.
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10. More examples of financial
relationships
• Professional services agreements
• Call coverage arrangements
• Medical directorships
• Medical staff officers payments
• GME programs
• Uncompensated care
• Leases
• Risk-sharing
• ACO’s
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11. What’s DHS?
• Inpatient services
• Lab
• Physical therapy
• Occupational therapy
• Radiology and imaging
• Medical equipment
• Medical supplies
• Prosthetics
• Home health and other outpatient services
• Prescription drugs
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12. Surely there’s an exception….
• Personal services arrangements
• AMC arrangements
• Medical staff incidental benefits (must be provided to
all)
• Physician recruitment
• Non-monetary compensation up to $372 ($390 in ‘15)
• Employment (legitimate)
• Office spaces leases
• Hospital ownership (must be greater than 50%)
• Compliance training
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13. Remember
• Not an exhaustive list
• Work with your attorney
• Each exception has very specific elements that must
be met and documented. Play safe.
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14. And, don’t forget
• Strict liability statute
• Intent to violate the law doesn’t have to be proven
• Technical violations of the law are still violations
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15. How much are we talking?
• No payment for claims
• Civil monetary penalties for each service ($15,000)
plus an assessment of up to three times the claim
• Penalties up to $100,000 for “circumvention
schemes”
• Physicians and entities could be excluded from
participating in CMS programs
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16. How is it different from AKS?
• AKS prohibits the exchange or offer to exchange
anything of value in an effort to induce the referral of
health care services (any items) from any person or
provider
• Much more broad than Stark
• Applies to all federal health care programs
• Intent must be proven
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17. Stark Law and the False Claims Act
• Enacted during the Civil War, the law imposes liability
on people/organizations who defraud government
programs
• Payments to a hospital for services that violate Stark
could be subject to penalties because they defraud
the government
• Allows whistle-blowers to bring qui tam lawsuits and
sue on behalf of federal government for Stark
violations
• Yikes!
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18. Challenge: maintain key physician
relationships
• Strong physician relationships key to a successful
organization and to promote clinical excellence
• Compensation decisions impact physicians
immensely: be deliberate, thoughtful and consistent
• Remember that all physician financial relationships,
even non-monetary compensation, should have a
contract and FMV documentation
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19. Best practices for protecting your
organization and physicians
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20. Check out MD Ranger resources
• Compliance checklists
• Structuring physician contracting programs
• How to identify risky contracts
• And more
www.mdranger.com/resources
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21. Have a written and signed contract
• Stark requires written contracts for physician services
with payment terms set in advance!
• Both the hospital and the physician must sign the
agreement
• Though this step is obvious, sometimes it can be
quite challenging to determine if a contract exists.
• No money exchanged for the service? STILL
CREATE A CONTRACT
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22. Document non-monetary
compensation
• Are you providing non-monetary payments to
independent physicians (that you aren’t providing to
the entire medical staff) that exceed the cap?
• Parking spaces?
• Meals?
• Electronic health records?
• Overhead from charity events involving doctors?
• Joint marketing?
• Office artwork?
• Technology?
• Infrastructure?
• ….?
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23. Be specific about the service
• The services to be provided must be described in
detail in the contract.
• Don’t forget important details, like number of hours in
administrative agreements
• Record keeping for time and performance of duties
• Periodic ‘audits’ of time cards to see if they are
accurate, meetings attended, reports filed, etc.
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24. Set rates at fair market value
• Check the fair market value documentation with the agreement
to ensure that methods/data are sufficient
• If documentation or methods are questionable, look up market
data for the service
• If no documentation exists and payment rates were determined
by something other than fair market value, flag the contract for
follow up
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25. Don’t pay for referrals! Period.
• Paying for referrals or bribing physicians in any way
is illegal
• Due diligence is required when reviewing contracts to
ensure that the payments are not for referrals; lack of
documentation leaves you vulnerable to technical
Stark violations
• Remember: the government doesn’t have to prove
intent for Stark violations
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26. Compliance is mandatory
• Ensure that the hospital is paying the appropriate
rates as per the agreement (AP is great for this)
• Check physician documentation is up to standard,
medical directorship hours especially
• Read through the description of the service and
ensure it is not only being adhered to, but also if the
service is still needed
• Check up on ‘special deals’ that didn’t follow standard
procedures or legacy contracts that haven’t changed
in years
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27. Audit your contracts
• Review the entire auditing process and document this
discussion or meeting in full
• Create a file or document to capture your internal
process. Include:
• Memos written by responsible executive or leader
• Minutes from meetings
• Flags and notes
• List of follow up items in one place, as collected from above
documents, notes, memos, and emails
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28. Stark questions?
MD Ranger, Inc.
650-692-8873
inquiries@mdranger.com
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