US Attorney Michael DiGiacomo announced on May 16 that a New York health system had agreed to pay $3,293,122.66 to resolve allegations under the False Claims Act that it knowingly submitted, or caused to be submitted, false claims to the Medicare program. The alleged false claims were the result of violations of the Physician Self-Referral Law, commonly known as the Stark Law.
The Stark Law generally prohibits healthcare providers from billing Medicare for certain services referred by physicians who have a financial relationship with the provider, unless an exception applies. According to the government, the health system and its affiliated hospitals had financial relationships with non-employee physicians who referred services—such as laboratory tests, hospital services, and medical supplies—to the health system.
The health system then submitted claims to Medicare for those services. The government alleges that the financial arrangements did not meet any of the Stark Law’s exceptions because they were either not commercially reasonable or involved compensation that exceeded fair market value for the administrative services provided by the physicians.
“The Stark Law is designed to protect Medicare by ensuring that physician referrals are not influenced by financial interest,” said US Attorney DiGiacomo. “This office is committed to holding healthcare providers accountable who engage in such conduct.”
Compliance Perspective
Issue
The Stark Law prohibits healthcare providers from billing Medicare for certain designated health services referred by a physician with whom the provider has a financial relationship—such as an ownership interest or compensation arrangement—unless the relationship meets a statutory or regulatory exception. Congress enacted the Stark Law to protect Medicare beneficiaries from financial relationships that may improperly influence physician decision-making and result in unnecessary services. Submitting claims to Medicare in violation of the Stark Law may also constitute a violation of the federal False Claims Act (FCA). Liability under the FCA can result in treble damages and additional civil penalties.
Discussion Points
- Review policies and procedures to ensure they comply with Stark Law requirements regarding physician referrals. Include guidance on acceptable compensation arrangements and referral practices. Confirm that policies clearly outline how to assess whether services or referrals meet applicable regulatory requirements.
- Provide staff training on the Stark Law, including guidance on appropriate referral practices and how to identify potential violations. Emphasize that referrals must be based solely on patient needs and not influenced by financial arrangements. Include instruction on how to report suspected noncompliance.
- Conduct periodic audits to evaluate compliance with referral and compensation protocols. Review referral documentation and related financial arrangements to verify adherence to Stark Law requirements. Investigate and address any discrepancies promptly to ensure continued compliance.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*