Stark Law

Stark Law is a legislation that is named after Pete Stark, a United States Congressman who sponsored the initial bill on three different provisions. Generally, this legislation is also known as the physician self-referral law as it emanates from Section 1877 of the Social Security Act (the Act). The law is an amendment to the Social Security Act that forbids physicians involved in a self-referral when referring patients to seek for certain services elsewhere. Self-referral by physicians can be described as the practice of these health professionals to refer patients to a medical facility where they have investments, financial interest, structured compensation plans, and ownership.

Description and Purpose of the Law:

As an important legislation, the Stark Law is a piece of regulations that basically governs three separate provisions. The three separate provisions basically entail self-referrals, Medicare claims, and regulatory exceptions for financial relationships. Under self-referrals, the Stark Law forbids a physician from making referrals for some designated health services that are covered by Medicare to a facility that he/she has some relationship or interests. The physician is banned from making such referrals to an entity where he/she or an immediate family member has interests or financial links on ownership, compensation, or investment unless there is an applicable exception.

Secondly, the legislation bans the health care entity from presenting or stimulating the presentation of claims to Medicare for the referred services. Some of the prohibited claims to Medicare include billing another person, entity or third party payer. Third, the regulation has established certain exceptions and provided the Secretary the power to develop regulatory exceptions for financial relationships that arent risky to patient of program abuse.

Following its enactment, the Centers for Medicare and Medicaid services has established comprehensive regulations that are geared towards illuminating the limits of the Stark Law. Moreover, physicians and designated health services entities have been provided with some flexibility because of the exceptions to the general rule forbidding self-referrals. While the regulatory scheme managing self-referrals is comprehensive and complex, it has costly consequences for non-compliance (“The Stark Law,” p. 1). Consequently, physicians and entities providing designated health services need to be carefully plan their relationships and seek for help in establishing compliance with the law.

The main purpose of the Stark Law is to govern self-referrals by physicians in order to prevent the occurrence of and address potential conflicts of interest. To ensure that it deals with the conflicts effectively,.