Starting or operating a healthcare practice requires knowledge of several state and federal laws associated with the healthcare industry. One of these laws is known as Stark Law or the “physician self-referral” law. Failing to comply with this law can result in several harsh penalties and ultimately cause major financial damage to the business.
The primary focus of this article is to provide information to physicians and healthcare practitioners particularly within the State of Florida. This includes an overview of the law, penalties for violations, and how an attorney specialized in healthcare can help your practice ensure compliance.
Stark Law Overview
Stark Law is a set of federal laws that prohibit doctors from referring Medicare or Medicaid patients to any health facility that the physician (or a physician’s close family member) holds a financial interest.
According to this law, it “prohibits physicians from referring patients to receive ‘designated health services’ payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies.” (Office of Inspector General, Physician Self-Referral Law [42 U.S.C. § 1395nn])
For example, if a Medicare or Medicaid patient needs Occupational Therapy, and a physician owns an Occupational Therapy clinic; the physician may not refer the patient to that clinic. Often doctors buy nursing homes, assisted living centers, medical testing centers, etc. If a doctor owns any part of one of these businesses; then, it is against the law to refer Medicare/Medicaid patients to that particular center. In other words, a physician may not profit from referrals.
Stark Law only applies to services paid for by the federal government, like Medicare and Medicaid. This includes a physician’s investment interests and independent contractor relationships. One exception would be on-site lab and imaging services. In other words, if your cardiologist runs an EKG in the office, or draws blood, that is not a violation of the law. In summary, every state must follow these federal laws.
Penalties for Violations
Stark Law violations carry numerous financial penalties and possible future denials of Medicare/Medicaid reimbursement. If a physician is in violation, any money received must be paid back. In addition to reimbursement, a financial penalty up to $100,000 may be assessed for each violation. So, it’s important to ensure every medical practice is compliant
Healthcare Law in Florida
Doctors in Florida must follow federal Stark Law and ensure compliance with several other Florida healthcare laws. The Florida Patient Self-Referral Act, Florida Statute Section 456.053 applies to all physicians. This statute prohibits doctors from sending patients for care to any business owned by the physician. Violation of this civil statute carries stiff penalties. The Florida Statute contains some differences to this law
While Stark Law focuses on patients receiving Medicare, Medicaid, or any other federal insurance money, the Florida Self-Referral Act includes all patients. The Florida Statute is broader in a couple areas and more complicated. In fact, Florida’s regulatory healthcare compliance laws may be the most complex in the United States.
These federal physician referral laws and the Florida Statute allow ancillary services in a physician’s office. However, the Florida Statute dictates that a physician must be present in the office when these services are performed. So, if a cardiologist has testing equipment at the office one cardiologist must be at the office when the test is performed. Also, testing is limited to current patients and a limited number of outside referrals may be accepted under Florida law. Stark Law does not set the same limitations. So, it’s important to consult an attorney that understands Florida’s complicated healthcare laws before setting up a practice, or investing in a related business.
Vital Role of a Healthcare Law Attorney
Federal and State Healthcare Laws are complicated and violations carry stiff penalties. Physicians establishing new practices should consult with an attorney that specializes in this area of law. A healthcare law attorney assists doctors and hospitals with: writing contracts and transactions, setting up financial relationships between hospitals/physicians, mergers, designing policy programs compliant with federal and state laws, etc.
In addition, if a doctor, hospital, or medical practice is accused of violating a Florida Healthcare Statute or Stark Law, hiring an experienced attorney is crucial. A lawyer understands the complex laws and can prepare and submit legal documents. Whenever the government is involved, a case becomes even more complicated and must be handled by a professional that understands the law and how the government works. Not seeking sound legal assistance is costly and may destroy a medical practice. Thus, contacting an experienced attorney for any violation notice is a wise move.