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Compensation Arrangement Exceptions Stark Law Lawyers

July 3, 2020 Federal Criminal Attorneys

According to Stark law or the Physician Self-Referral Act, physicians or doctors are prohibited from referring Medicaid or Medicare patients to specific health service providers -in which the medical practitioner doing the referral has a financial interest.

Considering the challenges associated with the implementation of the Stark law minus exception would make it close to impossible to practice medicine, federal policymakers have continued to permit situations that (though provisions of the Stark law are contravened), are prevented from being enforced as known exceptions.

Compensation arrangement exceptions

The Stark law stipulates a number of compensation arrangement exceptions designed to allow physicians to get into business relationships with Designated Health Services (DHS) without necessarily going against the patient referral rule.

Normally, the exceptions in the compensation arrangements mandate all agreements should be in writing and commercially viable. Besides, all compensations should be made in advance according to the current market value.

Conditions for Stark law exceptions

Although the main intention of Stark law is to curb wastage and fraud in the healthcare system, it has some provisions that ensure that service delivery is not compromised.

Despite the fact that each condition is distinct to every exception, there are general conditions demanded by most exceptions. They include the following:

1. Written agreements

Almost all Stark exceptions require that healthcare providers have written agreements with doctors. This includes things such as the lease of equipment or office space, fair market compensation, arrangements for group practice, recruitment of physicians, and personal service agreements.

It doesn’t matter if all the conditions of the exception are met, a written agreement should always be there. A lack of it constitutes the violation of Stark law.

2. Volume or value referrals

Most doctors and other medical practitioners get into trouble with law enforcement agencies when it comes to their volume or value of referrals.

Stark law expressly prohibits this and is a key requirement in most exceptions applicable to compensation requirements.

3. Group practice

For one to qualify for various stark exceptions such as in-office ancillary service, a medical practitioner must fulfill all the elements stipulated definition of Group practice.

This consists of the requirements concerning the structure of a group in terms of the corporation, foundation, and partnership.

4. Commercially reasonable or viable

Most Stark exception demand payments to be “commercially reasonable” even if referrals are done between healthcare providers and doctors.

A good example of a situation where payments won’t be considered as commercially reasonable is renting medical equipment or office that will only be used once in a month. It can also be a scenario where two or three doctors are hired in a department that can be handled by one doctor.

Common exceptions under Stark law

The unique situation and facts of services, relationships, and compensation are what basically determines the exception to be applied.

Nonetheless, there are several exceptions that cut across – for healthcare providers and physicians to ensure that they don’t breach the law.

Below are a few examples:

1. Physician services

The exception here involves physician to physician referral services offered personally under the supervision of another physician in a similar group practice. It is not a must for one to be a member of a group practice in order to qualify. Some circumstances allow contractor physicians.

2. Market value

If arrangements specify time-frame or remuneration, use transactions that are considered commercially viable and done in writing, then Stark law will permit exceptions based on fair market value.

3. Indirect compensation

Compensation arrangements done between healthcare entities and physicians are allowed under indirect compensation exceptions.

However, this is only applicable if the payments are based on fair value, doesn’t consider a referral value or volume, and everything was done in writing and signed by both parties.

4. Leases for offices and equipment

Physicians or doctors who desire to share personnel, office, equipment, services, or supplies with fellow colleagues can take advantage of the leases for equipment or office exception as long as they fulfill the stipulated requirements.

Generally speaking, complying with the Stark law can be a challenge for most medical practitioners.

This is because of the complexities and ambiguities that exist in the interpretation of the law. The best way to stay safe would be to seek the services of an experienced lawyer.

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