Stark Relief May Be on the Way for Physicians


Physicians are almost unanimous in their dislike of the physician self-referral, or Stark law, but recent congressional action may give them some relief in the form of reduced penalties.

The Stark Administrative Simplification Act (H.R. 3726) was approved unanimously by the House Ways and Means Committee Sept. 13 and reported to the House with no changes.

The bill, co-sponsored by Reps. Kenny Marchant (R-Texas) and Ron Kind (D-Wis.), creates an alternate self-disclosure for technical Stark violations and sets penalties at either $5,000 or $10,000, depending on the timeliness of the disclosure. Under the current disclosure process, penalties can range up to $15,000 per violation.

Technical violations can range from failing to sign a contract to letting a contract expire without renewal. “I think many people in the government, as well as in the provider community, have been concerned about the draconian penalties that can be imposed for such technical lapses,” Linda Baumann, a health-care attorney with Arent Fox in Washington, told me.

The Stark law generally prohibits doctors from referring Medicare patients to facilities, such as labs and imaging centers, in which they have ownership interests.

The bill’s penalties are much more consistent with the level of technical Stark violations, and would give providers an incentive to come forward and self-disclose technical violations, Baumann said.

The new protocol for self-disclosing a technical violation is likely to be a handful, but it’s unlikely to fundamentally change the risks associated with the Stark law or how parties will try to comply with Stark, Karl Thallner Jr., a health-care attorney with Reed Smith LLP in Washington, told me.

There are bigger Stark issues than technical violations, Thallner said, such as the uncertainty surrounding the application of the volume or value standard. The standard refers to a contract’s compliance with the Stark law based on whether a physician’s payment reflects the volume and the value of referrals.

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