Understanding the Stark Law and Anti-Kickback Statute

Posted Jul 10, 2023 under:

Be on the lookout

The Stark Law and Anti-Kickback statute are in place to protect patients, tax dollars, and physicians, but how do they work? What are the penalties associated with a violation?

Medical and healthcare laws

Understanding Stark Law & Anti-Kickback Statute

SCA Health remains committed to ensuring that our physician partners, affiliated centers, and their staff understand and are in compliance with the Stark Law and anti-kickback statute.

The Stark Law and anti-kickback statutes protect patients and taxpayers from manipulation and draining of public funds. Additionally, these rules preserve positive patient outcomes by avoiding the prescription of unnecessary medications and services.

SCA Health remains committed to providing education for all our centers to ensure compliance with the Stark Law and anti-kickback statutes.

What is the Stark Law?

Often referred to as the “physician self-referral law,” the Stark Law is maintained by the Social Security Act ( 42 U.S.C. 1395nn), according to the. When initially enacted in 1989, the Stark Law’s scope primarily focused on prohibiting healthcare providers from referring patients to clinical labs with which they shared a financial relationship. However, as referenced by the National Legal Research Group, Inc., the law has expanded to include other services. These include physical therapy, occupational therapy, radiation, prosthetics and orthotics, outpatient prescription drugs, and more.

While physicians are required to follow the rules of the Stark Law, the immediate family members of those physicians are also expected to understand their part. For example, should a physician’s spouse have a financial relationship with a company that provides services covered under the Stark Law, the physician may face a violation if they refer their patients to said company. This extension of the law to physician’s families provides increased protection against receiving illegal profits and kickbacks.

Penalties for Violating the Stark Law

An important note regarding the Stark Law is its range of coverage, particularly regarding intentions. The National Legal Research Group, Inc. adds that a referral violating the statute does not need to be intentional to be considered a violation.

“Physicians who violate the Stark Law can be excluded from participating in federal health care programs and may face additional civil penalties under anti-fraud statutes, such as the False Claims Act,” the National Legal Research Group, Inc. website states.

Examples of penalties for violation of the Stark Law include:

  • Denied payments for services
  • Order to refund existing payments
  • Fine of up to $15,000 for each service provided (regardless of intent)
  • Providers may also be liable for up to 3x the total amount of improper payments received from Medicare/Medicaid

Anti-Kickback Statute

The anti-kickback statute covers a slightly different aspect of improper financial relationships. This statute prohibits “offers or exchanges of financial incentives for referrals to services which are payable under federal health care programs.”

Examples of these financial incentives include, but are not limited to:

  • Overly high speaking fees
  • Meals
  • Travel
  • Discounted rent
  • Any direct payments in exchange for a referral of a patient to a particular provider or pharmaceutical

Illegal kickbacks can lead to negative patient outcomes and unnecessary prescriptions and services. Fraudulent funds received through this illegal method also drain money allocated for payment by federal healthcare programs.

Anti-Kickback Penalties

Violators of the anti-kickback statute face strict penalties, including fines of up to $25,000 and five years in jail. Similar to violations of the Stark Law, guilty parties can also be excluded from participating in all federal healthcare programs. Additionally, fines of up to $50,000 per kickback and treble damages can be introduced as part of the Civil Monetary Penalties Law.

Avoiding the Stark Law & Anti-Kickback Violations

Ensuring your center complies with the Stark Law or anti-kickback statute can be simple. Ensure that other providers or companies you work with have no relation to you and never accept a gift or payment from a company or representative offering an incentive to refer or utilize a product.


National Legal Research Group, Inc.: https://www.natlawreview.com/article/stark-law-violations-ambulatory-surgery-what-whistleblowers-need-to-know

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