Question

What updates has Stark made in Stark II?

Answer 1

"Existing Stark and associated fraud and abuse laws are one of the principal barriers to the development of alternative payment models and the advancement of value-based care,"

The Stark law essentially prohibits physicians from making referrals for certain health care services -- called "designated health services" ("DHS") -- to organizations with which the physician or a family member has a financial relationship. Unless an exception applies, a referring physician and the entity receiving the referral are prohibited from billing Medicare for the services, Medicare is prohibited from paying for the services, and refunds are required for payments already made. Stark law violations can also result in penalties (up to $15,000 per claim plus twice the reimbursement claimed, and $100,000 for schemes to circumvent the Stark law), False Claims Act liability and program exclusion. As a result, even relatively small dollar Medicare claims can result in big dollar losses.

The final rule has been awaited with significant anticipation and trepidation because Stark law issues can arise in a wide variety of settings and relationships. Phases I and II comprise more than 200 pages of Federal Register text addressing both high-level concepts and highly technical aspects of this complex law.

For individuals and organizations that furnish health care services, Phase II provides much-needed clarification of the regulatory landscape relating to an important law. For better or worse, Phase II now provides a definitive framework that can and must be used to guide the structure of various business and other relationships involving physicians, hospitals and other health care organizations. This surely will result in some modification of existing relationships, as well as some potentially tough discussions regarding relationships established in the future. Moreover, now that a complete final rule exists, many observers believe that the enforcement effort -- whether by the government or by qui tam whistleblowers -- is likely to follow close behind.

The Stark law may unduly limit ways that physicians and healthcare providers can coordinate patient care by restricting ways physicians can organize and work together and with others,