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15 Things to Know About Stark Law

Article Commentary Written by Garth Hogan, Executive Managing Director, Global Healthcare Services

After 2 decades, the Stark Law still has an impact on contracts between hospitals and physicians. With the original Stark 1 act passed in 1989 and revisions to the Stark II in 1995, hospitals and health systems have been held to a high standard of ethics, with regards to contracts and agreements between referring physicians. Real estate has always been a key factor in keeping the relationships at “arm’s length” and “at fair market value”.

Written by Ayla Ellison | Becker's Healthcare

Enacted more than two decades ago with the simple purpose of curbing physician self-referral, Stark Law has evolved into a complex set of regulations, which some argue impede efforts to transition away from a fee-for-service system.

Here are 15 things to know about Stark Law.

1. In 1989, Congress passed the Ethics in Patient Referrals Act, which was dubbed Stark I after Rep. Pete Stark, a Democrat from California, who sponsored the initial bill.

2. The original statute was quite simple. It sought to ban physician self-referral for designated services when a patient was covered by Medicare or another government payer. Self-referral occurs when physicians refer patients for designated health services to hospitals, labs and other entities from which they or an immediate family member benefit financially.

3. Stark Law applies to the following designated health services:

Clinical laboratory services
Physical therapy services
Occupational therapy services
Outpatient speech-language pathology services
Radiology and certain other imaging services
Radiation therapy services and supplies
Durable medical equipment and supplies
Parenteral and enteral nutrients, equipment and supplies
Prosthetics, orthotics and prosthetic devices and supplies
Home health services
Outpatient prescription drugs
Inpatient and outpatient hospital services


4. The intention behind the original statute was to eliminate any financial motivation for physicians to send patients for unnecessary testing that could raise overall healthcare costs.

5. The original statute was expanded in January 1995, when Stark II went into effect. Over the next decade, CMS published a series of regulations implementing the physician self-referral law. Today, there is a sprawling group of regulations and statutes collectively named Stark Law.

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