Christopher L. Nuland, Esq.
General Counsel

Although the federal Stark Law (42 USC 1395nn) and Anti-Kickback Statute (42 USC 1320a-7b) have existed for over fifteen years, enforcement of the respective provisions has not always been vigilant. With the advent of health care reform and the much-publicized crackdown on Medicare fraud, however, enforcement of the Stark Law and related Anti-Kickback Statute has increased dramatically, and physicians are reminded that the failure to comply with its provisions can lead to hefty fines, disbarment from the Medicare program, and even criminal penalties.

The basic premise of the Stark law is that a physician may not refer a patient for the provision of “designated health services” (“”DHS”- including clinical laboratory, diagnostic imaging, and a host of other services) if the physician has a financial relationship to the entity to whom the referral was made. Physicians should be aware that the definition of “financial relationship” is extremely broad, and includes “any remuneration, directly or indirectly, overtly or covertly, in cash or in kind.”

The government has held that any benefit given to a physician for the referral of a patient for the provision of DHS is a violation of both the Stark law and the Anti-Kickback Statute. Such benefits include not only direct kickbacks, but also preferential pricing for those physicians who refer a minimum number of patients to a DHS provider. In other words, a lab that offers a referring physician a discount if he refers a certain number of specimens is actually providing a kickback to such a physician based upon the volume of referrals, which is explicitly prohibited under federal law.

With the advent of increased government enforcement of such provisions, physicians are urged to seek legal counsel before entering into any relationship with an outside entity for the provision of such designated health services.