Your compliance program should reflect the laws that apply to your practice.
Question: I have four doctors and one physical therapist in my practice. I have been approached by a compliance program company. They have said that if I buy their book and program, I will be protected in the event that I am investigated by the government for Stark or anti-kickback violations. What do you think?
Answer: A compliance program is an important thing to have, but only if it’s tailored to your needs. Many of these off-the-shelf programs contain lots of information that is typically better suited for a large practice.
If you opt to purchase such a program, remember that you are required to comply with everything in the book. If it states that you must offer an 800 number for your employees to make anonymous complaints, and you don’t have that resource, you will create a problem with the regulators. Implementing a program and not abiding by it is worse than not having a program at all.
First, decide whether you need to be worried about the Stark law at all. The Stark law is named after Rep. Fortney Hillman “Pete” Stark, Jr., who proposed the statute; it is not a description of the statute itself. The Stark law’s real name is the Ethics in Patient Referrals Act.
Both the Stark law and the anti-kickback statute are federal laws and therefore only apply to programs such as Medicare, Medicaid, CHAMPUS, and other federal entitlement programs (FEPs). So, if you don’t participate in Medicare, Medicaid, or related government healthcare services, you’re not at risk of a violation.
But, because almost every state has a law against self-referrals, you do need to worry about those regulations—you could think of them as mini-Stark laws—as they frequently track, in whole or in part, the federal Stark laws. Sometimes these laws are even stricter than the federal ones, so have your attorney advise you on the specifics of your state.
Even if your practice treats FEP beneficiaries, you needn’t worry about the Stark law unless your practice provides one or more of the following 11 services referred to as designated health services or DHSs. These include
- clinical laboratory services;
- physical therapy services;
- occupational therapy services;
- radiology (including magnetic resonance imaging, computerized axial tomography scans, and ultrasound services);
- radiation therapy services and supplies;
- durable medical equipment and supplies;
- parenteral and enteral nutrients, equipment, and supplies;
- prosthetics, orthotics, prosthetic devices, and supplies;
- home health services;
- outpatient prescription drugs; and
- inpatient and outpatient hospital services.
Although the Stark law doesn’t provide specific definitions for these DHSs, the Centers for Medicare and Medicaid Services (CMS) has defined certain ones including clinical laboratory, physical therapy, radiology, imaging, and radiation therapy services by publishing specific Current Procedure Terminology (CPT) and Health Care Common Procedure Coding System (HCPCS) codes that providers can use. For further details, see the online CMS code list.1
If you’re using those CPT codes in your treatment of FEP beneficiaries, there may still be a safe harbor available to you in the form of a government-approved exception. But if you don’t provide any of these services to FEP beneficiaries, then Stark Law violation won’t be an issue for you.
It’s easy to confuse Stark law and the anti-kickback statute because they address similar issues, have similar safe harbors, and most problems arise under both laws because of improper referrals. But a violation of the Stark laws will cost you money; a violation of the anti-kickback statute can land you in jail (and cost you money, too).
Before entering into a transaction, do a Stark analysis first. If the transaction violates Stark and fails to fall under an exception, don’t worry about the anti-kickback analysis of the transaction: you can’t do the deal anyway. Unlike the anti-kickback statute, there is no wiggle room; you either meet an exception or you don’t.
The Stark law applies only to doctors and their immediate family members (if they are in a position to make referrals). For example: If Mary Smith, DC (mother of John Smith, DC), refers one of her Medicare patients to her son’s practice for physical therapy, such a referral would violate the Stark law, as physical therapy is a Medicare-designated health service. If, however, John Smith’s father, who is a lawyer, made such a referral, it would not be prohibited because he is not a doctor.
To clarify, the purpose of the Stark law is to prevent the referral of an FEP patient for a designated health service to another entity in which the doctor (or the doctor’s close relative) has a financial interest. A classic example is that of an MRI center:
John Smith, MD, owns shares in Acme MRI Center. He refers his Medicare patients to Acme for MRI services. As a result of his ownership interest, Smith will benefit financially from such referrals. Therefore, such referral is prohibited.
On the other hand, if Smith had his own MRI machine or if he was a member of a valid group practice that maintained its own machine, there would be no violation because he wouldn’t be receiving compensation from a third party.
Many chiropractors, if not most, will not have to be concerned with the Stark law. But even if it doesn’t apply to you, consider the implementation of a compliance program, which might save you from problems in the future.
Deborah Green, Esq., practices law in New York and Florida and has been a practicing attorney since 1977. If you have any questions concerning this article or other legal healthcare issues, she can be contacted at firstname.lastname@example.org or through healthcarelawcenter.com.
DISCLAIMER: This column is provided for educational purposes only. The information presented is not as legal advice and no attorney-client relationship is hereby established.
1 Centers for Medicare and Medicaid Services. “Code List for Certain Designated Health Services (DHS).” http://cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/List_of_Codes.html. Updated December 12, 2014. Accessed November 2014.