Exploring Stark Law: Provisions, Exceptions, Penalties & Protections - Term Paper

Introduction

This term paper looks at Stark Law in general, its provision under the law, the parties to which it applies, their roles under this law, exceptions provided by the law, penalties encountered due to violation of the law and ways through which Health Care Organizations has tried to align and safeguard professionals and DHS entities from violation of Stark Law

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United States Code: Federal Statute Title 42-THE PUBLIC HEALTH AND WELFARE, Chapter 7-SOCIAL SECURITY, Sub-Chapter XVIII-HEALTH INSURANCE FOR AGED AND DISABLED, Part E- Miscellaneous Provisions, Section 1395nn-Limitation on certain physician referral.

Stark law is a set of United State federal laws which prohibit doctors and or physicians from referring Medicare patients from designated health care services(DHS) to an entity which the physician or close relative has financial ties to, however, some exceptions are given in the statute (Thaheld, 2015). The statute also prohibits designated health from submitting claims to Medicare services for those services resulting from an illegal referral.

Management's Financial Responsibility

Sub-clause (a): Prohibition of certain referrals, sub-paragraph(B); the entity may not present or cause to be presented a claim under this sub-chapter or bill to any individual, third party or other entity for designated health services furnished pursuant to a referral prohibited under subparagraph (Reisman, Wool, Chananie, & Finnegan, 2009). This sub-paragraph denies claims to Medicare for those services resulting from an illegal claim. This sub-paragraph prohibits any entity providing designated health services (DHS) from receiving prohibited claims under this law.

The specific sub-clause of the statute talks about the different circumstances under which an entity providing DHS services is obligated by the statue to make bills for payments or payments. The sub-clause looks at the different instances under which this sub-clause applies and the form of billing or payment (Anscher et al., 2010).

Sub-clause (h): Definitions and special rules. Sub-paragraph 6; designated health services. Performing the services billed as designated health services to the Medicare programs. This section of the statue mainly tries to define the scope of work handled by entities providing designated health care services to Medicare programs.

Consequences for Ethical or Legal Breach

Some of the penalties on civil breach of the statue are as mentioned; over-payment/refund obligations, False claim Act liability, civil monetary penalties and program exclusion for the known violation, refund obligation and civil assessment of up to six times of the amount claimed (Anscher et al., 2010).

Case Study of Tuomey Hospital in South Carolina

In April 2004, a ruling was made by a federal jury that Tuomey Hospital had violated the Stark Act depending on the type of employment contracts it had with physicians at its Outpatient Surgery Center. Federal prosecutors also accused the defendant of violating the False Claim Act by submitting prohibited claims according to the Stark Law (Reisman et al., 2009). However, the jury dismissed the later claim stating that the defendant was not involved in any act of fraud. The government is asking for 45 million dollars as civil monetary penalties for violation of Stark Federal law (Thaheld, 2015). The American Hospital Association has provided support for the defendants by filing an amicus brief.

Based on the facts presented by this case a proper health care organization management can help the defendant to escape or reduce any damage it might incur due to violation of Stark law.

Department of Justice of Florida v Halifax Hospital Medical Centre

The case was filed on June the year 2009 by a whistle-blower who served as a director of the defendant. He claimed that the defendant, Halifax hospital violated the Stark law by receiving referrals from its oncologists and neurosurgeons (Thaheld, 2015). Arguments from the complaint (Department of Justice of Florida) were as follows; that the arrangements between the defendant and its physicians resulted in a compensation in excess of the fair market value and that the arrangement between the defendant and its physicians took into account the volume of the referrals made by the physicians and was not just based on the normal bonuses given to the physicians. The complaint also argued that the prohibited referrals resulted in an over-payment of close to 105,366,000 dollars (Anscher et al., 2010). A tentative settlement was reached on which the defendant was given a fine of 85 million dollars as refunds for violating Stark Law.

Based on the fact that the defendant (Halifax hospital medical center) was found in violation of both the Stark law and the false claim act and large amount obtained through excess payment Halifax hospital medical center should have received a heftier fine than 85 million.

A Case Study of University of Pittsburgh Medical Center Hamot, 2017

The defendant (Hamot) was faced with a whistle-blower claim that the hospital had come up with false directorship positions between the years 2004-2010 to incentivize referral to Hamot for heart procedures which fall under designated health services (DHS). In the above case, the District Court earlier stated that if the arrangements made are not fine-tuned to fall in the exceptions for stark law, then claims to arise from the violation of stark law might lead to False Claim Act liability too. However, on November 7th, 2017 the parties reached upon a settlement of 20.75 million dollars which was to be paid by Hamot as Civil Monetary Penalties,

Proper record for the defendant (Hamot) between the years in question might provide sufficient evidence on whether the defendant violated the Stark law or it might also provide information to exonerate it from the said charges.

HCO Management Remedies to ensure Health Care Organizations comply with Stark Law. A Health care manager oversees all activities carried out by a health-care organization such as financial matters and its day to day operations (Reisman et al., 2009). A health-care manager's main objective is to ensure patients receive the best health-care service possible by providing the medical personnel in general with all the necessary tools and equipment they need to perform optimally.

Professional Service Arrangements

Modern and current practices for professional service arrangements provided by independent physicians often include the following aspects; assigning of collections for professional services to the relevant health-care organization by the independent physician group, leasing of physicians by health-care organizations to supply professional services to hospitals providing DHS services, by leasing practice/internship staff or passing through cost for the practice expense and provision of compensation of the independent physician group by HCO based on work relative value units for personally provided charges.

Co-Managements Arrangements

Co-management arrangements under HCO mainly covers management of clinical service lines by physicians, regular services are cardiovascular or cardiology surgery, orthopedic surgery, oncology, and neurosurgery, transforming to care continuity throughout different less popular specialties, it normally incorporates a yearly standard fee for existing oversight and fixed management and a yearly 'risk' remuneration allowance for a realizing predefined objectives.

Physician Compensation for Employed Physicians

The compensation approach for physicians improves the following components; (1)an incentive compensation based on multiplier based on performance score and WRVU conversion factor for each WRVU exceeding the desired threshold, (2)base salary of the physicians and (3)quality incentive. This aspect of HCO management ensures that physicians can be compensated without raising claims for prohibited referrals or kickbacks.

Conclusion

The Stark Law is a federal statute that acts as a guide to the conducts of physicians and medical entities in general. It gives circumstances under which referral is prohibited by law and also gives instances when exceptions are applied. From the paper, we also find out that entities providing designated health services(DHS) have a role to play in ensuring that prohibited referrals do not take place and enforcement of Stark law. Health Care Organization(HCO) objectives provide for alignment of organization policies and practices with aspects of the Stark Law to ensure that professionals are protected from violation of the federal law or any associated law such as anti-kickback law or False Claim Act Liability.

Reference

Anscher, M., Anscher, B., & Bradley, C. (2010). The Negative Impact of Stark Law Exemptions on Graduate Medical Education and Health Care Costs: The Example of Radiation Oncology. International Journal of Radiation Oncology, 76(5), 1289-1294. doi.org/10.1016/j.ijrobp.2009.11.061

Reisman, G., Wool, H., Chananie, S., & Finnegan, J. (2009). Yet More Changes to the Stark Law Regulations. Journal of the American College of Radiology, 2(6), 81-84. doi.org/10.1016/j.jacr.2008.11.005

Thaheld, F. (2015). Can the Stark-Einstein law resolve the measurement problem from an animated perspective? Biosystems, 135(1), 50-54. doi.org/10.1016/j.biosystems.2015.07.005