Stark Law

Editorial approval scope: The team checked current source fidelity, scope boundaries, dates, arithmetic, reader usefulness, practical workflow, and general-information limitations.

Stark uses a sequence of defined elements

The CMS physician self-referral page describes two core prohibitions. A physician generally cannot refer Medicare designated health services to an entity with which the physician or immediate family member has a financial relationship unless an exception is satisfied. The entity also cannot bill Medicare or another person or payer for improperly referred services.

Review these questions in order:

1. Is the person a physician for Stark purposes?
2. Is there a referral as defined by the rule?
3. Is the item or service a designated health service?
4. Is it payable by Medicare within the rule's scope?
5. Which entity furnished the service?
6. Does the physician or immediate family member have an ownership, investment, or compensation relationship with that entity?
7. Does one applicable exception satisfy every required condition?

ABA services are not a universal answer

CMS lists designated health services including clinical laboratory, physical therapy, occupational therapy, outpatient speech-language pathology, imaging, radiation therapy, durable medical equipment, certain nutrients and supplies, prosthetics and orthotics, home health, outpatient prescription drugs, and inpatient and outpatient hospital services.

“ABA” is not itself a designated-health-service category on that list. An ABA organization can still encounter Stark through hospital outpatient billing, co-located or integrated services, physician ownership or compensation, labs, therapy disciplines, equipment, or another arrangement. Map the actual service, code, place of service, billing entity, and payer.

Financial relationships include ownership and compensation

A financial relationship can involve direct or indirect ownership, investment, or compensation. Review employment, medical director, consulting, supervision, lease, recruitment, marketing, management, shared-space, equipment, and value-based arrangements involving physicians or immediate family members.

The current regulation at 42 CFR 411.353 states the referral and billing prohibitions. Do not release referrals or claims while an applicable element or exception remains unresolved.

Exceptions are exact requirements

Stark contains statutory and regulatory exceptions. Requirements vary. Depending on the exception, relevant terms can include writing and signature evidence, duration, identifiable services, fair market value, commercial reasonableness, set-in-advance compensation, and limits involving referral volume or value.

The CMS modernization fact sheet describes value-based exceptions and clarified terminology. It does not make every value-based or fair-market-value arrangement compliant. Counsel should identify one exact exception and test each element against current evidence.

Stark differs from other fraud and abuse laws

The OIG fraud and abuse overview distinguishes Stark, the Anti-Kickback Statute, False Claims Act, exclusion law, and Civil Monetary Penalties Law.

An arrangement outside Stark can still implicate the Anti-Kickback Statute, state self-referral law, fee-splitting, corporate-practice rules, professional ethics, tax, payer contracts, or the False Claims Act. Review each law separately.

A fictional arrangement inventory

A fictional ABA group inventories nine arrangements involving physicians or their immediate family members. Six have no identified Medicare designated-health-service referral after counsel's documented scope review. One fits an exception with complete evidence. Two stay held because a shared-space agreement lacks current compensation support and a hospital outpatient arrangement has unresolved service-code mapping.

Documented release readiness is 7 of 9, or 77.8%. The two holds remain in the denominator and block affected referrals and claims. This rate does not prove Stark compliance; it measures completion of the practice's review gate.

Build an arrangement register

For each arrangement, record:

• parties, immediate-family links, and entity roles
• ownership, investment, and compensation flows
• referred services, codes, sites, billing entities, and payers
• Medicare and state-law scope
• identified exception and every required element
• agreement, valuation, commercial rationale, signatures, and dates
• claims hold, monitoring, renewal, correction, and disclosure route
• attorney conclusion, source, effective period, and recheck trigger

Sample payments and referrals against the written terms. Changes in ownership, compensation, service mix, codes, location, payer, or contract should trigger review.

Define a claims hold that activates when an arrangement lacks a completed scope analysis or exception element. Record affected services, referrals, claims, dates, owner, and release authority. Only qualified review of the actual facts should lift the hold; an ordinary contract approval is not a Stark conclusion.

Advisory opinions have narrow reliance

CMS provides an advisory opinion process for specified existing or proposed arrangements. The requestor is the party that may rely on the resulting opinion. A public opinion can inform issue spotting, while another practice should not treat it as clearance for different facts.

Questions owners should ask

• Is a physician referral for Medicare designated health services present?
• Which entity furnishes and bills the service?
• What ownership, investment, or compensation relationship exists?
• Which exact exception applies, and is every element documented?
• What change would reopen review or place referrals and claims on hold?

Keep counsel's conclusion linked to the facts and effective period it reviewed. A copied checklist or another organization's opinion cannot clear a different arrangement.