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What is Stark Law?

The Stark Law is similar to the Anti-kickback Statute, but applies only to physician relationships with entities that bill Medicare or Medicaid. The Stark Law bans certain financial arrangements between a referring physician and a covered entity that bills the Medicare or Medicaid programs.

A financial relationship is an invested interest in, or a compensation arrangement with, another entity. An ownership or investment interest may be through equity, debt, or other means. A compensation arrangement is generally defined as any arrangement involving any remuneration between a physician (or immediate family member) and an entity.

Stark Law prohibits payments for certain designated health services provided through a prohibited referral, and requires refunds for improperly billed and collected amounts. It permits CMPs (up to $15,000 per service) and exclusion from government programs when a provider submits an improper claim known, or should have been known, to have been provided through a prohibited referral, and has not refunded the payment. Physicians who violate the statute may be subject to additional fines per prohibited referral.