The United States has filed a complaint against a healthcare system located in Tennessee and North Carolina, alleging it violated the Stark Law and thereby submitted false claims to the Medicare program. The Stark Law prohibits healthcare entities from billing Medicare for services referred by a physician with whom the entity has an improper financial relationship that does not meet any statutory or regulatory exception.
The government’s complaint alleges that the healthcare system had employment relationships with a number of physicians that did not meet any Stark Law exception because the compensation paid to the physicians was well above fair market value. According to the complaint, the healthcare system received referrals from these physicians in violation of the Stark Law and submitted claims to Medicare knowing that the claims for those referred services were not eligible for payment.
“This complaint serves as a warning to healthcare entities that attempt to increase profits through improper financial arrangements with referring physicians,” said Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG will continue to investigate such deals to prevent financial arrangements that could compromise impartial medical judgment, increase healthcare costs, and erode public trust in the healthcare system.”
The Justice Department’s Civil Division and the US Attorney’s Office for the Western District of North Carolina handled the case, with assistance from HHS-OIG.
Compliance Perspective
Issue
The Stark Law prohibits healthcare providers from billing Medicare for certain designated health services referred by a physician with whom the provider has a financial relationship, including a compensation arrangement, that does not meet any statutory or regulatory exception. Financial relationships include both ownership/investment interests and compensation arrangements. Congress enacted the Stark Law to protect Medicare patients from financial arrangements that can adversely impact physicians’ decision making and lead to unnecessary services. Claims knowingly submitted to Medicare in violation of the Stark Law also violate the federal False Claims Act (FCA). If a defendant is found liable for violating the FCA, the United States may recover three times the amount of its losses plus applicable penalties.
Discussion Points
- Review policies and procedures to ensure they align with Stark Law requirements regarding referrals. Update as needed.
- Train staff on the Stark Law and the importance of accurate referral practices. Emphasize that referrals should be based on the needs of residents and not influenced by financial incentives. Include information on how to identify and report inappropriate referral arrangements, and stress that prompt reporting is mandatory. Document that the training occurred and place in each employee’s education file.
- Periodically perform audits to assess compliance with referral protocols. Review referral documentation to ensure adherence to Stark Law guidelines. Address any discrepancies promptly to maintain compliance.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
