Exceptions to the Stark law: practical considerations for surgeons.

BACKGROUND: The purpose of this study was to provide an understanding of the applicable legislative exceptions to prohibitions under the Stark law, which governs common legitimate business relationships in surgical practice.

METHODS: Stark I and II prohibits all referrals (and claims) for the provision of designated health services for federal reimbursement if a physician or immediate family member has any financial relationship with the entity. Regardless of intent (unlike the antikickback statute), any financial relationship is illegal unless specifically excepted by statute. These exceptions are relevant to ownership, compensation arrangements, or both. The most important ones relevant to surgeons are as follows: physician service exception (services rendered in an intragroup referral); in-office ancillary services exception (office-based vascular laboratory); the whole hospital exception (ownership interest in a hospital or department); lease exception (conditions that must be met for a lease not to be considered illegal); bona fide employment exception (important to academic medical centers); personal services arrangement exception (vascular laboratory medical directorship); physician incentive plans exception (if volume or value of referrals are an issue); hospital-affiliated group practice exception (physician services billed by a hospital); recruitment arrangement exception (inducements by hospitals to relocate); items/services exception (transcription services purchased from a hospital); fair market value exception (covers services provided to health care entities); indirect compensation arrangements (dealings between a hospital and entity owned by physicians); and academic medical centers exception (new phase II rules broaden the definition of academic medical centers and ease the requirement that practice plans be tax-exempt organizations, among other changes.

CONCLUSIONS: Although expert legal advice is required for navigation through the maze of Stark laws, it is incumbent on surgeons in private practice and at academic centers to have basic knowledge of exceptions under this burdensome statute. Antikickback "safe harbors" provide some protection against possible Stark violations. Penalties for violating Stark laws are severe, including fines of up to $15,000 per service and the economic threat of exclusion from participation in federal health care programs.