How to Comply with Stark Law and Anti-Kickback Policies and Procedures

Health care organizations are required to comply with a long list of federal and state laws that are meant to help prevent instances of fraud, waste, abuse and other unethical behavior or actions in the health care industry. Two of these laws include the Stark Law and the Anti-Kickback Statute (AKS).

What is the Stark Law?

The Stark Law prohibits physicians from referring Medicare patients for designated health services to any entity with which the physician, or their immediate family member, has a financial relationship. In this law, “financial relationship,” is described as any direct or indirect ownership or investment interest. The Stark Law also prohibits the entity from submitting claims to Medicare for designated health services provided as a result of a prohibited referral.

What is the Anti-Kickback Statute (AKS)?

The AKS prohibits offering, paying, soliciting, or receiving anything of value (referred to as remuneration) to induce or reward patient referrals or generate any federal health care program business involving any item or service payable by federal health care programs. Examples of remuneration referred to in this law could include anything from cash payments and paying for expensive hotels and meals to excessive compensation for medical directorships.

Distinctions Between AKS and Stark Law

Although these laws are similar in the ways they address remuneration related to improper referrals, there are several distinctions between them:

1. The Stark Law is only a civil enforcement statue, whereas the AKS includes both civil and criminal
2. The Stark Law only includes penalties for referrals specifically from physicians providing designated health services paid for by Medicare, but the AKS applies to referrals from any source with services paid for by either Medicare or any other federal health care
3. The Stark Law is a strict liability statute, meaning there is no requirement to provide proof of the physician’s intent to violate the law. On the other hand, the AKS requires that intent of violating the law must be proven as knowing and
4. The Stark Law has mandatory exceptions, such as the Fair Market Compensation Exception or the In-Office Ancillary Services Exception, and the AKS only has voluntary safe harbors that can protect certain payment and business practices that would otherwise violate the law.

Consequences of Stark Law and Anti-Kickback Statute Violations

One of the major differences between the Stark Law and the AKS is the type and degree of each law’s associated penalties. Given that the AKS includes both civil and criminal penalties, and that intent of violating this law has to be proven, the consequences are more severe than those of the Stark Law. Civil penalties of the AKS include False Claims Act liability, civil monetary penalties (CMP) and program exclusion, up to $50,000 CMP per violation, and civil assessment of up to three times the amount of kickback. If the AKS is addressing criminal penalties, the consequences include fines up to $25,000 per violation and up to a five-year prison term per violation.

Stark Law consequences may not be as severe as the AKS, but they can still cost physicians much more in damage than they might have been receiving in reward to begin with. Civil penalties for the Stark Law include overpayment/refund obligation, False Claims Act liability, civil monetary penalties and program exclusion for violations where there was an intent, up to $15,000 CMP for each service, and a civil assessment of up to three times the amount claimed.

How to Ensure Compliance with Stark Law and Anti-Kickback Policies and Procedures

Although the consequences of violating these laws are no small matter, there are many policies, procedures, and practices available to help health care organizations remain compliant with both the Stark Law and the AKS. The most overarching way organizations can maintain compliance with these laws is by ensuring their compliance programs are effective and operating as recommended by the Department of Health and Human Services Office of Inspector General (OIG). In the OIG’s Compliance Program Guidance documents¹, there are seven key elements of an effective compliance program including:

• Implementing written policies, procedures and standards of conduct.
• Designating a compliance officer and compliance committee.
• Conducting effective training and education.
• Developing effective lines of communication.
• Conducting internal monitoring and auditing.
• Enforcing standards through well-publicized disciplinary guidelines.
• Responding promptly to detected offenses and undertaking corrective action.

The most notable of these elements as it relates to compliance with the Stark Law and the AKS is implementing written policies, procedures and standards of conduct. By following necessary policies and procedures for these laws, health care organizations can avoid instances of improper referrals and other remuneration fraud or abuse. Compliance Resource Center’s Policy Resource Center (PRC) is a beneficial resource for health care organizations that want to make sure they have the right policies and procedures in place to stay compliant with the Stark Law and the AKS.

The PRC houses hundreds of customizable policy and procedure templates that cover Stark Law and AKS, along with a variety of other compliance topics. Included under documents and templates for these laws, the PRC has policies for gifts, joint ventures, patients, physician arrangements, physician recruitment, safe harbors, and vendor relationship. Health care organizations can explore these topics in depth in the PRC to bolster their compliance program’s effectiveness and remain compliant with federal fraud, waste, and abuse laws.

AKS and Stark Law Compliance: In Review

Health care organizations are required to comply with the Stark Law and AKS to prevent occurrences of fraud, waste and abuse in the workplace and in compliance operations. These laws both address improper patient referrals resulting from rewards, remuneration or financial gain of any kind, but they also have detailed components that are specific for each law. One such component is the different consequences that the organization, physician, or other entity will face should either law be violated. However, organizations can easily avoid violations of the Stark Law and AKS by implementing proper policies and procedures and by following the OIG’s guidance on operating an effective compliance program. Combining these practices can protect health care organizations from future violations of the Stark Law, AKS, and other laws that the OIG has mandated.

1 https://oig.hhs.gov/authorities/docs/cpghosp.pdf