Stark and Physician Self-Referral Laws
Stark Laws, also known as the Ethics in Patient Referrals Act, prohibit physician self-referrals. These laws are codified at 42 U.S.C. Sec. 1395 nn and 42 C.F.R. Sec. 411.350 – 389. A physician self-referral occurs when a physician refers a patient to another entity (e.g. one which provides lab services or therapy services) with which the physician has a financial relationship. Stark generally prohibits two activities:
- Physicians making referrals for designated health services to entities with which they or their immediate family have a financial relationship; and
- Entities billing Federal health care programs for any such improperly referred services.
The theory behind the statute is that because a physician will benefit financially from the referral, the physician may refer patients without sufficient medical justification, and, as a consequence, order either duplicative or unnecessary services for the medical issues presented. This practice could result in increased health care costs and over-utilization of medical services. Moreover, self-referrals could also limits competition among local health care providers, resulting in a potential decrease in the quality of health care services.
