In September and October, the Department of Justice (DOJ) announced four record-breaking False Claims Act settlements – ranging from $25 million to $115 million – involving health care systems that allegedly made improper payments to referring physicians in violation of the Stark Law. The DOJ press release for each of the settlements can be accessed here: Columbus Regional Healthcare System, North Broward Hospital District, Adventist Health, and Tuomey Healthcare System. While the specific facts and circumstances giving rise to these settlements is different in each case, the allegations in each of these settlements involved above fair market value payments to the referring physicians and payments which allegedly reflected either directly or indirectly the volume or value of the physicians DHS referrals to the health care system, both of which are prohibited by the Stark Law. With the continued focus of the government on investigating and prosecuting matters involving compliance with the Stark Law, health care systems entering into compensation arrangements with referring physicians must have robust processes in place to ensure that the compensation arrangements – at the time that they are structured and during the course of the arrangement – don’t run afoul of the Stark Law.
There are several applicable Stark Law exceptions for arrangements between health care systems and employed physicians and independent contractor physicians, as well as specific rules for compensation arrangements with physicians who are employed by a group practice. A comprehensive discussion of all of the requirements of each of the applicable exceptions is beyond the scope of this post. With that in mind, though, there are certain core requirements that health care systems should consider addressing when developing processes designed to ensure that compensation arrangements with referring physicians comply with the Stark Laws. These requirements include the following:
Ensuring that physician compensation arrangements comply with the Stark Law is no easy task. There are design, implementation and ongoing monitoring requirements, all of which present unique challenges not only from a legal perspective, but also from an operational perspective. As evidenced by the recent DOJ settlements, the risk of non-compliance is significant, again reinforcing the importance of assuring that the legal, business, finance and operations teams coordinate their efforts to manage this risk.