⚖️ Stark Law vs. Anti-Kickback Statute: What Small Healthcare Providers Need to Know
📚 What Is Stark Law?
The Stark Law (also called the physician self-referral law) prohibits physicians from referring patients for certain designated health services (like labs, imaging, or therapy) to entities in which they—or an immediate family member—have a financial relationship, unless a specific exception applies.
Key Concepts:
Applies only to physicians and their Medicare/Medicaid patients
Only applies to designated health services (DHS)
Violations don’t require intent—strict liability
Must meet a statutory exception to be allowed
💰 What Is the Anti-Kickback Statute (AKS)?
The Anti-Kickback Statute is a broader criminal law that prohibits offering, paying, soliciting, or receiving anything of value to induce or reward referrals for services covered by federal healthcare programs.
Key Concepts:
Applies to anyone involved in a referral (not just physicians)
Covers all types of remuneration (cash, rent, bonuses, gifts)
Intent-based—violations require “knowing and willful” conduct
Has regulatory safe harbors that protect compliant arrangements
⚠️ Stark Law and AKS Violation Examples
Small and midsized healthcare organizations often get into trouble without realizing it. Here are some real-world examples:
A physician refers patients to a diagnostic lab where they own shares
A clinic offers “referral bonuses” to staff or community providers
A practice waives copays regularly to increase patient satisfaction
Two providers share office space without a written lease or FMV rent
A group practice pays a contractor based on the volume of referrals
🚨 Penalties for Violating Stark Law or AKS
Violations of these laws carry significant consequences—even for unintentional noncompliance.
Stark Law Penalties:
Civil fines up to $15,000 per service
Denial of payment for DHS claims
Exclusion from Medicare/Medicaid
AKS Penalties:
Criminal charges, including up to 10 years in prison
Civil monetary penalties up to $100,000 per violation
False Claims Act liability (including treble damages)
Important: Even an innocent mistake can trigger investigations if your contracts or referral relationships aren't compliant.
✅ How Small Providers Can Stay Compliant
You don’t need a massive compliance department to avoid risk. Here's how to stay on the right side of Stark and AKS:
✔️ Legal & Financial Relationships
Review all referral and ownership arrangements
Document fair market value (FMV) for all compensation and rent
Avoid any compensation tied to volume or value of referrals
✔️ Marketing & Operations
Don’t offer or accept gifts, bonuses, or perks in exchange for referrals
Train staff to recognize the difference between marketing and kickbacks
Ensure all leases, contracts, and consulting agreements are in writing
✔️ Safe Harbors & Exceptions
Familiarize yourself with safe harbors (AKS) and exceptions (Stark)
Use written agreements and standardized terms
Get legal help before entering into joint ventures, co-location deals, or shared services
💡 Final Takeaway
If you bill Medicare or Medicaid, Stark Law and the Anti-Kickback Statute apply to you—even if you’re a solo practice, therapist, or specialist group. But that doesn’t mean you can’t run a profitable and compliant practice.
With smart planning, proper contracts, and regular reviews, you can build strong referral relationships without legal risk.
Have a referral or ownership arrangement you're unsure about? Let’s take a look. A short review today could prevent major problems tomorrow.
Hurley Law Group
Healthcare Law for Small & Midsized Providers
📞 308-383-1867
🌐 hurleylawgroup.com
✉️ eric@hurleylawgroup.com