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Stark Law: Important Change for Healthcare Group Practices

In December of 2020, the Department of Health and Human Services released a series of updates for the Stark Law, the set of regulations designed to prohibit the self-referral of medical professionals. While most of these updates occurred in 2021, recent updates just recently went into effect at the beginning of this year in order to accommodate the time needed for practice groups to make the necessary changes. These updates concern physician groups, their compensation for their designated health services (DHS), and dividing profits based on distinct services, commonly known as “pool-splitting.” If your practice is considered a group practice, these updates are crucial to understand in order to remain compliant.

What is the Stark Law?

The Stark Law refers to Section 1877 of the Social Security Act (the Act) (42 U.S.C. 1395nn), and is defined as a set of regulations that prohibit physicians from self-referring their DSH under federal law. To learn more about the Stark Law, its background, its importance, and possible penalties, click here.

Prevent a Stark Law Violation By Eliminating “Pool-Splitting”

Since its creation, no significant updates or modernizations have been made to the Stark Law until December of 2020, when the “Final Rule” was publicized. Most of the changes began in 2021, however, changes taking place in 2022 concern the revenue of physicians involved in group practices. Important information in order to remain compliant may require alterations in your practice’s compensation system. In order to prevent a stark law violation, keep in mind the following changes and information:

  • The updated regulations clarify that the common practice of “split-pooling” based on DHS is no longer allowed.
  • A group practice must first aggregate a group’s entire referral profits or the entire profits of a component of that group with no less than 5 physicians.
  • While it is considered compliant to use factors such as speciality when creating groups, keep in mind that all profits from these physicians, regardless of the DHS they come from, must be incorporated into the aggregation.
  • Different practice groups can have different ways of dividing DHS referrals as long as compensation remains consistent within the members of each group and physicians are not compensated due to “volume or value” of referrals.

A Stark Law Attorney Can Help Your Practice Group Remain Compliant

Updates to regulations can often be met with confusion or frustration. Consult with an experienced health care attorney in order to be fully confident that you are not misinterpreting any portion of the newest Stark Law updates. You will rest easy knowing you are not in danger of facing harsh penalties, such as potential heavy fines or exclusion from healthcare programs such as Medicare or Medicaid. Contact us to make sure your group is following the Stark Law correctly.