Stark Law – Overview
Stark Law is a U.S. federal regulation that prohibits physician self-referrals for certain healthcare services that are paid for by Medicare or Medicaid, unless an exception applies.
Key Points:
Purpose: Prevent conflicts of interest and overutilization of healthcare services.
Applies to:
Physicians (MD, DO, dentists, podiatrists, optometrists, chiropractors, etc.)
Certain designated health services (DHS)
Penalties: Violation can lead to fines, repayment of claims, and exclusion from federal healthcare programs.
⚕️ Designated Health Services (DHS)
Under Stark Law, physicians cannot refer patients to entities where they have a financial relationship for these DHS:
Clinical laboratory services
Physical therapy, occupational therapy, and speech-language pathology services
Radiology and imaging services (MRI, CT, ultrasound)
Radiation therapy services and supplies
Durable medical equipment and supplies
Parenteral and enteral nutrients
Prosthetics, orthotics, and prosthetic devices
Home health services
Outpatient prescription drugs
💰 Financial Relationships Covered
Stark Law addresses two main types of relationships:
Ownership/Investment Interests
Physician has stock, partnership, or other ownership in a healthcare entity.
Compensation Arrangements
Physician receives payment for referrals or services provided.
🧾 Stark Law and Medical Coding
Medical coding plays a critical role in compliance with Stark Law:
Accurate CPT/HCPCS Codes
Codes must reflect the actual service provided.
Mis-coding can appear as overutilization or inappropriate referral.
Claims Submission & Billing
Only billable services under Stark Law exceptions should be submitted.
Incorrect coding may trigger audits or violations.
Audit and Documentation
Proper coding and documentation show services are medically necessary.
Supports compliance during OIG and CMS audits.
Identifying Prohibited Referrals
Coders can flag services that may violate Stark Law if referred improperly.
Example: Coding an MRI for a patient referred to an imaging center owned by the physician.
⚖️ Exceptions to Stark Law
Certain exceptions allow referrals even if financial relationships exist:
In-office ancillary services (services provided in the same office by the same group)
Bona fide employment relationships
Personal service arrangements
Certain ownership arrangements in hospitals
Non-monetary compensation under specified limits
🏗️ How Medical Coders Ensure Compliance
Verify documentation: Ensure every CPT/HCPCS code has corresponding clinical justification.
Check provider relationships: Confirm if the referring physician has a financial relationship with the service provider.
Use compliant billing software: Modern EHR and coding systems can flag potential Stark Law violations.
Education & training: Coders must be aware of Stark Law requirements and exceptions.
📌 Key Takeaways
Stark Law prevents self-referral of designated health services to avoid fraud and abuse.
Medical coding ensures proper billing, compliance, and documentation.
Accurate coding + awareness of financial relationships = reduced risk of Stark Law violations.
Coders, compliance officers, and healthcare providers must work together to maintain lawful billing practices.
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