Stark Law History
The Stark Law, named after Congressman Pete Stark, is actually three separate provisions governing physician self-referral for Medicare and Medicaid patients. Physician self-referral is when a physician refers a patient to a medical facility in which s/he has a financial interest. Critics allege an inherent conflict of interest could encourage over-utilization of services and creates a captive referral system, limiting competition. Opponents believe that while problems exist, they are not widespread and contend that physician investors are responding to a demonstrated need, which would not be met otherwise in underserved markets.
Stark Law banning self-referrals went into effect January 1, 1992. Later, known as Stark II, the ban was extended to other services and programs. It also contained clarifications and modification to the exceptions in the original law. Minor technical corrections to these provisions were included in the Social Security Amendments of 1994.
Stark III was published on September 5, 2007 and went into effect later that year. Stark III included two major changes, which included the repeal of the prohibitions based on compensation arrangements and the reduction in the list of services subject to the ban. Since 2007, the Stark Law has been amended slightly.
Penalty violations of Stark Law include:
- The denial of payment for the DHS provided;
- Refund of monies received by physicians and facilities for amounts collected;
- Payment of civil penalties of up to $15,000 for each service that a person “knows or should know” was provided in violation of the law and three times the amount of improper payment the entity received from the Medicare program;
- Exclusion from the Medicare program and/or state healthcare programs including Medicaid; and
- Payment of civil penalties for attempting to circumvent the law of up to $100,000 for each circumvention scheme.
Multiple federal entities oversee enforcement of Stark Law: The Department of Justice, CMS and the Department of Health and Human Services. In recent years, enforcement of Stark Law has grown increasingly aggressive. 2014 saw some of the largest Stark Law violation settlements. In June 2015, the Office of the Inspector General issued a fraud alert targeting physician compensation arrangements with hospitals and health systems.
Hospitals have multiple physician contracts—medical directorships, on-call, teaching, research and co-management. Contracts between physicians and hospitals must fit within the seven rules for Stark Law and the Anti-Kickback Statute in order to fully alleviate risk of violation. The contract must:
- Have a duration of at least a year;
- Be in writing and signed by both parties;
- Specify aggregate payment which is set in advance;
- Be reasonable and of fair market value;
- Not relate to volume or value of business;
- State the exact services to be performed; and
- Be commercially reasonable.
Often physician contracts are monitored manually for compliance with logging of physician work hours kept on paper. Most Stark Law violations are the result of technical non-compliance. The majority of the technical errors do not occur because the contract was not set up correctly; they occur because of process failures. These technical violations are because the hospital did not technically follow the agreement. A few of these technical violations include:
- Compensation paid past the monthly maximum;
- A physician continues to turn in time logs and the hospital pays long after the contract ends;
- The annual maximum payment limit is exceeded, yet payments continue;
- A physician turns in incomplete or duplicate time logs;
- The physician documents a duty on a time log requesting payment that is excluded from the contract;
- A physician is paid for the same duty in two different contracts, resulting in overpayment;
- Time logs are not examined against the contracted duties so physicians are paid for services not within the agreement;
- The amount of time allowed for submission is exceeded, yet the time is paid; and
- The wrong party is remitted payment.
Technology to the Rescue
Many healthcare experts agree that technology is necessary to streamline hospital processes, including those relating to compliance and Stark Law. Technology solutions exist that specifically automate and validate physician time logging, which virtually eliminates noncompliance with Stark Law.
Physician agreements are so complex that ensuring compliance through manual oversight is nearly impossible. Thus, automating the processes helps in following the contract rules. According to Becker’s Hospital Review, one hour sifting through 50 paper physician time logs and payments will result in a finding of at least one of the technical violations above. Payments are being made incorrectly because the processes are complex, time-consuming and manual. Remember, today’s settlements are simply not a result of an incorrect contract set up, but due to the inability to follow the precise rules within the contract.
Leveraging a physician timekeeping app can help minimize the risk of contract and Stark Law noncompliance. Software that digitally logs physician time and duties, and includes an electronic signature can greatly reduce risk. Physician compliance software should provide a process that ensures oversight, meaning, that it will remind physicians to complete their logs, disallow late entries or reject over payments, identifies which agreement time is being submitted and has a review and approval process that includes an audit trail. Plus, it should be accessible on desktop and mobile devices, providing physicians with end to end flexibility and mobility.
With this level of physician time tracking automation, Stark Law technical violations are almost impossible and contract adjudication is fast, easy and streamlined. With an automated repeatable process to capture physician logs, review and reject/approve submissions, and access to a digital audit trail, the Stark Law will no longer be a threat to physician contract compliance.
Dynafios has developed a cost-effective physician contract compliance tool specifically created to provide a repeatable process to track and submit time in accordance with physician contracts—directorships, on-call, co-management and more. Dynafios TRACE is an easy to use physician timekeeping app that accommodates the busy schedule of any physician. TRACE offers untethered mobility with any smart device, takes seconds to use and affords the transparency desired by both the physician and the hospital. For more information on TRACE or for a demonstration, please email firstname.lastname@example.org or call 877.858.3282.