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Stark in 30 seconds 

Basic Penalties for violations. The Stark law is commonly referred to as a “strict liability” law because it can be violated without any intention to do so. If a physician makes a referral that is prohibited by the law and no exception applies, the Stark law’s prohibitions and penalties can be imposed. Compliance with the law is mandatory.

Sanctions for violations of the Stark law include the following:

  • No billing -- under the Stark law, an entity furnishing a service as a result of a prohibited referral is not allowed to bill Medicare or Medicaid, the patient or any third party for the service. 
  • Refunds – the law provides that any payment received for a prohibited referral must be refunded. 
  • Denial of payment -- payment by Medicare or Medicaid for designated health services that are furnished in violation of the Stark law is also denied.

These sanctions are imposed on the organization or “DHS entity” that receives the prohibited referral and that bills Medicare for the service (i.e., the physician-owned medical practice, a hospital or another service provider).

In addition to the prohibition on billing and receipt of payment from Medicare for services furnished in violation of the law, Stark law violations can result in the following additional sanctions:

  • Civil money penalties of up to $15,000 per service may be imposed upon entities submitting claims in violation of the law, and those that fail to make required refunds; 

  • Penalties of up to $100,000 may also be imposed for “circumvention schemes” where physicians or entities enter into arrangements that have the principle purpose of ensuring referrals to an entity in violation of the law; and

  • Physicians and entities that violate the Stark law can also be excluded from participating in the Medicare and Medicaid programs.

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