Stark Law

Stark Law is a set of United States federal laws that prohibit physician self-referral, specifically a referral by a physician of a Medicare or Medicaid patient to an entity providing designated health services ("DHS") if the physician (or an immediate family member) has a financial relationship with that entity.

The term "referral" means "the request by a physician for the item or service" for Medicare Part B services and "the request or establishment of a plan of care by a physician which includes the provision of the designated health service" for all other services. DHS includes "clinical laboratory services"; "physical therapy services"; "occupational therapy services"; "radiology services, including magnetic resonance imaging, computerized axial tomography scans, and ultrasound services"; "radiation therapy services and supplies"; "durable medical equipment and supplies"; "parenteral and enteral nutrients, equipment, and supplies"; "prosthetics, orthotics, and prosthetic devices and supplies"; "home health services"; "outpatient prescription drugs"; "inpatient and outpatient hospital services"; and "outpatient speech-language pathology services." A "financial relationship" includes ownership, investment interest, and compensation arrangements.

Stark Law contains several exceptions, including physician services, in-office ancillary services, ownership in publicly traded securities and mutual funds, rental of office space and equipment, and bona fide employment relationship. It is named for United States Congressman Pete Stark (D-CA) who sponsored the initial bill.

In 1988, Stark introduced an "Ethics in Patient Referrals Act" bill concerning physician self-referrals. Some of the ideas in the bill became law as part of the Omnibus Budget Reconciliation Act of 1990. In specific, what is referred to as "Stark I" prohibited a physician referring a Medicare patient to a clinical laboratory if the physician or his/her family member has a financial interest in that laboratory. It was codified in the United States Code, Title 42, Section 1395nn (42 U.S.C. 1395nn, "Limitation on certain physician referrals").

The Omnibus Budget Reconciliation Act of 1993 contained what is known as "Stark II" amendments to the original law. "Stark II" extended the "Stark I" provisions to Medicaid patients and to DHS other than clinical laboratory services.

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