Stark Law overview and implications

Stark Law is a legislation that is named after Pete Stark, a United States Congressman who sponsored the initial bill on three different provisions. Generally, this legislation is also known as the physician self-referral law as it emanates from Section 1877 of the Social Security Act (the Act). The law is an amendment to the Social Security Act that forbids physicians involved in a self-referral when referring patients to seek for certain services elsewhere. Self-referral by physicians can be described as the practice of these health professionals to refer patients to a medical facility where they have investments, financial interest, structured compensation plans, and ownership.

Description and Purpose of the Law:

As an important legislation, the Stark Law is a piece of regulations that basically governs three separate provisions. The three separate provisions basically entail self-referrals, Medicare claims, and regulatory exceptions for financial relationships. Under self-referrals, the Stark Law forbids a physician from making referrals for some designated health services that are covered by Medicare to a facility that he/she has some relationship or interests. The physician is banned from making such referrals to an entity where he/she or an immediate family member has interests or financial links on ownership, compensation, or investment unless there is an applicable exception.

Secondly, the legislation bans the health care entity from presenting or stimulating the presentation of claims to Medicare for the referred services. Some of the prohibited claims to Medicare include billing another person, entity or third party payer. Third, the regulation has established certain exceptions and provided the Secretary the power to develop regulatory exceptions for financial relationships that aren't risky to patient of program abuse.

Following its enactment, the Centers for Medicare and Medicaid services has established comprehensive regulations that are geared towards illuminating the limits of the Stark Law. Moreover, physicians and designated health services entities have been provided with some flexibility because of the exceptions to the general rule forbidding self-referrals. While the regulatory scheme managing self-referrals is comprehensive and complex, it has costly consequences for non-compliance ("The Stark Law," p. 1). Consequently, physicians and entities providing designated health services need to be carefully plan their relationships and seek for help in establishing compliance with the law.

The main purpose of the Stark Law is to govern self-referrals by physicians in order to prevent the occurrence of and address potential conflicts of interest. To ensure that it deals with the conflicts effectively, the legislation has undergone several phases of amendments that establish and expand restrictions and exceptions.

Pros of the Stark Law:

The enactment of the Stark Law has several advantages because of its provisions that focus on addressing several aspects in health care services. Some of these advantages include & #8230;

Effective Governance of Physicians Referrals:

Through the establishment of regulations that govern physicians' referrals to designated health services entities, the Stark Law has been able to establish effective governance procedures regarding these practices. This has largely been achieved through ensuring that physicians and these entities are carefully in planning their relations and seek for professional assistance when necessary.

Helps in Addressing Conflicts of Interest:

The other main advantage of the Stark Law is that it helps in addressing the conflicts of interest that may arise during physician's referrals. Through establishing effective governance procedures for physician's referrals, the legislation has helped in dealing with issues that come from referrals to entities where the physicians have investments, ownership, and compensation.

Prevents Referrals Based on Self-Interest:

Since the legislation governs physicians' referrals, it helps in preventing referrals that are centered on selfish interests. Physicians are mainly prevented from referring patients to entities in which they will reap financial incentives or gains from Medicare patients.

Cons of the Stark Law:

Despite of its several advantages, the Stark Law also has some disadvantages that basically emanate from its application including & #8230;

Contributing to over-utilization of Services:

The legislation leads to over-utilization of services since there is a likelihood of referrals that are not clinically necessary, increasing healthcare costs, restricting competition among providers, and placing the health of patients at risk ("Anti-Kickback, Stark," p.12).