Stark Laws Case Study The Stark Laws are three separate provisions that govern physician self-referral for Medicare and Medicaid patients, named after U.S. Congressman Pete Stark who first sponsored the legislation in the early 1990s. The idea for the laws came into place because of the practice of physician self-referral, or the practice of a doctor referring a patient to a medical organization in which they had some sort of financial interest. Critics of this practice believed that there was an inherent conflict of interest, not to mention a fiscal benefit to the physician, which might encourage over testing, use of procedures that might be more expensive than the market could bear, and/or because of the captive audience (the patient) provide undue pressure to use only those physician recommended providers and services (Law 2011).

Definition of the Issue- A group of physicians and medical professionals formed a new medical group called K. Street Internal Medicine. This group was to be located in the high-profile district of Washington, DC, primarily to serve the employed individuals who worked either for the government or for agencies that served the government. Since this is a high-end real estate market, they reasoned that if they could provide a well-rounded and comprehensive range of services, they would be able to better meet the needs of the population under consideration. Indeed, a number of the physicians, support staff, and ancillary service providers view the ability for K. Street to provide a broad range of services as integral to their participation in the organization, and even the organization's ability to become solvent.

There are, however, some questions and issues regarding K. Street's logistical...

These laws, designed to prevent undue collusion and unfair practices among the medical community, were designed primarily to ensure that Medicare and Medicaid billing practices remained legal and did not impinge on a physician's own benefit when providing ancillary services to the patient. K Street Internal Medicine wishes to create an in-house laboratory, physical therapy group, and additional specialists that may be under one roof -- and therefore under one set of ownership. The question is thus whether this would violate Stark and if so, what type of arrangement could be construed that would remain legal. Under the strict interpretation of the Stark Law, designated health services (DHS) include:
Clinical Laboratory Services

Physical or Occupational Therapy

Radiological Therapy

Other inpatient and Outpatient Services

Viewing this in a strict sense, then, would prevent K. Street from offering these services, at least in terms of any Medicare or Medicaid patient. However, this format is primarily used when dealing with a single physician's office that may make referrals to another physician's office or service outside their own practice- whether for profit or not. The Stark laws certain realize that at times, it makes more logistical, patient comfort, and financial sense for the practicing physician's office to offer some services at the point of contact with the patient (e.g. x-rays while at the office, etc.).

Since the letter of the Stark law deals with the physician referring the patient to another source in preparation for Medicare or Medicaid billing, there is also a set of exceptions for Group Practice. Group Practice…