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Physician Conflicts of Interest and Healthcare Quality and Costs: The Stark Law

Physician Conflicts of Interest and Healthcare Quality and Costs: The Stark Law

The complexity of the Stark Law requires substantive compliance measures to apply and enforce.

The healthcare industry continues to grow in complexity: Spiraling healthcare costs. Vendors outsourcing hospital services, such as imaging, rehab, testing, and dialysis. Hospitals looking for new ways to control costs and increase patient outcomes. These dynamics have squeezed physician compensation due to cost management, leading them to look for new ways to augment their income.

As physicians enter relationships with other healthcare providers, questions arise from hospitals, patients and payers about overutilization of services, compromised healthcare decisions, higher costs, and possibly unfair competition that favor vendors with the physician relationships.

In response to these and other issues, legislatures have enacted or ramped up focus on several rules to address patient and insurer concerns that also help to manage healthcare fraud, waste and abuse. These include the Physician Payments Sunshine Act, Anti-Kickback Statute, False Claims Act, and several state laws.

One of these laws is the Ethics in Patient Referral Act, better known as the Stark Law. Like the other rules, it addresses physicians’ potential conflicts of interest when they refer patients to outside entities for healthcare services and where the physician may financially benefit.

The Stark Law’s purpose is to encourage transparency in physician relationships, push physicians to make informed decisions on patient care, and help hospital staff working with physicians identify possible conflicts. The law covers:

  • Physician relationships with outside entities
  • Nature of relationship/benefits to physicians, including group practices
  • Referrals to outside healthcare entities
  • What constitutes a designated health service
  • Exceptions to the Stark Law

Further, the Stark Law requires certain compliance measures of a physician and hospital to ensure compliance, principally that physicians disclose relationships with outside entities to which they make patient referrals for designated health services and in which they have a relationship that qualifies under the Stark Law.

The Stark Law is complex and requires substantive compliance measures to apply and enforce. The hope is that it is another step to improve healthcare outcomes and control costs by helping physicians avoid conflicts of interest, assist hospital staff with transparency and review of physicians’ potential conflicts, and ultimately provide patients with better care and insurers and Medicare with improved pricing.

To develop this training, Syntrio worked with Bob Wade, a partner at Nelson Mullins and a noted expert in healthcare compliance, specifically the Stark Law. Bob advises clients on fraud and abuse issues, fair market value, commercial reasonableness and developing, monitoring, and documenting effective healthcare compliance programs. He has served as both a healthcare compliance officer and as a corporate legal counsel regarding the Stark Law and other fraud compliance.

Learn More About Employment Law.

Jason has worked in ethics and compliance for over twenty-five years, consulting with Fortune 500™ companies across the business ethics and compliance spectrum, including assessing and strengthening corporate values initiatives, instituting leadership engagement efforts, developing and revising codes of conduct and policies, designing and implementing related procedures, developing monitoring systems, conducting risk, culture and program assessments.

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