{"id":15485,"date":"2022-06-17T10:10:26","date_gmt":"2022-06-17T10:10:26","guid":{"rendered":"https:\/\/www.medicalbillersandcoders.com\/blog\/?p=15485"},"modified":"2025-07-28T03:35:46","modified_gmt":"2025-07-28T03:35:46","slug":"understanding-physician-self-referral-law-stark-law","status":"publish","type":"post","link":"https:\/\/www.medicalbillersandcoders.com\/blog\/understanding-physician-self-referral-law-stark-law\/","title":{"rendered":"Understanding Physician Self-Referral Law (Stark Law)"},"content":{"rendered":"<h2><strong>Physician Self-Referral Law (Stark Law) Basics<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">The Physician Self-Referral Law, commonly referred to as the Stark law, prohibits physicians from referring patients to receive Designated Health Services (DHS) payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship unless an exception applies. Financial relationships include both ownership\/investment interests and compensation arrangements. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The term Stark Law refers to former U.S. Representative Pete Stark of California, who originally introduced the physician ethics bill in the late 1980s that would later evolve into this law. At that time, healthcare services were provided mostly on a fee-for-service basis, meaning that healthcare providers (HCPs) were paid a predetermined amount for each type of service performed, rather than the current value-based system that focuses more on patient outcomes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The fee-for-service healthcare delivery system encouraged physicians to focus on the number of procedures, patients, and claims filed versus how well the patients\u2019 health goals were being met by these services. While the Stark Law originally only applied to physician referrals for clinical laboratory services, it has since been expanded to include a variety of health services and provider types. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, if you invest in an imaging center, the Stark law requires the resulting financial relationship to fit within an exception or you may not refer patients to the facility and the entity may not bill for the referred imaging services. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The following items or services are Designated Health Services (DHS):<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Clinical laboratory services.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><a href=\"https:\/\/www.medicalbillersandcoders.com\/speciality\/physical-therapy-medical-billing-services.html\">Physical therapy services<\/a>.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Occupational therapy services.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Outpatient speech-language pathology services.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Radiology and certain other imaging services.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Radiation therapy services and supplies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><a href=\"https:\/\/www.medicalbillersandcoders.com\/speciality\/durable-medical-equipment-medical-billing-services.html\">Durable medical equipment<\/a> and supplies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Parenteral and enteral nutrients, equipment, and supplies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Prosthetics, orthotics, and prosthetic devices and supplies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Home health services.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Outpatient prescription drugs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Inpatient and outpatient hospital services.<\/span><\/li>\n<\/ul>\n<h2><strong>The Stark Law Consists of Three Components:\u00a0<\/strong><\/h2>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It prohibits healthcare providers from referring Medicare patients for certain health services to a business in which the physician has a financial or familial interest.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The law also prohibits the billing of Medicare or other insurance providers for health services when an improper physician referral is made.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Finally, the law establishes several exceptions to the two provisions above and grants the secretary of the Department of Health and Human Services the authority to create specific exceptions for referrals to entities or medical provider businesses that will not result in a conflict of interest.<\/span><\/li>\n<\/ol>\n<h2><strong>Penalties for Violating the Stark Law<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Covered healthcare providers who violate the Stark Law are strictly liable. Strict liability is a form of legal liability in which the individual who violated the law is held responsible, even if they had no intention of doing so and the court can find no fault or specific action that the practitioner did that resulted in the violation. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Any HCP, healthcare system, or hospital found at fault could be required to refund all payments for the improper amounts collected, to pay up to $15,000 per improper referral, and be excluded from all federal healthcare programs. If the violator is found to have done so intentionally, they could face civil penalties <\/span><span style=\"font-weight: 400;\">of up to $100,000 per violation. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Stark Law only applies to Medicare participants who receive a referral for a designated health service. This means that a referral for a private-pay (or even self-pay) patient would not fall under the law\u2019s requirements.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We shared summarised but crucial information about Physician Self-Referral Law (<a href=\"https:\/\/www.cms.gov\/Medicare\/Fraud-and-Abuse\/PhysicianSelfReferral\/Downloads\/FAQs-Physician-Self-Referral-Law.pdf\">Stark Law<\/a>) for your reference. You can even refer to the CMS document <\/span><span style=\"font-weight: 400;\">\u201cPhysician Self-Referral Law: Frequently Asked Questions\u201d<\/span><span style=\"font-weight: 400;\"> for a detailed understanding. <\/span><\/p>\n<p><a href=\"https:\/\/www.medicalbillersandcoders.com\/\"><b>Medical Billers and Coders (MBC)<\/b><\/a><span style=\"font-weight: 400;\"> is a leading medical billing company providing complete revenue cycle services. In case any assistance is needed for Medicare billing or submitting claims to private insurance carriers, contact us at <\/span><span style=\"font-weight: 400;\"><a href=\"mailto:info@medicalbillersandcoders.com\">info@medicalbillersandcoders.com<\/a>\/<\/span><span style=\"font-weight: 400;\">\u00a0 <a href=\"tel:888-357-3226\">888-357-3226<\/a>.<\/span><\/p>\n<h2>FAQs<\/h2>\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1753673530500\"><strong class=\"schema-faq-question\">1. <strong>What is the Physician Self-Referral Law (Stark Law)?<\/strong><\/strong> <p class=\"schema-faq-answer\">The Stark Law prohibits physicians from referring patients to receive Designated Health Services (DHS) payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship unless an exception applies. It is designed to prevent conflicts of interest in healthcare referrals.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1753673579242\"><strong class=\"schema-faq-question\">2. <strong>What types of services are considered Designated Health Services (DHS) under the Stark Law?<\/strong><\/strong> <p class=\"schema-faq-answer\">DHS includes a range of services, such as clinical laboratory services, physical and occupational therapy, radiology and imaging services, home health services, durable medical equipment, outpatient prescription drugs, and inpatient and outpatient hospital services, among others.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1753673600060\"><strong class=\"schema-faq-question\">3. <strong>Are there exceptions to the Stark Law&#8217;s restrictions?<\/strong><\/strong> <p class=\"schema-faq-answer\">Yes, the Stark Law includes several exceptions that allow referrals despite financial relationships. These exceptions must be strictly followed, and the financial relationship must fit within one of the allowed categories to avoid violating the law.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1753673620357\"><strong class=\"schema-faq-question\">4. <strong>What are the penalties for violating the Stark Law?<\/strong><\/strong> <p class=\"schema-faq-answer\">Healthcare providers who violate the Stark Law are subject to strict liability, meaning they can be held responsible even without intent. Penalties include refunding improper payments, fines up to $15,000 per improper referral, and potential exclusion from federal healthcare programs. Intentional violations can result in civil penalties of up to $100,000 per violation.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1753673638888\"><strong class=\"schema-faq-question\">5. <strong>Does the Stark Law apply to all patients and payers?<\/strong><\/strong> <p class=\"schema-faq-answer\">No, the Stark Law only applies to Medicare and Medicaid patients who receive a referral for a designated health service. Referrals for private-pay or self-pay patients are not covered under the Stark Law\u2019s requirements.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>Physician Self-Referral Law (Stark Law) Basics The Physician Self-Referral Law, commonly referred to as the Stark law, prohibits physicians from referring patients to receive Designated Health Services (DHS) payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship unless an exception applies. Financial relationships include [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":15486,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[92],"tags":[117,753,3472,4420,4418,4419,4421],"class_list":["post-15485","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-physicians-doctors","tag-medical-billers-and-coders-2","tag-medicare-billing","tag-medicare-or-medicaid","tag-physician-self-referral-law","tag-physician-self-referral-law-stark-law-basics","tag-the-stark-law","tag-understanding-physician-self-referral-law"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.8 (Yoast SEO v27.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Understanding Physician Self-Referral Law (Stark Law)<\/title>\n<meta name=\"description\" content=\"In this Blog, We shared summarised but crucial information 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The main goal of our organization is to assist physicians looking for billers and coders, at the same time help billing specialists looking for jobs, reach the right place.\",\"sameAs\":[\"https:\\\/\\\/www.medicalbillersandcoders.com\\\/blog\"]},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/www.medicalbillersandcoders.com\\\/blog\\\/understanding-physician-self-referral-law-stark-law\\\/#faq-question-1753673530500\",\"position\":1,\"url\":\"https:\\\/\\\/www.medicalbillersandcoders.com\\\/blog\\\/understanding-physician-self-referral-law-stark-law\\\/#faq-question-1753673530500\",\"name\":\"1. What is the Physician Self-Referral Law (Stark Law)?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The Stark Law prohibits physicians from referring patients to receive Designated Health Services (DHS) payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship unless an exception applies. It is designed to prevent conflicts of interest in healthcare referrals.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/www.medicalbillersandcoders.com\\\/blog\\\/understanding-physician-self-referral-law-stark-law\\\/#faq-question-1753673579242\",\"position\":2,\"url\":\"https:\\\/\\\/www.medicalbillersandcoders.com\\\/blog\\\/understanding-physician-self-referral-law-stark-law\\\/#faq-question-1753673579242\",\"name\":\"2. What types of services are considered Designated Health Services (DHS) under the Stark Law?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"DHS includes a range of services, such as clinical laboratory services, physical and occupational therapy, radiology and imaging services, home health services, durable medical equipment, outpatient prescription drugs, and inpatient and outpatient hospital services, among others.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/www.medicalbillersandcoders.com\\\/blog\\\/understanding-physician-self-referral-law-stark-law\\\/#faq-question-1753673600060\",\"position\":3,\"url\":\"https:\\\/\\\/www.medicalbillersandcoders.com\\\/blog\\\/understanding-physician-self-referral-law-stark-law\\\/#faq-question-1753673600060\",\"name\":\"3. Are there exceptions to the Stark Law's restrictions?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Yes, the Stark Law includes several exceptions that allow referrals despite financial relationships. These exceptions must be strictly followed, and the financial relationship must fit within one of the allowed categories to avoid violating the law.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/www.medicalbillersandcoders.com\\\/blog\\\/understanding-physician-self-referral-law-stark-law\\\/#faq-question-1753673620357\",\"position\":4,\"url\":\"https:\\\/\\\/www.medicalbillersandcoders.com\\\/blog\\\/understanding-physician-self-referral-law-stark-law\\\/#faq-question-1753673620357\",\"name\":\"4. 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