07/28/2025    Lawrence Rubin, DPM

How you much do you know about the Stark (self-referral) laws?

In a recent poll, many practicing podiatrists were
unclear about the requirements of the Stark Law.
So, I asked AI for its take on the Stark Law
essentials podiatrists should know. Here is AI's
reply:

"The Stark Law, also known as the Physician Self-
Referral Law, is a complex federal law that
impacts physicians, including podiatrists, who
refer patients for Designated Health Services
(DHS) payable by Medicare or Medicaid to entities
with which they (or their immediate family
members) have a financial relationship. The law
aims to prevent potential conflicts of interest
that could lead to unnecessary healthcare services
and increased costs to the Medicare program.

Here are some key essentials podiatrists should
understand about the Stark Law:

*Prohibition on self-referrals: Podiatrists cannot
refer patients for DHS to an entity where they (or
a family member) hold a financial interest, unless
a specific exception applies.

*Defining financial relationships: Financial
relationships include both ownership/investment
interests and compensation arrangements. This
could involve owning a part of a podiatry practice
that also provides DHS, being employed by an
entity that provides DHS, or having a contractual
arrangement for services where referrals are made.

*Designated Health Services (DHS): The Stark Law
applies only to certain services defined as DHS,
such as clinical laboratory services, physical
therapy, durable medical equipment, and
prosthetics, orthotics, and prosthetic devices and
supplies. It's crucial for podiatrists to be aware
of the full list of DHS to ensure compliance.

*Strict liability: A key aspect of the Stark Law
is its "strict liability" nature. This means that
a violation can occur even if there was no intent
to defraud, unlike the Anti-Kickback Statute
(AKS), which requires "willful knowledge". This
makes strict compliance with the law and its
exceptions critical.

*Importance of exceptions: The Stark Law includes
numerous exceptions to accommodate legitimate
business arrangements. However, each exception has
specific requirements that must be met to avoid a
violation. Examples of exceptions include bona
fide employment relationships, in-office ancillary
services (with strict conditions), and fair market
value compensation arrangements.

*Consequences of violation: Non-compliance can
lead to serious penalties, including civil
monetary penalties, significant financial losses
due to refunds for improper payments, and
potential exclusion from Medicare and Medicaid
programs.

*Documenting and auditing compliance: Podiatrists
and their practices should maintain detailed
documentation of all financial arrangements and
referrals to demonstrate compliance. Regularly
auditing these arrangements can help identify and
address any potential issues proactively.

*Seeking legal counsel: Given the complexity of
the Stark Law and the severity of potential
penalties, consulting with a healthcare attorney
is highly advisable for podiatrists to ensure
compliance with the law and navigate its nuances
effectively."

Lawrence Rubin, DPM, Las Vegas, NV

Other messages in this thread:

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07/30/2025    Paul Kesselman, DPM

How you much do you know about the Stark (self-referral) laws? (Lawrence Rubin, DPM)

Dr. Rubin's remarks have come after a wonderful
article by Dr. Koback (also a JD) appeared in the
most recent issue of Podiatry Management and after
a follow up joint clarification by Dr. Koback and
me about two issues with Stark, which cannot be
overemphasized. I am stating these as best I know
them and I am sure the attorneys who write here
almost daily will be sure to correct me if
anything I state below is wrong: My intent is
purely to make sure that Dr. Rubin's AI summary is
not incorrectly interpreted and thus here are some
simple, what I believe to be facts about Stark
every physician should know (and have already been
stated either in Dr Kobak (also JD) article or in
our joint recent letter to PM News.

Designated Health Services are the primary target
of Stark rules and regulations, but here is where
it gets tricky:

1) Not all DME is considered Designated Health
Services (DHS) and not all DHS are DME. For
example, surgical dressings while considered DME
are not listed as DHS. Radiology is just one
example of a DHS, but it is not DME. As stated,
Designated Health Services are subject to Stark
rules. If however, you provide those DHS yourself,
those are mostly exempt from Stark, if you refer
them to another entity and you are billing for
those items, that is an issue. It certainly
becomes a bigger issue if you are referring to
another company to which you or a close relative
owns. Those are subject to Stark.

An example which rings true in the podiatry world
is with surgical dressings for which you are
billing. If you have a distributor mail them to a
patient, since dressings are NOT DHS, then there
is no Stark Violation. If on the other hand, you
had a CAM walker shipped to the patient from a
distributor and you are the billing entity,
because the orthotic (CAM boot) is a DHS, that is
a NO-NO. If you dispense it in your office that is
fine, if your employee (medical assistant)
provides it and in particular you are not in the
office, that is a potential DHS violation and thus
an issue with Stark.

2) If you are in private practice and are
providing the above services to your own patients
as ancillary services, that is perfectly fine.
Thus, if you are taking x-rays in your own office,
or providing DME in your own office to your own
patients as part of the medical care they are
receiving from you and you are supervising those
services, they are mostly exempt from the Stark
self-referral rules.

The whole point of this complex dissertation is:
1) If you yourself are providing services to your
own patients as part of their care, then you are
fine.

2) If you are referring to another entity for
those services and you or a close relation (see
CMS' definition) has a part ownership, that is
problematic.

3) There are a myriad of healthcare attorneys out
there who are well versed in Stark.

4) Providing DHS for other providers' patients
without those patients becoming your patients, may
also be a Stark or other violation.

Example is simply filling an Rx for surgical
dressings or cam boots because your colleague a
few blocks away is not a DME provider and they
come to you just to have the Rx filled. That is
more than just a Stark issue it also becomes an
issue for the DME accreditation exemption.
Certainly, if you bill for those items and share
the remuneration with the other provider, that
becomes an even greater infraction on possibly
other levels.

With private equity groups becoming more popular
and the Stark rules having been written quite some
time ago, there has been a push by many for
changes in these regulations. Thus, it is
extremely important to ask questions to the right
Health Care Attorney's particularly when providing
DHS and when you are contemplating investing in
other medically-related income generating sources.

Bottom Line: Don't take my word or anyone else's
word on these issues, in particular if you are
receiving income from other sources which is
derived as a result of you referring patients
elsewhere. Those are potential Stark nightmares.
And as laws evolve, more than ever, legal advice
is highly recommended.

Paul Kesselman, DPM, Oceanside, NY