Stark Law and Anti-Kickback Basics for East Texas Physicians

Tyler is a regional health care hub, with hospitals, specialty groups, surgery centers, imaging centers and home health agencies all working together. Many of those relationships involve money changing hands. Two federal laws, the Stark Law and the Anti-Kickback Statute, decide whether those arrangements are legal.

The Stark Law

The physician self-referral law, known as Stark, generally prohibits a physician from referring Medicare patients for certain designated health services to an entity the physician, or an immediate family member, has a financial relationship with, unless an exception applies. Designated health services include lab work, imaging, physical therapy, home health and hospital services. Stark is a strict liability law, so good intentions are not a defense.

The Anti-Kickback Statute

The Anti-Kickback Statute makes it a crime to knowingly offer, pay, solicit or receive anything of value to induce or reward referrals of items or services paid by federal health care programs. It applies to anyone, not just physicians. Safe harbors protect certain arrangements that meet every requirement.

Where East Texas Providers Get Into Trouble

• Medical director and consulting agreements that pay above fair market value or are not in writing
• Office and equipment leases between referral sources at below-market rent
• Expired contracts that continue without renewal
• Joint ventures structured around referral volume
• Free services or perks given to referral sources

Staying Compliant

Put every arrangement in writing, set compensation at fair market value, track expiration dates, and review deals before they are signed. Lindsey Birdsong is Board Certified in Health Law by the Texas Board of Legal Specialization and spent five years as chief legal counsel and compliance officer for a regional health system.

Violations of these laws can also lead to False Claims Act liability. Read what Tyler providers should know about the False Claims Act.

Frequently Asked Questions

Does the Stark Law apply to commercial insurance?

Federal Stark applies to Medicare referrals, but Texas has its own laws, and many payor contracts impose similar rules. Arrangements should be reviewed with all payors in mind.

What is fair market value in a physician arrangement?

It is the value in an arm’s length transaction, not based on referrals. Many providers get an independent valuation for significant arrangements.

Talk With a Tyler Attorney

Reviewing a physician arrangement? Learn about our health care law services. Call Lindsey Birdsong, PC at (903) 595‑6297 or visit our contact page. Our office is at 2307 Dueling Oaks Drive, Suite 103, in Tyler.

This article is general information, not legal advice. Talk with an attorney about your specific situation.