The physician self-referral law, or Stark Law, generally forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital unless that relationship falls within an enumerated exception. When faced with concerns of possible Stark Law violations, some hospitals have been too quick to seek cover under a supposed Stark Law exception, without first digging deeper into the underlying financial arrangements.

Most of the Stark Law exceptions have specific requirements mandating that the financial arrangements do not exceed fair market value and do not take into account the volume or value of any referrals and are commercially reasonable. Stark Law violations typically infect an entire hospital, for hospitals tend to recycle contract language when signing up a new community-based physicians or practice groups.

California-based Tri-City Medical Center recently self-disclosed to the government that it had allegedly maintained improper financial arrangements with 97 different community-based physicians and practice groups. The list of providers included a wide spectrum of specialties, ranging from cardiology to anesthesiology.

Unfortunately, some hospitals do not self-disclose when they uncover similar Stark Law violations. In those instances, the False Claims Act provides handsome whistleblower rewards to encourage private citizens to step forward and expose this costly wrongdoing.

More information for whistleblowers is located at the Nolan Auerbach & White website.