The Stark Regs (1) forbid doctors and their immediate family members from referring their patients to businesses they own which provide “designated health services,” and (2) contains a long list of permitted financial relationships between health care providers. The list of what constitutes a “designated health service” (DHS) includes PT, rehab, diagnostic imaging, clinical lab, DME, and home health. A “physician” means an M.D., D.O., chiropractor, podiatrist, optometrist or dentist. An “immediate family member” is a husband or wife; birth or adoptive parent, child, or sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild. In short, if you or your family member owns a DHS, don’t refer to it. Unless of course your situation falls within one or more of the gazillion exceptions.
A few key changes from the third set of revisions (so called Stark III) which affect physicians are helpful to keep in mind. For instance, the way fair market value of physician compensation is determined in the Stark II regs has been simplified and now depends on an amorphous consideration of the transaction, its location and other factors. The clear formulas contained in Stark II was dropped and this makes the need for an expert FMV study even more compelling. Continue reading →