Here are five recent Stark law updates and reports that physicians need to know:
CMS recently issued rare Stark law guidance for physician-owned hospitals
CMS recently issued a rare Stark law advisory opinion allowing a physician-owned hospital to relocate eight miles away and add an emergency department while retaining its “whole hospital” exception. Despite changes in location and services, CMS determined it remained the “same hospital” due to unchanged ownership, license, tax ID, patient base, and branding.
The hospital maintained physician ownership and its Medicare provider agreement as of Dec. 31, 2010 — a requirement to retain Stark law exemption. CMS has issued only 20 such advisory opinions since the process began, offering valuable compliance insights.
“Payment by a Physician” exception applies more broadly than thought
CMS clarified that the Stark law’s “Payments by a Physician” exception, which permits fair market value transactions like equipment rental, can apply even when other exceptions also do. Previously thought to be a last-resort exception, it now offers broader applicability.
This exception doesn’t require a written contract, duration or proof of commercial reasonableness, making it easier to satisfy than others. A past CMS typo contributed to misunderstanding about its use, which has now been corrected.
Physician imaging practices raise Stark law concerns
A study in the American Journal of Roentgenology found that office-based physicians self-interpreted 43.6% of 1.6 million imaging exams they ordered for Medicare patients in 2022. Radiologists reviewed just 36.4%, with many exams interpreted in-house by referring physicians.
Orthopedic and cardiology practices had the highest self-interpretation rates. Experts warn this practice may compromise diagnostic accuracy and call for federal policy reform
Stark law enforcement surged in 2024
In 2024, there was a surge in whistleblower-driven Stark law enforcement, with seven major indictments contributing to a record-breaking 979 qui tam lawsuits. False Claims Act settlements and judgments reached $2.92 billion by the end of the federal government’s fiscal year on Sept. 30 — an increase from $2.79 billion in 2023 and the highest total since 2021’s $5.69 billion.
ASC ownership deals must navigate Stark law carefully
ASC transactions face Stark law scrutiny, especially under the Anti-Kickback Statute. Key risks include:
- Overpaying for controlling interests — may be seen as referral incentives.
- Underpricing non-controlling interests — could favor referring physicians.
- Buyouts and practice expansions — must follow fair market value and uniform terms.
Independent valuations and compliance with safe harbor rules are essential to avoid violations.
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