“Those complications were added by high-priced lawyers who tried to build loopholes for their clients. The original law was pretty simple,” Stark said. “Basically it says anyone who takes a bribe or a split or a commission or a kickback in exchange for referring services gets five years or a $50,000 fine.”
The Stark law, he says, was supposed to go after people with bad intentions “who are soliciting referrals, and offering kickbacks and special rates. I think they should be put out of business.”
In practice, the Stark law operates nothing like what he described. What he outlined is actually closer to a different law called the anti-kickback statute.
HHS has filled hundreds of pages of text in the federal register in several rounds of regulations, with the most recent installment in 2007 bearing the title “Stark III.” It was greeted by physicians and hospitals with about as much warmth as someone meeting a Mafia hit man.
Today the Stark law prohibits doctors from referring Medicare patients to hospitals, labs and other physicians for healthcare services if the referring doctor has any direct or indirect financial relationship with that entity.
That definition makes illegal vast swaths of medicine performed in the current healthcare system. HHS officials have crafted 35 exceptions to the law, each of which carries its own detailed requirements. Most of the exceptions require that doctors receive only fair-market prices for their services, and that the agreements be written and signed, in advance, and that the pay not vary with the volume or value of those services.
Anyone caught violating the law must give back all the Medicare funds paid to the doctor, hospital or lab under the tainted arrangement, even if the violations were unintentional, because Stark is a “strict liability” statute that doesn't consider motive or knowledge of the law.
Got all that? For a more detailed explanation, see the American Medical Association's excellent “overview” of the law (PDF), which itself runs to 79 pages.
Stark has heard the critics' calls to repeal the Stark law over the years, and he says he's come to agree with them. “I would like to just go back to the old law,” he said.
But to the hospital executives who complain that the Stark law's penalties are too severe, he offers two observations. First, he's fine with stiff penalties because they work to discourage self-referrals across the entire industry, which many observers say help drive up the cost of U.S. healthcare.
But as to how those punishments came to be what they are today, he took no responsibility. “I didn't write those penalties,” he said. “You'd have to talk to someone in Health and Human Services. None of that was in the original bill, other than probably the five years or fifty thousand bucks.”
Follow Joe Carlson on Twitter: @MHJCarlson