Can Physicians Self-Refer Patients to a Company in Which the Physician Has a Financial Interest?

In general, a doctor — whether a chiropractor, dentist, pain management specialist, or uninsured/allied healthcare provider — is prohibited from making any referral to a person or entity that bills Medicare or Medicaid programs, and with which the physician has a financial interest.

This is referred to as physician self-referral, which is what the federal Stark Laws are aimed at preventing.

The penalties for violating Stark Laws are steep. They include:

• Civil monetary penalties up to $15,000 for each service that a person “knows or should know” was provided in violation of the Stark Law, and three times the amount of improper payment the entity received from the Medicare program.
• Payment of civil penalties for attempting to circumvent the Stark Law of up to $100,000 for each circumvention scheme.
• Exclusion from the Medicare program and/or state health care programs including Medicaid, as well as placement OIG Exclusion List.
• Payment recoupment to Medicare, Medicaid and/or commercial insurers.
• Denial of payment for the designated health service (DHS) provided.

CMS reports in its 2019 list of self-referral disclosure protocol settlements that 17 disclosures led to more than $1 million in total settlements, with each settlement ranging as high as $280,000.