Telehealth and Stark Law 

Telehealth has expanded rapidly in recent years, giving patients greater accessibility and convenience than ever before when it comes to taking charge of their health. With this massive growth and change, there are a number of legal complexities that those offering telemedicine have to stay on top of. One regulation that all medical practices, including telehealth providers, must consider is the Stark Law. This regulation has some unique intersections with telemedicine that may not be obvious. Here are ways that telehealth providers can stay in compliance. 

What Is The Stark Law?

The Stark Law, or Physician Self-Referral Law, prohibits physicians from referring patients for Medicare or Medicaid-covered “designated health services” to entities with which they or their family members have a financial relationship unless an exception applies. Financial relationships include ownership, investment, and compensation arrangements. Examples of designated health services include clinical labs, physical therapy, imaging services, and home health services. The law is a strict liability statute, meaning intent to violate is not required. 

Penalties under the Stark Law are civil rather than criminal. These include repayment of overpayments, civil monetary fines, and potential exclusion from federal healthcare programs. A Stark Law violation can also trigger liability under the False Claims Act (FCA).

How Might Telemedicine Providers Violate the Stark Law?

One of the primary ways telemedicine providers can violate the Stark Law is by engaging in improper referrals to entities with which they have a financial interest. For example, if a telemedicine provider refers a patient to a testing facility, laboratory, or specialist with which they have a financial arrangement, such as an ownership interest or a compensation agreement, they could be in violation of the Stark Law. Even if the provider believes the referral is for legitimate medical reasons, the existence of a financial relationship could lead to a breach of the law.

Another way telemedicine providers might inadvertently violate the Stark Law is through improper arrangements involving telehealth technology or services. For instance, if a telemedicine provider receives compensation from a telehealth platform or technology vendor and uses that platform to refer patients to other services or entities, this could create a conflict of interest. These compensation arrangements have to comply with the law’s exceptions, such as those for bona fide employment relationships or personal services agreements.

A common Stark Law violation occurs when telemedicine providers enter into compensation arrangements with physicians that are not based on fair market value or are tied to the volume or value of referrals. For instance, a telemedicine company might offer a physician inflated compensation in exchange for referring a certain number of patients to the company’s services. These types of incentive-based arrangements violate Stark Law, as they create a financial conflict of interest and encourage overutilization of healthcare services.

Failing to properly document financial relationships is another frequent way telemedicine providers can violate the Stark Law. For example, suppose a telemedicine practice might establish a contractual relationship with a specialist for consulting services but fail to create a written agreement that outlines the terms, scope of services, and compensation details. Without a formal, signed agreement that meets Stark Law exceptions, such as the personal services arrangement exception, the relationship may be considered non-compliant.

Staying In Compliance With The Stark Law 

In order to stay in compliance with the Stark Law, it is essential to consult with a telemedicine attorney who has extensive knowledge of the requirements of the Stark Law, particularly because violations can have significant financial repercussions. Here are some practices that a telemedicine organization can adopt or refine to prevent running afoul of this rule.

1. Collaborate and Communicate

Encourage open communication among healthcare professionals, administrators, and compliance officers to ensure a unified approach to compliance and address any potential issues early.

2. Conduct Regular Audits

Review all financial relationships, lease agreements, and other arrangements to ensure that they comply with Stark Law requirements. Regular audits help identify and mitigate risks.

3. Document and Report

Maintain thorough documentation and adhere to proper reporting practices to support compliance and provide evidence in case of audits or legal reviews.

4. Establish Internal Controls

Implement procedures for reviewing and approving contracts to ensure all arrangements meet legal and regulatory standards. This will reduce the likelihood of non-compliance.

5. Follow Safe Harbor Provisions

Ensure adherence to the seven key components of the Stark Law’s safe harbor provisions, which protect certain financial relationships from violation risks when properly followed.

6. Implement Written Agreements

Ensure that all compensation arrangements are clearly documented and reflect fair market value standards to avoid conflicts of interest or violations. Do not rely on oral or other informal agreements.

7. Maintain Transparency

Make sure that all financial transactions are transparent. This will help to prevent misunderstandings or unintentional violations of the Stark Law.

8. Monitor Provider Compensation

Verify that provider compensation is based on fair market value and is not influenced by the volume or value of referrals.

10. Train Staff

Provide regular training for staff to ensure they understand the Stark Law and its requirements, including updates to the law. Well-trained staff can help prevent violations and ensure ongoing compliance.

11. Understand and Apply Exceptions To Stark Law

Familiarize yourself with the Stark Law’s exceptions and how they apply to your telemedicine practice. Using these exceptions appropriately can help ensure compliance while allowing necessary financial arrangements.

Contact an Experienced Telehealth Attorney 

If you are a telehealth provider, ensuring compliance with the Stark Law is crucial to avoid legal pitfalls. Contacting an experienced telehealth attorney can help you navigate the complex regulations surrounding financial relationships and referral practices. They can assist in structuring your agreements to meet the law’s exceptions and to ensure that all arrangements are in compliance with the law. With expert legal guidance from a telehealth attorney, you can reduce the risk of Stark Law violations and focus on delivering quality care to your patients.