The Stark Legislation (42 U.S.C. 1395nn), introduced by Representative Pete Stark, is a body of federal law that imposes limitation on certain physician referrals. In general, if a physician or an immediate family member has a financial relationship with an entity, the physician is prohibited from referring Medicare and Medicaid patients to that entity for the furnishing of designated health services. Designated services, of which there are eleven, are those services that are easily over‑utilized and include such services clinical laboratory, physical and occupational therapy, radiology and other diagnostic services.
In general, designated services rendered in ambulatory surgical centers fall within a safe harbor provision created by the Health Care Financing Administration. Rulemakers reasoned that when a designated health service is furnished in connection with a covered surgical procedure, there is little potential for over utilization or abuse as the procedure is often reimbursed on a global fee basis and these same services would be covered if they were furnished on an inpatient or outpatient basis in a hospital for the same procedure. Thus, ASCs providing designated services in connection with a covered surgical procedure are not subject to the physician referral prohibitions as there is no incentive to over utilize designated health services.
Some ASCs, however, have on‑site laboratories, x‑ray or other diagnostic services that perform and bill for services that are not a part of the procedures performed at the ASC. Often these services are provided purely for patient convenience. It is this circumstance in which Stark may be implicated. Referrals to an ASC for general laboratory or diagnostic services which are not part of a procedure performed at the ASC by a physician who has a financial relationship with the ASC are prohibited by Stark. It is also important to note that services independent of procedures performed at the ASC must be billed independently of the ASC.
