Government spending on healthcare and the cost of healthcare in general has risen dramatically in the past few decades. With costs continuously escalating, the federal government has more incentive than ever before to root out the fraud and corruption in the healthcare sector that costs taxpayers billions of dollars each year.
The purpose of the Stark Statute is to reduce the questionable overutilization of medical services encouraged by certain financial arrangements between service providers and referring physicians. To achieve this purpose, the Stark Statute prohibits hospitals or other medical service providers from billing Medicare for items or services provided based on a referral from a physician with whom the provider has a financial relationship. Originally passed in 1989 to cover laboratory services, the Stark Statute has since been amended to cover nearly every type of medical service, therapy, or medical item.
Stark Statute and Medicare Fraud
Stark violations are a type of Medicare fraud because they represent cases in which a physician’s financial incentive to refer patients may compromise his or her professional judgment on whether the particular treatment is necessary. This means that claims submitted based on those referrals are medically suspect and therefore fraudulent.
There are exceptions for physicians under bona fide employment contracts with the provider as well as other particular transactions. However, for any financial relationship to be compliant with Stark, it must be well-documented, involve fair market value compensation for services rendered, and not be based on the number of referrals the physician makes.
Physicians As Whistleblowers
While most members of the healthcare sector deal honestly and fulfill their obligations under the law, healthcare fraud is still prevalent and costly for both federal and state governments. Often, physicians are in a position to report instances of fraud, kickbacks, and Stark Statute violations because they may work or have contact with unscrupulous healthcare providers. However, some do not take the opportunity to become a whistleblower because of legitimate fears about the potential impact on their careers.
Because healthcare fraud is often difficult to detect or prove without insider knowledge, physician whistleblowers are highly valued as intelligent, credible, and knowledgeable individuals in qui tam lawsuits. Often, physicians have access to key documents without which proving healthcare fraud in court would be extremely difficult, if not impossible. Physician whistleblowers are also able to analyze and explain the sometimes complex and technical medical documents they provide. Their insider knowledge and testimony can be invaluable in securing a positive outcome in a qui tam case.