Stark Law (Physician Self-Referral)
Last reviewed · By Chad Griffith
The Physician Self-Referral Law (commonly 'Stark Law') at 42 USC 1395nn and 42 CFR 411.350-389 prohibits physicians from making referrals for designated health services payable by Medicare to entities with which the physician (or an immediate family member) has a financial relationship, unless an exception applies. Stark is a strict-liability statute — the government does not need to prove intent. Violations require return of the overpayment within 60 days under 42 USC 1320a-7k(d) and may form the basis of False Claims Act liability if not refunded. CMS operates a Voluntary Self-Referral Disclosure Protocol for resolving Stark violations through self-disclosure with reduced penalty exposure.
Frequently Asked Questions
What are 'designated health services' under Stark?
11 categories at 42 USC 1395nn(h)(6): clinical lab services, physical therapy and occupational therapy services, speech pathology services, radiology and imaging services, radiation therapy and supplies, durable medical equipment and supplies, parenteral and enteral nutrients/equipment/supplies, prosthetics/orthotics, home health services, outpatient prescription drugs, and inpatient/outpatient hospital services. Services not on this list are outside Stark's scope (though may still be covered by AKS).
What is a 'financial relationship' under Stark?
Two categories: (1) Ownership or investment interest — direct or indirect ownership, equity interest, or stockholder interest in the entity; (2) Compensation arrangement — any arrangement involving direct or indirect remuneration. Compensation arrangements include employment, personal services contracts, consulting agreements, leases, joint ventures, and any payment from the entity to the physician or family member. Financial relationships are evaluated comprehensively — even informal arrangements can trigger Stark.
What are the most-used Stark exceptions?
Most common: (1) Bona fide employment relationships (411.357(c)) — direct employment with FMV compensation not based on volume/value of referrals; (2) Personal service arrangements (411.357(d)) — written contract for specific services at FMV; (3) Lease of office space or equipment (411.357(a) and (b)); (4) In-office ancillary services (411.355(b)) — services furnished by the physician's group practice; (5) Group practice exception (411.355(a)) for member-physicians performing services within the group; (6) Academic medical centers (411.355(e)) for designated AMC arrangements.
What is the CMS Voluntary Self-Referral Disclosure Protocol?
The CMS Voluntary Self-Referral Disclosure Protocol (SRDP) allows entities to self-disclose Stark violations and resolve overpayments at substantial discounts. Self-disclosed violations typically resolve at 5-15% of the calculated overpayment plus interest, versus full repayment plus False Claims Act exposure if discovered through audit. SRDP submissions document the violation's nature and duration, calculate the overpayment, and propose settlement. CMS has authority to compromise overpayments under 42 USC 1395nn(g)(1)(B). Self-disclosure also reduces (but does not eliminate) reputation risk.
Authoritative sources
Related terms
FileFlo classifies and tracks compliance documents against rule packs that map directly to the regulators referenced above. Run a free CFR-cited audit →