Complying with Referral Laws

It is the policy of CoxHealth to fully comply with the Stark and Anti-Kickback laws and regulations at all times.

To that end, each CoxHealth financial relationship with a physician or a physician’s immediate family member shall meet a Stark exception, and if possible, meet an Anti-Kickback Statute safe harbor where applicable.

CoxHealth has developed a Contract Manual that details Cox’s policies and procedures for contracting with physicians, physician groups or their immediate family members. That policy must be followed by the CoxHealth representative negotiating a financial relationship with a physician.

Below is a brief overview of the Stark and Anti-Kickback Laws:

Stark Law

The Stark Law was enacted to prevent referral sources such as physicians and physician extenders from inappropriately profiting from referrals. The Stark Law prohibits a physician from referring a patient for certain services to be reimbursed by federal health care programs to an entity with which the physician has an ownership interest or compensation arrangement if payments for the services furnished under the referral are to be made by the Medicare program.

Since it is a civil strict liability statute, no intent is required to violate the Stark Law. As such, if the Stark Law applies to an arrangement between a hospital and a physician and if the arrangement does not meet an exception of the Stark Law, then both parties have violated the Stark Law regardless of the extent of their attempts to comply with it.

As a civil statute, the Stark Law does not subject violators to imprisonment. However, because intent is not required to violate the statute, violations occur more frequently and are easier for the government to prove. Violations of the Stark law may result in denial of payment for services, repayment of reimbursed services and monetary penalties up to $15,000 per violation and $100,000 per arrangement or scheme. Additionally, a knowing Stark violation may result in exclusion from Federal healthcare program participation.

The Stark Laws are enforced by the Department of Health and Human Services, Centers for Medicare and MedicaidServices. Designated Health Services are specifically defined by CPT code and generally include services provided by hospitals such as laboratory, physical therapy, radiology, Durable Medical Equipment, home health, pharmaceuticals, inpatient and outpatient services.

The various exceptions that are available under the Stark Law include Exceptions specific to Compensation Arrangements. These exceptions include the following types of arrangements:

Rental of Office Space
Rental of Equipment
Employment Relationships
Personal Service Arrangements
Physician Recruitment
Isolated Transactions (e.g., one time sale of property)
Arrangements with Hospitals (unrelated to DHS)
Group Practice Arrangement with Hospital
Payments from Physicians
Charitable Donations by Physicians
Non-Monetary Compensation

Medical Staff Incidental Benefits
Risk-Sharing Arrangements
Compliance Training
Indirect Compensation
Referral Service Programs
Obstetrics Malpractice Coverage Assistance
Professional Courtesy Retention
Payments in Underserved Areas
Community-Wide Health Information Systems
Electronic Prescribing Services
Donation of Electronic Health Record Items and Services

The Guidance offered in Phases III and IV addresses topics such as anti-mark-up provisions; percentage based compensation arrangements; per-click arrangements; stand-in-the-shoes principles; under-arrangements transactions; periods of disallowance and amendments to agreements. For additional information on the Stark laws, contact the Corporate Integrity Department or the Legal Department at CoxHealth.

Anti-Kickback Statute

By contrast, the Anti-Kickback Statute is a criminal statute. It prohibits any knowing or willful solicitation or acceptance of any type of remuneration intended to induce referrals for health services that are reimbursable by the federal government. It is important to recognize that remuneration can be in the form for below-market rent, free services, free graduate medical education, etc.

Violation of the Anti-Kickback Statute is a felony and punishable with criminal penalties up to $25,000 in fines and five years in prison and civil penalties up to $50,000 in fines per violation. Additionally, the government can elect to exclude the provider from Federal healthcare program participation.

The Anti-Kickback Statute was enacted in 1972 and is entitled “Criminal Penalties for Acts Involving Federal Health Care Programs." This law is found in the Social Security Act and is enforced by the Department of Justice. In 1987, Congress required the Office of Inspector General to develop safe harbors for various payment and business practices that, while potentially prohibited by the law, would not be prosecuted. There are 21 Safe Harbors published for the Anti-Kickback Statute. The Anti-Kickback safe harbors are different than the Stark exceptions. The Anti-Kickback Statute is a criminal statute, so the government must prove an intent to induce referrals in order to take action against the company or individual. The safe harbors provide guidance which can be followed. Failure to meet all criteria in a safe harbor does not necessarily mean that a violation of the Statute has occurred. Safe harbors are available for areas such as:

Investments in large publicly held health care companies

The factors required to fall within these safe harbors vary. Contact the Corporate Integrity Department (417-269-7655) or the Legal Department (417-269-6577) for additional information regarding the steps required to satisfy a safe harbor, or for additional information about the Physician Referral Regulations.

It is the policy of CoxHealth that items or services should not be provided to physicians or their immediate family members without the prior approval of the Legal Department or Corporate Integrity. This includes discounts, meals, tickets to events, CME credits or anything that would be considered of value to the physician.