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    Did I violate the Stark Statute?

    David J. Goldberg, M.D., J.D.Dr. Money is the senior member and managing partner of a six-partner dermatology practice—all members of Skin Money, LLC. Fifty percent of their practice patients are insured by Medicare. One of his partners owns his own separate and distinct dermatopathology lab that is located two miles away. Because he is a partner, Skin Money, LLC has a simple deal with that lab to get $25 back from any biopsy submission to the lab. This amount is less than what they would pay the dermatopathologist if he were paid his customary percentage commission for working in the practice. All the partners are comfortable with this arrangement.

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    Ten years after this arrangement was put in place, Dr. Money and Skin Money, LLC are named as defendants in a $15 million Stark violation lawsuit. What did they do wrong?   

    Designated health services

    The essence of the Stark statute is a prohibition on a physician (or immediate family member) referring a Medicare patient to an entity with which the physician or family member has a financial relationship, when the referral is for any of a targeted list of “designated health services” (DHS), unless the financial relationship meets one of a host of exceptions. For dermatology, the primary impact of this law is on relationships between dermatology practices and dermatopathologists. Because clinical laboratory services are on the DHS list, the complexities are considerable.

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    A “referral” under Stark is any request for a service, item, or good payable by Medicare. This definition includes referrals within a group practice. In order to refer to another physician for the professional portion of a pathology service, or to ancillary personnel to perform the technical portion, the relationship of the physicians must meet the definition of a group practice.

    To qualify as a group practice, there must be at least two “members” of the group. A member is a shareholder, W-2 employee, or a partner. Independent contractors do not count as members.

    Each member of the group must provide the full range of services—medical care, consultation, diagnosis, or treatment—that he or she routinely provides. Services must be provided through the joint use of shared office space, facilities, equipment, and personnel. Substantially all of the services of members of the group must be provided through the group and be billed under a billing number assigned to the group. The monies received must be considered the group’s receipts.

    NEXT: Stark rule and exceptions

    David J. Goldberg, M.D., J.D.
    Dr. Goldberg is Director of Skin Laser & Surgery Specialists of New York and New Jersey, Director of Mohs Surgery and laser research, ...


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