In recent years, the healthcare industry has seen unprecedented levels of physician employment. Stark law, too, has undergone many significant changes. Stark law now includes an exception that allows hospitals to provide financial support to physician practices that employ or contract with non-physician practitioners ("NPPs"). However, prior to moving forward with any NPP arrangements, physician leases or other employment arrangements, the parties should carefully evaluate whether the proposed structure and financial terms support compliance with Stark’s technical requirements and key tenets of defensibility.
Stark law enforcement actions have led to substantial awards and settlements. Structuring employment arrangements appropriately and periodically auditing implementation are critical in today’s challenging enforcement climate. In order to manage compliance and enterprise risks, healthcare organizations and physicians should ensure that their employment arrangements are defensible under the Stark law. They must monitor and audit their existing arrangements to ensure that they are in compliance with Stark’s technical requirements and the key tenets of defensibility such as fair market value, commercial reasonableness, as well as not taking into account assigned health service referrals, in case their physician setups are ever challenged.