Stark Act


The Stark Act is a law with limitation on certain physician referrals. It prohibits physician referrals of Designated Health Services (DHS) for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity. A financial relationship includes ownership, investment interest, and compensation arrangements. The term “referral” means, for Medicare Part B services, “the request by a physician for the item or service” and, for all other services, “the request or establishment of a plan of care by a physician which includes the provision of the designated health service.” DHS includes clinical laboratory services, as well as, the following:


  • Physical-therapy services;
  • Occupational-therapy services;
  • Radiology, including magnetic resonance imaging, computerized axial tomography scans, and ultrasound services;
  • Radiation-therapy services and supplies;
  • Durable medical equipment and supplies;
  • Parenteral and enteral nutrients, equipment, and supplies; prosthetics, orthotics, and prosthetic devices;
  • Home health services and supplies;
  • Outpatient prescription drugs; and
  • Inpatient and outpatient hospital services.


The Stark Law contains several exceptions which include:


  • Physician services;
  • In-office ancillary services;
  • Ownership in publicly traded securities and mutual funds;
  • Rental of office space and equipment; and
  • Bona fide employment relationship; etc.