Year-End Bonuses and Distributions and Stark Law Compliance

As physician practices are in the midst of calculating and distributing 2022 year-end bonuses to physician employees and profits to owners, practices providing Designated Health Services (“DHS”), such as laboratory testing, diagnostic radiology testing, dispensed medications or physical therapy that are paid for by Medicare or Medicaid, must pay careful attention to the Federal Self-Referral (Stark) Law. Stark prohibits distributions or bonuses to physicians that directly or indirectly account for the physician’s volume or value of DHS referrals. Bonus determinations that are made “ad hoc” or based on a practice’s overall profitability for the year can unintentionally run afoul of the Stark Law. As a strict liability statute, even unintentional violations of the Stark Law can lead to significant penalties.

A proactive approach to developing and documenting a bonus and distribution structure in compliance with the Stark Law is crucial. Our attorneys can assist in ensuring that your bonus and distribution structure is fully compliant with Stark Law. Please contact us for assistance or for more information.