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Stark Law and Hearing Aid Dispensing

Bryan Liang, MD, JD, PhD

March 15, 2004


Question

Can you explain the Stark Law and how it applies to hearing aid dispensing in a hospital facility?

Answer

The stark laws prohibits physician or immediate family member referrals to entities in which the physician has a financial interest. Certain designated health services are covered by the law. if the physician or immediate family member has a financial relationship with an entity, then the physician may not make a referral to the entity to furnish designated health services for which payment otherwise may be made by a federal health care program; and the entity may not present or cause to be presented a claim to a federal health program or bill any other payor.

First, with regard to your question, note that the stark laws apply to physicians, rather than audiologists at the current time. Hence, dispensing hearing aids by audiologists should not implicate any prohibited stark transactions, unless the audiologist is in the scheme of self-referral or is an immediate family member of a physician who is engaging in self-referral activities.

Second, the stark laws do not apply to any designated health services provided by hospitals if the referring physician is authorized to perform the services at the hospital and the physician's ownership or investment interest is in the hospital itself, rather than one of the hospital's subdivisions or departments. Hence, if an audiologist works with a physician who has in fact ownership in the entire hospital, there should be no issue with regard to dispensing hearing aids from that hospital. Of course, this also means that if the physician does not have interest in the entire hospital and only in a subdivision or department, there may be issues of self-referral for the audiologist. If this is the case, the audiologist should speak directly to the hospital's general counsel or seek independent counsel to assess the circumstances.

It should also be noted that state laws that mirror the federal stark laws may also be implicated. Because state laws sometimes do have some differences compared with federal law, state laws should also be assessed with regard to self-referral prohibitions.

BIO:
Bryan A. Liang, MD, PhD, JD, is the John & Rebecca Moores University Professor at the University of Houston Law Center, Houston, TX, and Director pro tem of the Health Law & Policy Institute there. His research focus is on the interface of law, health care, and public policy, including ethics, fraud and abuse, and patient safety.


bryan liang

Bryan Liang, MD, JD, PhD

Professor and Director of the Institute of Health Law Studies at the California Western School of Law and the University of California San Diego School of Medicine in San Diego, CA

Bryan A. Liang is Professor and Director of the Institute of Health Law Studies at the California Western School of Law and the University of California San Diego School of Medicine in San Diego, CA. He received his B.S. from the Massachusetts Institute of Technology;his Ph.D. in health policy from the University of Chicago Harris School of Public Policy Studies his M.D. from Columbia University College of Physicians & Surgeons and his J.D. from Harvard Law School. His research focuses upon the interface of how law and health care practice interface, with particular attention to ethics, quality issues, and provider education. He does not have a high school diploma, which may explain a lot.


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