The Stark Law, formally known as the Physician Self-Referral Law, is a set of federal regulations aimed at preventing conflicts of interest in the medical field. Enacted in 1989 and named after Congressman Pete Stark, this law prohibits physicians from referring patients for certain designated health services (DHS) payable by Medicare or Medicaid to entities with which the physician (or an immediate family member) has a financial relationship, unless an exception applies. The law’s complexity and the severe penalties for non-compliance, including substantial fines and exclusion from federal health programs, underscore the importance of meticulous management and reporting of financial relationships in healthcare organizations.

The Impact of Stark Law

The implications of the Stark Law are profound, as violations can result in substantial financial penalties. Specifically, each claim can incur fines of up to $24,478. Additionally, false claims submitted under the Stark Law may trigger further civil monetary penalties under the False Claims Act, which can include fines ranging from $13,946 to $27,894 per false claim, plus treble damages—tripling the amount of damages the government sustains. With each submitted claim to government payers, the submitter obtains a certification assuring compliance with all applicable Medicare of Medicaid laws and regulations, including the Stark Law. If such a claim violates Stark Law, it can be considered a false claim resulting in the penalties mentioned above. This severe financial exposure, combined with the potential for significant reputational damage and operational disruptions, underscores the critical importance of Stark Law compliance for healthcare providers. Ensuring adherence not only mitigates the risk of financial loss but also safeguards the integrity and operational stability of healthcare organizations.

How Lease Management Software Can Help

Lease management software offers a comprehensive solution for healthcare organizations to manage real estate and equipment leases, ensuring compliance with Stark Law. Here’s how it can be beneficial.

Tracking Real Estate Transactions

Lease management software enables healthcare providers to meticulously track all real estate transactions, ensuring that all leases, subleases and other property-related agreements are compliant with Stark Law. By maintaining a detailed and organized record of these transactions, healthcare organizations can easily demonstrate compliance during audits or investigations.

Repository for Data

A centralized repository for all lease-related data is crucial for compliance and operational efficiency. Lease management software stores all pertinent information, including:

Financial Terms
Detailed records of financial terms help ensure that lease arrangements meet fair market value requirements and commercial reasonableness standards.

Space Assignment
Accurate tracking of space assignments prevents unintentional overlaps or improper referrals, ensuring that the use of leased space aligns with Stark Law provisions.

Documents
Storing lease agreements, amendments, and related documents in a secure, centralized location facilitates easy access and retrieval during audits.

Contacts
Keeping an organized record of all contacts involved in lease agreements ensures clear communication and accountability.

Options and Clauses
Detailed documentation of lease options, renewal clauses and other contractual elements helps maintain compliance by ensuring all terms are transparent and adhered to.

Creation of Notifications

One of the significant benefits of lease management software is its ability to create automated notifications. These alerts can be set for critical dates, such as lease renewals, expirations and option exercise periods. Timely notifications ensure that no important deadlines are missed, reducing the risk of non-compliance with lease terms and, by extension, Stark Law.

Equipment Leases

Stark Law compliance extends beyond real estate to include equipment leases. Lease management software tracks all equipment leases, ensuring that they adhere to fair market value and commercial reasonableness standards. By maintaining detailed records and automated tracking, healthcare organizations can ensure that equipment leases are compliant with Stark Law, thereby avoiding potential violations.

Subleases

Subleases add another layer of complexity to lease management. The software helps track sublease agreements, ensuring that the terms of both the primary lease and sublease are compliant with Stark Law. Detailed tracking and documentation of sublease arrangements help prevent any potential conflicts of interest or violations.

Conclusion

Stark Law compliance is a critical concern for healthcare organizations, given the significant penalties for violations. Lease management software, like the one provided by Yardi Corom, provides an essential tool for managing real estate and equipment leases, ensuring that all financial relationships are documented, tracked and compliant with the law. By utilizing features such as centralized data repositories, automated notifications and detailed tracking of lease agreements, healthcare providers can mitigate the risk of Stark Law violations and focus on delivering quality care to their patients.

Yardi Corom is a comprehensive and user-friendly accounting, lease and workplace management solution for CRE tenants. Our cloud-based software solution increases efficiency and accuracy across your entire lease portfolio: manage leases and subleases, track key lease data, centralize transactions and become FASB/GASB/IFRS compliant. To learn more, you can visit our website or schedule a meeting with our team.