Stark Law & Anti-Kickback Statute: A Plain-Language Guide
Updated March 2026 · 42 U.S.C. § 1395nn, 42 U.S.C. § 1320a-7b, 31 U.S.C. §§ 3729–3733
Healthcare Fraud Laws at a Glance
$2.9B+
DOJ False Claims Act recoveries in 2024 alone
10 years
Maximum prison sentence for Anti-Kickback Statute violations
$100K
Per-violation fine under both AKS and Stark circumvention schemes
Three federal statutes form the backbone of healthcare fraud enforcement in the United States: the Physician Self-Referral Law (Stark Law), the Anti-Kickback Statute (AKS), and the False Claims Act (FCA). Together, they generated over $2.9 billion in DOJ recoveries in 2024 — and violations of one law frequently trigger liability under the others.
Yet many healthcare providers conflate these laws or assume they only apply to large hospital systems. In reality, a solo physician who owns a stake in a lab, a practice manager who accepts a vendor’s gift card, or a clinic that leases space at below-market rent can all face six- and seven-figure penalties. This guide breaks down each law in plain language, walks through real violation scenarios, and explains exactly how to check the OIG exclusion list and SAM.gov to protect your compliance program.
The Three Laws: Side-by-Side
While these statutes overlap significantly, each addresses a distinct type of healthcare fraud. Understanding their differences is critical because a single financial arrangement can violate all three simultaneously.
Stark Law
42 U.S.C. § 1395nn
Scope
Physician self-referral for designated health services (DHS)
Who It Applies To
Physicians with financial relationships to DHS entities
Programs Covered
Medicare & Medicaid
Intent Standard
No intent required — strict liability
Anti-Kickback Statute
42 U.S.C. § 1320a-7b(b)
Scope
Any remuneration to induce or reward referrals
Who It Applies To
Anyone — physicians, administrators, vendors, entities
Programs Covered
All federal healthcare programs
Intent Standard
Knowing and willful (but one-purpose test applies)
False Claims Act
31 U.S.C. §§ 3729–3733
Scope
Submitting false or fraudulent claims for payment
Who It Applies To
Anyone who submits or causes submission of false claims
Programs Covered
All federal programs
Intent Standard
Knowledge, reckless disregard, or deliberate ignorance
Stark Law (Physician Self-Referral)
The Stark Law, codified at 42 U.S.C. § 1395nn, prohibits a physician from referring Medicare or Medicaid patients to an entity for designated health services (DHS) if the physician — or an immediate family member — has a financial relationship with that entity, unless a specific exception applies.
Strict liability — no intent required
Unlike the Anti-Kickback Statute, Stark violations do not require proof of intent. If a financial relationship exists and no exception applies, the referral is illegal regardless of whether the physician acted knowingly. This makes Stark violations easier to prove but also easier to commit accidentally.
Designated Health Services (DHS)
Stark only applies to referrals for these specific service categories:
- 1Clinical laboratory services
- 2Physical therapy, occupational therapy, speech-language pathology
- 3Radiology & imaging (MRI, CT, ultrasound)
- 4Radiation therapy & supplies
- 5Durable medical equipment (DME) & supplies
- 6Parenteral & enteral nutrients, equipment, supplies
- 7Prosthetics, orthotics, prosthetic devices & supplies
- 8Home health services
- 9Outpatient prescription drugs
- 10Inpatient & outpatient hospital services
Key Stark Exceptions
Over 35 exceptions exist. These are the five most commonly used by physician practices. Every exception has specific requirements — close enough does not count. Document your compliance basis for each arrangement.
In-Office Ancillary Services
Services performed in the same building where the referring physician practices, by the physician or a member of the same group practice.
Bona Fide Employment
Compensation paid to an employed physician that is consistent with fair market value and not determined by the volume or value of referrals.
Rental of Office Space or Equipment
Lease is in writing for at least one year, rent is set in advance at fair market value, and space/equipment is reasonable and necessary.
Personal Service Arrangements
Written agreement, services specified, compensation set in advance at FMV, and term of at least one year.
Value-Based Arrangements
Added in 2021 — permits arrangements where participants assume meaningful downside financial risk or full financial risk.
Anti-Kickback Statute (AKS)
The Anti-Kickback Statute at 42 U.S.C. § 1320a-7b(b) is broader than Stark in every dimension. It prohibits anyone from knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or reward referrals for items or services covered by any federal healthcare program — not just Medicare and Medicaid.
This is a criminal statute
An AKS conviction is a felony carrying up to 10 years in prison and $100,000 per violation. Civil penalties add up to $100,000 per violation plus treble damages. Since 2010, the “one purpose” test applies: if any one purpose of the remuneration is to induce referrals, the arrangement violates the AKS — even if other legitimate purposes exist.
What Counts as “Remuneration”?
The statute defines remuneration broadly — anything of value, directly or indirectly, overtly or covertly, in cash or in kind. Common examples that trigger investigations:
AKS Safe Harbors
OIG has established over 28 safe harbors that protect specific payment practices from AKS prosecution. Arrangements must meet every element of a safe harbor to qualify — partial compliance offers no protection. Review each arrangement during your annual compliance audit.
Fair Market Value Compensation
Payments set in advance, consistent with FMV, and not tied to the volume or value of referrals. Must be in writing for at least one year.
Space & Equipment Rental
Written lease, term of at least one year, rent set in advance at FMV, commercially reasonable space/equipment.
Personal Services & Management Contracts
Written agreement specifying services, aggregate compensation set in advance at FMV, term of at least one year.
Employee Safe Harbor
Payments by an employer to a bona fide employee for employment in furnishing covered items or services.
Value-Based Arrangements (2021)
Three tiers: care coordination arrangements, substantial downside financial risk, and full financial risk arrangements.
Electronic Health Records (EHR)
Donation of EHR software or IT to prescribers if conditions met — recipient pays at least 15% of costs.
False Claims Act (FCA)
The False Claims Act at 31 U.S.C. §§ 3729–3733 is the federal government’s primary weapon for recovering losses from healthcare fraud. It imposes liability on anyone who knowingly submits — or causes the submission of — a false or fraudulent claim for payment to a federal program.
The whistleblower provision (qui tam)
The FCA allows private individuals — often current or former employees — to file lawsuits on behalf of the government. These “relators” can receive 15-30% of any recovery. In 2024, qui tam actions accounted for the majority of FCA healthcare recoveries, making disgruntled staff a significant compliance risk. A strong training program with clear reporting channels reduces qui tam exposure.
The AKS-Stark-FCA Connection
This is the critical linkage that multiplies penalties. Since the ACA amendments in 2010, claims resulting from AKS violations are automatically false claims. Stark violations work the same way: any claim for a DHS that resulted from a prohibited self-referral is a false claim. This means a single arrangement can trigger:
Common False Claims Examples
Billing for services not rendered
Submitting claims for procedures that were never performed or appointments that never occurred.
Upcoding
Billing a higher-level CPT code than the service actually provided — e.g., billing a Level 5 E&M visit for a routine follow-up.
Unbundling
Separating services that should be billed together under a single code to inflate reimbursement.
Kickback-tainted claims
Since 2010, any claim resulting from an AKS violation is automatically a false claim — even if the underlying service was medically necessary.
Stark-tainted referrals
Claims for DHS resulting from a prohibited self-referral are false claims, regardless of whether the referring physician intended to violate Stark.
Misrepresenting credentials
Billing for services provided by an unlicensed or excluded individual as if performed by a qualified provider.
Common Violation Scenarios
These scenarios illustrate how a single arrangement can trigger multiple statutes. Each is drawn from actual enforcement patterns reported by OIG and DOJ.
Below-Market Office Lease
A hospital leases office space to a referring physician at $15/sq ft when fair market value is $28/sq ft.
Per-Click Equipment Lease
A physician group leases an MRI machine from an imaging company and pays per scan rather than a fixed monthly rate.
Referral Bonus Payments
A home health agency pays physicians $200 for each Medicare patient referred for home health services.
Pharmaceutical Rep Gift Cards
A drug company gives $50 gift cards to office staff at practices that prescribe their products.
Routine Copay Waivers
A practice routinely waives copays for Medicare patients without documenting financial hardship.
Penalties Compared
Penalties are not mutually exclusive. A physician who maintains a non-compliant lease arrangement can face Stark penalties, AKS criminal charges, and FCA treble damages simultaneously — on top of program exclusion.
Civil
Up to $15,000 per claim; $100,000 per circumvention scheme
Criminal
None — civil statute only
Multiplier
3x improper payment amount
Additional
Refund of all amounts collected; Medicare/Medicaid exclusion
Civil
Up to $100,000 per violation; CMP of up to $50,000 per violation
Criminal
Felony — up to 10 years imprisonment; $100,000 fine per violation
Multiplier
3x kickback amount
Additional
Program exclusion; debarment from federal contracts
Civil
$13,946 – $27,894 per false claim (2024 adjusted)
Criminal
Criminal analogue carries up to 5 years imprisonment
Multiplier
3x damages to the government
Additional
Qui tam relators receive 15-30% of recovery
Checking the OIG Exclusion List & SAM.gov
Employing or contracting with an excluded individual is one of the costliest compliance failures. OIG can impose penalties of up to $21,562.80 for each item or service furnished by an excluded person, plus assessments of up to three times the amount claimed. CMS requires screening at least monthly.
Who Must Be Screened
How to Screen: Step by Step
Check the OIG LEIE
exclusions.oig.hhs.govSearch the List of Excluded Individuals and Entities by name, NPI, or UPIN. Updated monthly. This is the primary source — HHS recommends checking here directly.
Check SAM.gov
sam.govSearch the System for Award Management for debarred or excluded entities. Note: SAM data is updated periodically (not monthly) — OIG is more current.
Check State Medicaid Lists
Many states maintain separate exclusion lists. Check your state Medicaid agency website — exclusions may exist at the state level that don't appear in federal databases.
Document Each Search
Retain a screenshot or PDF of each search result with date stamp. CMS requires monthly screening — document even when results are clean.
Pre-hire screening is not enough
Exclusions can occur at any time. An employee who was clean at hire could be excluded six months later. Monthly screening is a CMS requirement, not a best practice. Use your onboarding checklist for initial screening and build monthly checks into your compliance program.
Building a Compliant Program
OIG’s Seven Elements of an Effective Compliance Program provide the framework for preventing Stark, AKS, and FCA violations. Having a documented program in place also serves as a mitigating factor if a violation does occur.
Written Policies & Procedures
Document every financial arrangement with referring physicians, vendors, and contractors. Map each arrangement to a specific Stark exception or AKS safe harbor.
Compliance Officer & Committee
Designate someone with authority to investigate potential violations and report directly to leadership — not through the billing department.
Training & Education
Train all staff on fraud and abuse laws annually. Front-desk staff, billing teams, and practice managers need different training than physicians. See our training requirements guide.
Internal Reporting (Hotline)
Provide anonymous reporting channels. This reduces qui tam exposure by giving employees an internal path before they go to a whistleblower attorney.
Auditing & Monitoring
Review billing patterns, referral volumes, and lease arrangements quarterly. Screen all individuals against OIG LEIE and SAM.gov monthly. See our audit checklist.
Enforcement & Discipline
Apply consistent consequences for violations regardless of the employee's role or revenue impact.
Corrective Action & Response
When violations are identified, self-disclose through CMS's Self-Referral Disclosure Protocol (Stark) or OIG's Self-Disclosure Protocol (AKS). Voluntary disclosure significantly reduces penalties.
Self-disclosure reduces penalties
CMS’s Self-Referral Disclosure Protocol (SRDP) allows providers to self-disclose Stark violations and settle for significantly reduced amounts — often 1.5x the excess DHS payments rather than the full statutory penalty. For AKS issues, OIG’s Self-Disclosure Protocol offers similar benefits.
Quick Reference Card
Stark Law vs. AKS vs. False Claims Act
What It Prohibits
Who It Covers
Intent Required
Programs
Criminal?
Max Per-Violation Fine
Protections
Self-Disclosure
Build a defensible compliance program
Fraud and abuse laws are interconnected — a single referral arrangement can trigger Stark, AKS, and FCA liability simultaneously. Start with a compliance checklist to identify structural gaps, implement the audit checklist for ongoing monitoring, and screen every employee and contractor against the OIG LEIE monthly.
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