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Vital Stark Law considerations for physician employment agreements

Since the Affordable Care Act (ACA) –popularly called Obamacare –came into existence, there has been an exponential increase in the number of physician practice acquisitions. Some of the reasons that can be ascribed for this phenomenon are these:

-        Physician practice acquisitions are an opportunity for healthcare providers in consolidating and integrating their business better, as the business prospects of the referral networks align with the hospital’s strategic goals


-        On account of the amendments brought about to the Medicare and Medicaid reimbursement systems, providers have been moving towards bundled and integrated payments of late. This system is well suited for hospitals with more physician practice acquisitions


-        As the reimbursement rates of a few specialties fall, such specialists gain when their practice is attached to a bigger hospital brand. They feel secure when they have to negotiate contract rates. Being attached to a hospital also means that they have the financial security a consistent practice brings, something for which they have struggle for long periods if they were to be in their own private practice


-        Both new and experienced physician practices gain when their practice gets acquired by hospitals. For experienced physicians; it is a means for augmenting their incomes. Younger physicians, on the other hand, get greater freedom to work at convenient and flexible times, leading to better work life balance, something that people of that age group, normally with a growing family, attach a premium to.

So, there is no question that physicians find favor with physician practice acquisitions. Given the rewards acquisitions bring to them; they are well advised to take utmost care to scrutinize the finer aspects of agreements while negotiating them. In addition to the pros and cons of what an acquisition means to their practice and to their profession; they also have to be highly diligent in looking at the legal aspects of the acquisition. Important legal and regulatory issues that govern physician practice acquisitions have to be taken note of before negotiating and signing physician practice acquisitions.

The Stark Law

The Physician Anti-Referral Law, or Stark II, or just the Stark Law, is the major federal law that deals with this aspect of healthcare practice. It is with the provisions of this law about physician referrals that any healthcare provider which files claims has to comply with.

Noncompliance invites enforcement actions

The primary objective of the Stark Law, which is implemented in stages known as Stark II and Stark III, is to eliminate the various malpractices that prevail in the healthcare sector. One of the important means by which the Stark Laws does this is by considering certain physician actions as unlawful. So, all these aspects, along with the changes that the Stark Law brought in in 2016, need to be carefully taken note of when negotiating physician practice acquisition agreements.

This thoroughness is crucial also because Stark Law enforcement actions hand significant awards and settlements. It is imperative for medical groups, hospitals, and health systems that move towards integration and work out innovative hospital-physician arrangements to be completely compliant with the provisions of the law, so that they put in place compensation arrangements that are defensible under the Stark Law.

Gain familiarity with the Stark Law

Need to understand all the intricate aspects of how to draft physician practice acquisitions that are compliant with the provisions of the Stark Law, both from the hospitals’ and the physicians’ side? Then, just enroll for a highly interesting webinar on this topic that is being organized by MentorHealth, a leading provider of professional trainings for the healthcare industry.

Joseph Wolfe, who is an attorney with Hall, Render, Killian, Heath & Lyman, P.C., the largest health care focused law firm in the country, and offers advice and counsel to some of the nation's largest health systems, hospitals and medical groups on a variety of health care issues; will be the speaker at this webinar.

Please register for this webinar to gain the important insights needed for getting a grasp of the legal aspects of the Stark Law on physician practice acquisitions. This Course is approved for 1 general credit from the Nevada Board of Continuing Legal Education.

Simplification of the legally compliant physician practice acquisition agreements

Joseph will describe the ways by which to understand and interpret the contents of the Stark Law for drafting meaningful and legally compliant physician practice acquisition agreements. He will explain the important factors that need to be carefully analyzed and scrutinized when working out physician practice acquisitions.

Everyone connected with Stark Law and its implementation, namely professionals such as In-House Counsel, Healthcare Compliance Officers, Healthcare Human Resources, Healthcare CFO's, and other levels of healthcare executives, will find this session very useful. Joseph will cover the following areas:

  • Provide a general Stark Law overview
  • Examine critical components of Stark and Anti-Kickback compliant employment arrangements
  • Discuss best practices for drafting physician employment agreements, related compensation plans and facilitating effective onboarding
  • Discuss best practices for auditing existing employment arrangements
  • Describe alternative structures for organizations intending to qualify as Stark group practices.

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