Beyond Stark: Nevada’s Lesser-Known Physician Self-Referral Laws

By October 8, 2018 News

By J. Malcolm DeVoy, Attorney, DeVoy Law

Nevada law imposes obligations upon physicians that are under-appreciated and may foil an otherwise effective compliance program. Medical providers are aware of the federal penalties for kickbacks and impermissible self-referrals under the Anti-Kickback Statute and the Stark Law, which can include civil monetary penalties, exclusion from Medicare and Medicaid, and even criminal prosecution. Many providers believe that if they do not accept Medicare or Medicaid, then their regulatory burden is all but eliminated. This is only partially true. Nevada has long had its own laws against self-referrals that apply to all referrals made by physicians—or others acting at their behest1—regardless of payment source.2

Nevada’s prohibition on self-referrals is similar to the Stark Law, but distinct enough that compliance with federal law alone does not ensure compliance with state law. Nevada prohibits a physician from referring a patient for any goods or service “related to health care” to any health facility, laboratory, imaging center, or broadly defined “commercial establishment,”3 in which the referrer has a financial interest.4 A “financial interest” is defined as an “ownership or other interest” held by the referrer or the referrer’s family member, including immediate family, cousins, aunts, uncles, grandparents, and certain in-laws as well.5

To satisfy this definition, the referrer’s interest must provide compensation to the physician (or family member) that varies based on the volume or value of goods and services provided due to referrals.6Regulations provide examples of what payments would qualify under this definition. These include finder’s fees, income-sharing agreements, debt instruments, leases, or other relationships where the referring physician’s compensation is tied to the value or quantity of goods or services referred to the business.7

Like the Stark Law, Nevada’s prohibition on self-referrals contains exceptions to its application, and several of the exceptions under Nevada law are similar to the exceptions that exist for the Stark Law. For example, referrals within a group practice of physicians are permitted.8 Similarly, referrals to large, publicly traded companies in which the physician is an investor are allowed.9 Recognizing the challenges faced in rural Nevada as well, certain referrals that otherwise would be prohibited are permitted based on geographic factors.10

These exceptions to Nevada’s prohibition on self-referrals are narrowly drawn and limited in number. Nevada’s prohibitions on physician self-referral have fewer exceptions than the Stark Law, which sets forth exemptions within the statute itself, and still more exceptions within the Code of Federal Regulations. The exceptions to the Nevada law that do exist are less developed than those accompanying the Stark Law, which have been examined and explained by the United States Department of Health and Human Services over the span of decades.

Any violation of this law, which is written to impose strict liability, is a misdemeanor.11 Physicians may also face professional discipline for violating Nevada’s self-referral prohibitions,12 or an investigation by the Nevada Department of Health and Human Services.13 Loss or impairment of a professional license, and one’s livelihood, is never worth the short-term gain of improper referrals. For that reason, it is crucial for physicians to ensure their referral practices comply not only with federal law, but even Nevada’s lesser-known laws as well.

1 – NAC 439B.5402.
2 – NRS 439.425.
3 – NAC 439B.5207.
4 – NRS 439B.425(1).
5 – NAC 439B.530(1).
6 – Id. 439B.530(1)(a).
7 – Id. 439B.530(2).
8 – NRS 439B.425(2)(c) and (5)(a); see also NAC 439B.5404(1) and (2).
9 – NRS 439B.425(2)(f).
10 – Id. 439B.425(2)(a) and (g).
11 – Id. 439B.425(1) and (3).
12 – Id. 630.305(1)(c) (specifying a violation of NRS 439B.425 as a ground for professional discipline); see also Id. 633.131(1)(c) and 2(a) (describing prohibited referral-based compensation that may be a basis  or discipline).
13 – NAC 439B.5408.