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Designated Health Services (Stark Law) (DHS)

What does DHS stand for in healthcare?

In healthcare, DHS stands for Designated Health Services. 


What services are covered under Designated Health Services (Stark Law) (DHS)?

Before explaining what designated health services are, let’s discuss Stark Law (formally known as the Physician Self-Referral Law). Stark Law is one of five significant fraud and abuse laws that apply to physicians. The other four are the Anti-Kickback Statute, the Civil Monetary Penalties Law, the Exclusion Statute, and the False Claims Act. Stark Law forbids physicians from referring patients to receive “designated health services” from entities in which the physician has a financial relationship or family member. Financial relationships can include:

    • Compensation arrangements

    • Investment interests

    • Ownership interests

Designated Health Services (DHS) are specific services that are considered unlawful in relation to the Stark Law. The services covered under “designated health services” include the following:

    • Clinical lab services

    • Physical therapy

    • Occupational therapy

    • Home health services

    • Outpatient prescription drugs

    • Outpatient speech-language pathology services

    • Radiology services

    • Imaging services

    • Inpatient hospital services

    • Outpatient hospital services

    • Medical equipment and supplies

    • Prosthetics

    • Orthodontics

    • Prosthetic devices and supplies

    • Radiation therapy services

    • Radiation therapy supplies

    • Parenteral equipment, nutrients, supplies

    • Enteral equipment, nutrients supplies

Violation of the Stark Law can result in severe punishment. Because the punishment can be so severe, it is important that healthcare providers remain compliant by studying the referrals that are and are not allowed under the Stark Law. 

In addition to knowing the referrals that are and aren’t lawful under the Stark Law, it is also important to understand the exceptions to this law. The exceptions of the Stark Law are the fair market compensation exception, the indirect compensation exception, the in-office ancillary services exception, and the non-monetary exception. 

The fair market compensation exception states that an arranged compensation between a physician and an entity will not be considered a “financial relationship” if the arrangement is written, provides a timeframe, states the compensation, deals with a commercially reasonable transaction, and follows the “safe harbors” regulation of the Anti-Kickback Statute. 

The indirect compensation exception permits an indirect compensation arrangement between a physician and an entity if the arrangement is written, the physician’s compensation is considered reasonable in market value, and the compensation does not consider the value or quantity of referrals. 

The in-office ancillary services exception allows a medical practice to refer patients to in-office ancillary services. Such in-office ancillary services might include radiology services. 

The non-monetary exception states that a “financial relationship” is not created if a physician receives a non-monetary payment of less than $300 a year from an entity under the following conditions: the physician did not solicit the compensation and the compensation does not consider the value or quantity of referrals. 

The exceptions for Stark Law are rather specific, healthcare organizations must follow the rules to refer patients to any entity with which they have a “financial relationship” rather than suffer the consequences later. It is always best to remain on the right side of compliance when it comes to the healthcare industry. 

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