Final answer:
The Stark Law is part of the Social Security Act and aims to prohibit physicians from self-referring patients to services where they have a financial interest. It applies to physicians, their immediate family members, and the entities receiving the referrals that are covered by Medicare and Medicaid.
Step-by-step explanation:
The Stark Law, which is part of Section 1877 of the Social Security Act, is a set of federal provisions designed to curb self-referrals by physicians. Specifically, it prohibits doctors from referring patients to healthcare services with which the physician or an immediate family member has a financial relationship, when those services are paid for by Medicare or Medicaid. The law applies to physicians and their immediate family members, as well as to the entities providing the healthcare services that may be receiving these referrals.
When the Johnson administration passed the Social Security Act of 1965, it introduced Medicare, a significant component of healthcare legislation for those over sixty-five. The Stark Law was enacted to prevent conflicts of interest in healthcare services paid for by this program. Additionally, as healthcare became more regulated, with acts such as the Patient Protection and Affordable Care Act (PPACA or Obamacare), ensuring ethical practices in referrals continued to be a priority, which the Stark Law addresses.
The Stark Law's connection to financial compensation for healthcare services and its implications for Medicare and Medicaid reveal its role in supporting the integrity of services provided under the Social Security Act's programs.