Stark law governs physician self-referral for Medicare and Medicaid patients. Physician self-referral is the practice of a physician referring a patient to a medical facility in which he has a financial interest, be it ownership, investment, or a structured compensation arrangement. Critics of the practice allege an inherent conflict of interest, given the physician's position to benefit from the referral.
Stark Law proponents suggest that physician self-referral may encourage over utilization of services, in turn driving up health care costs.
The law is named for United States Congressman Pete Stark, who sponsored the initial bill.