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How Contract Management Software Can Help You Navigate the Stark Minefield

How Contract Management Software Can Help You Navigate the Stark Minefield

Stark Law, a series of detailed physician self-referral and billing regulations, eliminates financial incentives that would encourage inappropriate utilization of Medicare funds. With Stark Law comes a complex web of rules and standards that apply to a number of Designated Health Services (DHS), hospitals, providers and countless physicians and medical contractors.

The Stark Law imposes substantial risk to hospitals and other healthcare services that work with referring physicians. In addition to liability for civil and criminal penalties, entities and individuals that violate Stark Law can effectively be banned for life from providing healthcare services.

Sound intimidating? It should.

The requirements imposed by the Stark Law pose serious administrative challenges to hospitals and physicians, and even well-intentioned parties are subject to penalties. In order to navigate the complexity presented by Stark Law, hospitals and physicians have to carefully administer their contractual arrangements, and be able to access and report on the agreements they’ve made–particularly in the case of a random audit.

Because contractual agreements are under a microscope in these situations, healthcare organizations are among the top industries that have found relief in contract management software, which not only helps ensure that hospitals remain compliant with Stark, but also improves operational efficiency overall.

In what ways might contract management software help?

Centralizes documents throughout the organization

Contract management software captures and sorts documents into personal service agreements, equipment and facilities leases,  joint ventures, recruiting arrangements, and other areas addressed under Stark Law. Permission-based access controls create guardrails for users and what they can and cannot do in certain documents, preventing errors from being introduced and causing problems down the road.

Maintains compliance with industry and government regulations

When a new regulation is introduced or when an existing one is modified, contract management software can detect which contracts are affected by changes such as Stark Law exceptions, and allow contract administrators to update accordingly.

Eases contract creation

Clause libraries of approved language allow those constructing contracts to drag and drop the right language into contracts, keeping records standardized and ensuring the terms and clauses that need to be included are present.

Prepares hospitals for audits—whether expected or surprise

With Centers for Medicare and Medicaid Services (CMS) performing random audits for Stark Law compliance, the expectation is that hospitals are carefully tracking and collecting pertinent information. Automated contract management is the “penalty preventer” that can easily generate accurate reports that demonstrate the required compliance information auditors look for.

Streamlines internal request, creation, and approval for contracts

Contract management software gives companies visibility into where contracts are in their “lifecycle”—identifying who requested them, where they lie in the creation and negotiation process, and whose hands they should be in for approvals. The time saved chasing down this information is often reason alone for companies to be interested in this type of software.

Despite challenges presented by Stark Law, contract management technology gives a high level of insight into compliance, improves organizational efficiency, and makes for fewer audit “explosions” overall.

For more information about the role contract management software plays in Stark Law compliance, take a look at our full guide on the topic.

Want more on Contract Management Software? Browse additional articles and reviews on best contract creation tools and contract management software with’s CLM resource page. Also check out the free Top 10 Contract Management report which compares pricing, features and more to select the best CLM solution for your business.

[This post originally appeared on the Selectica blog and is republished with permission.]

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Jordan McMahon

Marketing Communications Manager, Selectica, Inc.
Jordan McMahon is a Marketing Communications Specialist at Selectica by day, and a member of the San Jose-renowned Trebekistan trivia team by night. When she’s not writing, carpooling, or drinking copious amounts of the company’s sparkling water, Jordan spends her ...