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The Self-Referral Disclosure Protocol: So Much For Guaranteed Leniency?

The Self-Referral Disclosure Protocol: So Much For Guaranteed Leniency?


Health Care Law Note
(October 1, 2010)

On September 23, 2010, the Centers for Medicare and Medicaid Services ("CMS") issued the much anticipated Self-Referral Disclosure Protocol (the "SRDP"), as required by Section 6409 of the Patient Protection and Affordable Care Act ("PPACA"). While the SRDP provides a formal mechanism by which health care providers and suppliers (referred to in the SRDP as "disclosing parties") may self-disclose actual or potential violations of the Physician Self-Referral Law (commonly known as the Stark Law), disclosing parties are not guaranteed leniency when making such self-disclosures. Instead, the SRDP specifies that CMS has the discretion to evaluate the facts and circumstances surrounding the disclosure and to determine "an appropriate resolution" on a case by case basis.

While there is no guaranteed leniency, even in instances in which the violation stems from a "technical" violation of the Stark Law (for example, a contract between a hospital and a physician is not signed), providers that fail to report a "known" Stark Law violation may be subject to additional liability under the False Claims Act. When faced with the conundrum of whether it is advantageous to self-disclose, providers should consider the key elements of the SRDP, as outlined below.

Disclosure Details. At the time a disclosing party submits a disclosure under the SDRP (and receives e-mail confirmation of the submission from CMS), the disclosing party's obligation under Section 6402 of PPACA to return any potential overpayment within 60 days is suspended. Parties that are subject to government inquiries are not automatically precluded from making a disclosure; however, all SRDP disclosures must be made in good faith. In evaluating a potential self-disclosure, a provider should note that CMS is "not bound by any conclusions made by the disclosing party" under the SDRP, and is "not obligated to resolve the matter in any particular manner." Further, CMS must be given access to all financial statements, disclosures, and other supporting documentation without the disclosing party's assertion of privilege or limitations on the information produced to support the verification process. Additionally, if the disclosed matter is resolved through a settlement agreement, the disclosing party waives any right of appeal.

Disclosure Instructions. When submitting a self-disclosure, a disclosing party will be expected to make such disclosure via e-mail and hard copy to CMS's Division of Payment Policy. Such disclosure must include the following information:

  • The identity of the disclosing party and its affiliated entities, and a description or diagram that illustrates the entities involved in the actual or potential violation.
  • A description of the transaction or arrangement, which should include details regarding the parties involved; the time periods in which the parties have been out of compliance; and the type of designated health service claims that are at issue.
  • A description of why the disclosing party believes there is an actual or potential violation of the Stark Law. If a Stark Law exception was utilized in structuring the transaction or arrangement, such exception should be mentioned, as well as the elements of the exception that were met and those that were not met. In addition, a description of the potential causes of the incident or practice.
  • A description of how the violation was discovered and what specific measures were taken to address the violation and to prevent future abuse.
  • A statement indicating whether the disclosing party has a history of similar problems, regardless of whether such conduct resulted in criminal, civil, and/or regulatory enforcement actions.
  • A description of the disclosing party's pre-existing compliance program and any actions or measures taken to restructure the arrangement.
  • A statement indicating whether the disclosing party has knowledge of whether such transaction or arrangement is under investigation by a government agency or contractor; provided, however, that the SRDP specifies that a disclosing party is not precluded from self-disclosing merely because it is already subject to government inquiry.
  • A financial analysis of the recoupment amount that is actually or potentially owed pursuant to the Stark Law, along with a description of the methodology utilized to arrive at this amount. (Note that the "look back" period is the time during which the disclosing party was not in compliance with the Stark Law.)
  • A signed certification from the disclosing party or its authorized representative that the disclosure is truthful and based on a good faith effort to resolve any potential liability.

Relevant Factors CMS May Consider. When evaluating whether the self-disclosed Stark Law violation warrants a reduction of the recoupment amount, CMS may consider the following factors: (i) the nature and extent of the improper or illegal conduct; (ii) the timeliness of the self-disclosure; (iii) the cooperation in providing additional information pertaining to the disclosure; (iv) the litigation risk associated with the disclosed conduct; and (v) the disclosing party's financial position. However, CMS has no obligation to reduce any amounts due and owing by a disclosing party.

Separate from the Stark Advisory Opinion Process. The SRDP should be used by a disclosing party who has the "intention of resolving its overpayment liability exposure for the conduct it identified." It is separate from the Stark advisory opinion process, and should not be used as a mechanism to obtain a CMS determination as to whether such conduct is in violation of the Stark Law.

Distinguishable from the OIG Self-Disclosure Protocol. The SRDP is distinguishable from the Office of Inspector General ("OIG") Self-Disclosure Protocol, which is available to disclose conduct that raises potential liabilities under other federal criminal, civil, and administrative laws, including the Anti-Kickback Statute and the False Claims Act. Although CMS states that a disclosing party should not disclose the same conduct under the SRDP and the OIG Self-Disclosure Protocol, it remains unclear whether providers who have engaged in activity that may violate both the Anti-Kickback Statute and the Stark Law should self-disclose such conduct pursuant to the SRDP or the OIG Self-Disclosure Protocol. However, providers should be aware that when appropriate, CMS has the authority to disclose submissions made under the SRDP to the OIG and the Department of Justice. Additionally, CMS may conclude that the disclosed matter warrants a referral to law enforcement for consideration under civil and/or criminal authorities.

Given the fact that only time will reveal how CMS will exercise its discretion to settle Stark Law violations for less than their full recoupment value, be on the lookout for additional commentary from Smith Moore Leatherwood.

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