On September 23, 2010, the Centers for Medicare & Medicaid Services (CMS) issued the much anticipated Medicare self-referral disclosure protocol (SRDP) mandated by section 6409 of the Patient Protection and Affordable Care Act (PPACA).  The SRDP provides an important process for health care providers of services and suppliers to facilitate resolution of only matters that, in the disclosing party's reasonable assessment, are actual or potential violations of the physician self-referral law (Stark Law).  Such a process has been unavailable since March 24, 2009, when the Office of Inspector General of the Department of Health and Human Services (OIG) indicated that it would henceforth, under its self-disclosure protocol that has been in place since 1998, only consider self disclosures of conduct that constitutes a colorable violation of the anti-kickback statute, and would no longer consider self disclosures of potential Stark Law violations.

There are a number of important considerations for any provider, including a physician group or a hospital, to consider when deciding whether to self disclose.  That is particularly true since the Stark Law is technically a strict liability statute, and the good faith intent of a provider is simply not relevant in determining whether a Stark Law violation has occurred.  For one, CMS clearly states that it "has no obligation to reduce any amounts due and owing" but that it "will make an individual determination as to whether a reduction is appropriate based on the facts and circumstances of each disclosed actual or potential violation."  The factors CMS may consider in reducing the amounts otherwise owed include:  (1) the nature and extent of the improper or illegal practice; (2) the timeliness of the self-disclosure; (3) the cooperation in providing additional information related to the disclosure; (4) the litigation risk associated with the matter disclosed; and (5) the financial position of the disclosing party.

Moreover, if a disclosing party discloses a matter under the SRDP, it waives its appeal rights to the claims relating to the conduct disclosed if a settlement agreement is reached.  However, if the disclosing party withdraws or is removed from the protocol, the disclosing party may appeal any overpayment demand letter in accordance with applicable regulations.  Additionally, it is important to understand that CMS may coordinate with the OIG and Department of Justice (DOJ) upon review of the disclosing party's disclosure submission in cases where the disclosed matter warrants a referral to law enforcement for consideration under its civil and/or criminal authorities.  In all events, CMS reserves the right to use the submission to prepare a recommendation to the OIG or the DOJ for resolution of violations of the False Claims Act or the Civil Monetary Penalty Law.  Importantly, the SRDP does not contain any statements of leniency for reporting, and states only that CMS will review the circumstances surrounding the matter disclosed to determine an appropriate resolution.  All this being said, nonetheless this protocol is an important avenue now available to providers to seek to resolve potential Stark Law violations, and hopefully to seek a significant compromise on the amounts the Government might otherwise theoretically seek to recover for any Stark Law violation.

To this end, The SRDP contains detailed instructions on the content and form of the disclosure submission, which CMS states must be made in furtherance of diligent and good faith cooperation by the provider.  After review of the submission, CMS will send a letter to the disclosing party or its representative either accepting or rejecting the disclosure.  CMS may also seek additional documentation or information about the conduct at issue, and it makes clear that it expects a provider to provide the same without CMS having to resort to a compulsory process. 

  • In brief, the disclosure must contain a description of the following: The name, address, national provider identification numbers, CMS Certification Numbers and tax identification numbers.
  • A description of the nature of the matter being disclosed, including the type of financial relationship(s), the parties involved, the specific time periods the disclosing party may have been out of compliance (and, if applicable, the dates or range of dates whereby the conduct was cured), and type of designated health services claims at issue. 
  • A statement from the disclosing party regarding why it believes a violation of the physician self-referral law may have occurred, including a complete legal analysis of the application of the physician self-referral law to the conduct and any physician self-referral exception that applies to the conduct and/or that the disclosing party attempted to use.
  • The circumstances under which the disclosed matter was discovered and the measures taken upon discovery to address the issue and prevent future abuses.
  • A statement identifying whether the disclosing party has a history of similar conduct, or has any prior criminal, civil, and regulatory enforcement actions (including payment suspensions) against it.
  • A description of the existing and adequacy of a pre-existing compliance program that the disclosing party had, and all efforts by the disclosing party to prevent a recurrence of the incident or practice in the affected division as well as in any related health care entities.
  • A description of appropriate notices, if applicable, provided to other Government agencies in connection with the disclosed matter.
  • An indication of whether the disclosing party has knowledge that the matter is under current inquiry by a Government agency or contractor.

Additionally, the disclosure must contain a detailed financial analysis, setting forth the total amount that is potentially due and owing based on the time period during which the disclosing party may not have been in compliance with the physician self-referral law, i.e., the "look back" period. 

In light of the new SRDP, any decision by a provider to self-disclose potential Stark violations should be carefully considered in light of the entire facts and circumstances, and preferably in consultation with experienced health care counsel. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.