The Centers for Medicare and Medicaid Services (CMS) issued its anticipated self referral disclosure protocol (SRDP) on September 23rd. The SRDP is designed to (1) give providers a way for self disclosing self-referral (Stark Law) violations, and (2) paying any associated Medicare overpayment.
The SRDP was mandated by the healthcare reform law. It is striking in many respects, including (a) it is a "voluntary" self-disclosure program, (b) it is not the result of the usual rule making process (which includes a comment period), (c) the scope of information required to be reported is extremely broad, including for instance a detailed description of the violation and all parties involved, and (d) even "technical" violations will likely give rise to significant monetary repayments. Key provisions of the SRDP include:
- CMS has the authority to reduce the amount due as a result of a Stark violation, but is not required to do so. like FTC investigations (of antitrust violations), CMS is expected to look at the facts and circumstances of each report;
- The "disclosing party" is required to report the total amount that is due or even potentially due, and that has to be itemized for the applicable look-back period;
- CMS can consider many factors in deciding whether to reduce the amount owed, including—(i) timeliness of disclosure, (ii) the nature of the illegal conduct, and (iii) the financial situation of the disclosing party;
- If the disclosing party reports the violation within 60 days of identifying the overpayment, the disclosing party's obligation to refund the identified amount is suspended while CMS determines the settlement amount;
- The SRDP process is not available for opinions regarding Stark compliance. It is available when a provider believes there has been a Stark violation, in which case money will be owed.
The voluntary nature of the law is debatable, since Medicare payments made in violation of Stark must be returned within 60 days of being identified, or they will be converted to a False Claims Action violation, which is punishable by up to $11,000, plus triple the impermissible charges!
The new law presents a huge conundrum for providers: to disclose or not to disclose. It is not an easy thing to even identify a Stark violation. That said, there is clear exposure to criminal penalties if the disclosure is late or if there is some suspicion that the violation has been concealed. Self reporting does not save a provider from False Claims Act exposure (or from any other, such as a whistle blower action!).
Stark law compliance has always been elusive for even the most risk averse providers, and myths continue to abound, like:
- One cannot pay compensation on a percentage basis;
- Diagnostic testing profits can be allocated based on which physicians in a group practice ordered the test; and
- Independent contractor physicians in a group practice can provide services off-site of the ordering physician.
Stark compliance has never been more critical and more complex. Now more than ever, the existence of compliance measures will likely prove to be an important factor in mitigating SRDP repayment amounts. Providers can be expected to request more advisory opinions on Stark issues and to seek legal guidance early and often.
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With over 20 years of healthcare law experience following his experience as legal counsel for the Florida Medical Association, Mr. Cohen is board certified by The Florida Bar as a specialist in healthcare law. With a strong background and expertise in transactional healthcare and corporate matters, particularly as they relate to physicians, Mr. Cohen's practice immerses him in regulatory, contract, corporate, compliance and employment related matters. As Founder of The Florida Healthcare Law Firm, he has distinguished himself and his firm for providing exceptional legal services with the right pricing, responsiveness and ethics.
