The Centers for Medicare & Medicaid Services (CMS) recently released data on its 2023 settlements of voluntary self-disclosures related to past violations or potential violations of the physician self-referral law (the Stark Law). In 2023, CMS settled an agency record 176 self-disclosures, with settlement amounts totaling over $12,000,000 in the aggregate. Both totals exceeded its prior records, set the prior year, when CMS settled 103 self-disclosures with settlement amounts totaling over $9,000,000 in the aggregate as we reported last fall.
The Stark Law generally prohibits a physician from making a referral for designated health services (which include clinical laboratory services, radiology and certain other imaging services, and durable medical equipment and supplies) payable by Medicare to an entity with which the physician (or an immediate family member of the physician) has a financial relationship, unless an exception is satisfied. The Stark Law is highly technical, has strict liability consequences, and violations are often inadvertent. The CMS voluntary self-referral disclosure protocol (SRDP) allows healthcare providers and suppliers to self-disclose actual or potential violations of the Stark Law in order to resolve overpayment liability for the disclosed conduct.
Over the years, many providers experienced significant waiting periods for their self-disclosure to be addressed and thus this annual data release on settlements can provide guidance on CMS’s efforts to clear some of the historic backlog. The chart below highlights the number of self-disclosures settled each year to date and showing the significant increase the last two years setting annual records.
The aggregate settlement amounts to date are shown in the chart below. In addition to a record number of settlements, the aggregate settlement amount hit a new record high in 2023. This record for aggregate settlements was 35% higher than last year’s previous record high.
While the number of settlements and the aggregate settlement amounts hit record highs in 2023, the chart below demonstrates that the average settlement amounts have not changed materially. In fact, the average settlement amount for 2023, $71,363.73, is relatively low compared to the average settlement amounts in past years (third lowest on record). Settlement percentages and amounts can vary based on several factors, so it is difficult to draw conclusions based on this without more data. Additionally, the average can be skewed if there are high or low outliers in settlement amounts.
To this point, it is interesting that CMS’ 2023 range of settlements indicated the lowest ever reported SRDP settlement ($26), although there were previously reported settlements as low as $33. Meanwhile the maximum settlement in this reported range ($548,302) was the smallest maximum settlement in a year since 2019, a year which had a similarly low average settlement. While we do not want to read too much into this data, it is suggestive that average settlement amounts are not materially changing.
The record settlement numbers, first in 2022, and now in 2023, demonstrates CMS’s continued focus and efforts to work through SRDP submissions more expeditiously than in the past. Our anecdotal experiences reinforce this, as we have seen responses to submissions and settlements occurring on a more rapid basis than in prior years.
For those considering using the SRDP process, these reported settlements provide further context that settlement may come quicker than previously anticipated. Further, the settlements amounts, at least on average, are not inconsistent with past years. We will continue to monitor CMS statements on SRDP settlements in future years to examine what other trends the provider community may be able to glean from these announcements.
