CMS Releases Self-Disclosure Protocol for Stark Violations

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On September 23, 2010, the Centers for Medicare and Medicaid Services (CMS) released its long-awaited self-referral disclosure protocol (SRDP), which is effectively immediately. The SRDP (available here) is intended as a mechanism for health care providers and suppliers to resolve liability arising from noncompliance with the Stark law, with at least the possibility of having to pay an amount less than the sometimes extremely high amounts required under current law. As described below, the SRDP contains substantial limitations and raises significant questions.

Background

The Stark law prohibits physicians from referring Medicare beneficiaries for “designated health services” to entities (generally hospitals) with which they have a financial relationship, unless an exception applies. As important, Stark also prohibits entities from submitting claims to Medicare for services that arise from prohibited referrals. The Stark prohibitions are strict, and its exceptions are highly technical and seldom intuitive. Stark violations are thus easy to commit, but can trigger significant and often disproportionate financial and legal consequences.

Entities that discover even inadvertent Stark noncompliance often have no good options. Repayment of prohibited claims can be unaffordable, but failure to repay can expose an entity to False Claims Act liability and attendant qui tam suits. Moreover, with very few exceptions, negotiated settlement has not been an option: the HHS OIG’s self-disclosure protocol is no longer available for Stark violations, and, until now, CMS has provided no similar avenue for redress.

The Patient Protection and Affordable Care Act (PPACA), enacted earlier this year, directed the Secretary of HHS to develop a protocol under which health care providers and suppliers could self-disclose Stark violations and potentially reduce their repayment obligations. The SRDP is that protocol.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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