CMS Guidance on the Stark Self-Referral Disclosure Protocol

On November 19, 2010, the American Health Lawyers Association sponsored a Webinar entitled “The New Reality of Stark Self-Disclosures, What to Do and Not Do”.

The Presenters included Troy Barsky, Esq. and Roy Albert, Esq. from the Centers for Medicare and Medicaid Services. Mr. Barsky is the Director, Division of Technical Payment Policy and Mr. Albert is in the Financial Services Group, Office of Financial Management.

Mr. Barsky and Mr. Albert made the following points regarding the Stark Self-Referral Disclosure Protocol (SRDP):

• Prior to the enactment of Section 6409 of the Patient Protection and Affordable Care Act (PPACA), CMS was not authorized to reduce amounts due and owing as a result of a violation of the Stark statute. The inclusion of this provision in PPACA is essential to the Stark self-disclosure process because without this authority an entity has no incentive to self-disclose.
• CMS essentially adopted the approach taken by the HHS Office of Inspector General in accepting self-disclosures under the anti-kickback statute.
• The purpose of the SRDP is to resolve actual and potential violations of the law and not to provide a process to obtain an opinion on whether a particular factual situation constitutes a violation. Therefore, if a disclosure is made under the protocol, CMS will assume that it constitutes a violation. A submission that attempts to argue that a particular arrangement did not violate the statute will be rejected.
• If a submission is rejected, CMS will be entitled to reopen the claims submitted in violation of the statute from the date of the disclosure.
• CMS and OIG will know whether there are simultaneous disclosures of the same conduct. If a submission is made under the SRDP, CMS will assume it did not fall within the Department of Justice or OIG jurisdiction.
• The submission should not include protected health information (PHI). If the submitter believes it is necessary to include PHI, the information should be segregated and the submitter should let CMS know that PHI is included.
• Submissions must be made electronically. If the submission constitutes a large PDF file, the PDF files should be broken up into the cover memo and the exhibits.
• Submitters should expect a response immediately indicating the submission has been received. It is the receipt of this automated e-mail that stops the sixty day clock on the obligation to refund any over payments. CMS expects to review each submission within two to three weeks and advise whether the submission has been accepted, rejected or whether additional information is required. In most cases, CMS expects to request additional information.
• CMS is considering whether it needs to promulgate frequently asked questions on its website regarding the SRDP.
• CMS is not providing any specific guidance on how the submissions will be resolved. The only assurances they will provide are that they will strive to be reasonable and efficient and will evaluate each submission on a case by case basis.
• The financial analysis should include the total amount actually or potentially due and owing to CMS. This would include any payments made by Medicare fee for service for a designated health service that was furnished pursuant to a prohibited referral. The submission should be itemized by year. If the submitter is estimating the amount due and owing, the description of the methodology used should be provided.
• The Office of Financial Management (OFM) has the responsibility to determine whether the amount due and owing should be reduced.
• The SRDP discusses the factors that OFM will use to determine whether to reduce the amount due and owing. The most important factor is the nature and extent of the improper or illegal practice. Some of the sub-factors OFM will consider are whether the arrangement was commercially reasonable, whether the compensation paid was fair market value, whether the arrangement took volume or value of referrals into account, whether the entity has a history of program abuse, whether the payments were set in advance, whether the entity has a pre-existing compliance program and the strength of the program, the length and pervasiveness of non-compliance in relation to the size of the disclosing entity, and the steps taken to correct the problems causing the non-compliance. Ideally, the steps would be taken before the disclosure is submitted, but must come before settlement.
• The additional factors that OFM will consider are the timeliness of the self-disclosure, the cooperation in providing additional information, litigation risks and the financial position of the disclosing party. The definition of litigation risk is found at 42 CFR § 401.613. Under this Section, CMS may compromise a claim if it determines that it would be difficult to prevail in a case before a court of law as a result of the legal issues involved or inability of the parties to agree to the facts of the case. The amount that CMS accepts as a compromise under this provision will reflect; (i) the likelihood that CMS would have prevailed on the legal questions involved; (ii) whether and to what extent CMS would have obtained a full or partial recovery of judgment, depending on the availability of witnesses, or other evidentiary support for CMS’ claim; and (iii) the amount of court costs that would be assessed to CMS.
• CMS will also look at the financial position of disclosing entity. CMS expects to look at the ability to pay in only limited circumstances. It would be a factor if the disclosing entity argued that it could not pay the amount the amount of the penalty that CMS believed was appropriate to assess.
• Under Section 6409(c) of PPACA, CMS must submit a report to Congress no later than March 23, 2012, which addresses the implementation of the SRDP. The report shall include the number of health care providers/suppliers making disclosures; the amount collected pursuant to the SRDP; the types of violations reported under the SRDP and such other information as may be necessary to evaluate the impact of Section 6409 of the PPACA.
• CMS has not determined yet whether it will make settlements under the SRDP available to the public. The OIG has made settlement terms available to the public.
• CMS has received approximately thirty submissions, some prior to the date that the SRDP was promulgated. The size of the submission so far has varied from one or two violations to fifty to one hundred financial relationships. All of the proposed violations relate to compensation arrangements and not ownership interests. The potential violations disclosed include technical violations and lack of fair market value and commercial reasonableness.
• In the case of a technical violation where the parties continue to perform under an expired contact as an example, the starting point for the financial analysis is the total amount billed to Medicare fee for service for designated health services and not the total compensation paid under the arrangement. If CMS agrees that the violation is solely related to signature requirements and not a more substantive requirement, CMS expects to compromise the amount due and owing significantly. The analysis will begin, however with the overpayment amount.
• The SRDP only applies to Medicare payments and not to Medicaid payments, although the federal Stark law does apply to the federal government’s share of the Medicaid payments. If the payor is a Medicare Advantage Plan, there is an exception for such arrangements that should apply in those cases.

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