von Briesen Health Law Blog

CMS released its protocol today for providers and suppliers to disclose an actual or potential violation of the federal physician self-referral law known as “Stark.”  The protocol was required by the Patent Protection and Affordable Care Act signed by the President on March 23, 2010.

You may review the disclosure protocol here.  A summary follows below.

Description of the Actual or Potential Violation

The submission to CMS must include:

1. A description of the nature of the matter being disclosed.
2. 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 and a description of the potential causes of the incident or practice (e.g., intentional conduct, lack of internal controls, circumvention of corporate procedures or government regulations).
3. The circumstances under which the disclosed matter was discovered and the measures taken upon discovery to address the issue and prevent future abuses.
4. 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.
5. A description of the existence and adequacy of a pre-existing compliance program.
6. A description of appropriate notices, if applicable, provided to other government agencies, (e.g., Securities and Exchange Commission and Internal Revenue Service) in connection with the disclosed matter.
7. An indication of whether the disclosing party has knowledge that the matter is under current inquiry by a government agency or contractor.

Financial Analysis

CMS expects the disclosing party to conduct a financial analysis, and report its findings to CMS.  The analysis should include:

1. The total amount, itemized by year, that is actually or potentially due and owing based upon the applicable “look back” period. The “look back” period is the time during which the disclosing party may not have been in compliance with the physician self-referral law.
2. A description of the methodology used to set forth the amount that is actually or potentially due and owing.  Indicate whether estimates were used, and, if so, how they were calculated.
3. A summary of auditing activity undertaken and a summary of the documents relied upon.

Factors CMS May Consider in Reducing Amounts Owed

CMS states that the factors that it may consider in reducing the amounts owed are:

1. The nature and extent of the practice.
2. The timeliness of the self-disclosure.
3. Cooperation in providing additional information;
4. The litigation risk associated with the matter; and
5. The financial position of the disclosing party.

Payment

The disclosing party is not required to submit payment with its submission, but CMS encourages disclosing parties to set aside adequate amounts for repayment liability.

Unfortunately, CMS does not offer any suggestion that it will use a fixed penalty amount to determine liability, as advocated by some industry groups such as the American Hospital Association.  Providers, of course, may advocate for a reduced penalty during the disclosure process.