The physician self-referral statute, otherwise known as the Stark law, prohibits referrals of Medicare and Medicaid patients for designated health services to entities with which the referring physician or his or her immediate family members have a financial relationship. Prior to the passage of the Patient Protection and Affordable Care Act (PPACA), there was no self-disclosure rule for Stark law violations.

On September 23, 2010, pursuant to the requirement imposed by §6409 of PPACA, the Centers for Medicare & Medicaid Services (CMS) released the Medicare self-referral disclosure protocol (SRDP). Under the SRDP, all health care providers and suppliers, whether individuals or entities (“disclosing parties”), will be able to self-disclose any actual or potential violations of the Stark Law. It is worth noting that the SRDP is separate from the advisory opinion process, and may not be used to obtain advisory opinions as to whether a violation has occurred.

If a provider or supplier self-discloses using the SRDP, §6409(b) of PPACA gives the Secretary of HHS the discretion to reduce any penalties that may be levied. Factors the Secretary may consider in determining the amount of any such reduction will include (1) the nature and extent of the violation, (2) the timeliness of the disclosure, (3) cooperation from the disclosing parties in providing information related to the disclosure, (4) the litigation risk associated with the disclosed matter; and (5) the financial position of the disclosing party. The protocol is clear: while CMS may consider these factors, it has no obligation to reduce any amount due and owing. Those decisions will be made on a case by case basis and will depend on facts and circumstances of each disclosed actual or potential violation.

According to the newly released SRDP, a provider/supplier desiring to self-disclose must follow these directions:

1. All disclosures must be submitted electronically, and an original and one copy must be mailed to CMS. After review, CMS will respond in letter either accepting or rejecting the disclosure.

2. Every SRDP submission must include:

a. name, address, national provider identification number, CMS certification number, and tax identification number of the disclosing party;

b. a description of the nature of the matter being disclosed (including the type of financial relationship involved and other various specific facts);

c. a statement from the disclosing party as to why it believes a violation has occurred (must include detailed legal analysis);

d. circumstances of discovery and corrective and remedial measures taken;

e. a statement whether the disclosing party has any past history of similar conduct or other regulatory enforcement actions against it;

f. a description of the existence and adequacy of any pre-existing compliance programs;

g. a description of any notices sent to other government agencies regarding the disclosed matter; and

h. an indication whether the disclosing party has knowledge that the matter is currently under inquiry by a Government agency or contractor (and if so, provision of various related facts).

3. The disclosing party must submit a financial analysis to CMS, setting forth the total amount potentially owing the government based on the applicable look-back period, describing the methodology used to calculate that amount, and providing a summary of all auditing activities undertaken and all documents relied on.

4. The disclosing party’s CEO, CFO or other authorized representative must certify to the accuracy and truthfulness of all information submitted.

Following receipt of a self-disclosure in compliance with this protocol, CMS will complete a verification process with regard to all information provided. During this verification process, CMS must be given access to all financial statements and other supporting documents. CMS may request additional information if needed, and will permit 30 days to furnish same.

The SRDP also expressly notes that, while participation in the SRDP is limited to potential or actual violations of the Stark law, conduct that is reportable under the SRDP may also raise liability risks under the federal anti-kickback statute. Disclosing parties are not to disclose the same conduct under both the SRDP and the OIG’s self-disclosure protocol for the anti-kickback statute. Instead, when appropriate, CMS may use a disclosing party’s submission under the SRDP to recommend appropriate actions to the OIG or the DOJ for resolving False Claims Act, civil monetary penalty, or other liability. As the SRDP warns, a disclosing party’s initial decision of where to refer a matter involving non-compliance with the physician self-referral law should be made very carefully.

Finally, the SRDP indicates that disclosing parties currently under the governance of a corporate integrity agreement (CIA) or certification of compliance agreement (CCA) with the OIG should also comply with any reporting requirements in such agreements.

Kathryn Gilchrist is a Partner and the Health Care Team Leader at Adams and Reese, practicing in the firm's Jackson office. Gilchrist handles litigation and administration and contract matters for physicians, hospitals and other healthcare providers, and Certificate of Need and other proceedings before the Mississippi State Department of Health. Additionally, she has experience in all types of employment discrimination actions including sexual harassment and discrimination, race and age discrimination and Fair Labor Standards Act cases. She is currently serving a two-year term as an at-large member of the Executive Committee of the Mississippi Bar’s Health Law Section. She also serves as an Adjunct Professor at both The University of Mississippi School of Law (since 2006) and Mississippi College School of Law (since 2004), where she teaches courses on Health Law.

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