Medicare Self-Referral Disclosure Protocol: To Disclose or Not to Disclose
On March 23, 2012, the Department of Health and Human Services (HHS) submitted a report to Congress on the implementation of the Center for Medicare and Medicaid Services’ (CMS) Voluntary Self-Referral Disclosure Protocol (SRDP) (Report to Congress: Implementation of the Medicare Self-Referral Disclosure Protocol, herein after “the Report”). Authorized by the Affordable Care Act and implemented on September 23, 2010, the SRDP provides a vehicle for health care providers to self-disclose to CMS actual or potential violations of the physician self-referral statute. The Report, required under the Affordable Care Act, summarizes the implementation of the SRDP, including information regarding the number of health care providers that have made disclosures pursuant to the SRDP, the amount collected, and the types of violations reported. The issuance of the Report sheds some light on the advantages and drawbacks of the decision to self-disclose overpayments due to potential or actual violations of the physician self-referral statute.
The physician self-referral statute prohibits physicians from making referrals for certain Medicare covered designated health services (DHS) to an entity with which the physicians (or a member of their immediate family) have a financial relationship, unless an exception applies. In addition, the entity is prohibited from presenting, or causing to be presented, claims to Medicare (or billing another individual, entity, or third party payer) for the referred services. In addition to denial of payment or recoupment of overpayments for violations of the physician self-referral statute, the sanctions for such violations can be severe, including the imposition of disproportionately large damage amounts. Prior to the Affordable Care Act, the Secretary’s authority to compromise or otherwise minimize sanctions associated with violations of the physician self-referral statute was severely limited. As noted in the Report, “[f]or the first time, the Secretary has the ability to take into consideration the severity of a physician self-referral statute violation and, as appropriate, reduce the amount owed to the government based upon an assessment of the conduct at issue.”
The Affordable Care Act requires the Secretary of HHS, in cooperation with the HHS Office of the Inspector General, to establish the SRDP to facilitate the resolution of matters that, according to the disclosing party’s reasonable assessment, are actual or potential violations of the physician self-referral statute. The Affordable Care Act also grants the Secretary of HHS the authority to reduce the amount due for violations of the physician self-referral statute, which are disclosed pursuant to the SRDP.
The SRDP sets forth a process for providers to self-disclose actual or potential violations of the physician self-referral statute. The requirements for such disclosures involve the submission of a great deal of information, sometimes involving hundreds of pages, as well as conducting a financial analysis relating to the actual or potential violations.
Disclosures must be submitted to CMS electronically and include a description of the actual or potential violation(s). Such description should include: (1) the name, address, and national provider identification number of the disclosing party; (2) “a description of the nature of the matter being disclosed, including the type of financial relationship(s), the parties involved, the specific time periods the disclosing party may have been out of compliance, . . . and the type of [DHS] claims at issue”; (3) a statement regarding why the disclosing party believes that the physician self-referral statute may have been violated, “including a complete legal analysis of the application of the physician self-referral [statute] to the conduct” involved and any exception that may apply or that the disclosing party attempted to utilize; (4) “the circumstances under which the disclosed matter was discovered” and any attempts to address the actual or potential violation; (5) “whether the disclosing party has a history of similar conduct,” or has any enforcement actions against it; (6) a description of the disclosing party’s pre-existing compliance program; (7) “a description of appropriate notices, if applicable, to other Government agencies”; and (8) whether the disclosing party knows that the matter is subject to a current inquiry by a Government agency or contractor.
The financial analysis should include: (1) the total amount for each year that is actually or potentially due; (2) the methodology used to determine such amount; (3) the total amount of remuneration that a physician(s) received as a result of the actual or potential violation; and (4) a summary of any auditing activity performed and a summary of the documents the disclosing party relied upon relating to the actual or potential violation.
CMS determines the amount due for disclosed matters on a case-by-case basis, and may determine that a reduction is appropriate based on the facts and circumstances of the case. In making its determinations, CMS may consider: (1) the nature and extent of the improper activity; (2) the timeliness of the disclosure; (3) the disclosing party’s cooperation in providing additional information; (4) the litigation risk associated with the disclosed matter; and (5) the disclosing party’s financial situation.
Under the Affordable Care Act, the deadline for reporting and returning overpayments is the later of: (1) 60 days from when the overpayment was identified; or (2) the date any corresponding cost report is due, if applicable. Disclosure though the SRDP, however, temporarily tolls the provider’s obligation to return any associated overpayment until it has entered into a settlement agreement with CMS, it withdraws from the SRDP, or CMS removes the provider from the SRDP.
Once a final settlement amount is determined and agreed upon by CMS and the disclosing party, the disclosing party enters into a formal agreement with CMS, which releases the disclosing party from liability under CMS’ administrative authority for that violation. According to the Report, however, “[a]s part of the agreement, the disclosing party acknowledges in writing that CMS’ acceptance of the settlement amount does not constitute the Government’s agreement as to the amount of losses suffered by the Medicare program as a result of the disclosed violation, and does not relieve the disclosing party of any criminal, civil, or civil monetary penalty liability, nor does it offer a defense to any further administrative, civil, or criminal actions against the disclosing party.” In addition, according to the SRDP, as a condition of disclosure, “the disclosing party agrees that no appeal rights attach to claims relating to the conduct disclosed if resolved through a settlement agreement.”
In the Report, HHS stated that CMS has received 150 disclosures from 148 providers since the SRDP was implemented. As of the date of the Report, six of the disclosures had been resolved through settlements for a total of $783,060; 51 disclosures are still under CMS review, and CMS is waiting for additional documentation related to 61 disclosures. Nine disclosures were withdrawn by the disclosing party, three have been referred to law enforcement, and 20 disclosures are in administrative hold for reasons such as pending bankruptcy proceedings.
The most commonly disclosed violations were failure to comply with the personal services arrangement exception, the nonmonetary exception, the office space rental exception, and the physician recruitment exception. The Report however, does not identify the number of disclosures that involved merely technical violations of the physician self-referral statute.
The Report does provide some insight for providers who may be considering submitting a disclosure through the SRDP. First, it advises that the more complete the submission, the more quickly it will be resolved. Specific deficiencies that have delayed resolution include inadequate legal analysis, insufficient financial information, and not providing relevant documentation of the disclosed violation, such as copies of contracts. Second, submitting a disclosure through the SRDP does not guarantee a resolution of the matter by CMS. As mentioned, CMS referred three disclosures to law enforcement entities, and placed 20 submissions in administrative hold.
While the SRDP and the factors CMS uses to determine its settlements may not be the ideal or most transparent solution to resolving potential or actual violations of the physician self-referral statute, the SRDP does offer providers a process for disclosing such violations in a manner that may result in a more favorable outcome than not reporting, particularly in light of the fact that the physician self-referral statute is a strict liability statute. Submitting matters pursuant to the SRDP also temporarily tolls the obligation to return overpayments associated with such violations.
