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HHS Issues Report to Congress on the Self-Referral Disclosure Protocol

Written by Tom Crane and Brian Dunphy

On March 23, 2012, the Department of Health and Human Services (HHS) issued its statutorily required report to Congress (Report) describing the implementation of the Medicare Physician Self-Referral Disclosure Protocol (SRDP) and the status of disclosures under the SRDP to date.  The SRDP was authorized by the Affordable Care Act (ACA), which also gave the Secretary of HHS the authority to reduce the amount due for violations of the physician self-referral statute (commonly referred to as the “Stark Law”), and required HHS to establish the SRDP.  The SRDP defines the process to self-disclose actual or potential violations of the Stark Law and specifies the information that health care providers or suppliers must submit to the Centers for Medicare & Medicaid Services (CMS) (acting on behalf of the HHS Secretary) so that CMS can analyze and potentially resolve liability for those violations.

One benefit to providers for making a self-disclosure through the SRDP is the possible reduction of financial liability.  The Stark Law is a strict liability statute (there is no intent requirement), and a violation of the Stark Law, even if unintentional, can result in denial of payment, significant liability for overpayments (since an entity cannot bill Medicare for a service provided pursuant to a prohibited referral), and penalties for claims submitted pursuant to a prohibited referral.  CMS noted in the Report that overpayment liability “may be disproportionate to the severity of the violation,” and through the SRDP, CMS has the authority to “compromise or to minimize an overpayment associated with a violation.”

The Report discusses use of the SRDP to date and provides a summary of the number of disclosures, the types of disclosing parties, the number of resolutions, and the amounts collected through the SRDP since it was implemented on September 23, 2010.  Details include the following:

  • Number of disclosures - CMS has received 150 disclosures from 148 providers.
  • Types of disclosing parties - of those 150 disclosures, CMS has received disclosures from 125 hospitals, 11 clinical laboratories, 8 physician groups, 2 community mental health centers, 2 durable medical equipment suppliers, 1 ambulance service company, and 1 health care foundation.
  • Disclosed violations - the most commonly disclosed violations include failure to comply with the Stark Law exceptions for personal service arrangements, non-monetary compensation, rental of office space, and physician recruitment arrangements.
  • Status of disclosures – 61 disclosures are awaiting additional requested information, 51 disclosures are under CMS review, 20 disclosures are on administrative hold (for pending bankruptcy proceedings and ongoing law enforcement activities), 9 disclosures have been withdrawn, and 3 disclosures were referred to law enforcement (the Office of Inspector General or Department of Justice) for resolution.
  • Number of settlements - CMS has settled 6 cases (4 of which are posted on CMS’s website as of the date of this entry) with a total value of $783,060. In addition, we have been informed that one more case has been settled since the Report was sent to Congress.

CMS commented on trends in disclosures received to date and the factors that have slowed the agency’s ability to review and resolve disclosures.  First, the nature and complexity of the disclosures varies widely.  Some disclosures cover violations among a number of providers over a period of years, which makes resolution complex.  Second, many disclosures did not provide adequate information.  For 61 disclosures—more than 40% of the total number of disclosures—CMS  is awaiting additional information.  In particular, disclosures from distressed hospitals in the process of a sale or asset acquisition were often insufficient.  The SRDP provides a path for distressed hospitals to resolve outstanding liabilities under the Stark Law before completing a transaction, and typically the parties are seeking a quick resolution.  CMS has been working with the disclosing parties to obtain the information required to assess the potential Stark Law violation and to determine an appropriate financial resolution.

The Report also offers insight for providers and suppliers who may be participating in the SRDP or contemplating submission of a disclosure.  First, the Report indicates that a more complete disclosure may lead to a faster resolution.  CMS attributes some of the delays in resolving disclosures to insufficient information in the disclosures.  Second, though the SRDP provides a path to resolving Stark Law liabilities, the resolution may not be as quick as the disclosing party would hope.  In particular, for distressed entities, or those being purchased, the Report makes clear that the resolution of Stark Law liability may take a significant amount of time.  Last, providers should be aware that making a disclosure pursuant to the SRDP does not guarantee that CMS will resolve the matter.  Three disclosures were referred to law enforcement authorities, and 20 additional disclosures were placed on administrative hold due to, among other things, pending law enforcement activities and bankruptcy proceedings.


The Report leaves many questions unanswered. First, the Report does not address how many of the self-disclosures involved technical violations of the Stark Law, such as the failure to meet one or more of the Stark Law’s requirements pertaining to written agreements.  Second, there is a backlog of disclosures.  Because providers have a legitimate expectation of a prompt resolution of self-disclosed problems, it would have been useful if CMS had critically assessed the reasons for the significant backlog in unresolved cases, and commented on the degree to which this problem was due to an initial burst of yet-to-be-resolved self-disclosures, and whether the flow of disclosures has now waned.  Finally, providers have been looking for some comfort that CMS will view seriously Congress’s directive to resolve self-disclosed violations by compromising overpayments, which could otherwise be potentially significant if CMS were merely to calculate the amount of claims submitted pursuant to non-compliant referrals.  Four out of the seven settlements to date were for under $25,000, which suggests that CMS is basing its settlement decisions on other factors.  It would have been helpful if CMS had identified how much emphasis it gives to factors other than the value of impermissible referrals.

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Brian P. Dunphy

Member / Co-Chair, Health Care Enforcement Defense Practice

Brian P. Dunphy is a member of the Health Care Enforcement & Investigations Group at Mintz. He defends clients facing government investigations and whistleblower complaints regarding alleged violations of the federal False Claims Act. Brian also handles commercial health care litigation.