Legal Intelligencer article by Lamb McErlane PC partner Vasilios J. Kalogredis, and associate Katherine E. LaDow*

On March 23, 2010, Section 6409 of the Patient Protection and Affordable Care Act (ACA) was signed into law. Section 6409(a) of the ACA required the Secretary of the Department of Health and Human Services, in cooperation with the Inspector General of the Department of Health and Human Services, to establish a Medicare self-referral disclosure protocol that would get forth a process to enable health care providers and suppliers to self-disclose actual or potential violations of the physician self-referral statute (Section 1877 of the Social Security Act).

Section 1877 of the Social Security Act, is also known as the physician self-referral law and commonly referred to as the “Stark Law.” The Stark Law (1) prohibits a physician from making referrals for certain designated health services (DHS) payable by Medicare or Medicaid to an entity with which he or she (or an immediate family member) has a financial relationship (ownership, investment, or compensation), unless an exception applies; (2) prohibits the entity from presenting or causing to be presented claims to Medicare or Medicaid (or billing another individual, entity, or third party payer) for those referred services; and (3) establishes a number of specific exceptions.  It also grants the Secretary the authority to create regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse.

On May 6, 2016, Centers for Medicare & Medical Services (CMS) published a notice seeking public comment on its plan to revise the information collected under the Medicare-Referral Disclosure Protocol (SRDP). On March 28, 2017, the new CMS SRDP was announced. Parties disclosing actual or potential violations of Stark Law will be required to use a new series of forms under CMS’s SRDP process as of June 1, 2017. All voluntary Stark Law self-disclosures made on or after June 1, 2017, other than those by physician-owned hospitals that failed to disclose physician ownership on a hospital’s public website or in any public advertisement, must be submitted using the new forms and financial worksheet. Physician-owned hospitals are required to continue to report noncompliant conduct referenced above under separate special instructions issued by CMS, which are available on the SRDP web page. According to CMS, the new forms will present a streamlined and standardized format for making SRDP submissions.

The new SRDP process represents a significant departure from the current SRDP. CMS is now providing health care providers and suppliers with detailed and specific forms that require parties to narrate the noncompliance at issue, identify the prevalence of the noncompliance, identify when an overpayment was first identified, and submit an exhaustive financial analysis worksheet. The new SRDP is comprised of three main components: (1) the SRDP Disclosure Form, which collects information about the disclosing party, the pervasiveness and history of the noncompliant conduct and steps taken to prevent future noncompliance; (2) the Physician Information Form, which is required for each physician included in the disclosure and which collects details of the noncompliant financial relationship(s) between the physician and the disclosing party; and (3) a Financial Analysis Worksheet in a specified format that quantifies the overpayment associated with each physician’s referral(s).

SRDP Disclosure Form

The new SRDP Disclosure Form requires disclosing parties to provide not only general identification information (i.e. business name, address, national provider identifier, etc.), but also to address the “pervasiveness” of the noncompliance at issue. CMS defines the “pervasiveness of noncompliance” as “how common or frequent the disclosed noncompliance was in comparison with similar financial relationships between the disclosing party and physicians.”

Physician Information Form

The disclosing party must provide, in narrative form, the nature of the financial arrangement at issue, the specific type of noncompliance, the method of cure or termination, and the period of the noncompliance. The narrative section requires the party so also submit the date in which the party determined that it received an overpayment. The “date of discovery” requirement is significant because it relates to reporting and returning overpayments in compliance within the 60-day overpayment rule. The “date of discovery,” which is reported to CMS, is the point at which the clock will start running for disclosing parties to report and return amounts actually or potentially received pursuant to Stark noncompliance.

Financial Analysis Worksheet

Disclosing parties must provide a financial analysis of the potential overpayment. The new SRDP process modifies the old format and changes how parties are to report such overpayment information. The financial analysis must list each physician, the date of actual or potential overpayment associated with each individual physician, and the overpayment arising from each physician’s prohibited referrals, itemized by each calendar year. However, the new SRDP states that unless specifically requested by CMS, the disclosing party does not need to provide CMS with data quantifying the remuneration received by the physician(s) as a result of the actual or potential violation.

All SRDP financial analysis worksheets must be submitted electronically in an Excel-compatible format and also sent via first class mail with an optional cover letter. Disclosing parties are required to update CMS within 30 days if the disclosing party files for bankruptcy, undergoes a change in ownership, or changes its designated representative.

The new SRDP is meant to streamline the disclosure process for disclosing parties while also expediting CMS’s internal review process by standardizing the presentation of information.

To read the full text of the CMS Voluntary Self-Referral Disclosure Protocol visit: https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/downloads/6409_srdp_protocol.pdf.

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*Katherine E. LaDow, Esquire, an associate with Lamb McErlane PC., contributed to this article.

Vasilios (“Bill”) J. Kalogredis is Chairman of Lamb McErlane’s Health Law Department. Bill has been practicing health law for over 40 years, representing exclusively physicians, dentists, group practices, other health care professionals and health care-related entities.

*Katherine (“Katie”) E. LaDow, Esquire, Katie is an associate in the litigation department. She concentrates her practice in the areas of state civil litigation, family law and health law.