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CMS Issues New Stark Self Disclosure Form

on Tuesday, 9 May 2017 in Health Law Alert: Erin E. Busch, Editor

Prior to the enactment of the Patient Protection and Affordable Care Act (the “Act”), CMS had no express authority to negotiate settlements of, and reduce the liabilities associated with, Stark violations.  Providers had two alternatives: (i) the provider could repay the entire amount paid by Medicare as a result of prohibited referrals, which many times was cost-prohibitive; or (ii) do nothing, hoping that the violation would not become known to CMS, the Department of Justice, or qui tam relators.  

The Act directed CMS to develop the Stark self-referral disclosure protocol (the “SRDP”).  In the years since the enactment of the Act, CMS has gone through various iterations of the SRDP.  Previous SRDP guidance was fairly detailed but also left many unanswered questions.  There was no “form” so long as the required elements were addressed in the disclosure.  Over the years, CMS clearly has desired to streamline SRDP disclosures to allow for efficient review due to the volume of SRDP disclosures it was receiving.  To that end, CMS recently “retired” its SRDP guidance and replaced it with a detailed SRDP protocol form.  

Effective June 1, 2017, most all  new Stark self-disclosures must be submitted using the form available on CMS’s website.  The Form streamlines the reporting of actual or potential Stark violations but still requires a substantial amount of information.  For example, the Form utilizes a “check the box” approach to answer certain questions that previously would have generated long narratives.  The Form also provides much more structure than the previous SRDP protocol.  There is much less opportunity to present legal arguments and postures with regard to the financial relationship being disclosed.

Also, in what appears to be a significant variance from the prior protocol, the Form requires that information, including financial information, be provided individually for each physician.  This means that when a Stark violation occurs and the “stand-in-the-shoes” rule is implicated, financial and other information for each physician owner of the group practice will need to be obtained and disclosed.  

SRDP disclosures will continue to consist of a legally and factually intensive review process.  Not only will aggregate financial information need to be obtained and disclosed, but financial information will also need to be broken down by physician.  While CMS allows for an explanatory cover letter, it is unclear whether and to what extent that cover letter will be taken into account when determining litigation risk and other elements utilized by CMS to determine the appropriate settlement amount.

Andrew D. Kloeckner


1 There is a limited exception for disclosures related to the public advertisement of physician ownership in physician-owned hospitals and rural providers.

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