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CMS SRDP Settlements Announced

on Wednesday, 18 June 2014 in Health Law Advisory: Zachary J. Buxton, Editor

Two submissions under the Self-Referral Disclosure Protocol (SRDP) reporting possible violations of the Stark Law were settled by CMS on December 23, 2013.

As reported by CMS on its website, the first submission involved an acute care hospital in Florida, which disclosed that its arrangement with 51 physicians failed to satisfy the requirements of the personal service arrangements exception. The settlement amount was $150,431.

The second case involved an acute care hospital in California, which disclosed that its arrangement with a physician group failed to satisfy the personal services arrangement exception. The settlement amount in this case was $12,914.

The timing of these two announced case settlements is intriguing, since the settlement amounts are significantly different, although based on both hospitals’ failure to satisfy the personal services arrangement exception. The only apparent difference noted in the case descriptions that might explain the difference in settlement amounts is the number of physicians involved (although it is entirely possible that 51 or more physicians were involved through the physician group contracted in the California case).

Ideally, the information provided by CMS would be detailed so as to inform parties considering submissions under the SRDP on the settlement amount they might anticipate in light of their particular facts. Unfortunately, the predictive value of CMS’s descriptions of these settlements is low, except to indicate the dollar range of settlement amounts. The variables in the cases submitted under the protocol are significant:

  1. The factual description of the Stark violation may describe minor contractual omissions which are technical in nature (e.g., a missing signature on a lease, or late signature of a personal services agreement) or arrangements with physicians which on their face are designed to induce referrals inappropriately. It would be understandable if CMS demanded a higher settlement of a party engaged in a classic self-referral arrangement.
  2. The period of the violation. If detected quickly, the exposure may be relatively small. If not, the exposure may extend to the period of the applicable statute of limitations.
  3. Amounts subject to refund because they were paid under the Medicare program for Designated Health Services ordered by the physician(s) involved, which were not payable due to the financial relationship which did not fall within a Stark Exception. This is the information which, if provided by CMS in describing its SRDP settlements, would be most helpful in predicting future settlements. This amount will obviously vary based on the number of physicians implicated in the financial relationship(s), the volume and value of their referrals of Designated Health Services to the other party, and the period of the violation.
  4. Other disclosures required under the SRDP might also influence the settlement amounts: the reason the violation may have occurred, circumstances of discovery of the violation, history of any similar conduct, description of existence and adequacy of pre-existing compliance program, efforts to prevent future recurrences, and whether the matter is under investigation by a Government agency.

 

On the theory that other announced SRDP settlements is all that is available in the public domain to provide context, we provide a few additional settlement descriptions recently issued by CMS:

  • A California acute care hospital disclosed arrangements with three physicians for on-call services to the Emergency Department that did not satisfy the requirements of any exception. Settled for $42,630.
  • A Texas general acute care hospital disclosed an arrangement with a physician to provide utilization review services, which did not satisfy the requirements of any applicable exception. Settled for $82,055.
  • A North Carolina acute care hospital disclosed arrangements with a physician to provide medical director services, a physician group practice to provide medical coding and consulting services and a physician and a physician group practice for the lease of office space, which did not satisfy the requirements of any applicable exception. Settled for $87,110.
  • A Minnesota non-profit community hospital disclosed an arrangement with a physician group practice for the rental of office space and the provision of support services did not satisfy the requirements of any applicable exception. Settled for $9,570.
  • A California acute psychiatric hospital disclosed that it had arrangements with two physicians for the provision of psychiatric services which did not satisfy the requirements of any applicable exception. Settled for $67,750.
  • An Oklahoma nonprofit acute care hospital disclosed arrangements with four physicians for the provision of electrocardiogram interpretation services, which failed to satisfy the requirements of any applicable exception. Settled for $124,008.

Barbara E. Person

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