April 13, 2017
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Health Law Alert: CMS Publishes Updated Stark Law Self-Referral Disclosure Protocol Against Backdrop of Significant Increase in Scope of False Claims Act Penalties
In late March, the Centers for Medicare and Medicaid Services (CMS) issued a new Stark Law Self-Referral Disclosure Protocol (SRDP). Originally enacted as part of the Affordable Care Act, the SRDP was created as a tool for health providers to self-disclose violations of the Stark Law that did not rise to the level of necessitating the disclosure of an Anti-kickback Statute violation under the separate Office of Inspector General Self-Disclosure Protocol. The updated SRDP creates a new standardized format for providers to self-disclose violations of the Stark Law.
The publication of the updated SRDP occurs against the backdrop of significant increases in the scope of penalties under the federal False Claims Act (FCA) going into effect. Per-claim fines under the FCA now range from a minimum of $10,957 to a maximum of $21,916 for every claim submitted in violation of the law, an increase that essentially amounts to almost a doubling of the per-claim fines previously in effect. This is in addition to the treble damages that are also available under the FCA. Meanwhile, the regulatory requirement to report and return “overpayments” within 60 days of identification (with the failure to do so actionable under the FCA) has been in effect for over a year. All of this raises the stakes for providers to act quickly upon discovery of potential Stark Law violations.
Updated SRDP Requirements: A Little of the Good, A Little of the Bad
The Stark Law prohibits physicians from referring Medicare beneficiaries for the provision of certain designated health services to entities with which the referring physician has a financial relationship unless an exception applies. There is no intent element to the Stark Law, which means that if the law is triggered and an exception is not met, a violation has occurred. The SRDP is the tool providers can use to self-report violations, hopefully placing themselves in a position where they incur smaller penalties than they would if the matter came up as part of an action under the FCA.
The previous version of the SRDP did not require a particular form, just a requirement that disclosing parties address certain elements in their submission as a condition of CMS’s acceptance of that submission. The updated SRDP requires the use of a new form that consists of four separate components:
All of these items must be provided for the submission to be considered complete. Parties are also permitted to include an optional cover letter with their submission if they so choose.
The updated SRDP differs from the prior version in a number of ways, including the following:
Use of the new form is mandatory effective June 1, 2017, although parties are permitted to start using the new SRDP now.
Increase in Scope of FCA Penalties Raises the Stakes on Noncompliance
Importantly, in February 2017 the U.S. Department of Justice announced an increase in the per-claim range of penalties under the FCA. FCA defendants are now subject to fines ranging from $10,957 to $21,916 for every claim submitted in violation of the law. In addition, the per-claim FCA penalties will continue to change each year to reflect changes in the inflation rate. The reason for the increase is that FCA penalties have not gone up in amount since 1999. Legislation passed in 2015 attempted to correct this through a “catch up” adjustment.
Updates on the Stark Law and False Claims Act enforcement will be part of Gray Plant Mooty’s 21st annual Health Law Conference, to be held on Thursday, July 20, 2017. Look for information about registration coming soon!
If you have questions about the SRDP or FCA enforcement, please contact Jesse Berg at Jesse.Berg@lathropgpm.com or 612-632-3374 or Catie Bitzan Amundsen at Catherine.Amundsen@lathropgpm.com or 612-632-3277.
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