This installment of Hall Render's Health Law Broadcast series on health care reform is designed to provide you with a brief update on significant developments from the previous week.

NEW OPTION FOR PROVIDERS TO SELF-DISCLOSE ACTUAL OR POTENTIAL STARK LAW VIOLATIONS

Section 6409 of the newly enacted Patient Protection and Affordable Healthcare Act, H.R. 3590 (the "Act"), requires the Secretary of Health and Human Services (the "Secretary") to develop a protocol, in cooperation with the Office of Inspector General ("OIG") of the Department of Health and Human Services, to enable health care providers to disclose actual or potential violations of the federal Stark law. 

This self-referral disclosure protocol ("SRDP") provides a new option for providers looking for an avenue to disclose Stark violations after the sudden change in position by the OIG last year with respect to its Self-Disclosure Protocol ("SDP").  On March 24, 2009, the OIG released an Open Letter to Health Care Providers ("Open Letter") that narrowed its existing SDP to exclude matters that involved only liability under the Stark law in the absence of a colorable Anti-Kickback statute violation.  This position seemed in contrast to the OIG's previous promotion of the SDP to providers for resolving civil monetary liability under Stark.

Enacted nearly one year after the Open Letter, the Act instructs the Secretary to develop and implement a disclosure protocol for actual and potential Stark violations within six (6) months from the date of enactment (by September 23, 2010). The SRDP must include direction to providers as to (i) the specific person, official, or office to whom disclosures should be made; and (ii) instruction on the implication of the SRDP on corporate integrity agreements and corporate compliance agreements.  The Secretary must post this information on the Centers for Medicare & Medicaid Services ("CMS") website.  The Act clarifies that the SRDP process is to be separate and distinct from the Stark advisory opinion process established under 42 U.S.C. § 1395nn(g).

Perhaps the most important feature of the Act is to expressly authorize the Secretary to reduce payment and penalty amounts for violations of the Stark Law.  In determining the amount due for a violation, the Secretary is instructed to consider the (i) nature and extent of the improper or illegal practice, (ii) the timeliness of the self-disclosure, (iii) the provider's cooperation in supplementing information as needed, and (iv) any other factors the Secretary deems appropriate. Historically, the OIG's settlement authority for civil monetary penalty damages under the SDP could at times result in penalty amounts that seemed disproportionate to the harm done to federal health care programs because of the "strict liability" nature of the Stark law.  Therefore, this change is viewed as a significant positive development for providers. 

The SRDP is scheduled to be established and available for review on CMS' website in late September, 2010.  In our experience, the OIG's existing SDP has not been widely utilized among the provider community.  However, this new Stark law SRDP option may have increased utility for many providers because Stark law concerns often predominate the decision to self-disclose. Health care providers should carefully assess this new option in dealing with matters that involve possible Stark law violations to determine the best course of action, which may still include determinations of Stark law compliance, remediation, and overpayment refunds among others.  Note, however, for matters that involve dual Anti-Kickback and Stark concerns, at present it is unclear how, if at all, this SRDP process will line up with the OIG's existing SDP.

Should you have any questions, please contact:
Scott W. Taebel (414.721.0445 or staebel@hallrender.com),
Erin M. Drummy (317.977.1470 or edrummy@hallrender.com), or
your regular Hall Render attorney.

Visit our Health Law Broadcast at hallrender.com/reform for a comprehensive listing of health care reform resources.  Also sign up for health care reform alerts and periodic updates as we continue to monitor this important issue.