In an Open Letter to Health Care Providers dated March 24, 2009, the Office of Inspector General (OIG) of the Department of Health and Human
Services notified health care providers of significant new restrictions on the use of the OIG's Self Disclosure Protocol (SDP). In the March 24
Open Letter, Inspector General Daniel Levinson announced that in order to "more effectively fulfill our mission and allocate our resources" the
OIG is narrowing the SDP's scope regarding the federal physician self-referral law (commonly referred to as the Stark Law). Starting immediately
on March 24, 2009, providers may utilize the SDP for disclosure and settlement of matters involving potential violations of the federal physician
anti-referral law (42 U.S.C. § 1395nn) only if the situation also involves a "colorable violation" of the federal anti-kickback law
(42 U.S.C. § 1320a-7a) violation. Inspector General Levinson declined to give any further guidance or examples of what would constitute
"colorable violations." As a result, providers now may utilize the SDP to settle cases involving potential violations of the federal
anti-kickback statute. Cases involving only potential violations of the Stark Law cannot utilize the SDP. In addition, the OIG also announced
that starting March 24, 2009, the OIG will require a minimum $50,000 settlement to resolve an anti-kickback matter disclosed using the SDP.
CLICK HERE for a copy of the March 24 Open
Letter.
Although the OIG considers these major developments to be simply refinements of the SDP, they are a significant departure from the OIG's prior
SDP initiative announced in an earlier Open Letter to Health Care Providers dated April 24, 2006. In the earlier 2006 Open Letter, the OIG
announced an initiative that promoted the use of the SDP to resolve civil monetary penalty (CMP) liability under the federal physician
self-referral and anti-kickback statutes for financial arrangements between hospitals and physicians. This apparently was in response to
the OIG hearing from hospitals that, as a result of their compliance programs, the hospitals were discovering improper arrangements under the
Stark Law and were seeking ways to resolve those violations. At that time, the OIG considered the SDP one vehicle to resolve this type of
administrative liability and, as a result, some providers effectively utilized the SDP for disclosure of potential Stark physician anti-referral
liability.
In the April 24, 2006, Open Letter, the OIG also noted that "because multiple OIG authorities are implicated, a provider's liability in theses
cases typically falls along a continuum – the CMP damages calculation for physician self-referral violations is based on the number and
dollar value of improper claims, while the CMP damages calculation for kickbacks is based on the number and dollar value of improper payments or
remuneration. Subject to the facts and circumstances of the case, OIG will generally settle SDP matters for an amount near the lower end of this
continuum, i.e., a multiplier of the value of the financial benefit conferred by the hospital upon the physician(s)." Notably, at that time, the
OIG did not require a minimum settlement amount for use of the SDP.
CLICK HERE for a copy of the
April 24, 2006, Open Letter.
Now, in light of the OIG's new restrictions upon the use of the SDP, providers will be in a quandary as to how to resolve potential Stark Law
violations that do not also implicate the federal anti-kickback statute. Since the Stark Law is basically a strict liability statute, where the
Stark Law is violated if the Stark Law applies to a given arrangement and the arrangement does not meet all the requirements of an applicable
Stark Law exception, providers must deal with a Stark Law violation. Providers will also not be able to use the SDP to settle potential
anti-kickback liability for situations where the amount at issue is less than $50,000, even if the potential violations are otherwise qualified
for the SDP.
Obviously, it would not be prudent or advisable for a provider to come up with a "colorable violation" of the federal anti-kickback statute in
order to utilize the SDP for a situation that is more likely a Stark physician anti-referral violation. On the other hand, if the provider
honestly believes that a "colorable" violation of the anti-kickback statute is involved in a situation involving a potential Stark violation, it
is also not clear what the OIG would do with such a SDP disclosure and proposed settlement involving alleged violations of both statutes –
if the OIG disagrees that there is a colorable anti-kickback violation.
If providers' situations cannot be resolved by use of the SDP in light of the new restrictions, such providers may have to consider options of
going to the Medicare or Medicaid fiscal intermediary/carrier or the Department of Justice/U.S. Attorney's Office to attempt to favorably settle
such matters. However, each of those options has significant challenges and disadvantages.
For more information on compliance matters and the SDP, please contact Barron Bogatto
at 713.752.4355 or bbogatto@jw.com.
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