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CMS Voluntary Self-Referral Disclosure Protocol: Latest Developments

Evaluating If, When and How to Report Potential Noncompliance With the Stark Law

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TUESDAY, JULY 17, 2012

Presenting a live 90-minute webinar with interactive Q&A

Jesse A. Witten, Partner, Drinker Biddle & Reath, Washington, D.C. Renee M. Howard, Partner, Perkins Coie, Seattle Thomas S. Schroeder, Partner, Faegre Baker Daniels, Minneapolis

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CMS Voluntary Self-Referral Disclosure Protocol: Latest Developments

Evaluating If, When & How to Report Potential Noncompliance with the Stark Law

July 17, 2012

Renee M. Howard

206.359.6751 RHoward@perkinscoie.com

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Stark Law Prohibited Conduct

• The Stark law prohibits a physician from making

referrals for certain designated health services payable by Medicare to an entity with which a physician (or immediate family member) has a financial relationship, unless an exception applies.

• Strict liability; intent to comply is irrelevant.

42 U.S.C. § 1395nn

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Enforcement Risks

• Payment denial
• Mandatory refund
• Civil Monetary Penalties
• Up to $15,000 per service plus 3x

reimbursement claimed/received

• Up to $100,000 for circumvention schemes

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Enforcement Risks, Cont.

• False claims liability for failure to report

and return overpayment

• $5,500 - $11,000 per claim + treble damages
• Criminal liability for concealing known
• verpayment
• Felony charges and fine of up to $25,000, or

imprisonment for up to five years or both

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Enforcement Risks

• Federal program exclusion
• State law sanctions for prohibited Medicaid

referrals

• Reporting obligations under Corporate

Integrity Agreement

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So You Identified a Potential Stark Violation − Now What?

• Is there really a Stark violation? If yes:
• Take no action (not advised)
• Repayment to Medicare contractor
• U.S. Attorney's Office disclosure
• CMS Self-Referral Disclosure Protocol (SRDP)
• If other issues present (e.g., kickbacks), additional

disclosures may be needed

• OIG Self-Disclosure Protocol (no longer option for Stark-only)

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CMS Voluntary SRDP

• Intended to facilitate disclosure and resolution of

actual or potential Stark violations

• CMS has authority to decrease overpayment

liability

• Suspends 60-day report and return obligation
• SRDP sets forth, among other things:
• Detailed information to be disclosed
• Procedural process for resolving matter with CMS
• Factors considered in reducing amounts owed

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CMS Report to Congress

• 9/10 – 6/4/12: 171

disclosures

• 3 referred to law

enforcement

• 10 reported settlements as of

July 5, 2012

• Remaining disclosures:
• Still under CMS review
• Administrative holds
• Additional information requested
• Withdrawal by disclosing party

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Saints Medical Center Settlement

• 1st SRDP settlement and largest to date
• $579,000 payment; local media reported

liability could be as high as $14.5M

• PSA not satisfied for: (1) dep't chief and

medical staff "leadership services" agreements and (2) hospital coverage agreements with physician groups

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Remaining Nine Settlements

• Settlement Range: $60 - $130,000
• Nature of Stark Violation:
• Failure to comply with PSA exception (3)
• Exceeded calendar year non-monetary compensation

limit for physicians (3)

• Other (3)
• Disclosing Entities: 7 hospitals (including one

CAH) and 2 physician group practices

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Who is Disclosing?

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Settlement Agreements

• Limited release from liability under CMS

administrative authority for disclosed violation

• SRDP settlement does not:
• Constitute agreement on Medicare losses
• Relieve criminal, civil or CMP liability
• Defend against future administrative, civil or

criminal action against disclosing party

• Expect little negotiation on settlement amount

CMS Self-Referral Disclosure Protocol: Latest Developments July 17, 2012

Jesse A. Witten Drinker Biddle & Reath LLP Jesse.witten@dbr.com (202) 230-5146

Self-Referral Disclosure Protocol: Latest Developments | July 17, 2012

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Was There Really a Violation?

> Holdover exception > Late signature provisions > Hospital-based providers

– Definition of “referral” carveouts – See United States ex rel. Kosenske v. Carlisle HMA, 554

F.3d 88, 93 (3d Cir. 2009) > Does the “stand-in-the-shoes” provision apply? > Language requiring physicians to refer to hospital

Self-Referral Disclosure Protocol: Latest Developments | July 17, 2012

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Practical Tips

> Certification requirement > When is a Stark Law overpayment

“identified”?

> Dealing with investigation creep > Mixed Anti-Kickback and Stark Law issues > Structuring the Disclosure Report

Self-Referral Disclosure Protocol: Latest Developments | July 17, 2012

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Practical Tips

> Legal Analysis

– How much to admit? – Element by element review of most relevant

exception

– FRE 408

> Statement of the Cause > Ability to Pay, Corrective Action,

Compliance Program & Other Exculpatory Facts

Self-Referral Disclosure Protocol: Latest Developments | July 17, 2012

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Practical Tips

> SRDP does not require that Medicaid data be

provided

– Stark Law does not bar referral of Medicaid patients or

billing for those patients. See 63 Fed. Reg. 1659, 1704 (Jan. 9, 1998).

– Physician may not make a referral for DSH to an entity

for which payment may otherwise be made “under this subchapter.” 42 U.S.C. 1395nn(a)(1)(A).

– State may not recover FFP if Stark Law violation. See 42

U.S.C. § 1396b(s). But, conduct may also have violated State version of Stark Law.

– United States ex rel. Baklid-Kunz v. Halifax Hosp. Med.

Ctr., 2012 WL 921147 (M.D. Fla. Mar. 19, 2012)

Self-Referral Disclosure Protocol: Latest Developments | July 17, 2012

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Practical Tips

> Corporate Integrity Agreements

– Requirement that overpayments be refunded

can be satisfied via SRDP

– SRDP requires that copy be sent to OIG

monitor > Assume that information disclosed will

eventually become public, but assert a FOIA exemption.

> If prompt resolution is needed, such as to

complete a transaction, notify CMS.

CMS Self-Referral Disclosure Protocol:

Latest Developments

• Part III: Financial Analysis

July 17, 2012 Tom Schroeder, Partner Faegre Baker Daniels LLP tom.schroeder@FaegreBD.com Direct: +1 612 766 7220

Elements of SRDP Financial Analysis

► The disclosing party must conduct a financial analysis

setting forth:

– Total amount owing based on “look back” period (IV.B.2.a) – Calculation methodology, including any estimation (IV.B.2.b) – Total amount of “remuneration a physician(s) received as a result

• f an actual or potential violation(s)” (IV.B.2.c)

– Summary of any auditing done and documents relied upon (IV.B.2.d)

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Practical tips in dealing with client

► Provide business office personnel clear parameters for

calculation:

– Specify Stark “entity” under analysis – Search by physician name/NPI – Start/end date of each look-back period – Use dates of service (as surrogate for “referral”), not dates paid – Define the approach to handling DRG, bundled payments – For non-hospital DHS, refer to CMS’ list of DHS by CPT/HCPCS codes

• See 76 FR 73438 (Nov. 28, 2011)

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Determine the Stark “entity”

► For multi-provider/supplier systems, the Stark “entity” may

not be a corporate/legal entity

– Stark definition includes “persons” and “unincorporated associations” that furnish DHS – Look to Medicare enrollment status, not legal status or tax IDs – A noncompliant arrangement with one provider/supplier does not, by itself, taint referrals to all affiliated (but separate) provider/ suppliers – What about commonly enrolled clinics with separate NPIs?

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Determine the “tainted” physician(s)

► Whose referrals count?

– What if the contract does not reflect the actual Stark relationship?

• Contract with group for exchange of items/services with individual

group member

• Contract specifies payment to group, but check and 1099 go to

individual group member (or vis versa)

– Does “stand-in-the-shoes” apply?

• Pay attention to SITS effective date and grandfathering provision
• Remember that non-shareholder physician-employees don’t SITS
• But identifying them through time may prove difficult

– Don’t assume your EHR’s definition of “admitting” or “referring” physician is the same as Stark’s.

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“Look back” period defined

► CMS initially defined the “look back” period as the full

period of non-compliance

– Could have extended beyond applicable FCA and Medicare statutes of limitation

► CMS clarified new position in four FAQs posted 4/12:

– Total amount owing (IV.B.2.a) can now be based on 4-year reopening period described in 42 CFR § 405.980(b) – Total remuneration physician received (IV.B.2.c) can also based on 4-year reopening period

• NOTE: this applies “until the proposed rule [77 FR 9179] is finalized”
• Proposed § 401.305 would amend reopening period for reported
• verpayments to 10 years

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What about DRG claims?

► Example: Physician A has a non-compliant arrangement

with Hospital. Physician A orders a CT scan for a patient admitted by Physician B. For purposes of your SRDP calculation, do you include in the amount owing:

• A. The entire DRG payment?
• B. The calculated value of the scan alone (perhaps based on
• utpatient fee schedule)?
• C. Neither of the above (because Physician A did not refer the DHS

at issue (i.e., inpatient services, the DRG); and Physician A’s scan order did not affect reimbursement under the DRG)?

► What if the Hospital is a Critical Access Hospital?

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Calculating remuneration to physician

► SRDP requires calculation of “remuneration a physician(s)

received as a result of an actual or potential violation(s)”

– FAQ clarifies calculation based on 4-year reopening period

► But how is this calculation made when:

– The physician didn’t “receive” any payment under the arrangement (e.g., lease of space to physician)? – The remuneration is not the “result” of the violation (e.g., there is a legitimate fmv exchange, but one party fails to sign)? – Where SITS applies, and payment was to the group, how do you calculate the remuneration imputed to each (or a particular) physician?

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Practical tips dealing with CMS

► Be cooperative; preserve credibility ► For disclosures involving multiple arrangements, consider:

– Aggregating financial analyses in a spreadsheet – Describing financial methodologies/estimation approaches common to multiple arrangements in one summary memo – Submitting disk with electronic data – Discuss preferred organization/format with CMS analyst

► “Pre-” disclosure (Part IV(B)(1)), followed by financial

analyses?

– Submission will not be deemed complete, but may optimize defenses under FCA and/or reduce likelihood of DOJ intervention

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