9 Considerations for Hospitals Evaluating Self-Disclosure of Stark Law Violations

October 14, 2014

RELATED UPDATE: CMS Streamlines Stark Law Self-Disclosures (March 8, 2023)

In today’s challenging healthcare enforcement environment, hospitals and health systems are facing increasing exposure related to violations of the physician self-referral law, commonly known as the Stark Law. In recent years, the federal government has ramped up its efforts to identify Stark Law violations and has recovered Medicare overpayments from providers with increasing success. Penalties for such violations can be significant. Because Stark Law liability can be transferred to buyers in hospital transactions, sellers are facing growing pressure to resolve actual and potential violations as a condition to closing affiliation transactions.

Disclosing violations through Medicare’s Self-Referral Disclosure Protocol (SDRP) can help providers reduce damages associated with such penalties and related lawsuits. As McGuireWoods attorneys Holly Carnell and Timothy J. Fry and summer associate Kathleen Fisher note in a white paper, however, any hospital evaluating the SDRP should consider these nine points:

  • Technical Stark Law violations are common but can still lead to large penalties.
  • Stark Law violations can negatively impact hospital transactions.
  • Public and private Stark Law enforcement are on the rise.
  • The federal government considers healthcare fraud an enforcement priority.
  • The SRDP helps providers avoid future liability under the False Claims Act.
  • The Centers for Medicare and Medicaid Services’ (CMS’) SRDP overlaps with other federal agencies’ enforcement areas.
  • The SRDP tolls the period for reporting Medicare overpayments under the Affordable Care Act.
  • CMS has discretion in evaluating the nature of disclosures made under the SRDP and determines settlement amounts accordingly.
  • Reported SRDP settlement amounts are provider- and behavior-specific.

For more information, read the full report in our new white paper >>