CMS Considers Streamlined Physician Group Stark Law Self-Disclosures

July 13, 2022

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

On June 9, 2022, the Centers for Medicare & Medicaid Services announced an opportunity for the public to comment through Aug. 8, 2022, on its voluntary self-referral disclosure protocol (SRDP). The voluntary SRDP is a way to resolve technical violations under the physician self-referral law (commonly known as the Stark Law) by submitting information to CMS about the prohibited conduct as described below. During this period, CMS is accepting public comments on an updated SRDP submission process that could reduce the burdens on physician groups by limiting the information required to be disclosed to only a single form per disclosure instead of separate physician information forms for each physician included in a voluntary disclosure. This proposal may streamline the current SRDP process for physician group practices when they face technical violations of the Stark Law.

Section 6409 of the Patient Protection and Affordable Care Act (ACA) required CMS to create a voluntary self-disclosure process that allows Medicare providers and suppliers to self-disclose actual or potential violations of the Stark Law. These technical violations arise frequently as the Stark Law prohibits physicians from referring designated health services (DHS) — such as hospital services, laboratory, prescription drugs, radiology or other imaging, physical therapy, DMEPOS and certain other services — to an entity, including their medical practices, where they or their families have a compensation or ownership relationship, unless the referral and/or relationship is protected by meeting each element of an enumerated Stark Law exception. The Stark Law is a strict-liability statute and failure to meet each element of an applicable exception results in an impermissible referral and claim submission.

Due to the large scope of services included in DHS, the many financial relationships between physicians and entities that provide DHS and the strict-liability nature of the statute, inadvertent and technical failure to comply fully with an exception occurs frequently. As such, the SRDP process has been a welcome approach that providers often consider when they discover potential violations. That’s because CMS has tended to settle self-disclosed violations for much less than the amount received for the improperly referred DHS, rather than the full statutory potential financial penalties, which can include a refund of all Medicare receipts at issue (multiplied by three) plus civil monetary penalties (set at $27,750 per claim and $185,009 per arrangement in 2022), among others. The industry has embraced the SRDP for these technical violations and has submitted a significant number of SRDP filings, but there is a significant backlog, with CMS’ own data suggesting well over half of all submissions remain unaddressed.

Under the current SRDP process, a group physician practice that elects to disclose group practice noncompliance with the Stark Law must submit to CMS the following:

  1. the SRDP disclosure form;
  2. physician information form(s) for each physician included in the disclosure;
  3. a financial analysis worksheet; and
  4. a certification signed by the disclosing party.

The physician information form is lengthy and can be time-consuming to complete, requiring physician practices to enter individual physician identifiers and draft responses to questions. Often, when a physician group is making a voluntary disclosure, it is the result of a problematic compensation formula or some other groupwide issue that prevents the group and its physicians from complying with the strict requirements of an applicable Stark Law exception, which can implicate most or all of the group’s physician owners and employees. This can result in repetitive and lengthy disclosures for each physician of the group when the group practice is effectively reporting the same conduct for each physician.

For example, it is not uncommon for a group practice’s compensation formula dictating how the group’s DHS revenues are paid to all physician owners to miss one or more elements of the Stark Law rules for how group practices must distribute such revenue, triggering a violation. While the conduct at issue is the same — payments that were incorrect to all owners for the same reason — the SRDP requires different submissions for each physician. SRDP submitting group practices therefore need to carefully review forms and pages of description for each physician to ensure they are correctly reporting specific information about each physician uniquely throughout the form. These extensive and individualized submissions must then be reviewed by CMS, which must discern whether there are meaningful differences between the physicians who are part of the submission. For example, if 20 physician information forms are submitted, it may not be immediately clear to CMS whether there are differences between the individual physicians in the group or if the submitted information is effectively the same for all. CMS’ request for comment suggests that it is looking for suggestions to better streamline the SRDP process for group practices considering disclosure by allowing a group practice to effectively answer the physician information form questions for all physicians collectively and the supplementing the form with a chart for a few items, as necessary.

The industry will likely welcome any change that streamlines the SRDP as the frequency of conduct implicating the Stark Law may grow after CMS’ recent clarifications on group practice compensation. Shorter and more concise physician information forms for group practice submissions may reduce the burden on group practices preparing disclosures and on CMS’ investigatory process. This proposal may not assist other (nongroup practice) providers submitting through SRDP or reduce the overall time delays in CMS reviewing forms due to the backlogs noted above, but it may still be welcome relief.

To Submit a Comment
Comments must include the document identifier or Office of Management and Budget control number and must be submitted by Aug. 8, 2022. Comments may be sent electronically to the website, available here. Comments may also be mailed to this address.

Centers for Medicare & Medicaid Services
Office of Strategic Operations and Regulatory Affairs
Division of Regulations Development
Attention: Document Identifier/OMB Control Number ___
Room C4-26-05
7500 Security Blvd.
Baltimore, Maryland 21244-1850

McGuireWoods will continue to monitor the reported Stark Law SRDP updates to help clients navigate voluntary self-disclosures. Please contact one of the authors for questions about violations or potential violations to the strict-liability Stark Law that may necessitate self-disclosure.

The authors thank McGuireWoods summer associate Renee Kumon for assistance preparing this legal alert. She is not licensed to practice law.