Self-disclosure data lacking
Providers eager to know extent of CMS’ leniency for Stark law violators
In the year since the CMS released new rules on how healthcare providers can turn themselves in for violating the highly punitive Stark law on physician self-referral, the agency has quietly settled a few of its 109 cases and publicly acknowledged only one. Lawyers who represent hospitals and physicians in the matters are frustrated by the dearth of information about the federal agency’s new self-disclosure protocol, which went into effect on Sept. 23, 2010, and gives CMS regulators an ability—but not a mandate—to reduce healthcare providers’ liability when they turn themselves in.
Robert Belfort, a partner in the healthcare practice at Manatt Phelps & Phillips, said providers want to know what leniency, if any, the CMS is giving to organizations that self-report technical violations such as unsigned leases for physician office space, which can easily trigger millions in penalties.
“The expectation and the hope is that the settlements for technical violations will be significantly less than the maximum penalty, and that was the reason why the protocol was set up,” Belfort said. “If that’s not the case, I think the purpose of the self-disclosure protocol will be undermined.”
In an interview, CMS officials who spoke on condition of anonymity declined to say exactly how many of the cases have been resolved so far or which healthcare providers have received settlements under the process, which the agency was mandated to establish under the Patient Protection and Affordable Care Act.
The agency plans to post periodic summaries of its settlements online, including cursory disclosures of the illegal conduct and the type of provider, along with settlement amounts.
Saints Medical Center in Lowell, Mass., became the first hospital in the nation last February to announce a settlement with the CMS for a self-disclosed violation, paying $578,000 to resolve liability estimated to have been as high as $14 million. It remains the only publicly acknowledged settlement. Saints Medical Center executives declined to be interviewed about the experience.
The Stark law seeks to prevent physicians’ business interests from interfering with their medical decisions in medical referrals by making it illegal for doctors to refer patients to hospitals that compensate them, including with office space.
The law and subsequent CMS decisions established a complex set of “safe harbor” exceptions to the rule, under which physicians can continue making self-referrals as long as they fall within the bounds of the narrow exceptions.
Attorneys say the penalty for violating the law is severe— providers are compelled to give back all reimbursements for patients who were treated or referred under prohibited arrangements, and they may also face jeopardy under the False Claims Act, depending on the circumstances.
The Ohio Valley Health Education & Services Corp., a two-hospital system based in Wheeling, W.Va., found out just how severe the penalties can be last month when administrators there agreed to pay $3.8 million to settle a situation in which the hospitals had improper compensation arrangements with local physicians between January 2005 and August 2010.
The health system voluntarily disclosed the violations after they were uncovered by a turnaround consultant, but the disclosure came during an 18-month window between when HHS’ inspector general’s office closed its self-disclosure process to Stark violations in 2009 and before the CMS unveiled its new Stark process last year.
Although HHS’ self-reporting process remained open for violations involving the anti-kickback statute, which often overlap with Stark violations, HHS Inspector General Daniel Levinson closed the program to Stark-only infractions like those at Ohio Valley.
Ohio Valley threw itself on the mercy of the U.S. attorney’s office in Wheeling, W.Va. The system ultimately agreed to pay $3.8 million and enter a corporate-integrity agreement for what U.S. Attorney William Ihlenfeld II called “significant” violations of the Stark law when he announced the settlement under the False Claims Act.
“You really can’t tell how bad the underlying conduct is, but the fact