Legal Learning more about the SRDP

While healthcare watchers will stay focused this year on the overarching legality of the Patient Protection and Affordable Care Act, many specialized lawyers are keeping an eye on one discrete niche of the law that allows hospitals to ’fess up when they broke the law.

The new SRDP, or Self-referral Disclosure Protocol, is supposed to give hospitals a way to escape hugely punitive provisions of the Stark law by admitting errors regarding physician selfreferral and then getting a break on the fines.

Never heard of the SRDP? Observers say that what the protocol lacks in general public expo- sure is made up for by the keen focus paid to it by scores of industry lawyers. And their interest is of course driven by the multimillion-dollar price tags common to simple Stark violations.

Experts say many routine violations of the Stark law’s prohibitions on physician self-referral include a worst-case-fines scenario that can climb into the tens of millions or more, especially if the situation has persisted for years. That’s because penalties include $15,000 per prohibited patient referral plus refunding of all payments made under the illegal arrangement.

The SRDP was supposed to give hospitals a way to come clean with authorities, strike a set- tlement, and wipe Stark liability off the books in a methodical way—very helpful for transactional lawyers looking to eliminate X-factors when finalizing hospital mergers. The problem was, the CMS received more than 100 submissions under the protocol in 2011, but by mid-december had only announced two settlements on its website, www.cms.gov/physicianselfreferral. And for those two, lawyers say the information didn’t seem complete enough to tell whether self-reporting hospitals were getting reasonable settlement offers from the CMS.

“I’m hopeful that we’re going to see some fairly standardized settlements, but the likelihood of that happening is low. I think they’re going to play their cards close to their chest,” says healthcare compliance attorney Robert Wade, a partner with Krieg Devault in Mishawaka, Ind.

—Joe Carlson