By Ken Yood and Lynsey Mitchel

On September 23, 2010, the Centers for Medicare and Medicaid Services ("CMS") released its Voluntary Self-Referral Disclosure Protocol ("SRDP") that healthcare providers and suppliers can use to disclose violations of the physician self-referral statute or Stark Law (Section 1877 of the Social Security Act). The protocol potentially offers promising incentives for self-disclosing, but providers and suppliers must be aware of its attendant risks and burdens. Numerous and complex factors should be considered when a provider contemplates self-disclosing pursuant to the SRDP. 


The SRDP was required to be released by Section 6409 of the Patient Protection and Affordable Care Act ("PPACA") enacted on March 23, 2010. The SRDP fills an important gap that has existed since the Office of the Inspector General ("OIG") announced on March 24, 2009, that it would no longer accept "Stark only" disclosures. The SRDP offers providers and suppliers potentially valuable incentives for self-disclosing Stark Law violations. However, providers and suppliers must balance these incentives with the potential risks and burdens of self-disclosing.

Key Incentives for Self-Disclosing

As an incentive to providers and suppliers who self-disclose (referred to as disclosing parties), Section 6409 of the PPACA grants CMS the authority to reduce the amount due and owing for violations of the Stark Law. In establishing the amount by which an overpayment may be reduced, CMS may consider:

  • The nature and extent of the improper or illegal practice; 
  • The timeliness of such disclosure;
  • The cooperation in providing additional information related to the disclosure;
  • The litigation risk associated with the matter disclosed; and
  • The financial position of the disclosing party. 

In addition, the SRDP gives another incentive to disclosing parties because it suspends the timeframe set forth in Section 6402 of the PPACA for reporting and returning overpayments. Section 6402 establishes a deadline for reporting and returning overpayments by the later of: (1) 60 days after the date on which the payment was identified; or (2) the date any corresponding cost report is due, if applicable. If a disclosing party utilizes the SRDP, the obligation to return any potential overpayment within 60 days is suspended until a settlement agreement is entered, the party withdraws from the SRDP or CMS removes the party from the SRDP. 

Significant Aspects of the SRDP

The following are significant aspects of the SRDP:

  • The SRDP is open to all providers and suppliers and is not limited to any particular industry, medical specialty or type of service.   
  • The fact that a disclosing party is already subject to a government inquiry (such as an investigation or audit) will not automatically preclude a disclosure. However, a disclosure must be made in good faith and not to circumvent an ongoing inquiry.
  • The SRDP cannot be used to obtain a CMS determination as to whether an actual or potential violation of the Stark Law occurred. As such, the SRDP is separate from the CMS physician self-referral advisory opinion process. Therefore, a disclosing party should make a submission to the SRDP with the intention of resolving its overpayment liability exposure for the conduct identified.
  • Under the SRDP, disclosing parties with corporate integrity agreements ("CIAs") or certification of compliance agreements must use the SRDP to report Stark-only reportable events beginning September 23, 2010.

The Submission Process

Disclosures must be submitted electronically and by mail. The information to be disclosed is extensive. A disclosing party must submit:

  • A description of the matter being disclosed, including the type of financial relationships of the parties involved, the specific time periods the disclosing party may have been out of compliance and the type of designated health service claims at issue. 
  • The names of entities and individuals believed to be implicated and an explanation of their roles in the matter. 
  • A statement of why the disclosing party believes a violation of the Stark Law may have occurred, including a complete legal analysis of the application of the law to the conduct and any exception that applies to the conduct and/or that the disclosing party attempted to use.
  • The circumstances under which the disclosed matter was discovered and the measures taken upon discovery to address the issue and prevent future abuses.
  • A statement identifying whether the disclosing party has a history of similar conduct or has any prior criminal, civil and regulatory enforcement actions against it.
  • A description of the existence and adequacy of a pre-existing compliance program and all efforts by the disclosing party to prevent a recurrence of the incident or practice.
  • A description of appropriate notices, if applicable, provided to other government agencies (such as the Securities and Exchange Commission and Internal Revenue Service) in connection with the disclosed matter.
  • An indication of whether the disclosing party has knowledge that the matter is under current inquiry by a government agency or contractor. 

In addition, the disclosing party must submit a financial analysis that sets forth the total amount, itemized by year, that is actually or potentially due and owing based upon the applicable "look back" period and a description of the methodology used to set forth such amount. The disclosing party must also submit a summary of auditing activity undertaken and a summary of the documents relied upon. 

Lastly, the disclosing party or in the case of an entity its Chief Executive Officer, Chief Financial Officer or other authorized representative must submit a signed certification stating that, to the best of the individual’s knowledge, the information provided contains truthful information and is based on a good faith effort to bring the matter to CMS’ attention for the purpose of resolving any potential liabilities relating to the Stark Law. 

CMS will review the circumstances surrounding the matter disclosed to determine an appropriate resolution. CMS must have access to all financial statements, notes, disclosures and other supporting documents without the assertion of privileges or limitations on the information produced. 

Considerations for Disclosing Parties

CMS cautions that a provider or supplier’s initial decision of whether to disclose "should be made carefully." CMS has made it clear that it expects a disclosing party to fully cooperate with good faith throughout the entire process. The lack of cooperation will be considered when CMS assesses the resolution of the matter and could by itself result in criminal and/or civil sanctions, as well as exclusion from participation in the Federal health care programs. 

CMS expects to receive documents and information from the disclosing party without the need to resort to compulsory methods. Although CMS has stated that attorney/client privileged communications will not be requested in the "normal course of verification," and that CMS will be "willing to discuss" ways of obtaining information without a waiver of privilege, this must be considered by a provider or supplier contemplating utilizing the SRDP. 

Note that CMS has no obligation to reduce any amounts due and owing for a Stark Law violation and CMS will not be bound by any conclusions made by the disclosing party. Additionally, as a condition of disclosing a matter pursuant to the SRDP, the disclosing party loses any appeal rights if the conduct disclosed is resolved through a settlement agreement.

A provider or supplier should keep in mind that CMS will coordinate with the OIG and the Department of Justice ("DOJ"). As a result, CMS could conclude that the disclosed matter warrants a referral to law enforcement for consideration under its civil and/or criminal authorities. If so, CMS could conclude that the conduct disclosed should be referred to either the OIG and/or DOJ for resolution of False Claims Act, civil monetary penalty or other liability. 

Lastly, it is important to note that matters uncovered during the verification process, which are outside of the scope of the matter disclosed to CMS, may be treated as new matters outside the SRDP. 

For further information, please contact Ken Yood at (310) 228-3708 and Lynsey Mitchel at (310) 228-3745.