On March 24, the Office of Inspector General of the Department of Health and Human Services (OIG) issued an Open Letter to Health Care Providers1 that substantially narrows the scope of the OIG’s Provider Self-Disclosure Protocol (SDP) with respect to potential violations of the physician self-referral (Stark) law.
The Open Letter states that the “OIG will no longer accept disclosure of a matter that involves only liability under the physician self-referral law in the absence of a colorable anti-kickback statute violation.” The Open Letter reflects the OIG’s aim to “focus [its] resources on kickbacks intended to induce or reward a physician’s referrals.” The OIG also announced a minimum settlement amount of $50,000 to resolve matters implicating the anti-kickback statute.
Since it was first issued in 1998, the SDP has offered providers a formal mechanism for disclosing potential violations of federal law adversely affecting federal health care programs. In Open Letters in 2006 and 2008, the OIG encouraged providers to use the SDP to help resolve liability under the Stark and federal anti-kickback laws. Among other things, use of the SDP offers self-disclosing providers a potential opportunity to reduce fines and penalties, minimize the cost and disruption incurred by formal investigations, and reduce or avoid the burden of a Corporate Integrity Agreement or Certification of Compliance Agreement. Although disclosure does not preclude prosecution or enforcement by the U.S. Department of Justice for an anti-kickback statute or civil false claims act violation, a provider’s voluntary self-disclosure can influence the government’s decision regarding whether to pursue such actions. That said, the SDP undoubtedly exposes the disclosing party to government scrutiny (related to the disclosed matter and potentially other undisclosed or undiscovered matters) and the risk that the government will elect to prosecute.
Unlike the anti-kickback statute, the Stark law is a strict liability statute. As such, it may be violated even when the offending conduct is not “knowing” or “willful.” By restricting use of the SDP for potential Stark law violations to only those accompanied by potential criminal conduct, the Open Letter may cause some providers to reassess the relative risks and potential benefits of voluntary self-disclosure. In addition, while implicit in the OIG’s revised approach is a recognition that Stark law violations unaccompanied by an intent to induce referrals are most appropriately resolved through payment refunds, apparently without the imposition of additional penalties, in many cases a full refund itself may be an unduly harsh result for what may amount to a technical or inadvertent violation of the Stark law’s many detailed requirements. Without access to the SDP, it is unclear whether other government mechanisms will be made available for resolving these kinds of matters.