For the last ten years, the Office of Inspector General (OIG) has operated a self-disclosure protocol (SDP) for healthcare providers to voluntarily disclose self-discovered evidence of potential fraud and abuse violations. Providers utilizing the SDP generally have been able to avoid some of the disruptions and high costs associated with a government-directed investigation.
In 2006, the OIG expanded the scope of its SDP to cover Civil Monetary Penalty (CMP) liability under the Stark Law and encouraged the broad reporting of anti-kickback violations. In exchange for a provider's cooperation and self-reporting of violations, the OIG promised to "generally settle SDP matters for an amount near the lower end of" the CMP penalty range. The OIG's self-disclosure discount program was well received in the provider community.
Last year, the OIG's SDP program began showing signs that the number of disclosures were overburdening the OIG's resources. In an April 2008 Open Letter to Health Care Providers, the OIG attempted to limit the resources it expended evaluating provider disclosures received under the SDP through two mechanisms. First, the OIG reminded providers that disclosures relating to "mere billing errors or overpayments" should not be disclosed through the SDP but should be submitted directly to the appropriate claims-processing entity, such as the Medicare administrative contractor. The OIG only wanted matters involving potential fraud against federal healthcare programs to be reported under the SDP. Second, the OIG required that a provider's initial submission include specific information to limit the OIG's need to make additional requests for information and required that the provider be in a position to complete the investigation and damages assessment within three months after acceptance into the SDP.
In this year's installment of the Open Letter to Health Care Providers, the OIG has limited eligibility for the SDP "as part of [its] ongoing efforts to evaluate and prioritize [its] work." First, the OIG limited the self-disclosure discount by adopting a $50,000 minimum settlement amount under the SDP. Under the CMP statute, the OIG may impose a penalty of up to $50,000 for each kickback plus an amount of up to three times the total remuneration involved. The $50,000 SDP threshold suggests that the OIG is seeking self-disclosures only in cases involving multiple kickback violations or violations involving large amounts. Second, the OIG stated that it will no longer accept disclosures related solely to CMP liability under the Stark Law, limiting the SDP to Stark Law violations that are accompanied by an anti-kickback violation. The OIG intends to focus its resources on kickbacks intended to induce or reward a physician's referrals. Despite the clear prioritization of its efforts, the OIG urged providers "not to draw any inferences about the Government's approach to enforcement of the physician self-referral law."
Going forward, providers will have tougher choices to make when considering self-disclosures of anti-kickback violations under the SDP. The limitation also results in a near impossible situation with respect to the resolution of Stark Law violations, as the OIG has never stated when a Stark Law violation will be cured -- it has only stated the latest a Stark period of disallowance would end. With respect to Stark-only situations, providers are left only with refund of all amounts collected for services furnished pursuant to a prohibited referral, which sum may be extremely large in light of the benefit obtained by the physician, or disclosure directly to the U.S. Department of Justice. See 73 Fed. Reg. 48434, 48700 (Aug. 19, 2008).