CMS Unveils Revised Voluntary Self Referral Disclosure Protocol

On May 6, 2016, the Centers for Medicare and Medicaid Services (CMS) released proposed revisions to its Voluntary Self-Referral Disclosure Protocol (SRDP), through which providers may disclose actual or potential violations of the federal physician self-referral prohibition commonly known as the “Stark Law.” ¹ While the proposed revisions are intended to streamline the disclosure process, they also impose new requirements—such as an obligation to provide a financial analysis based on a six-year lookback period and an analysis of the pervasiveness of the disclosed noncompliance—that add to the burden of disclosing parties. CMS has requested public comments on its revisions by July 5, 2016.

The Affordable Care Act required the establishment of a voluntary self-referral disclosure protocol that sets forth a process through which providers may disclose actual or potential violations of the Stark Law. In accordance with this mandate, CMS established the SRDP on September 23, 2010. While the SRDP offers an important tool for resolving Stark Law compliance issues, it has not proved to be particularly expeditious. CMS representatives have acknowledged a significant backlog of disclosures, with some providers waiting years for disclosures to work through the system.

The effort to revise the SRDP comes, at least in part, from the recently released final rule on the reporting and returning of overpayments. In February, CMS published its final rule to implement the Affordable Care Act requirement that overpayments be reported and returned within 60 days of identification or, if applicable, the date a corresponding cost report is due.² The final overpayment rule established a six-year lookback period for overpayments made under Medicare Parts A and B. Prior to the final overpayment rule, CMS used the time frame established under the reopening rules at 42 C.F.R. § 405.980(b) as a guide to determine the time frame of the SRDP. As a result, SRDP submissions were generally based on a four-year lookback period. CMS now proposes to revise the SRDP to be consistent with the requirements of the final overpayment rule—that is, under the revised SRDP, disclosing parties must provide a financial analysis of the potential overpayment based on a six-year lookback period.

While CMS may have been prompted to revise the SRDP by the final overpayment rule, CMS has taken the opportunity to make a number of other changes to the SRDP. These changes are intended to reduce the burden on disclosing parties by reducing the amount of information required for submissions and providing a streamlined format. Whether the proposed changes will have this effect remains to be seen.

The revised SRDP structures the disclosure process through the use of four forms: (1) the SRDP Disclosure Form, (2) the Physician Information Form, (3) the Financial Analysis Worksheet, and (4) the Certification, which is substantially the same as the current SRDP certification requirement. Disclosing parties may, but are not required to, submit a cover letter that includes information believed to be relevant to CMS’s evaluation of the disclosure.

The SRDP Disclosure Form requires much of the same information currently required by the existing SRDP. However, the SRDP Disclosure Form also requires an analysis of the pervasiveness of the disclosed noncompliance. Disclosing parties are requested to report the “pervasiveness of the noncompliance relative to the disclosing party’s similar financial relationships […] or similar services furnished,” as well as the methodology used to determine pervasiveness. The SRDP Disclosure Form offers several examples of how CMS expects disclosing parties to respond to this request. Each of these illustrative statements includes an assertion about the number of noncompliant financial relationships as a proportion of all similar financial relationships involving the disclosing party. In other words, under the revised SRDP, disclosing parties will be requested to make general assertions about arrangements other than those being disclosed.

The Physician Information Form requires information regarding the physicians involved in the disclosure as well as a detailed description of the noncompliance. A separate form must be completed for each involved physician, and each noncompliant arrangement must be described separately. If, for example, a hospital disclosed a noncompliant lease arrangement and a noncompliant call coverage arrangement with a group of three physicians, the hospital would need to fill out three Physician Information Forms (one for each physician), each with two versions of the portions of the form requiring a detailed description of the noncompliance (one for the lease arrangement and one for the call coverage arrangement).

As noted above, the Financial Analysis Worksheet requires disclosing parties to provide a financial analysis of the potential overpayment based on a six-year lookback period. The Financial Analysis Worksheet must be submitted in a Microsoft Excel-compatible format. Among other things, the Financial Analysis Worksheet requires that parties list the date on which the potential overpayment was identified. In contrast to the current SRDP, the Financial Analysis Worksheet does not request information about the amount of remuneration between the parties (such information may, however, be disclosed in the Physician Information Form).

The proposed revisions to the SRDP also impose on disclosing parties an obligation to update CMS in certain circumstances. If, after a disclosure is made, the disclosing party files for bankruptcy, undergoes a change of ownership, or changes the designated representative identified in the disclosure, it must notify CMS of the event within 30 days. Providers with currently pending disclosures that have experienced one of these events should consider notifying CMS of the matter.

While the goal of streamlining the SRDP is laudable, it is unclear whether the changes CMS has proposed will have their intended effect. Requiring providers to complete forms rather than craft a narrative may expedite CMS’s review of submissions, but perhaps not providers’ preparation of the same. In particular, the obligations to conduct a lengthier financial analysis, to analyze the pervasiveness of the disclosed noncompliance, to determine precisely when potential overpayments were identified, and to provide notice of certain changes involving the disclosing party will add to the burden borne by providers. Providers and other interested parties should review the proposed revisions to the SRDP and consider submitting comments to CMS.