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Stark gets its own self-disclosure rules

April 12, 2010

The Patient Protection and Affordable Care Act of 2010, amended by the Health Care and Education Reconciliation Act of 2010 (Health Care Reform Law), provides for the resolution of a controversial development related to the Federal Physician Self-Referral (Stark) Law. This much awaited change has the potential to result in significant impact on physicians and hospitals with whom they have referral relationships.

In March 2009, the Inspector General of the U.S. Department of Health and Human Services (HHS) issued an open letter to health care providers, refining the protocol for self-disclosing violations of the Stark Law. In the open letter, the Inspector General made clear that his office (OIG) would no longer accept disclosures of matters involving only the violation of the Stark Law in the absence of colorable anti-kickback statute violations. This left providers with uncertainty as to the most appropriate path for self-disclosure upon discovery of a Stark violation and did not provide HHS with flexibility in settling Stark fines.

Under the Health Care Reform Law, Congress has now established a protocol for actual or potential Stark violations and mandated that the Secretary of Health and Human Services, in consultation with the OIG, establish procedures within six months of the March 23, 2010, date of enactment. Congress has also given the Secretary of Health and Human Services authority to reduce the amount due and owing for violations of the Stark Law, considering the following factors:

• The nature and extent of the improper or illegal activity
• Timeliness of the self-disclosure
• Cooperation in furnishing additional information
• Other factors deemed appropriate by HHS

This provision of the Health Care Reform Law settles a year-long controversy related to the disclosure of Stark violations and gives clarity as to the discretion that may be used by HHS in reducing the often extraordinary civil penalties that accompany such a violation. Providers and their counsel are encouraged to evaluate existing compliance plans and disclosure efforts for actual or potential Stark Law violations.