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OIG Limits Access to the Provider Self-Disclosure Protocol

April 20, 2009

As the government's fight against healthcare fraud escalates, Medicare providers and suppliers ("Healthcare Providers") need to stay informed about self-disclosure protocols and the benefits and drawbacks of voluntarily disclosing conduct that may give rise to liability. On March 24, 2009, the Office of the Inspector General ("OIG") announced two changes to its Provider Self-Disclosure Protocol ("SDP"). Prior to this date, the SDP could be used for the self-disclosure of conduct that may violate the physician self-referral law (the "Stark Law"), even if this conduct would not implicate the anti-kickback statute. Now, however, the OIG will no longer accept self-disclosures that only implicate violations of the Stark Law, unless the disclosed conductalso reveals a colorable anti-kickback statute violation. Also, for the first time, the OIG has established a minimum settlement amount of $50,000 to resolve kickback issues in the submission.

In light of these changes, Healthcare Providers considering disclosure of their own conduct utilizing the SDP should first answer two questions. First, does their conduct reveal a colorable anti-kickback statute violation (without regard to any additional Stark Law violations)? Second, is their conduct of sufficient concern to them that they are willing to pay a minimum settlement of $50,000 to resolve their risk of an anti-kickback violation? If the answer to either question is no, the SDP is not appropriate.

History of the OIG's SDP Program
The OIG first introduced the SDP in 1998. The SDP allows Healthcare Providers to voluntarily disclose conduct that may violate the anti-kickback law, which conduct may also violate the Stark Law. The benefit of self-disclosure under the SDP is the likely avoidance of the disruptions associated with a Government investigation and with civil, criminal or administrative litigation. In exchange for voluntary disclosures that the OIG believes are thorough and complete, the OIG will consult with the Department of Justice and other agencies to facilitate a reasonable resolution of the problems identified during the SDP process. Healthcare Providers will be removed from participation in this initiative if they fail to disclose matters in good faith or to timely perform the required self-assessment, including quantifying the financial benefits conferred upon the physicians and quantifying the full amount of any overpayments.

In addition, a Healthcare Provider's existing compliance program may also factor into the OIG's decision to impose Corporate Integrity Agreements, Certification of Compliance Agreements, or other additional compliance measures. Further, utilizing this SDP is "limited to matters that, in the provider's reasonable assessment, involve conduct that subjects the provider to civil monetary penalty ("CMP") liability under the OIG's physician self-referral and anti-kickback authorities - in particular situations involving a financial benefit knowingly conferred by a hospital upon one or more physicians." See An Open Letter to Health Care Providers, April 24, 2006.

In its April 24, 2006 Open Letter, the OIG announced an SDP program specifically tailored to resolving CMP liability under the Stark Law and anti-kickback statutes for financial arrangements between hospitals and physicians. In addition to the "Basic Information" that must be provided in connection with an application under the SDP, the following information must be enclosed in an initial disclosure submission: (1) a complete description of the conduct being disclosed; (2) a description of the provider's internal investigation or a commitment regarding when it will be complete; (3) an estimate of the damages to the Federal health care program and the methodology used to calculate that figure (or a commitment regarding when the provider will complete such estimate); and (4) a statement of the laws potentially violated by the conduct. See An Open Letter to Health Care Providers, April 15, 2008. In addition, a provider must be in a position to complete the investigation and damages assessment within 3 months after acceptance into the SDP.

With respect to potential penalties, the OIG has the authority to impose CMPs of up to $15,000 for each service billed in knowing violation of the Stark Law, and assessments of up to 3 times the amount claimed for such services. In addition, hospitals and physicians may also have liability for these types of arrangements under the OIG's anti-kickback CMP authority. This section authorizes a penalty of $50,000 for each kickback, plus an assessment of not more than 3 times the total amount of remuneration offered, paid, solicited, or received. Under the SDP, however, the OIG will generally settle with the Healthcare Provider for an amount near the low end of the damages continuum.

Recent Changes to the SDP
As noted above, the OIG just announced that it is narrowing the focus of its SDP initiative. See An Open Letter to Health Care Providers, March 24, 2009. First, the OIG will no longer accept disclosure of matters that concern only liability under the Stark Law in the absence of a colorable anti-kickback statute violation. This means simply that the SDP is not the disclosure pathway for conduct representing possible Stark Law violations, unless the same conduct also suggests an anti-kickback violation. Accordingly, Healthcare Providers need to conduct thorough investigations at an earlier stage in order to determine if the conduct at issue will even qualify for referral using the SDP given the March 24, 2009 change in protocol.

Second, the OIG has now established a minimum settlement amount for submissions concerning potential violations of the anti-kickback statute. Given the first change in the program discussed above, this effectively creates a minimum settlement amount for all submissions under the SDP. Specifically, the OIG will require a minimum settlement amount of $50,000 to resolve the matters raised by the self-disclosure. The OIG cited its need to better allocate its resources as the primary reason for narrowing the scope of its SDP.

OIG's recent changes impact a Healthcare Provider's decision of whether to use the SDP to disclose conduct representing potential violations. In addition to the substantive analysis that must be performed to ensure that such conduct may violate the anti-kickback statute, Healthcare Providers must think critically about whether the conduct at issue is sufficiently egregious to justify a settlement of at least $50,000. As a practical matter, these limitations will significantly decrease the number of self-disclosures, a goal of the OIG to control its workload and speed its response time to matters representing significant anti-kickback violations. Given the intent requirements for anti-kickback violations, Healthcare Providers must be extremely careful when deciding whether to use the SDP in the anti-kickback context and analyze the potential benefits and drawbacks of such a self-disclosure.

The SDP is only one of several alternatives for self-disclosure. Others include the U.S. Department of Justice, a State Medicaid agency, the Centers for Medicare and Medicaid Services, and the Healthcare Provider's payment contractor, the latter being appropriate for mere billing errors and overpayments.

The recent changes will also require Healthcare Providers to examine their corporate compliance programs to ensure that they are consistent with the OIG's SDP program. Any matters involving potential Stark Law or anti-kickback violations should be addressed with the assistance of legal counsel given the significant potential criminal and civil penalties. Godfrey & Kahn's White Collar Counseling and Defense Team has significant depth and experience in handling investigations and disclosures, including disclosures that fit within the OIG SDP program.

If you have any questions regarding the OIG's SDP, to whom you should self-disclose, or how your corporate compliance program impacts your self-disclosure decisions, please contact Thomas Shorter ( or 608-284-2239) or Hamilton Arendsen ( or 608-284-2629) in our Madison office, or Sean Bosack in our Milwaukee office ( or 414-287-9431).

To view the complete Health Care Law Vantage Poing, click here.

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