Updated Self-Disclosure Protocol Clarifies Disclosure Process and Obligations

Individuals and entities subject to the Civil Monetary Penalty Law (CMP) have received clarification regarding the process for disclosing and resolving potentially unlawful conduct involving the federal health care programs (FHCP). On April 17, 2013, in response to a 2012 solicitation for comments and recommendations, the Office of Inspector General for the Department of Health and Human Services (the “OIG”) issued an updated Provider Self-Disclosure Protocol (the “Updated SDP”). The OIG published its first guidance on self-disclosure in a 1998 Federal Register notice and subsequently issued three open letters that expanded upon that notice. With the Updated SDP, the OIG has consolidated its issuances on self-disclosure into a single, 15-page document that supersedes past issuances and formalizes some aspects of the process not previously articulated in writing.

Among other things, the Updated SDP:

1. identifies the individuals and entities and the conduct eligible for the SDP;
2. outlines the information a disclosing party must provide in all submissions;
3. defines specific information to be included in disclosures involving false billing, employment of individuals excluded from FHCPs, and possible violations of the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (Stark Law);
4. addresses the tolling of a provider’s 60-day obligation to return overpayments following a submission to the SDP; and
5. describes some of the methodologies the OIG uses for calculating damages.

The following chart summarizes key aspects of the Updated SDP.

Interplay with the 60-Day Overpayment Rule

The OIG addressed the relationship between the Updated SDP and the 60-day overpayment rule (the “Overpayment Rule”), which was passed in 2010 as part of the Affordable Care Act and which was the subject of a proposed rule published by the Centers for Medicare & Medicaid Services (CMS) in February 2012 (the “Proposed Rule”). Because the Overpayment Rule requires providers and suppliers to return Medicare and Medicaid overpayments within 60 days of identification, many have wondered how the Overpayment Rule related to the OIG’s previous instruction not to return overpayments that are the subject of a self-disclosure. According to the Proposed Rule, CMS intends to suspend the Overpayment Rule’s notice and repayment obligations “when [the] OIG acknowledges receipt of a submission to the OIG SDP” and “until a settlement agreement is entered, or the provider or supplier withdraws or is removed from the OIG SDP.” Consistent with the Proposed Rule, CMS Self-Referral Disclosure Protocol stays any requirements under the Overpayment Rule. The OIG plans to provide additional guidance on how participation in the SDP will account for or mitigate liability under the Overpayment Rule after CMS finalizes the regulations.

Disclosing Parties Must Weigh Costs and Benefits of Self-Disclosure

Self-disclosing possibly unlawful conduct to the OIG has both benefits and challenges. Benefits include potentially reduced damages and penalties; coordinated settlements among multiple enforcement agencies (CMS for Stark Law violations and the Department of Justice under the False Claims Act); a presumption that the OIG would not require a Corporate Integrity Agreement in exchange for the OIG’s release of its exclusion authority; and a potential stay of the 60-day deadline to return overpayments. However, a disclosing party faces a substantial burden because it must complete a thorough investigation of any potentially unlawful conduct before the self-disclosure and estimate damages within 90 days of submission. Further, the disclosing party must acknowledge that a potential violation of the Applicable Laws occurred.

Thomas Crane of Mintz Levin’s Health Care Enforcement Defense Group, who has substantial experience with the self-disclosure process, believes that “health care providers have long understood the significant challenges and risks presented by self-disclosure,” and, according to Crane, the Updated SDP “provides greater procedural clarity but raises the bar on submission requirements.” Thus, a party considering disclosure must carefully consider the conduct at issue and carefully weigh the pros and cons of submitting a self-disclosure.

Endnotes

1 Since releasing the Self-Disclosure Protocol in 1998, the OIG has issued three Open Letters dated April 24, 2005, April 15, 2008, and March 24, 2009. These letters are available at the OIG’s SDP website: http://oig.hhs.gov/compliance/self-disclosure-info/index.asp#current

2 63 Fed. Reg. 58399 (Oct. 30, 1998).

3 42 U.S.C. § 1320a-7b(b).

4 42 U.S.C. § 1395nn.

5 The Centers for Medicare & Medicaid Services (CMS) oversees the Self-Referral Disclosure Protocol, which is designed to cover disclosure of potential violations of the Stark Law. See Thomas S. Crane and Brian P. Dunphy, CMS Implements Self-Referral Disclosure Protocol Process to Self-Disclose Stark Law Violations (Sept. 27, 2010); Thomas S. Crane and Brian P. Dunphy, “HHS Issues Report to Congress on the Self-Referral Disclosure Protocol” (Mar. 28, 2012).

6 For a discussion of the proposed 60-Day Overpayment Rule, see Karen S. Lovitch and Stephanie D. Willis, CMS Publishes Proposed Rule on Return of Medicare and Medicaid Overpayments, (Feb. 16, 2012).

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