In Brief: When prevention efforts fail, how should you manage Stark law and antikickback violations?
As part of a routine compliance review, organizations may discover that a provider agreement has been in violation of federal regulations such as the Stark law or Anti-Kickback Statute. In an effort to correct the violation and minimize potential penalties, including financial settlements, organizations are often advised to self-disclose these incidents to the federal government.
While navigating this process can be a daunting task, engaging the support of your legal team and the expertise of independent valuation consultants can help alleviate the burden and minimize damages.
Self-Disclosure Background
Due to the increasing frequency and intensity of federal investigations, organizations are facing more pressure than ever to ensure they are maintaining regulatory compliance. In fact, the number of False Claims Act cases per year has more than doubled over the past 20 years as the government has cracked down on healthcare violations and spend.
Source: Fraud Statistics – Overview, October 1, 1986–September 30, 2021, Civil Division, US Department of Justice.
This has proven to be an effective approach for the government, as the US Department of Justice recovered $70 billion in 2021 alone from settlements and judgments related to False Claims Act investigations. Add this level of enforcement to the increasing financial pressures on healthcare organizations already, and it becomes clear that effectively and efficiently addressing regulatory violations should be a high priority for all provider arrangements.
The Self-Disclosure Process
While noncompliance can take many forms, some of the most common issues found in self-disclosed arrangements include the following:
- A provider’s total compensation exceeds FMV.
- Administrative services were paid but not fully provided.
- Call coverage rates exceed FMV.
- Concurrent call coverage payments were not properly valued.
- Leased office space was below FMV, and/or support staff services were not properly accounted for when determining the contractual payment rate.
No matter the specific violation, organizations must move quickly to address it. There are several avenues an organization may pursue when self-disclosing violations, the most common of which are the OIG Health Care Fraud Self-Disclosure Protocol and the CMS Self-Referral Disclosure Protocol. Organizations should engage their legal teams to decide the best course of action for self-disclosing violations.
Regardless of which pathway is selected, there are several best practices for organizations when self-disclosing. Below are the “5 ‘Cs’ of an Effective Self-Disclosure,” as coined by healthcare law firm Hall Render.
- Credibility of the self-disclosing provider and its legal representative
- Comprehensiveness of the prior internal investigation supporting the self-report
- Corrective action confirming the underlying compliance problem is a thing of the past
- Claims data that is accurate and complete in identifying the overpayment
- Compliance issues being resolved before they can escalate further against the organization
While following these best practices will help your organization address violations in a manner that minimizes damages, self-disclosure is not a process that should be attempted alone. It is often necessary to seek external support to prepare an optimal self-disclosure report.
Engaging Valuation Support
The self-disclosure process is usually led by an organization’s legal counsel, though third-party valuators are commonly called in to assist. In hopes of being comprehensive in their review and reducing the likelihood of additional government intervention, organizations will often obtain a retrospective FMV and CR assessment. This assessment will identify the exact value of the noncompliant payments that occurred over the duration of the arrangement. If the organization decides to continue with the arrangement, this third-party valuator can also provide a prospective FMV and CR review to aid in correcting any actions or payments going forward.
If we have learned anything from our 50 years serving the healthcare industry, it’s that prevention is the best medicine, and organizations should look to implement the necessary protocols and practices to avoid violations in the first place. These preventive measures range from developing robust compliance programs to obtaining prospective FMV and CR opinions.
ECG’s financial experts can help with these initiatives and many more, including navigating the self-disclosure process should the need arise.
Edited by: Emily Johnson
Published April 5, 2023