BP - Health Care Compliance Association

Mandatory Stark
reporting: Is a
denouement nigh, or
just another chapter in
the saga?
Editor’s note: Ed Rauzi and Lisa Hayward are
partners in the Seattle Office of Davis Wright Tremaine,
LLP. They work for clients in the health
care delivery system full-time, all the time. Ed
may be reached by telephone at 206/757-8127
and Lisa’s number is 206/757-8058.
Although it receives scant attention,
the Stark Law has always
authorized the Secretary of Health
& Human Services to require hospitals to
submit information concerning financial
relationships such hospitals have with physicians.
Regulations purporting to implement
that authority have existed since 1991. 1 To
date, however, there is no evidence that the
Centers for Medicare and Medicaid Services
(CMS) has ever used its authority, even in an
investigation. That may soon change.
In a filing with the Office of Management
and Budget (OMB) on December 18, 2008,
CMS sought approval of documents that
will require selected hospitals to disclose
in writing the financial relationships they
had with physicians in calendar year 2006.
OMB’s permission is required under the
Paperwork Reduction Act, which prohibits a
federal agency from subjecting any person to
a penalty for failing to respond to a request
for information unless the request includes an
OMB authorization number.
If CMS gets its way, 400 hospitals will soon
be receiving a form letter transmitting a
By Edwin Rauzi and Lisa Hayward
packet of information and eight Microsoft
Excel spreadsheets. The letter will inform the
hospitals that they have 60 days to compile a
comprehensive list and provide documentation
of virtually all financial relationships
with physicians and their immediate family
members. 2 The disclosing hospitals will need
to identify and disclose each financial relationship
with each physician. As compliance
officers know, a hospital is prohibited from
submitting a claim to the Medicare program
based on an order or referral from a physician
with whom the hospital has a financial
arrangement that does not satisfy a Stark
exception. The CEO, CFO or “comparable
officer” will be required to certify that the
information is “true and correct, to the best of
my belief and knowledge.”
This is not CMS’s first attempt at obtaining
approval to send out a demand for information.
As Compliance Today noted in its September
2007 edition, CMS has been pursuing this
initiative for some time. 3 Perhaps in response to
criticism by lobbyists and the hospital industry,
the last iteration of the packet was withdrawn by
CMS on April 10, 2008. CMS began retracing
its steps with the publication of a notice soliciting
additional comments in the April 30, 2008,
edition of the Federal Register.
The details CMS changed in the new packet
include:
n Reducing the number of hospitals to be
surveyed from 500 to 400;
Health Care Compliance Association • 888-580-8373 • www.hcca-info.org
n Increasing the estimate of time that will be
spent in responding from six to 100 hours;
n Disclosing that the responses will be
evaluated initially by a Program Safeguards
Contractor;
n Requiring the disclosure of the National
Practitioner Identifier numbers of
physicians (instead of Unique Physician
Identification numbers);
n Acknowledging that “some” hospitals may
solicit legal review of the information
before it is submitted;
n Clarifying that transactions in each direction
(e.g., leases to physicians by hospitals
as well as leases from physicians by hospitals)
are included; and
n Warning that the government will not be
“estopped” from asserting that an arrangement
the hospital characterizes as compliant
is non-compliant.
Many more things in the packet stayed the same.
In addition to the certification requirement:
n The deadline to respond remains 60 days
after receipt (although CMS will consider
granting extensions);
n The sanction for late responses is potentially
$10,000 per day;
n Unless the hospital has a calendar fiscal
year, information (and contracts) for two
fiscal years will be required;
n Unless groups of agreements are “substantially
the same,” copies of each agreement
must be submitted;
n The hospital must assert whether each
agreement satisfies all of the elements
defined in the applicable regulation;
n The hospital must identify not only
recruiting, personal service and rental arrangements
that they believe fit within an
exception, but also relationships that are
“implicated” by those exceptions; and
n That the information obtained may be
“shared” with other government agencies.
Continued on page 52
51
March 2009