On April 17, 2013, the Office of Inspector General (OIG) updated the OIG’s self-disclosure protocol (SDP).  This update significantly revises the SDP first published in 1998, and supersedes the OIG’s related open letters to providers from 2006, 2008 and 2009. To date, the OIG has processed 235 settlements and monetary recoveries in excess of $280 million under the SDP.

The SDP instructs healthcare providers and suppliers how to self-report upon discovery of any actions that potentially violate federal fraud and abuse laws.  Some of the most common issues providers disclose include:

  1. billing for items or services furnished by excluded individuals.
  2. upcoding Evaluation & management services (E/M) and DRG services
  3. billing multiple times for services
  4. altering or  falsifying medical records.
  5. receiving kickbacks and Stark Law violations.

Among the previous changes, the OIG narrowed the SDP’s scope regarding Stark, the physician self-referral law, established a minimum settlement amount and established guidelines for providers’ initial submissions in the disclosure process.

The recent updates include:

  1. Availability of the SDP.  The OIG clarified that the SDP is also available to drug and device manufacturers, not just traditional health care providers.  In the current SDP, OIG refers to “disclosing parties” rather than to “providers,” as had been the previous case in the 1998 SDP and subsequent open letters.  OIG reiterated that disclosing parties may use the SDP even if they are already subject to a government inquiry, so long as the disclosure is made in good faith. In those cases (as it may do otherwise), OIG would coordinate with the Department of Justice (“DOJ”). Significantly, OIG stated that it “will advocate that the disclosing party receive a benefit from disclosure under the SDP” in any matter in which DOJ is involved.

The updated protocol also confirmed that the SDP is available for matters subject to civil monetary penalties under federal criminal, civil, or administrative law, but not matters violating only the Stark Law, which must be processed through the CMS Self-Referral Disclosure Protocol, or that exclusively involve overpayments and errors, which remain subject to the voluntary refund process dictated by a provider’s or supplier’s local Medicare Administrative Contractor.

  1. Relationship Between Identified Overpayments and the SDP.  The Affordable Care Act required providers and suppliers to report and repay overpayments within 60 days of their identification. In 2012, CMS issued a proposed rule to implement that requirement; however the proposed  rule has not been finalized.  Although CMS has not finalized that rule, OIG indicated (i) that it expects self-disclosure under the SDP to satisfy a party’s compliance with the 60-day requirement and (ii) that a provider or supplier can toll the running of the 60-day time limit and avoid conversion of an identified overpayment into a potentially actionable claim under the False Claims Act by making a disclosure to OIG under the SDP. The initial submission does not need to include the complete findings from the provider’s or supplier’s internal review nor contain a calculation of overpaid amount, but the provider or supplier will have only an additional 90 days to complete these tasks or risk being rejected under the SDP.

OIG noted that providers and suppliers must also show “good faith willingness” to resolve all liabilities within the six-year Civil Monetary Penalties Law statute of limitations in order to be accepted into the SDP and deemed to satisfy the 60-day requirement.

  1. Additional Requirements for SDP Submissions.   To be eligible for the SDP, disclosing parties must complete an internal investigation within 90 days of their initial submission to OIG. Disclosing parties also must “acknowledge” that the conduct involves a potential violation of Federal criminal, civil, or administrative laws, and identify with specificity the laws potentially violated.  OIG cautions that failure to make a clear acknowledgment will result in the rejection of a submission under the SDP.
  2. Calculation of Damages.  The updated SDP provides a detailed methodology for calculation of damages from false billing, conduct involving excluded persons, and Federal Anti-Kickback Statute (“AKS”) violations.  For billing matters, OIG incorporated sampling and extrapolation principles and requirements similar to those found in Corporate Integrity Agreements (“CIAs”). For conduct involving excluded persons whose services are not separately billed to Federal health care programs (e.g., a hospital’s employment of a nurse who has been excluded from participation in Federal health care programs), OIG will use the disclosing party’s total costs of employment or contracting during the period of exclusion (e.g. salary, fringe benefits and taxes), multiplied by the disclosing party’s revenue-based Federal health care payor mix for the relevant time period. For AKS violations, while OIG requires parties to calculate the claims affected by the violation, OIG indicated that civil monetary penalty damages generally will be based on a multiple of the total amount of remuneration involved in the arrangement(s).

Significantly, OIG reaffirmed that its “general practice . . . is to require a minimum multiplier of 1.5 times the single damages,” although noted that it will “determine in each individual case whether a higher multiplier may be warranted.”

  1. Resolution of a SDP Submission.  As incentive for self-disclosure, OIG reaffirmed its presumption against requiring parties who disclose noncompliance to enter a CIA, stating that, in the 235 cases settled through the SDP, only one settlement imposed ongoing integrity measures on a provider in exchange for a release of OIG’s permissive exclusion authorities.
  2. Expectation for Resolution.  The updated SDP advises that the average time for a pending case is twelve months from acceptance into the SDP.  OIG repeated its expectation of a $50,000 minimum settlement for AKS-related submissions and added a $10,000 minimum settlement amount for all other matters resolved through the SDP.

The updated SDP is found at http://oig.hhs.gov/compliance/self-disclosure-info/