5.5.2006
BREAKING DEVELOPMENTS IN LONG TERM CARE AND
SENIOR HOUSING LAW
New "Open Letter" to Providers From the Inspector General
Encourages Increased Use of Self Disclosure Protocol For Stark and
Kickback Violations
On April 24, 2006, the U.S. Department of Health and Human Services' Office of Inspector
General ("OIG") released "An Open Letter to Health Care Providers" regarding a new initiative to
encourage self-reporting by providers. The focus of the OIG is to watchdog governmental
health programs and operations by "protecting them against fraud, waste, and abuse." The
OIG's duties are carried out through a nationwide network of audits, investigations and
inspections. Accordingly, when the OIG speaks, long term care facilities should listen.
The OIG periodically provides several different types of compliance guidance for providers,
including Advisory Opinions, Fraud Alerts, Special Advisory Bulletins and an annual Work Plan.
Less frequently, the Inspector General issues "open letters" to health care providers. Given
their rare nature (four issued in the last nine years), it is prudent for providers to be aware of
these open letters.
In last week's open letter, the Inspector General announced a new initiative with respect to
self-disclosure for providers in the areas of prohibited referrals and kick-backs. Since 1998, the
OIG has offered a Self Disclosure Protocol ("SDP") so that providers who discover compliance
violations with billing and other issues involving federal health care programs can self-report
these violations. While self-reporting does not guarantee leniency from the regulators, the OIG
has told providers that full disclosure and cooperation "generally benefits the individual or
company and that the OIG will report on the provider's involvement and level of cooperation to
the Department of Justice or other government agency affected by the disclosure."
Now, through this latest statement, the Inspector General is encouraging a broader use of the
SDP for violations of the physician self-referral (Stark) and anti-kickback laws.1 While these
laws principally affect hospitals and physicians, long term care facilities face potential liability
in areas such as relationships with hospitals, hospices, ambulance companies, medical directors
and joint ventures. The OIG's enforcement of these laws can implicate expensive civil monetary
penalties and exclusion from federal programs. Egregious violations of these laws could involve
the Department of Justice and liability under the False Claims Act.
With this new self-reporting initiative focused on physician self-referral and kickbacks, the
Inspector General points out that it will continue to consult with the Department of Justice
before it accepts any provider into the Protocol, and, here again, the OIG makes no guarantee
of any particular result. However, the new open letter points out that once a provider is
accepted into the Protocol, the OIG will generally settle the matter for an amount on the low
end of the continuum of potential administrative penalties and be less inclined to impose harsh
compliance requirements going forward.
We encourage all long term care facilities to create and implement compliance plans to ensure
that violations of these and other laws do not occur. However, when potential violations of
these laws are suspected by providers, the OIG's recent emphasis on self-disclosure must be
considered as strategies are explored.
1
In a nutshell, anti-kickback laws prohibit knowing and willful solicitation or receipt or offer or
payment of remuneration in return for referring a Program patient, or to induce the
purchasing, leasing or arranging for or recommending purchasing or leasing items or services
paid by the program.
Physician self-referral laws and regulations, also known as the Stark regulations, state that
when a physician (or an immediate family member of such physician) has a financial
relationship with an entity..., then the physician may not make a referral to the entity for the
furnishing of designated health services for which payment otherwise may be made under
Medicare (and to some extent Medicaid).
For more information, please contact the Long Term Care and Senior Housing Law Group at:
Lane Powell PC
206.223.7000 Seattle
503.778.2100 Portland
360.754.6001 Olympia
longtermcareandseniorhousing@lanepowell.com
www.lanepowell.com
We provide The Long Term Care and Senior Housing Law Hot Sheet as a service to our clients,
colleagues and friends. It is intended to be a source of general information, not an opinion or
legal advice on any specific situation, and does not create an attorney-client relationship with
our readers. If you would like more information regarding whether we may assist you in any
particular matter, please contact one of our lawyers, using care not to provide us any
confidential information until we have notified you in writing that there are no conflicts of
interest and that we have agreed to represent you on the specific matter that is the subject of
your inquiry.
© 2006 Lane Powell PC
Seattle - Portland - Anchorage - Olympia - London