Legal and Regulatory Compliance

HFMA urges support for the Stark Administrative Simplification Act (H.R. 3776)

January 23, 2014 10:24 am

January 22, 2014

The Honorable Dave Camp
The Honorable Fred Upton
U.S. House of Representatives
341 Cannon House Office Building
Washington, DC 20515
Via facsimile: (202) 225-9679

Re: Stark Administrative Simplification Act (H.R. 3776)

Dear Representative Camp and Representative Upton:

On behalf of our 40,000 healthcare financial professionals representing hospitals, physician practices, payers, and post-acute-care providers, the Healthcare Financial Management Association (HFMA) urges that you support the Stark Administrative Simplification Act (H.R. 3776) introduced by Representative Charles Boustany, M.D., and Representative Ron Kind.

Each year, healthcare organizations dedicate significant resources to avoid unintentional technical violations of the Stark Law. These technical violations, which are largely due to unintentional human error, could result in a healthcare organization suffering millions of dollars in penalties even if there has been no overutilization of health care services or harm to the Medicare program.

The Stark Administrative Simplification Act defines “technical noncompliance” as an unwritten, unsigned or lapsed agreement that is otherwise compliant with federal fraud and abuse law. Violations disclosed within one year of the date of noncompliance would be subject to a $5,000 penalty. Those disclosed after more than one year would be subject to a $10,000 penalty. The Centers for Medicare & Medicaid Services (CMS) would have 90 days to determine whether a technical noncompliance disclosure qualifies for a lower penalty using criteria set forth in the legislation. If CMS fails to act within 90 days, the disclosure is deemed to be accepted by CMS and the violation can be remedied by payment of the $5,000 or $10,000 penalty. The measure would also apply retroactively to a disclosure of technical noncompliance that has been made under the existing Self-Referral Disclosure Protocol, but not reached settlement.

Currently, healthcare organizations are forced to set aside large cash reserves for years while waiting for a technical violations disclosure to proceed through the existing protocol. The simplified self-disclosure process and fixed penalty structure described in H.R. 3776 would give these organizations more certainty and predictability regarding the outcome of a technical violation of the Stark Law. Also, it would also decrease legal expenses and free CMS resources to pursue more egregious fraud and abuse law violations. If faced with the choice of waiting years for a disclosure to work through the existing protocol to a nonnegotiable outcome or disclosing an unintentional non-fraud Stark Law violation and paying a fixed penalty, HFMA believes healthcare organizations will undoubtedly choose the latter.

Again, we strongly urge you to support H.R. 3776. It is a common sense approach to eliminating one of the many inequities in this complex and confusing law. HFMA looks forward to any opportunity to provide assistance or additional comments. As an organization, we take pride in our long history of providing balanced, objective financial technical expertise to Congress, CMS, and advisory groups. We are at your service to help gain a balanced perspective on this issue. If you have additional questions, you may reach me or Richard Gundling, Vice President of HFMA’s Washington, DC, office, at (202) 296-2920. The Association and I look forward to working with you.


Joseph J. Fifer, FHFMA, CPA
President and Chief Executive Officer
Healthcare Financial Management Association 

About HFMA

HFMA is the nation’s leading membership organization for more than 40,000 healthcare financial management professionals. Our members are widely diverse, employed by hospitals, integrated delivery systems, managed care organizations, ambulatory and long-term care facilities, physician practices, accounting and consulting firms, and insurance companies. Members’ positions include chief executive officer, chief financial officer, controller, patient accounts manager, accountant, and consultant.

HFMA is a nonpartisan professional practice organization. As part of its education, information, and professional development services, HFMA develops and promotes ethical, high-quality healthcare finance practices. HFMA works with a broad cross-section of stakeholders to improve the healthcare industry by identifying and bridging gaps in knowledge, best practices, and standards.


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