Kusserow’s Corner: OIG Moves to Expand Civil Monetary Penalty Authorities

The HHS Office of Inspector General (OIG) submitted to the White House Office of Management and Budget (OMB) two proposed rules (RIN 0936-AA04 and RIN 0936-AA05), titled “Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Office of the Inspector General’s Civil Monetary Penalty Rules.” If approved, it would revise fraud-related civil monetary penalties for providers and expand their exclusion authority. The changes are in accordance with provisions of the Affordable Care Act (ACA).

The Civil Monetary Penalties Law (CMPL) came into existence during my term as Inspector General (IG). Early on in my tenure, it became apparent there was a large gap in the enforcement authorities relating to false claims being submitted in connection with the Medicare and Medicaid programs. Until the passage of CMPL, cases had to be large and significant enough to warrant the Department of Justice (DOJ) opening and prosecuting cases in the Federal courts under the federal False Claims Act (FCA). I requested Congress to provide an added enforcement tool that would provide an administrative alternative to the FCA, and in 1981 the CMPL was enacted with the enforcement responsibility assigned to the OIG. The penalties provisions follow very closely those of the FCA; however, without the same evidentiary burden. To employ the CMPL authority, the OIG only has to prove gross negligence with the preponderance of evidence. This is the “knew or should have known” standard, whereas under the FCA there is a knowledge standard. The entire process is administrative and operated within the structure of HHS. The OIG investigates the alleged violation and determine whether there is a basis under which to impose civil money penalties or permissive exclusion and cases are litigated before HHS Administrative Law Judges (ALJs). If Civil Monetary Penalties and/or exclusions are imposed, Medicare is required to notify appropriate licensing authorities, state Medicaid programs, professional organizations, and peer review organizations. In effect, this type of notification may shut out an individual or entity from the health care industry.

Over time, CMPL has been modified and added to by legislation, as was done with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), that amended CMPL to be applicable to all federal health care programs except the Federal Employees Health Benefits Program. More recently, the ACA also modified and expanded CMPL. The proposed rule will make changes to the CMPL regulations at 42 C.F.R. § 1003 to implement authorities under the ACA and other statutes. The exclusions proposed rule would implement provisions in the ACA that expand the OIG’s exclusion authority. The OIG also proposes clarifying the regulations so that they are more “accessible to the public” and clarifying the liability guidelines for OIG authorities.

ACA provides for CMPs, assessments, and exclusion for:

  • Failure to grant access timely access to OIG;
  • Ordering or prescribing while excluded;
  • Making false statements, omissions, or misrepresentations in an enrollment application;
  • Failure to return an overpayment; and
  • Making or using a false record or statement that is material to a false or fraudulent claim;

The OIG also proposed the following:

  1. A reorganization of 42 C.F.R. § 1003 to make the regulations more accessible to the public;
  2. The addition of clarity to the regulatory scheme; and
  3. An alternate methodology for calculating penalties and assessments for employing excluded individuals in positions in which the individuals do not directly bill the Federal health care programs for furnishing items or services. We also clarify the liability guidelines under OIG authorities, including the CMPL, the Emergency Medical Treatment and Labor Act (EMTALA); section 1140 of the Social Security Act for conduct involving electronic mail, Internet, and telemarketing solicitations; and section 1927 of the Social Security Act for late or incomplete reporting of drug-pricing information (42 U.S.C. § 1320a-7a).

What all this means is that, if approved, the changes would streamline the CMPL process; making it easier to implement; and expand situation where the authority can be employed. It provides an intermediate sanction to providers for a variety of activities where enforcement today is difficult. For example, non-complying with record requests or granting access to the OIG would create a CMP situation. Currently, although providers have as a condition of participation in Medicare/Medicaid must provide access to and documents to the OIG on request, it is difficult to enforce. De-certifying a provider is like using a nuclear option. Granting the OIG authority to penalize un-cooperating providers with financial penalties would give added teeth to their enforcement powers. It also gives the OIG authority to impose monetary sanctions for a variety of other conduct not adequately addresses under current regulations, including addressing the issue of an excluded provider ordering or prescribing while excluded.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.