Equities rest with agency in administrative enforcement actions

Administrative enforcement is quicker than an investigation but still “deadly” for the provider or supplier, concluded Judith Waltz, partner at Foley & Lardner LLP, at the American Health Lawyers Association’s 2017 Institute on Medicare and Medicaid Payment Issues. “Administrative enforcement” means the tools available to HHS, CMS, and the HHS Office of Inspector General (OIG) without or with limited formal involvement of the Department of Justice, including civil money penalties (CMPs), payment suspensions, and billing privilege or enrollment denials and revocations. In administrative enforcement actions, the equities and more discretion may rest with the agency, and a lesser burden of persuasion applies for the agency to prove its case.

Exclusion regulations

In December 2016 the OIG revised its exclusion regulations (see 81 FR 88334) in part to implement the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Waltz explained that the Final rule did the following: (1) expanded its permissive exclusion authority for convictions related to obstruction of an investigation to include audits; (2) added permissive exclusion authority for making false statements, omissions, or misrepresentations in enrollment applications; (3) added early reinstatement for loss of license in a different state; and (4) added a 10-year look-back period for exclusions.

Inflation

Waltz noted that CMPs are being updated annually for inflation pursuant to a final rule issue in December 2016 (see 45 C.F.R. Part 102). For example, a CMP for failing to grant timely access is up to $15,000 per day, $16,312 after inflation, and the CMP for false statements, omissions, or misrepresentations in enrollment or similar documents is up to $50,000 per false statement, $54,732 after inflation. Waltz said, “After inflation, numbers are unbelievable.”

Kusserow on Compliance: Civil monetary penalty rules revised regarding inducements

In December 2016, the HHS Office of Inspector General (OIG) issued a Final rule applying to the Civil Monetary Penalty Law (CMPL) administered by the OIG. The legislation creating the law came about in 1981, upon my request as HHS Inspector General. In testimony before Congress, I requested legislation to provide an administrative alternative to the False Claims Act.  This was to permit taking action against wrongdoers administratively, rather than through the court system. The resulting legislation authorized the imposition of administrative penalties and assessments on any person who “offers to or transfers remuneration to any individual eligible for benefits” under a federal health care program “that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part” by a federal health care program–in short, it imposes financial penalties and exclusion from federal health care programs and participation in any state health care programs. The HHS Secretary assigned these authorities to the OIG. Remuneration is a major element in the CMPL and is implicated in other legislation, including the Anti-Kickback Statute and Stark Laws. It has undergone changes in definition over time.  The following outlines the five new exceptions to its definition under CMPL.

Five new exceptions to the definition of remuneration

  1. Reduction in copayment for certain outpatient services. The rule adds a cost-sharing exception permitting reduction in the copayment amount for covered outpatient department services, but does not apply to physician practice billing.
  2. Remuneration that poses a low risk of harm and promotes access to care. A provider can avoid the CMPL when it provides items or services that improve a beneficiary’s ability to obtain items and services payable by Medicare or Medicaid, and pose a low risk of harm to beneficiaries and the programs. This does mean it permits remuneration that would be likely to influence a patient to access unnecessary care. The inclusion of “items and services” revises the earlier proposed language, “medically necessary health care items and services.”  Cash and cash equivalents would not meet the criteria for the exception.
  3. Retailer rewards and discounts. Retailers may offer or transfer items or services for free or less than fair market value without being subject to civil monetary penalties. However, they must consist of coupons, rebates, or other rewards from a retailer; be offered or transferred on equal terms available to the general public, regardless of health insurance status; and must not be tied to the provision of other items or services reimbursed in whole or in part by a federal health care program.
  4. Remuneration to financially needy individuals. The regulations also provide for a financial need-based exception to the definition of remuneration, wherein a person may offer or transfer items or services for free or less than fair market value if: the items or services are not offered as part of an advertisement or solicitation and are not tied to the provision of other items or services reimbursed in whole or in part by a Federal health care program; there is a reasonable connection between the items or services and the medical care of the individual; and the person providing the items or services must determine in good faith that the individual is in financial need.
  5. Copayment waivers for the first fill of generic drugs. A Medicare Part D Plan sponsor may waive any copayment for the first fill of a covered Part D drug that is a generic drug, as long as the waiver is included in the benefit design package submitted to CMS.

These regulatory changes are effective January 6, 2017. A separate section of the same rule package focused on revision of the Anti-Kickback provisions.  For information about those changes, see my December 29, 2016, post.

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 © 2016 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Reminder—False Claims Act penalties are increasing next month

Last year, Congress enacted legislation modifying the False Claims Act (FCA) to add incentives to “Whistleblowers” and provide added deterrence to those who would violate law by increasing financial penalties.  The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, passed as part of the Bipartisan Budget Act of 2015 (P.L. 114-74), requires the Department of Justice (DOJ) to increase FCA penalties to annually account for inflation, raising penalties. The DOJ last raised civil monetary penalties under the FCA to their current levels in August 1999, increasing the minimum penalty from $5,000 to $5,500, and increasing the maximum penalty from $10,000 to $11,000. This increase was consistent with the maximum 10 percent increase provided for in the 1996 Debt Collection Improvement Act.  The $11,000 per claim penalty represents the maximum penalty permissible under prior law—exactly double the $5,500 per claim minimum penalty.  Under the new legislation now going into effect, this will increase next month, and the change will bump the minimum penalty for a FCA from $5,500 to $10,781 and increase the maximum penalty from $11,000 to $21,563. One of the provisions of the legislation is requiring the federal government to increase civil monetary penalties as a “catch up adjustment,” which requires agencies to update penalties to account for inflation. The initial adjustment would be implemented through rulemaking.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2016 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: OIG reports on fraud and abuse actions for the first half of 2016

The HHS Office of Inspector General (OIG) issued its Semi-Annual Report for first half of fiscal year (FY) 2016 (October-March), summarizing key accomplishments, significant problems, abuses, deficiencies, and investigative outcomes relating to the administration of HHS programs and operations that were disclosed during the reporting period.

428 criminal actions, 1662 exclusions

The OIG reported 428 criminal actions against individuals or entities that engaged in crimes against HHS programs and 383 civil actions, which include false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalties (CMP) settlements, and administrative recoveries related to provider self-disclosure matters.  In addition, the OIG reported the exclusions of 1,662 individuals and entities from participation in federal health care programs. Recoveries from CMP were reported to have increased five-fold over the past three years, and likely will exceed the prior year’s results by the end of FY 2016.

Recoveries of $2.77 billion

The reported expected recoveries of more than $2.77 billion consisting of nearly $554.7 million in audit receivables and about $2.22 billion in investigative receivables, which include about $336.6 million in non-HHS investigative receivables resulting from our work in areas such as the states’ shares of Medicaid restitution.

100 criminal actions by the Health Care Strike Force

The Health Care Fraud Strike Force teams brought charges against 87 individuals or entities, 100 criminal actions and $116.8 million in recoveries through investigations. The OIG also reported 1,662 individuals and entities barred from participating in federal healthcare programs during the first half of FY 2016, the report said.

1,553 criminal actions by state Medicaid Fraud Control Units (MFCUs)

In 2015, MFCUs reported conducting 17,665 investigations that resulted in 1,553 criminal actions, of which 1,097 were related to Medicaid fraud and 456 were related to patient abuse and neglect. Civil judgments and settlements totaled 795, and monetary recoveries in civil cases totaled over $397 million.  Many of these cases were joint actions with the OIG.  However, what may not be generally known is that the OIG has oversight responsibility for MFCUs and administers grants that provide Federal funding for their operations. The federal government reimburses 75 percent of the costs of operating a Unit; the States contribute the remaining 25 percent.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2016 Strategic Management Services, LLC. Published with permission.