New federal legislation has transformed the regulatory environment for health care providers’ participation in federally funded health care programs. Heightened risks of liability mean health care providers and the lawyers who advise them need to be more aware of what the federal government expects.
The Why of Reform
It is important to first state the obvious in terms of why the Affordable Care Act targets fraud, waste and abuse. The Congressional Budget Office projects that such efforts will return $1.75 for each dollar spent and maybe much more than that when one takes into account the payments made as a result of self-disclosures of mistakes and/or improper conduct. High-profile and high-buck cases are frequent newsmakers, but even relatively low-dollar settlements can cause significant pain. For example, on April 27, 2010, the Department of Justice announced that AstraZeneca LP and AstraZeneca Pharmaceuticals LP would pay $520 million to resolve allegations that AstraZeneca illegally marketed the antipsychotic drug Seroquel® for uses not approved (“off-label”) as safe and effective by the Food and Drug Administration (FDA). The company signed a civil settlement to resolve allegations that by marketing Seroquel® for unapproved uses, the company caused false claims for payment to be submitted to federal insurance programs. On the other end of the spectrum, in 2009, a physician in Texas paid the government $534,000 in a settlement after the Office of Inspector General (OIG) alleged he had submitted false or fraudulent claims by using billing codes that would generate a higher reimbursement than what was documented or that he submitted claims without any documentation. Although this latter amount is not “shocking,” the hidden monetary and emotional costs of defending against such charges can be enormous. In any event, given the rate of return, it is no wonder that the Affordable Care Act provides over $700 million in new funds to fight health care fraud over the next decade.
The How of Reform
Reporting of Overpayments
Duplicate submission of the same service or claim
Payment to the incorrect payee
Payment for excluded or medically unnecessary services
Payment made as primary payer when Medicare should have paid as secondary payer
Mandatory Compliance Plans
Ignorance Is Not Bliss
New Self Disclosure Protocol
Back Door to Qui Tam
It will be interesting to see how this provision works in practice. Proactive health care providers that are the subject of either a government or media investigation will want to dig faster and deeper to know what is going on and make full disclosures to shut the back door. Another outcome, however, may be that employees will find the qui tam back door too inviting to pass up.
Life Science Disclosure
Keep Your Eyes Open
Take Home Lesson
1 The main Affordable Care Act is embodied in H.R. 3590, P.L. 111-148 (March 23, 2010). The reconciliation bill language is contained in H.R.4872, P.L. 111-152.
2 31 U.S.C. §3729-3733 – (as amended March 23, 2010, P.L. 111-148).
3 42 U.S.C. §1320a -7b(b) – (as amended March 23, 2010, P.L. 111-148).
5 H.R. 3590 at p. 653, Title VI, Subtitle E, §6408 (a)(9).
© 2010 Gordon J. Apple. All rights reserved