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Fraud, Waste and Abuse Controls Under The Affordable Care Act

The Affordable Care Act (“ACA”) strives to improve our health care system in three main areas; by expanding consumer protections, strengthening Medicare and reducing health care costs.  One key way the government hopes to achieve these goals is through tougher fraud and waste controls. Given the focus on prevention, penalty and recovery, compliance plans are of the utmost importance for all health care providers. First we examine all of the elements incorporated in the ACA that pertain to fraud, abuse and waste before we can begin to develop a compliance plan for our facilities. The new law contains a host of tools aimed at enforcing fraud and waste prevention.  Let’s review:

The ACA institutes new rules and tougher sentences for crimes of fraud, abuse and waste.  Sentencing for Health Care Fraud will increase by 20-50% for crimes involving more than $1,000,000 in losses.  Obstructing a fraud investigation is now a crime, and the law makes it easier for the Department of Justice to investigate facilities like nursing homes for fraud or any wrongdoing.  The law also makes it easier for the government to recover funds obtained through fraudulent practices.

The law employs more stringent screening and enrollment requirements.  New providers or suppliers applying for enrollment in Medicare, Medicaid or CHIP will be subject to stricter oversight.  Fingerprinting, licensure checks, criminal background checks and site visits are all a possibility prior to provider billing approval.  The law enables the Secretary of the Department of Health and Human Services to deny enrollment to prevent or combat fraud, waste and abuse.  As well, the Secretary can withhold Medicare or Medicaid payment if an allegation of fraud is under investigation or pending investigation.

The allocation of $350 million over the next ten years to help fight fraud through the newly established Health Care Fraud and Abuse Control Account (“HCFAC”), will be used in part to hire new officials and agents aimed at preventing and identifying fraud.

The law pulls together a collection of reporting agencies including; Veterans Administration, Indian Health Services, Department of Defense, and Social Security Disability Insurance to expand the data collection in the repository for Centers for Medicare and Medicaid Services.  Data matching services between federal agencies is also strengthened, which in turn will increase the likelihood of identifying criminals and increasing prevention.

Overpayment recovery expansion is achieved through the expansion of the Recovery Audit Contractors (“RACs”).  Self-reporting is required by providers and suppliers of Medicare Advantage Plan and Part D (the Medicare drug benefit) and the return of overpayment is required within 60 days of identification.

Prevention is outlined as a responsibility not only for government agencies enforcing the new law, but for providers and suppliers as well.  They are required to supply a plan to prevent fraud and follow the new guidelines as a condition of enrollment in Medicare, Medicaid or CHIP. There are specific provisions for high fraud-risk providers and suppliers, including an attempt to tighten the screws on facilities that bill only Medicare – the rule of thumb here is a facility must serve at least 40% non-Medicare patients.

The ACA has augmented penalties meant to promote the deterrence of fraud and abuse.  The Office of the Inspector General (“OIG”) is authorized to impose stronger civil and higher monetary penalties for guilty parties.  The authority to exclude a provider or supplier from participating in Medicare and Medicaid  lies with the Secretary, who can deny participation based on many factors; i.e. providing false information on an application to enroll.  The penalties for all illegal actions and crimes have increased, and the law allows States to terminate a provider if they have been terminated under Medicare or another State Medicaid program.

The law increases regulations of private insurance to protect employers and employees from insurance scams. It also gives the Secretary and OIG power to audit and investigate the state health insurance exchanges.  These controls seek to protect the consumer and coupled with insurance accountability, lower the cost of insurance.

With the most general understanding of the implications for fraud, waste and abuse outlined in the ACA, it is evident that every provider needs to have a strong compliance plan in place. The stipulations are stringent, detailed and carry heavy penalties if not followed. We will begin to explore compliance plans in more depth next week. Check back on Monday, August 27th for Compliance Plan – A Provider’s Defense.

Christopher J. Shaughnessy is an attorney at McBrayer, McGinnis, Leslie & Kirkland, PLLC.  Mr. Shaughnessy concentrates his practice area in health care law and is located in the firm’s Lexington office.  He can be reached at cshaughnessy@mmlk.com or at (859) 231-8780, ext. 1251. 

This article is intended as a summary of state law enforcement activities and does not constitute legal advice. 

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