Health Care Reform: While Debate Rages, Enforcement Proposals Take Shape Alert - August 26, 2009
Health Care Reform: While Debate Rages, Enforcement Proposals Take Shape
August 26, 2009
Jonathan E. "Jon" Anderman- Boston
Michael M. Gaba- Washington
With Congress adjourned for the August recess, the debate over health care reform continues to play out in local town hall meetings and in the news media. The proposals considered this spring by the Senate and House of Representatives made clear that the reform effort is fraught with disagreements. Nevertheless, certain provisions emerging from the Senate and House reform packages – specifically, measures targeted at combating health care fraud, waste, and abuse – are quietly taking shape with little debate or controversy.
While the final status of comprehensive health care reform efforts is decidedly uncertain, if legislation should pass this year it no doubt will include significant anti-fraud and enforcement measures.1 Moreover, even if federal health care reform fails or is delayed, health care providers and suppliers reasonably can expect to see increased enforcement efforts at the state and administrative levels that incorporate the concepts and trends contained in the reform packages.2 Members of the health care industry would be wise to begin thinking of and implementing systems that will allow them to anticipate and address the next wave of enforcement efforts.3
Summarized below are some of the anti-fraud, waste, and abuse measures included in the current federal reform proposals.
The House of Representatives: America’s Affordable Health Choices Act
The major piece of health care reform legislation pending in the House is H.R. 3200, America’s Affordable Health Choices Act. The bill was voted out of the House Education and Labor and Ways and Means Committees on July 17, followed by the Energy and Commerce Committee on July 31. Each committee reviewed and amended the legislation extensively, and further significant changes no doubt will take place as the bill progresses. However, some of the major anti-fraud and other enforcement provisions of the bill likely will survive and be included in any completed health reform legislation, including the following:
- Mandatory Compliance Programs for Providers and Suppliers. Requires providers and suppliers to adopt compliance programs focusing on reduction of fraud, waste, and abuse. Empowers the Department of Health and Human Services (HHS) to disenroll non-compliant providers and suppliers and/or impose civil monetary penalties or other intermediate sanctions.
- Provider and Supplier Enrollment Scrutiny. Requires pre-enrollment screening of Medicare providers and suppliers. Screening includes background and criminal history checks, licensure history and compliance with other program requirements before Medicare billing privileges are granted. Allows enrollment moratoria in specifically identified high-risk areas. Limits Medicare enrollment for durable medical equipment and home health services companies.
- Enhanced Government Auditing. Requires Medicare and Medicaid program integrity contractors to conduct audits and payment reviews. Gives the Center for Medicare and Medicaid Services (CMS) additional audit powers and the authority to collect overpayments uncovered by audits.
- Increased Fraud and Abuse Funding. Increases funding for the Health Care Fraud and Abuse Control Fund by an additional $100 million per year and allows for more flexible use of such funds.
- Increased Data Access. Creates a comprehensive database of program integrity data sources, expands data sharing between relevant agencies and consolidates existing databases. Enables complex oversight of providers and suppliers by integrating and evaluating data regarding claims, quality of care, ownership, certification, adverse actions, penalties and sanctions, and various other program integrity data.
- Enhanced Penalties. Creates new penalties for areas such as false information on provider and supplier enrollment applications, false claims, obstruction of investigations and failure to implement proper compliance programs. In addition, establishes new penalties for Medicare Advantage and Medicare Part D marketing violations, false bids, inaccurate rebate reports and other submissions of information. Amends the civil monetary penalty (CMP) law to increase monetary penalties and authorize greater use of CMPs.
- Greater Transparency in Physician-Industry Relationship. Implements provisions proposed under the Physician Payment Sunshine Act requiring reporting of certain payments and other transfers of value by manufacturers to physicians, as well as reporting of certain physician ownership interests in manufacturers.4
- Elimination of Whole Hospital and Rural Exceptions to the Stark Law. Eliminates whole hospital and rural exceptions to the Stark Law’s general ban on physician self-referral, thus preventing any new physician-owned hospitals. Grandfathers current physician-owned hospitals through a new exception allowing previously formed hospitals, but also implementing certain disclosure and reporting requirements.
- Heightened Nursing Home Transparency. Implements a variety of changes related to nursing homes aimed at increasing transparency, improving quality of care, and allowing greater enforcement. Requires nursing homes to disclose certain ownership, adopt accountability procedures, report certain expenditures, participate in comprehensive staff training and ensure staffing accountability. Also increases CMPs and implements an informal dispute resolution process for certain penalties.
- Medicaid Fraud and Abuse. Extends several fraud and abuse provisions for the Medicare program to the Medicaid program including requiring provider and supplier compliance programs and increasing data access. Implements Medicaid-specific fraud and abuse requirements regarding areas such as overpayments, reports under the Medicaid Integrity Program, relationship of Medicare termination or exclusion to Medicaid termination and exclusion, and alternate payee registration.
The Senate: The Affordable Health Choices Act
On the Senate side, the Health, Education, Labor, and Pensions Committee (HELP) favorably voted out its own version of health care reform legislation on July 15, 2009: the Affordable Health Choices Act. The other Senate committee of jurisdiction, the Senate Finance Committee, has not yet released its health reform legislation. The Senate HELP legislation has fewer anti-fraud, waste and abuse provisions, and limited overlap with the House bill, because HELP does not have jurisdiction over Medicare and Medicaid. Fraud and abuse provisions related to those programs will be included in the Finance Committee’s bill, which is expected to be released in September. However, the Senate HELP bill does propose several other anti-fraud and enforcement provisions, including the following:
- New Federal Health Care Fraud Positions. Creates additional senior-level positions within HHS and Department of Justice (DOJ) with oversight responsibility for health care fraud enforcement efforts, including various newly proposed programs, and responsibility for various interagency coordinated enforcement efforts.
- Greater Coordination Between Enforcement Agencies. Creates the Program Integrity Coordinating Council to further facilitate coordination between federal, state and local health care fraud enforcement activities through formal coordination, strategic planning and coordination of efforts. In addition, amends ERISA and creates a new federal privilege allowing confidential communications between various entities investigating allegations of fraud and abuse including state insurance departments and attorneys general, the National Association of Insurance Commissioners, and federal regulators in HHS, DOJ, the Department of the Treasury, and the Department of Labor.
- Uniform Reporting. Encourages development of a uniform reporting form to be used by private health plans referring suspected cases of fraud and abuse to state insurance departments.
Holland & Knight’s Government Investigations and Compliance Services Team, along with the firm’s Public Policy and Regulation Practice Group, will continue to monitor health care reform developments, including the anticipated enforcement provisions of the major reform packages. Providers and suppliers who would like to learn more about the specifics of the House and Senate bills, or to find out what they can do to prepare and protect themselves from increased government enforcement efforts, are encouraged to contact us.
* The authors wish to acknowledge and thank Johanna Gray, Legislative Assistant with Holland & Knight’s Public Policy and Regulation Group in Washington, D.C., for her invaluable assistance in preparing this Alert.
1 See, e.g., The Pathway to Healthcare Reform, a Holland & Knight webinar presented on June 5, 2009, for further discussion of the concepts behind current enforcement proposals and how they derived from trends and activities occurring at the state and local levels. See also the June 22, 2009 Holland & Knight Health Law & Life Sciences Alert, Health Care Organizations Targeted with Anti-Fraud Enforcement Efforts: New and Ongoing Initiatives Will Affect Oversight Components of Health Care Reform.
2 For example, in May 2009, the Department of Justice and Department of Health and Human Services formed the joint Health Care Fraud Prevention & Enforcement Action Team (HEAT), which has already announced several criminal indictments against providers and suppliers.
3 Health care providers and suppliers are also likely to see more investigations and civil qui tam lawsuits involving alleged fraud and abuse pursuant to the May 20, 2009 amendments to the civil False Claims Act. See, e.g., Holland & Knight’s May 27, 2009, Health Law & Life Sciences Alert, President Obama Signs Landmark Anti-Fraud Bill Into Law.
4 For additional information, see Holland & Knight Health Law & Life Sciences Alert, The Physician Payments Sunshine Act: A Call for Transparency Could Lead to Increased Reporting Requirements.
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