By: Cathy A. Sloane, Esq.
Published in MD News Magazine
On February 8, 2006, the President signed the Deficit Reduction Act (DRA) of 2005.
The DRA is significant to healthcare providers because:
- Compliance policies and employee education are now mandated for certain recipients of Medicaid reimbursement; and
- Congress has allocated additional funding to combat fraud, waste and abuse in the entitlement programs with incentives for the states to adopt their own False Claims Acts.
Why the spotlight on Medicaid spending? The $300 billion Medicaid program is the largest health insurance program in the nation providing healthcare coverage and services for low-income and financially needy people. Jointly funded by the federal and state governments, Medicaid spending continues to soar with astronomical costs. Plainly, there is an urgent need to control spending. The DRA legislation seeks to ensure the financial health and integrity of the Medicaid program by making sure that the individuals who provide services to program beneficiaries do not engage in fraudulent, wasteful or abusive practices.
To fully appreciate the pressure placed upon the federal and state Medicaid programs to rein in wasteful spending and fraudulent claims, consider the funds allocated by Congress for these initiatives: (1) the Medicaid Integrity Program, modeled after the Medicare Integrity Program, is funded for $50 million in fiscal years 2007 and 2008, and $75 million in subsequent fiscal years; (2) the Medicare-Medicaid Data Match Program, which uses data mining software to identify cross-program fraud and abuse, is funded at $24 million in 2007, $36 million in 2008, $48 million in 2009, and $60 million in subsequent fiscal years; and (3) the Department of Health and Human Services will also receive $25 million each fiscal year through 2010 to oversee administrative changes.
What does this mean for large healthcare providers? Effective January 1, 2007, any healthcare entity that receives more than $5 million in annual Medicaid reimbursement must establish written policies for its employees, agents and contractors which include details about: the Federal False Claims Act and parallel state laws; available remedies and penalties for false claims and statements; and whistleblower protections for persons who come forward with information about false claims. Included in the employee handbook and other educational materials should be information on the roles of federal and state laws in preventing and detecting fraud and abuse; the rights of whistleblowers; and the provider’s own efforts for preventing and detecting fraud, waste and abuse. A mandatory compliance plan is implicit in the provisions. Because these requirements are a condition for receiving Medicaid payments, failure to comply with the mandates by January 1, 2007, will place Medicaid reimbursement at risk and may give rise to False Claims Act enforcement.
What does this mean for providers who do not receive large annual Medicaid reimbursement? If history is to be our guide, it will not be long before the new federal anti-fraud mandates are universal “best practices” for healthcare providers of all sizes. Prudent providers, regardless of size, will want to strengthen their processes for detecting fraud and abuse now. The good news is that relatively simple measures can greatly reduce your liability exposure. Affirmative steps to strengthening your in-office processes may include: adding information about the anti-fraud laws to your employee handbooks and orientation materials; conducting a staff training program on the laws and regulations facing healthcare providers today; establishing a fraud hotline or an internal reporting process for employee concerns; conducting periodic audits of your coding and billing functions; and, performing risk assessments to determine vulnerabilities.
Clearly, Medicaid enforcement is projected to be a high priority in the near future. The impact on healthcare providers of all sizes is palpable. As we ring in the New Year, this is certainly a great time to reevaluate compliance efforts.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.