It is estimated that health care fraud and abuse costs the government billions of dollars each year. Inasmuch as Medicare and Medicaid are the largest single consumer of health care in the entire world and represent over 20% of all U.S. federal government spending each year, the potential cost of health care fraud and abuse in the U.S. is tremendous. The enactment of comprehensive health reform legislation in 2010 added the Patient Protection and Affordable Care Act (PPACA) to the arsenal to combat health care fraud and abuse.
Existing Laws Prior To PPACA
Title XI of the Social Security Act contains Medicare and Medicaid program-related anti-fraud provisions that impose penalties and exclusions from federal health care programs on persons who engage in certain types of misconduct.
Under Section 1128A of the Social Security Act, civil penalties and assessments may be imposed on a person, including an organization, agency, or other entity who engages in various types of improper conduct with respect to federal health care programs, including the imposition of penalties against a person who knowingly presents or causes to be presented to a federal or state employee or agent certain false or fraudulent claims (for example, penalties apply to services that were not provided as claimed, or claims that were part of a pattern of providing items or services that a person knows or should know are not medically necessary). Certain payments made to physicians to reduce or limit services are also prohibited. This section provides for monetary penalties of up to $10,000 for each item or service claimed, up to $50,000 under certain additional circumstances, as well as treble damages.
Section 1128B of the Social Security Act provides criminal penalties involving federal health care programs. Under this section, certain false statements and representations, made knowingly and willfully, are criminal offenses. Persons who have violated the statute and have furnished an item or service under which payment could be made under a federal health care program may be guilty of a felony, punishable by a fine of up to $25,000, up to five years imprisonment, or both. Other persons involved in connection with the provision of false information to a federal health program may be guilty of a misdemeanor and may be fined up to $10,000 and imprisoned for up to one year.
Under Section 1128, exclusions from federal health care programs are mandatory under certain circumstances, and permissive in others. Exclusion is mandatory for those convicted of certain offenses, including (1) a criminal offense related to the delivery of an item or service under Medicare, Medicaid, or a state health care program; (2) a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service; or (3) a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.
Recognizing that health care providers can be improperly influenced by a profit motive that may result in federal programs being over-utilized and medical costs substantially increased, Congress enacted the anti-kickback statute. Under this criminal statute, it is a felony for a person to knowingly and willfully offer, pay, solicit, or receive anything of value (i.e., “remuneration”) in return for a referral or to induce generation of business reimbursable under a federal health care program. The statute prohibits both the offer or payment of remuneration for patient referrals, as well as the offer or payment of anything of value in return for purchasing, leasing, ordering, or arranging for, or recommending the purchase, lease, or ordering of any item or service that is reimbursable by a federal health care program. Persons found guilty of violating the anti-kickback statute may be subject to a fine of up to $25,000, imprisonment of up to five years, and exclusion from participation in federal health care programs for up to one year.
There are certain statutory exceptions to the anti-kickback statute. Under one exception, “remuneration” does not include a discount or other reduction in price obtained by a provider of services or other entity if the reduction in price is properly disclosed and reflected in the costs claimed or charges made by the provider or entity under a federal health care program. Another exception includes, under certain circumstances, amounts paid by a vendor of goods or services to a person authorized to act as a purchasing agent for a group of individuals that furnish services reimbursable by a federal health care program. In addition to these exceptions, the Department of Health and Human Services’ Office of Inspector General (OIG) has promulgated regulations that contain several “safe harbors” to prevent common business arrangements from being considered kickbacks. Safe harbors listed by regulation include certain types of investment interests, personal services and management contracts, referral services, and space rental or equipment rental arrangements. OIG has indicated that the safe harbor provisions are not indicative of the only acceptable business arrangements, and that business arrangements that do not comply with a safe harbor are not necessarily considered “suspect.”
New provisions under the PPACA attempt to further curtail health care fraud and abuse in the U.S., which will be the subject of the next blog posting.
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