HHS OIG Closes 2018 With New Fraud Risk Indicator For Corporate Integrity Agreements

While the number of new corporate integrity agreements (CIAs) declined since last year, and was below the trailing five-year average, 2018 was an important year on the policy front for the Office of Inspector General (OIG), U.S. Department of Health and Human Services (HHS). The HHS OIG rolled out a new fraud risk indicator and related transparency initiatives aimed at companies that refuse to enter into CIAs following a civil health care fraud settlement. Entities negotiating CIAs are likely to experience a tougher, less flexible approach from the HHS OIG as it continues to rely on model agreement templates as the starting point in CIA negotiations. If recent history is a guide, companies that violate existing CIAs may face stiff stipulated penalties for such breaches.

While the model CIA approach may provide welcome predictability, the HHS OIG should consider adopting one or more provisions from the Skadden-drafted Model Corporate Integrity Agreement template published last year in Law360. The Skadden Model CIA incorporates modern corporate drafting conventions, maintains core CIA requirements while providing more flexibility to companies in meeting these obligations, and bolsters provisions for risk assessment and oversight.

Key Takeaways

The number of new and amended CIAs and integrity agreements dropped to 38 in 2018, down from 40 in 2017 and below the five-year average from 2014-18. There were 243 open CIAs as of December 19, 2018. CIAs in 2018 continued to include detailed obligations on boards of directors and executive management to oversee compliance programs — and to certify to their efforts in doing so. CIAs also reinforced the separation of compliance from legal and other functions. One CIA incorporated DEA (i.e., Controlled Substances Act) requirements into the company's compliance program, and similar (or more burdensome) obligations are likely to be included in future CIAs with controlled substances manufacturers or distributors. The HHS OIG's new Fraud Risk Indicator — and public identification of companies that refuse to enter into CIAs — is a major policy development, which raises questions as to fairness and due process as it does not involve a court determination of unlawful conduct. The Year in Numbers: CIA Statistics

Number of Corporate Integrity Agreements*

The HHS OIG entered into 37 new CIAs and integrity agreements (IAs) in 2018,1 a modest decline from the 46 new agreements in 2017 and the lowest number of new agreements since 2012. As of December 19, 2018, there were 243 open CIAs according to the HHS OIG's website. Of the 38 agreements in 2018, 22 were new CIAs, one was an amendment to a prior CIA and the remainder (14) were IAs. The agency has explained that it does not require CIAs in all situations where one might be appropriate; rather, the HHS OIG focuses its limited CIA negotiating and monitoring resources on entities that pose a significant program integrity concern following a civil health care fraud settlement.2 As in prior years, the clear majority of the IAs were with individual, small group practices, or small providers; none of the IAs were with significant corporate or institutional entities.

Sector Breakdown

After physician practices, the second-highest number of CIAs by sector involved hospitals and health systems. Ambulance providers and nursing home/rehab/long-term care facilities were the next most common, with three CIAs in each sector.

Several large federal civil health care fraud cases were resolved without a CIA. Two settlements involved companies that resolved civil fraud allegations that occurred prior to the companies'...