No Change In Course On ACA Federal Antifraud And Transparency Provisions

Healthcare companies should work to comply with current provisions and prepare for those that will be implemented in the near future.

The U.S. Supreme Court's decision that the Patient Protection and Affordable Care Act of 2010 (P.L. 111-148 or ACA) is constitutional affirms the implementation status of many antifraud and transparency provisions that have occurred and may hasten the implementation schedule of those that remain in the regulatory rule-making process. The healthcare industry should expect that the Obama administration will move forward with implementing more than 32 sections of the law related to healthcare fraud and abuse, program integrity, and transparency.1 Accordingly, healthcare companies should take this opportunity to benchmark their compliance programs to certain ACA program integrity and transparency requirements. Moreover, the industry can expect that the government will continue to expand the use of enhanced enforcement tools and measures granted by ACA amendments that already have taken effect with respect to previously existing fraud and abuse laws.

Background

The ACA contained far-reaching antifraud provisions, including amendments to the False Claims Act (FCA), which was significantly amended in 2009 under the antifraud provisions of the Fraud Enforcement and Recovery Act (FERA). The FCA amendments in 2009 and 2010 squarely impacted industries that do business with the federal government directly or indirectly and raised the bar for risk management and compliance initiatives. The 2009 amendments, among other changes, expanded the definition of "claim" and the definition of "obligation" to impose potential liability for the retention of overpayments or for regulatory violations that negatively affect a government program or interest.

Specifically, the ACA's antifraud provisions added a new definition of "obligation," requiring repayment of an identified overpayment within 60 days to avoid the presumption of FCA liability. This amendment essentially will work to accelerate the identification and disclosure of potential overpayments. The ACA also provided, as a matter of law, that a violation of the Anti-Kickback Statute and any attendant federal healthcare program claim is a violation of the FCA. Parallel to the antifraud provisions were provisions for enhanced program integrity oversight, as well as transparency requirements for manufacturers, group purchasing organizations, pharmacy benefit managers, hospitals, and nursing homes. The ACA transparency requirements are designed to disclose relationships that may pose a conflict of interest. The status of a number of these provisions is highlighted below.

Medicare/Medicaid Overpayments

The ACA created a new requirement that any entity that has received an overpayment from Medicare or Medicaid generally must report and return the overpayment to the government within 60 days after the overpayment is identified. The retention of any identified overpayment after the 60-day period constitutes an "obligation" under the FCA, subjecting the entity to treble damages and monetary penalties for the knowing retention of such overpayment.

On February 16, 2012, the Centers for Medicare and Medicaid Services (CMS) published its proposed rule to implement the agency interpretation of, and provider obligation to report and return, identified Medicare Parts A and B overpayments.2 Providers and suppliers have raised concerns that the proposed rule does not clarify when an overpayment will be deemed to be "identified" for the purpose of triggering the 60-day clock. Furthermore, the proposed rule creates a 10-year look-back period that could create retroactive liabilities for the previous 10 years. This is inconsonant with government and industry practice on document retention, Medicare's long-standing and existing "reopening" provisions for adjudicated Medicare claims, and even government underpayment liability look-back provisions, which generally are only four years. Industry associations like the American Hospital Association have been vocal in their criticism of the proposed rule as creating a confusing and punitive set of expectations for the industry. In response to the...