PPACA and the OIG’s Exclusion and Civil Monetary Penalty Authority

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Yesterday, we discussed what healthcare human resources professionals should consider in order to comply with the Patient Protection and Affordable Care Act’s (PPACA) upcoming deadlines in 2015. HR leaders, however, are not the only ones who should be concerned with the implications of PPACA. Although not new for 2015, PPACA contains numerous provisions that expand the U.S Department of Health and Human Services (HHS) and the Office of Inspector General’s (OIG) authority to pursue allegations of healthcare noncompliance.

Here’s what healthcare compliance officers need to know about the OIG’s expanded authority regarding exclusions and civil monetary penalties.

Expanded Permissive Exclusion Authority

As mentioned above, PPACA contains provisions amending the current law regarding exclusions. Specifically, section 6402 of PPACA expands the OIG’s permissive exclusion authority under section 1128 of the Social Security Act (SSA) to apply in instances of obstruction of program audits and investigations, according to a paper by attorneys Kirk Ogrosky and Daniel A. Kracov from Arnold & Porter LLP. Before PPACA, this was limited to obstructing a criminal investigation.

Additionally, section 6402 also allows for the permissive exclusion of a person or entity that knowingly makes or causes to be made any false statement, omission, or misrepresentation of a material fact in any “application, agreement, bid, or contract to participate or enroll as a provider of services or supplier under a federal healthcare program”.

PPACA also expanded the provision related to failure to supply payment information. Under this law, this provision now applies to individuals who “order, refer for furnishing, or certify the need for” items or services for which payment may be made under Medicare or any state healthcare program.

Additional and Enhanced Civil Monetary Penalties

In a 2011 presentation by Cozen O’Connor law firm, presenters John Washlick and Melanie Martin explain how sections 6402 and 6408 of PPACA add and enhance civil monetary penalties for the following items.

  • Knowingly making, using or causing to be made, a false record or statement material to a claim for payment for items or services furnished under a federal healthcare program
  • Failing to promptly report and return a known overpayment
  • Knowingly making or causing to be made any false statement, omission, or misrepresentation of a material fact in any application, bid, or contract to participate or enroll as a provider of services or a supplier under a federal healthcare program
  • Failing to grant timely access, upon reasonable request, to the OIG for audits, investigations, evaluations or other statutory functions
  • Ordering or prescribing an item or service that a person knows will be paid by a federal healthcare program while the person is excluded

Furthermore, PPACA allows for civil monetary penalties to be imposed in the amount of $50,000 for each false record or statement, and $15,000 for each day of delay in the outlined items above.

Implications of the OIG’s 2014 Proposed Rules for Exclusions and Civil Monetary Penalties

On May 9, 2014, the OIG released its revisions to its Exclusion Authorities. The proposed rule would incorporate statutory changes, propose early reinstatement procedures, and clarify existing regulatory provisions. In an article published in the American Bar Association’s Health eSource, attorney Scott R. Grubman from Rogers & Hardin LLP states, “The OIG’s proposed rule related to its exclusion authority will, if it becomes final, implement many of the provisions contained in PPACA that amend the exclusion statute. The proposed rule will also allow the OIG to issue administrative subpoenas as part of any exclusion investigation.”

On May 12, 2014, the OIG published its revisions to the Civil Monetary Penalty Rules. The proposed rule would incorporate the new CMP authorities under PPACA as well as clarify existing ones. While it incorporates the items from sections 6402 and 6408 discussed above, the OIG also proposed modifying the provisions relating to the factors considered in determining the exclusion period and the amount of penalties and assessments for violations. In addition, the proposed rule raises the dollar threshold where no mitigating circumstances will be considered from $1,000 to $5,000. The rule also provides clarification in the claims-aggravating factor by replacing the formerly open-ended term “substantial” with “$15,000 or more”.

At the time of this article, it is currently uncertain when the OIG’s proposed rules regarding exclusion and civil monetary penalties released in May 2014 will be finalized. Healthcare organizations, however, should recognize that PPACA contains provisions that address the changes proposed by the OIG in these rules. Since PPACA is currently the law, it’s highly recommended that healthcare organizations comply with its provisions in the interim.

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