As we are all aware, after months of debate and struggle to pass healthcare reform measures, on March 23, 2010, President Obama signed into effect Public Law 111-148, more commonly known as the Patient Protection and Affordable Care Act of 2010 ("PPACA"). Most of the media surrounding PPACA has focused on what effect PPACA has on individuals and businesses. However, there is a section that has not been addressed by the mainstream media which has significant impact on healthcare providers.
Section 6402 of PPACA addresses the issue of program overpayments and provides a direct nexus between the retention of overpayments and liability under the False Claims Act ("FCA"). The FCA contains three areas of liability: (1) instances in which a person submits a claim to the federal government that he or she knows (or should know) is false; (2) instances in which an individual knowingly submits a false record in order to obtain payment from the government; and (3) instances in which someone may obtain money from the federal government to which he may not be entitled, and then uses false statements or records in order to retain the money. The third area of liability is often referred to as the "reverse false claim." Prior to the enactment of the Fraud Enforcement and Recovery Act of 2009 ("FERA"), the reverse false claim provision was fairly narrow.
In 2009, FERA was enacted, expanding the reverse false claims provision by imposing liability on any person who "knowingly conceals" or "knowingly and improperly avoids or decreases" an "obligation to pay or transmit money or property to the Government." Note the absence of the requirement that such person use a false record or statement to perpetrate this false claim.
Prior to the PPACA, many providers (and their counsel) asked: what is an "obligation to pay" and when does it arise?
The PPACA answers those questions (at least in part). Specifically, Section 6402 of PPACA
- defines "overpayments" as "any funds that a person receives or retains under [Medicare] or [Medicaid] to which the person, after applicable reconciliation is not entitled under such title;"
- provides that all overpayments must be reported and refunded by the later of "60 days after the date on which the overpayment was identified" or "the date any corresponding cost report is due;"
- provides that the provider must notify to whom the overpayment was returned in writing the reason for the overpayment; and
- perhaps most significantly, provides that a "repayment retained by a person after the deadline for reporting and returning the overpayment" is an "obligation" and therefore actionable under the FCA if retention of the overpayment is made "knowingly."
Why is this so alarming? The FCA generally provides for the imposition of treble damages and harsh penalties (ranging from $5,500 to $11,000 per claim) for the knowing presentation of false claims to the United States, its agents, and contractors.
In the event possible violation of the FCA is not enough to alarm providers, Section 6402 of the PPACA also amends Section 1128A(a) of the Social Security Act. This amendment subjects anyone who knows of an overpayment and does not report and return the overpayment in accordance with Section 6402 to Civil Monetary Penalties. (Note that Civil Monetary Penalties may be administratively imposed by the Secretary of the Department of Health and Human Services without the necessity of a court proceeding.) The Secretary may assess penalties of up to $10,000 or up to $50,000 per violation (depending on the violation) and up to three times the amount unlawfully claimed (ie, three times the overpayment). In addition, providers may be suspended from participation in the Medicare and Medicaid programs.
Providers must quickly review and revise their compliance programs to ensure that policies and procedures are in place to address this issue.
NOTE: At the time of submission of this article, 18 states had joined a lawsuit challenging the constitutionality of the PPACA. The 18 states involved in the lawsuit are Alabama, Arizona, Colorado, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington. The suit, State of Florida v. US Department of Health and Human Services, 10-cv-00091, U.S. District Court, Northern District of Florida (Pensacola), claims that "the legislation places an unconstitutional burden on their cash-strapped budgets with an expansion of state-run Medicaid." Perhaps there is still more "evolving" to come.
Shannon D. Coleman is special counsel with Kramer Rayson LLP. Her practice includes advising hospitals, physicians, physician organizations and physician practice management groups in Stark, Anti-Kickback and HIPAA matters, as well as general transactional matters such as employment, mergers, acquisitions and divestitures. Ms. Coleman was recently named as a top attorney in hospital and healthcare law in Knoxville by CityView. Ms. Coleman is a graduate of Lincoln Memorial University and the University of Tennessee College of Law. She may be contacted at email@example.com. Disclaimer: The information contained herein is strictly informational; it is not to be construed as legal advice.