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New Medicare Fraud and Abuse Provisions Under the PPACA

By Jeff Weinstein and Scott Honiberg for HealthLeaders Media, July 12, 2010

While providers may be amused at the prospect of being overpaid by Medicare when the typical complaint is that Medicare doesn’t pay its fair share, consider this: Last November, when CMS released its 2009 Comprehensive Error Rate Testing Report, the national error rate for overpayments to Medicare providers increased from 3.3% in FY 2008 to 7.5% in FY 2009. In 2009, these overpayments amounted to approximately $23 billion.

While CMS attributes much of the increase in errors to a change in review methodology, under the new law, providers can still be held liable for overpayments, many of which may be attributable to the carrier or fiscal intermediary that processes the claim. With the magnitude of all of the other changes occurring as a result of the new health law, there’s a reasonable probability that previous trends of payment errors by Medicare contractors will continue, if not increase, further extending the potential liability to providers for inadvertent errors on the part of the Medicare contractor who pays their claim.

Not only must providers be concerned about the accuracy of claims they file; now they have to be concerned about the accuracy of how Medicare’s contractor payments.

What the law means for the Anti–Kickback Statute
A third important change in the law is the broadening of liability under the Medicare and Medicaid Patient Protection Act of 1987, commonly known as the “Anti–Kickback Statute” (AKS). Pursuant to the new legislation, the government does not need to prove that a provider had actual knowledge of the AKS or a specific intent to violate it; general criminal intent will now suffice for additional liability under the AKS.

In addition, the new legislation amends the AKS by stating that a claim that includes “items or services” resulting from a referral made in violation of the AKS now will automatically subject a provider to liability under the FCA, which includes a provision for treble damages.

The new law provides for $250 million over the next ten years to help investigate and prosecute healthcare fraud. Coming on the heels of a recent upswing in investigations by the Justice Department, as well as significantly greater public focus on healthcare costs, the new potential exposure under the FCA means that healthcare providers have to be extra vigilant in monitoring their billings and government payments.

Just having in place ethics guidelines and training will not insulate a company from liability; the key to reducing risk remains implementing training and ethics codes, and making compliance a key component of day–to–day business activities.

Scott Honiberg is president and Jeff Weinstein is of counsel at Potomac Health Associates, Inc. They can be reached at S.Honiberg@PHAInc.com or J.Weinstein@PHAInc.com, respectively.

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