Fraud and Abuse Issues Under the Affordable Care Act

by Saul Ewing Arnstein & Lehr LLP

The June 28th Supreme Court ruling to uphold the Patient Protection and Affordable Care Act ("ACA") focused upon the constitutionality of the individual mandate and insurance-related matters (i.e., Medicaid expansion). Other components of the ACA have gone largely unnoticed. This Alert focuses on key elements of the ACA that relate to the federal government's fraud and abuse enforcement efforts, namely: (i) the Fraud Prevention System ("FPS") and the Automated Provider Screening system ("APS"), which are the centerpieces of the Centers for Medicare & Medicaid Services ("CMS") data analytics/data mining system; and, (ii) CMS' ability to suspend all Medicare and Medicaid payments to a provider pending an investigation of a "credible allegation of fraud."

Increased Funding for Fraud Enforcement Efforts

ACA provided mandatory appropriations of $1.7 billon in both FY 2010 and FY 2011 (as well as discretionary funding of $311 million for FY 2010 and $561 million for FY 2011) to fund fraud enforcement efforts through various federal agencies, including CMS, the Department of Health and Human Services ("HHS"), the HHS Office of Inspector General ("OIG"), the Department of Justice ("DOJ"), and the Federal Bureau of Investigation ("FBI").

CMS Center for Program Integrity

The ACA funding stream created the CMS Center for Program Integrity in April 2010 to administer the FPS and the APS. The FPS analyzes all fee-for-service claims prior to payment. The APS monitors Medicare/Medicaid program enrollment applications, and was implemented on December 31, 2011. The FPS and APS are being used in conjunction with data from outside sources (including other federal law enforcement agencies, state health care agencies and private insurance plans) to proactively deny provider claims by subjecting them to prepayment review.

Suspension of Medicare and Medicaid Payments

Under ACA, HHS is now permitted to suspend Medicare and Medicaid payments to a health care provider pending an investigation of a "credible allegation of fraud," which includes anonymous fraud hotline complaints (including "whistleblowers"), patterns identified through data mining and investigations under the False Claims Act. These suspensions are for a "maximum" of 18 months, and can be extended if administrative action is pending or being considered by OIG, or if DOJ requests an extension based on an ongoing investigation and an anticipated or pending criminal prosecution or other action. As such, the length of these suspensions is effectively unlimited and leaves providers in a very difficult position. In some circumstances, going out of business or a settlement may be the only options available to a provider that has had its payments suspended.

These significant additions to the government's anti-fraud arsenal in health care have gone relatively unnoticed because of the intensive political debate over other aspects of ACA. The cumulative effects of these enhanced fraud enforcement capabilities compel providers to strengthen their compliance programs to prevent and correct errors before the commencement of any government audit inquiry or investigative demand. Providers need to be constantly mindful of the federal government's attention to curtailing fraud and abuse, and ensuring proper coding and documentation standards.

Saul Ewing's Health Practice has significant experience in the development and implementation of compliance programs for health care organizations, as well as conducting compliance program effectiveness reviews. For more information on the Patient Protection and Affordable Care Act, read our previous Alerts here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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