May 18, 2011

In a continuing effort to fight health care fraud and abuse, Congress enacted (and the President signed on March 23, 2010) comprehensive health reform legislation, including the Patient Protection and Affordable Care Act (PPACA).

PPACA Fraud And Abuse Provisions

PPACA amends the administrative sanctions and authorizes the imposition of new civil monetary penalties for persons who knowingly (1) order or prescribe a medical or other item or service during a period in which the person was excluded from a federal health care program when the person knows or should know that a claim for the item or service will be made under the program; (2) make or cause 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 health care program; (3) fail to report and return an overpayment within specified time limits; (4) fail to grant the Department of Health and Human Services’ Office of Inspector General (OIG) timely access (upon reasonable request) for the purpose of audits, investigations, evaluations, or other statutory functions; and (4) make or use a false record or statement material to a false or fraudulent claim for payment for items and services.

PPACA provides that in order to establish a violation of Section 1128B of the Social Security Act, including the anti-kickback statute, a defendant does not have to have actual knowledge of, or specific intent to commit a violation of, the anti-kickback statute. PPACA did not remove the requirement that a defendant must still “knowingly and willfully” offer or pay remuneration to induce prohibited referrals or other business under the anti-kickback statute — the government needs to prove that the defendant knew that the conduct in question was unlawful, but not that it was a violation of the anti-kickback statute per se. However, PPACA may make it easier for the government to prove an anti-kickback statute violation.  

PPACA also added new disclosure requirements to the in-office ancillary services exception (Section 6003). Wth respect to magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), and any other designated health services determined by the Secretary, the referring physician must inform the individual in writing at the time of the referral that the individual may obtain the services from a person other than the referring physician, a physician who is a member of the same group practice as the referring physician, or an individual who is directly supervised by the physician or by another physician in the group practice. The individual must be provided with a written list of suppliers who furnish these services in the area in which the individual resides.

Under the “whole hospital exception” to the Stark law existing prior to PPACA, a physician could have referred a patient to a hospital in which the physician had an investment or ownership interest, and a hospital could have presented claims for DHS to Medicare or Medicaid, so long as (1) the referring physician was authorized to perform services at the hospital, and (2) the ownership or investment interest was in the whole hospital, and not just a subdivision of it.

PPACA made changes to the Stark law by placing new restrictions on the hospitals eligible for the whole hospital exception (Section 6001). The whole hospital exception cannot be met unless the hospital has (1) physician ownership or investment as of December 31, 2010, and (2) a Medicare provider agreement in effect on that date. Therefore, beginning December 31, 2010, new physician-owned hospitals may be prohibited from meeting the whole hospital exception. Furthermore, after the March 23, 2010 enactment date of PPACA, existing physician-owned hospitals may not add new beds, operating rooms, or procedure rooms unless the hospital meets certain specified criteria. Existing hospitals must also meet additional requirements regarding conflicts of interest, bona fide investments, and patient safety issues. Additionally, a facility cannot convert from an ambulatory surgical center to a hospital after March 23, 2010.

Source: Congressional Research Service: Health Care Fraud And Abuse Laws Affecting Medicare And Medicaid: An Overview (August 10, 2010)

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