By William H. Maruca, Esq.
The Office of Inspector General has led a five-year crusade to encourage health care providers to police themselves, including by adoption of effective compliance programs and by self-disclosure of improper conduct to the government. Considering the potentially staggering penalties authorized by the federal False Claims Act, practitioners should take all reasonable steps that may reduce their liability for billing errors or other violations of Medicare regulations and policies. Knowing what to disclose, when, and to whom is critical. Unfortunately, there is no guarantee that any form of disclosure will be 100 percent effective in avoiding or minimizing penalties.
The civil False Claims Act prohibits the “knowing” submission of a false or fraudulent claim for payment to the United States, the knowing use of a false record or statement to obtain payment on a false or fraudulent claim, or a conspiracy to defraud the United States by having a false or fraudulent claim allowed or paid. A false claim is a claim for payment for services or supplies that were not provided specifically as presented or for which the provider is otherwise not entitled to payment. To knowingly present a false or fraudulent claim means that the provider has actual knowledge that the information on the claim is false, acts in deliberate ignorance of the truth or falsity of the information on the claim, or acts in reckless disregard of the truth or falsity of the information on the claim. The Act imposes civil penalties equal to three times the improper amounts received in addition to refunding the payment itself, plus up to $11,000 per claim, plus exclusion from participation in egregious cases. Contrast false claims with “innocent” billing errors (if the Medicare authorities truly believe such errors ever occur), which only require the refund of the overpayment, and you will see the importance of determining whether an incorrect payment is a “false” claim. In recent years, changes in the law also treat retention of funds where practitioners have reason to know that they are not entitled to those funds as a form of false claim, and failure to disclose the receipt of such amounts may trigger additional penalties.
Some types of disclosures may effectively be mandatory. For instance, practitioners are be obligated to make certain representations in Medicare form such as the HCFA 855 Application for a Provider Number. Also, the government is increasing its use of Corporate Integrity Agreements (CIAs) in connection with settlement of False Claims and other Medicare violation cases. CIAs typically contain strict reporting obligations that increase the provider’s duty to report problems or potential problems to the government. For examples of CIAs, see http://www.dhhs.gov/progorg/oig/cia/index.htm.
An affirmative duty to report an overpayment appears in federal criminal statutes, which provide “whoever, having knowledge of the occurrence of any event affecting his initial or continued right to a benefit or payment from a federal health program, conceals or fails to disclose such event with an intent fraudulently to secure such benefit or payment either in a greater amount that is due or when no such benefit or payment is authorized is liable for criminal fines and imprisonment.” This statute only creates a duty to report, not a duty to refund the overpayment. The duty to report arises even when the payment has been received due to a carrier or intermediary error, and not as a result of any mistake or intentional act by the provider.
Under the Health Insurance Portability and Accountability Act (HIPAA), it is a federal crime to knowingly and willfully embezzle, steal or otherwise convert or intentionally misapply monies, funds, or assets of a health care benefit program. This law extends the reach of federal enforcement authority beyond federal programs to cover private health care programs.
The OIG has published compliance guidance targeted to various segments of the health care industry, including solo and small physician practices and third-party billing companies based on federal sentencing guidelines. In each guidance document, voluntary disclosure without undue delay is an element of an “effective” compliance program.
An important consideration in making voluntary disclosures is the likelihood that others may disclose the facts relating to the overpayment or violation, including qui tam whistle-blower plaintiffs. Whistle-blowers are entitled to share in up to 30 percent of the amounts collected by the government in false claims actions, and therefore, a financial incentive exists to exploit insider knowledge of questionable billing practices or payments. Whistle-blowers often emerge from the ranks of disgruntled current or former employees, competitors, and patients.
Disclosure itself is not without risk. It may increase the chances of a more extensive audit or review of a provider’s billing practices. Moreover, there is no guarantee of leniency associated with voluntary disclosure, either through the formal processes outlined by the OIG or through informal methods. One thing is clear: a true voluntary disclosure timely made will be viewed more favorably than a violation that is uncovered through a routine or targeted audit or as a result of a whistle-blower’s tip.
The OIG suggests that overpayments or errors that do not involve violations of law should be disclosed only to the Medicare carrier or intermediary. But beware: if the carrier believes that the underlying reason for the disclosure represents a potential violation or law, the matter will still be referred to the OIG for further investigation and potential enforcement action. Therefore, it is not an easy matter to determine which types of errors are can be safely handled by reporting only to the carrier.
In making a disclosure to the carrier, it is advisable to disclose how the error was discovered, the nature of the error, the individual beneficiaries and claims involved, and the amount of any overpayment. It is also important to disclose what corrective action has been taken to prevent recurrences of the error.
If the provider believes it is without fault, a refund may not be required. It is still necessary to disclose the receipt of the overpayment and the circumstances underlying it so that the carrier may make a determination of fault.
A disclosure must be made in a timely manner for it to have any beneficial value. Under the formal OIG protocol, the report must be made within 60 days after the organization receives credible evidence of misconduct and after reasonable inquiry leads to a belief that the misconduct may violate criminal law, civil law, or program rules or regulations.
The OIG self-disclosure protocol is the latest in a series of procedures issued by the OIG. The current self-disclosure protocol appeared in the August 7, 1998 Federal Register and is available on the OIG’s Website at http://www.dhhs.gov/progorg/oig/oigreg/selfdisclosure.pdf . Any provider may make a self-disclosure under the OIG rules. Unfortunately, the Department of Justice is not a party, so there is no guarantee that the Department of Justice may not bring legal action against the disclosing party.
A disclosure must include a number of elements to satisfy the OIG protocol. They include full identification of the name, address, provider number and tax identification number of the disclosing provider and a point of contact. The provider must disclose whether the matter being disclosed is under current inquiry by government agency or contractor. The provider must provide a full description of the nature of the matter being disclosed, including the nature of the potential misconduct involved, the names of entities and individuals believed to be implicated, an explanation of their roles in the matter, and the time period involved. The provider must explain why the matter disclosed may involve a violation of federal, criminal, civil or administrative law. The disclosure must be certified by a representative of the disclosing agency that, to the best of the individual’s knowledge, the submission contained truthful information and is based on a good faith effort to bring the matter to the government’s attention for the purpose of resolving any potential liabilities for the government. The provider is expected to conduct an internal investigation and a self-assessment, and then report its findings to the OIG. The provider must disclose how the problem was discovered or identified, detail the efforts to investigate and document the problem, and provide summaries of interviews with personnel along with names of any individuals who refuse to be interviewed. The self-assessment must meet certain criteria for statistical validity and procedures. The provider must agree to fully cooperate with the OIG as a condition of participation in the voluntary disclosure process.
Since there are no guaranteed benefits from the OIG protocol, relatively few providers have participated in the program since its inception. A practitioner or provider who discovers an overpayment or other possible violation of law or policy needs to determine whether it is of a nature which should be merely reported to the carrier or disclosed to other enforcement agencies, and if so, how and when to make that disclosure. This decision should not be made lightly, nor without the input and guidance of experienced health care counsel.
William H. Maruca, Esq., is a shareholder with the Pittsburgh law firm of Kabala & Geeseman.