As noted in the last issue of STAT Health Care News, the federal government will be stepping up its enforcement of the health care laws. In addition to increasing funding for such enforcement, the new health care reform law, the Patient Protection and Affordable Care Act (the “Reform Law”), also includes enhanced program integrity rules which will increase scrutiny of health care providers doing business with the government. The following is an overview of some of the most important of these changes.

Mandatory Compliance Programs. The days of “strong encouragement” to execute a compliance plan are over; health care providers doing business with the government (Medicare, Medicaid, and Children’s Health Care Program) will now be required to implement formal compliance programs. The government will be releasing the deadlines and specific requirements for these programs over the next few months.

Return of Overpayments. Effective immediately (March 23, 2010, the effective date of the Reform Law), Medicare and Medicaid overpayments must be “reported and returned” within 60 days of being “identified,” unless they are subject to reconciliation. We are still awaiting clarification of what precisely is meant by “identified,” but providers should be proactive in auditing for overpayments. In addition, recipients of overpayments must report the reason for the overpayment. Failure to timely report, return and explain overpayments can lead to civil monetary penalties and exclusion from Medicare and Medicaid. The new law also makes keeping an overpayment beyond the deadline a violation of the False Claims Act, punishable by treble (i.e., triple) damages, in addition to other penalties.

Suspension of Payments. The Reform Law now allows the government to suspend Medicare and Medicaid payments to a provider or supplier if is there a “credible allegation of fraud.” This gives the government a tremendous amount of discretion in situations where no actual fraud is proven.

Increased Government Spending. In connection with the above, the Reform Law provides for an automatic $10 million annual appropriation for the Health Care Fraud and Abuse Control Account, $250 million for fiscal years 2011 through 2016 for administrative and operational costs of the Health Care Fraud and Abuse Control Program and Medicare Integrity Program, and annual appropriations starting at $95 million for 2011 and declining through 2016.

Expansion of RAC Audits. The Recovery Audit Contractor (“RAC”) program has been expanded to cover Medicaid, Medicare Advantage and Part D.

Enhanced Penalties. Among other things, failure to timely grant the Office of Inspector General access to documents for audits, investigations, evaluations or other statutory functions, can lead to civil monetary penalties of up to $15,000.00 per day.

In light of the foregoing, the health care attorneys at Blalock Walters are working with our health care provider clients to help them be proactive in reviewing and updating their corporate compliance plans, policies and procedures to ensure full compliance with the new rules.