Lat­est bud­get deal es­ca­lates false claims and civil mon­e­tary penal­ties

Modern Healthcare - - NEWS - By Lisa Schencker

Health­care providers ac­cused of fraud and cer­tain reg­u­la­tory vi­o­la­tions could soon face sig­nif­i­cantly higher fines be­cause of a lit­tle-dis­cussed part of the re­cent con­gres­sional bud­get deal.

Le­gal ex­perts say there’s prob­a­bly no need for most providers to panic. But a trade group rep­re­sent­ing nurs­ing homes called the pro­vi­sion “out­ra­geous.”

The Bi­par­ti­san Bud­get Act of 2015, which the pres­i­dent signed into law this month, re­quires that civil mon­e­tary penal­ties be raised to ac­count for in­fla­tion by Au­gust 2016. Some penal­ties haven’t changed since 1987.

Daily penal­ties im­posed on nurs­ing homes for non­com­pli­ance with Medi­care and Med­i­caid con­di­tions of par­tic­i­pa­tion could dou­ble from a cur­rent max­i­mum of $10,000 a day, said Lyn Bent­ley, the Amer­i­can Health Care As­so­ci­a­tion’s se­nior di­rec­tor of reg­u­la­tory ser­vices.

The nurs­ing home group is in­ves­ti­gat­ing its op­tions to fight the in­crease, she said. The HHS sec­re­tary can is­sue a rule keep­ing the penal­ties be­low the new max­i­mum rate if the so­cial costs out­weigh the ben­e­fits, or if the higher penal­ties would have a “neg­a­tive eco­nomic im­pact,” ac­cord­ing to the law.

Penal­ties are also go­ing up for providers ac­cused of fraud un­der the False Claims Act, which makes it a crime to sub­mit tainted claims to gov­ern­ment pro­grams such as Medi­care and Med­i­caid.

Those penal­ties, which now range from $5,500 to $11,000 per false claim, haven’t changed since 1999, so the in­fla­tion ad­just­ment could mean a 40% leap, said Pa­trick Burns, co-ex­ec­u­tive di­rec­tor of the Tax­pay­ers Against Fraud Ed­uca- tion Fund, a not-for-profit sup­port­ing whis­tle-blower in­cen­tive pro­grams.

Higher penal­ties could add up quickly in False Claims Act cases, which can in­volve hun­dreds of al­legedly tainted claims. Plus, the law al­lows the gov­ern­ment to seek triple the amount of money it ac­tu­ally lost.

But le­gal ex­perts say the ac­tual im­pact of the change may be neg­li­gi­ble. The gov­ern­ment might not even want to max­i­mize its penal­ties, said Jen­nifer Weaver, a part­ner at Waller Lans­den Dortch & Davis. Gar­gan­tuan penal­ties—those that are 10 to 15 times

the value of the dis­puted claims—could be con­sid­ered a vi­o­la­tion of the Con­sti­tu­tion, which bars ex­ces­sive fines.

Also, False Claims Act cases typ­i­cally set­tle for amounts that re­flect the gov­ern­ment’s losses rather than the penal­ties, Weaver said.

Still, the threat of higher penal­ties might at least in­flu­ence providers’ de­ci­sions to set­tle.

In re­cent months, a num­ber of hos­pi­tals and health sys­tems have set­tled False Claims Act cases for whop­ping sums. Florida-based Ad­ven­tist Health Sys­tem re­cently agreed to pay $118.7 mil­lion to set­tle its case. North Broward Hos­pi­tal Dis­trict in Fort Laud­erdale, Fla., agreed in Septem­ber to a $69.5 mil­lion set­tle­ment. Tuomey Health­care Sys­tem in Sumter, S.C., agreed last month to pay $72.4 mil­lion, dodg­ing a $237 mil­lion ver­dict. All of those cases con­cerned al­legedly il­le­gal com­pen­sa­tion ar­range­ments with physi­cians.

Burns agreed that higher penal­ties might some­times com­pel tar­gets of fraud in­ves­ti­ga­tions to set­tle. “It’s not a big deal un­less you are in­tend­ing to do fraud and are an­gry there’s go­ing to be ac­count­abil­ity,” he said.

Higher penal­ties could add up quickly in False Claims Act cases,

which of­ten in­volve hun­dreds of

al­legedly tainted claims.

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