Top Ten Issues for Health Lawyers in 2010: Fraud and Abuse, Stark, and Anti-Kickback Issues, as appeared in AHLA Connections

As appeared in AHLA Connections, February 2010, Volume 14, Issue 2.

Given the advancing capabilities of recently operational auditing contractors and the significant increases in federal healthcare spending projected to be triggered by the passage of some version of a health reform bill, fraud and abuse enforcement activity will likely continue to trend upward in 2010.

Audit Contractors: This year may signal the end of the Recovery Audit Contractors (RACs) "ramp up" years. 2010 will be the first year in which RACs will begin operating in all 50 states; and accordingly, RACs will likely greatly increase their visibility by performing more unscheduled onsite visits to provider locations and initiating widespread Medicare claims audits. Likewise, the near analog of RACs, Medicaid Integrity Contractors (MICs), have already begun conducting audits and will continue to increase Medicaid auditing in 2010. MICs in particular are nearing the end of their five-year implementation plan (which began in 2006) and will be moving out of their start-up phase as they become increasingly operational.

Fraud and Abuse Modifications in Health Reform: Both versions of the health reform bills contain a number of provisions that would strengthen and enhance the government's enforcement capabilities. These provisions include: $10,000,000 in additional annual appropriations to the Department of Health and Human Services (HHS) Office of Inspector General (OIG), the Department of Justice (DOJ), and the Federal Bureau of Investigation; expanded OIG authority to broadly obtain "any supporting documentation necessary to validate claims"; new provisions permitting administrative penalties for beneficiaries who knowingly participate in healthcare fraud; mandatory reporting and returning of overpayments within 60 days after the overpayment was discovered or by the date of the cost report; civil monetary penalties for false statements or misrepresentations made by federal program providers or suppliers in applications and agreements; a provision clarifying that submitting a claim resulting from a violation of the Anti-Kickback Statute per se constitutes a false or fraudulent claim; and, finally, a provision that clarifies the intent threshold for a kickback violation such that an individual need not have specific intent or actual knowledge of the kickback prohibition to violate it.

Other notable issues to track: Last year, on October 1, 2009, many physician-owned entities that perform technical services "under arrangements" were required to divest, restructure, or halt referral streams in order to comply with the Stark Law. While we have not seen significant proposed modifications to the Stark Law in 2009, in its Calendar Year 2010 Physician Fee Schedule, the Centers for Medicare and Medicaid Services (CMS) stated that it is taking a second look at how the self-referral law regulates/restricts under arrangements and welcomed comments from the health community. Finally, anecdotally, the health law bar is also seeing an uptick in fraud enforcement of Medicare Part D related entities. The Fraud Enforcement and Recovery Act of 2009 (FERA) significantly expanded the government's ability to bring causes of actions under the False Claims Act against those who participate in federal healthcare programs as subcontractors. Given this expanded authority and the cost of the Medicare Advantage and Part D programs, increased enforcement of providers that submit claims to government-funded plans should not come as a surprise in 2010.