LEGISLATION

Brief Your CEO: New Penalties Double the Dollar Value of Protecting Your Lab from Liability

You may not realize this, but Congress has just doubled the dollar value of what you do as a compliance manager to keep your lab out of federal health care fraud hot water.

How?

By significantly increasing the penalties for violations.  While sneaky may be too strong a word, these new penalty increases have flown under the radar despite their obvious and immediate ramifications for your lab. And even if you are on top of the situation, odds are that your lab executives are totally oblivious. So, it behooves you—and them—to let the C-Suiters know about the higher penalties and how they increase the stakes of compliance.

Look What I Found
As is often the case when significant amendments are made to existing legislation, the new penalty provisions were tacked onto a larger bill addressing a totally different topic—in this case, the new federal budget, aka the Bipartisan Budget Act of 2018 (BBA) that was officially signed into law on Feb. 9, 2018. In addition to making the execs aware of the legal risks your lab is facing, pulling out this bit of critical information from a dense federal budget bill running over 1,000 pages sends them a subtle message: Our compliance officer is really on the ball!

Which Laws Were Affected
Now you can demonstrate your legal knowledge by pointing out which health care fraud laws the new BBA penalty provisions affect, namely the Civil Monetary Penalties Law (CMPL) and the Anti-Kickback Statute (AKS). (If you want to look them up and perhaps photocopy them for your briefing, the changes are contained in Section 50412 of the BBA.)

Higher Civil Penalties Under the CMPL
Explain that the CMPL is the foundation of federal health care enforcement because it authorizes the OIG to impose civil monetary penalties and other punishments for Medicare and Medicaid fraud and abuses, including AKS and Stark Law offences. The CMPL lists a schedule of fines for different types of offenses. The BBA amendments double (and in some cases more than double) those fine amounts:

New CMPL Civil Penalties

Offense Type Previous Penalty New Penalty(1)
Knowingly filing an improper claim for a medical or other item or service Maximum of $10,000 per claim Maximum of $20,000 per claim
Knowingly making or causing to be made a false statement, omission or misrepresentation of a material fact in any application, bid or contract to participate or enroll a federal health care program provider or supplier Maximum $50,000 per false statement Maximum $100,000 per false statement
AKS violation $50,000 per violation $100,000 per violation
Payments made to induce reduction or limitation of services(2) Maximum $2,000 Maximum $5,000

NOTES:
(1) The numbers are actually less dramatic when you take into account that previous budgets mandated that penalty amounts be indexed for inflation
(2) In addition, some payments to induce reduction or limitation of services that once carried a $5,000 maximum were also increased to a $10,000 maximum

Higher Criminal Penalties Under the AKS
Let your executives know that the BBA also jacks up the maximum criminal penalty for an AKS violation from $25,000 to $100,000 while doubling the maximum prison sentence from five to 10 years.

When the New Penalties Take Effect
End the briefing with a sense of urgency by explaining that the new BBA penalties are already in effect—they actually took effect on Feb. 9, 2018, the same date that the BBA did. On a more consoling note, you can point out that the new higher fines are not retroactive but apply only to offenses committed on or after Feb. 9.

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