Enforcement Trends: Feds Administer a Double Dose of Civil Monetary Penalty Increases

Potential penalties for Medicare violations will be higher if they’re assessed on or after Oct. 11, 2018. That’s when the newly announced Dept. of Health and Human Services’ (HHS) inflation-adjusted civil monetary penalties (CMPs) take effect. And that’s only the beginning of the story.

CMPs & Annual Adjustments
Along with imprisonment, criminal fines and exclusion, CMPs are among the penalties that can befall a lab that commits Medicare fraud and abuse. CMP amounts are listed in a schedule that varies based on the type of offense and can run to up to three times the amount of illegal remuneration a lab offers, pays, solicits, or receives.

In 2015, Congress passed a law requiring HHS and other federal agencies that use CMPs to enforce their regulations to:

• Make an initial baseline or “catch-up” adjustment to their CMPs; and
• Starting in 2017, adjust those CMP amounts for inflation each year after that using the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October.

Annual Inflation Adjustments for 2018
For its 2018 adjustment, HHS applied a 1.02041 inflation multiplier, which translates into a 2.041% increase. Effective dates depend on not just the date the CMP is assessed but also the date the violation occurs:

• 11, 2018 for assessment of CMPs for violations occurring on or after Nov. 2, 2015;
• The pre-adjustment CMP amounts in effect before Sept. 6, 2016 for violations occurring before Nov. 2, 2015 and/or for adjustments to CMPs assessed before Sept. 6, 2016.

The Other CMP Increase
It’s not just the annual inflation adjustment. This year’s federal budget bill, aka, the Bipartisan Budget Act of 2018 also increased the maximum amounts of many CMPs significantly above 2.041%. For example, the maximum CMP has increased from $55,262 to $100,000 for:

• 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 as a provider or supplier; and
• Making or using a false record or statement that is material to a false or fraudulent claim.