New Laws: Very Quietly, Congress Doubles Penalties for Medicare Fraud & Abuse

Sneaky may be too strong a word. But what is fair to say is that the new hikes in federal health care fraud violation penalties have flown totally under the radar despite their obvious and immediate ramifications for labs, pathology practices and other providers. Here is the rundown of what you need to know.

How It Happened
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.

Which Laws Were Affected
Of course, funding the federal government is the perfect occasion for tweaking just about any and all activities the budget pays for, including enforcement of health care fraud and abuse laws. Among the laws amended by the BBA are the Civil Monetary Penalties Law (CMPL) and the Anti-Kickback Statute (AKS). (See the related story on page x to find out about BBA changes to the Stark Law.) If you want to look them up, the changes are contained in Section 50412 of the BBA.

Higher Civil Penalties Under the CMPL
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 doubles (and in some cases more than doubles) those 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

(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
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
The penalties went into effect on the same date that the BBA did, Feb. 9, 2018 and apply only to offenses committed on or after that date.


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