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Preventing Health Care Fraud and Abuse

(Title II, Subtitles A - E)

Effective date: July 1, 1997

Application of health care fraud and abuse sections

  • The Secretary of HHS will provide guidance regarding application of health care fraud and abuse sanctions. This includes:
    • Modifications to existing safe harbors pertaining to the Medicare program;
    • Additional safe harbors specifying payment practices that will not be treated as criminal actions, advisory opinions; and
    • Special fraud alerts.
  • The Secretary will consult with providers and health plans to establish standards related to the exception for risk-sharing arrangements to the anti-kickback penalties.

Fraud and abuse control program

  • Establishes a program to coordinate federal, state, and local law enforcement programs to control fraud in health plans.
  • The Secretary of HHS and Attorney General to share data with health plans.
  • Establishes, in the federal hospital insurance trust fund, a health care fraud and abuse account into which criminal fines and civil penalties will be deposited.
Medicare integrity program

  • Establishes a program under which the Secretary would promote the integrity of the Medicare program by entering into contracts with eligible private entities to carry out certain activities (entities need to comply with conflict of interest standards generally applicable to federal acquisition and procurement). These activities would include the following:
    1. Review of activities of providers of services or other individuals and entities furnishing items and services for which payment may be made under the Medicare program, including medical and utilization review and fraud review;
    2. Audit of cost reports;
    3. Determinations as to whether payment should not be, or should not have been, made by reason of Medicare as secondary payor provisions and recovery of payments that should not have been made;
    4. Education of providers of services, beneficiaries and other persons with respect to payment integrity and benefit quality assurance issues; and
    5. Developing and updating a list of durable medical equipment pursuant to §1834(a)(15) of the Social Security Act.
  • An entity is eligible to enter into a contract under this program if it meets certain requirements, including demonstrating to the Secretary that the entity's financial holdings, interests, or relationships will not interfere with its ability to perform the required functions.
  • Current contractors meeting applicable requirements may compete for contracts on new program integrity activities.

Fraud and abuse sanctions

  • Persons convicted of a felony relating to health care fraud will be mandatorily excluded from participating in Medicare and state health care programs. There are intermediate sanctions for Medicare health maintenance organizations (§1876, 42 USC amended).
  • The Secretary HHS may terminate a contract with an eligible §1876 organization or may impose intermediate sanctions such as civil money penalties or suspension of enrollment of individuals.
  • There is an additional exception to anti-kickback penalties for risk-sharing arrangements.

Fraud and abuse data collection program

  • Establishes a national health care fraud and abuse data collection program for reporting final adverse actions against health care providers, suppliers or practitioners.
  • Each government agency and health plan is required to report any final adverse action (not including settlements in which no findings of liability have been made) taken against a health care provider, supplier, or practitioner.

Civil Monetary Penalties

  • Imposes civil monetary penalties up to $10,000 for each occurrence and recoveries related to federal health care programs will be deposited into the Federal Hospital Insurance Trust Fund.

Revisions and amendments to criminal law regarding fraud and abuse

  • Amends the United States Code by adding the federal offense of health care fraud in any health care benefit program, which includes public and private plans.
  • An authorized investigative demand procedure including subpoena authority is allowed in any case relating to a federal health care offense.

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