Loss of Reimbursement Faced by Large Medicaid Providers

By: Carla J. Cox

As of January 1, 2007, all State Medicaid plans must require that health care providers who receive annual Medicaid payments of $5,000,000 or more comply with provisions of the Deficit Reduction Act (DRA) of 2005 relating to employee education about false claims recovery.  Compliance with the new requirements is a condition of receiving Medicaid payments.  Therefore, if a provider is determined to be out of compliance with these requirements, the provider could forfeit Medicaid payments received after the effective date of the requirements.  Although neither CMS nor the Texas Health and Human Services Commission have yet adopted regulations that implement these requirements, the Texas OIG indicated in a recent presentation to the HCCA/AHLA Healthcare Fraud and Abuse Compliance and Enforcement Conference in Baltimore that the compliance deadline will not be postponed. 

For members of the $5 million club, the DRA requirements are as follows:

• Written policies must be established for all employees, including management and any contractor or agent of the entity, that provide detailed information about the federal False Claims Act  and  administrative remedies for false claims and false statements.  Detailed information must also be provided regarding the false claims acts of any state in which the provider operates, including information pertaining to civil and criminal penalties for false claims and statements.  Detailed information also must be provided regarding whistleblower protections under both the Federal and State False Claims Acts.  The DRA provides that information must be provided with respect to the “role of such laws in preventing and detecting fraud, waste and abuse in Federal health care programs.”
• The written policies must include detailed provisions regarding the provider’s policies and procedures for detecting and preventing fraud, waste, and abuse.
• Any employee handbook must include a specific discussion of the Federal and State False Claims Acts as described above.  The employee handbook must explain the rights of employees to be protected as whistleblowers and must also contain the provider’s policies and procedures for detecting and preventing fraud, waste, and abuse.

There are many unanswered questions with regard to how the DRA requirements will be interpreted.  For example, will a provider be considered to be in compliance if its employee handbook contains a link to a company website that contains the detailed information required by the law?  In addition, most employers that operate in more than one state have attempted to adopt uniform employee handbooks.  How do such multi-state employers comply with the law without having a different handbook for each state?  Another question arises as to how providers are to establish policies for contractors and agents who are not employees of the company.  The lack of federal or state regulatory guidance notwithstanding, providers that receive $5,000,000 or more in Medicaid payments cannot wait for answers to these questions, but must be prepared to demonstrate compliance by January 1, 2007. 

If you need assistance meeting or have questions regarding the DRA requirements, you may contact Carla Cox by e-mail at cjcox@jw.com or by phone at (512) 236-2040.

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