Alerts and Updates
Deficit Reduction Act of 2005 Imposes New Requirements on Large Medicaid Providers Effective January 1, 2007
March 23, 2006
The federal Deficit Reduction Act of 2005 ("DRA") was signed into law on February 8, 2006. It contains specific provisions aimed at reducing Medicaid fraud and abuse that directly affect all healthcare providers receiving at least $5 million in annual Medicaid payments. These new provisions, which must be adopted into state medical assistance plans, will require providers to develop policies and educate their staff about Medicaid compliance and enforcement.
Under the DRA, the following requirements will be imposed on providers receiving at least $5 million in annual Medicaid payments:
Written policies must be established for all management, employees, and contractors and/or agents to include "detailed information" regarding:These requirements are effective January 1, 2007, so affected providers should begin monitoring developments taken by their states to implement these requirements. Compliance programs should be revised in accordance with the DRA's directives. Although not an express requirement, providers should consider implementing procedures to ensure that the appropriate individuals who are employed by the provider or do business in the capacity of contractor or agent receive the policies and employee handbook.Providers must also update employee handbooks to include a "specific discussion" of the above information.
- the federal (and any state) False Claims Act ("FCA"), including the role of such laws "in preventing and detecting fraud, waste and abuse";
- whistleblower protections under these laws; and
- the providers' policies and procedures for detecting fraud, waste and abuse.
A second key provision of the Medicaid section of the DRA is designed to encourage individual states to develop their own false claims act with provisions comparable to the federal FCA. Under the new law, states that adopt their own false claims act will receive an additional 10% of any funds recovered as part of Medicaid enforcement actions for false claims. This provision is intended to provide a strong incentive for states to invest in pursuing Medicaid fraud recoveries.
The DRA also establishes a new federal Medicaid Integrity Program to step up Medicaid fraud enforcement by permitting the government to contract with outside entities to review Medicaid claims for payment and reimbursements, and to identify overpayments. The total effect of these new provisions is to dramatically enhance the statutory framework for Medicaid fraud prevention and detection.
Exactly what is required of providers under the new law is still subject to some interpretation. Nevertheless, providers with Medicaid revenues of at least $5 million should begin to review their policies and handbooks to determine what changes are needed in order to be compliant with these new federal provisions on January 1, 2007.
For Further Information
If you have any questions about this Alert or would like more information, please contact any of the attorneys in the Health Law Practice Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
