The Patient Protection and Affordable Care Act (ACA), enacted in 2010, brought about significant changes to the American healthcare landscape. Beyond expanding insurance coverage, the ACA also introduced robust measures to combat fraud, waste, and abuse within federal healthcare programs. A cornerstone of these efforts is the mandatory Affordable Care Act Compliance Program, a requirement for healthcare providers and suppliers participating in Medicare, Medicaid, and other federal healthcare programs. Understanding and implementing an effective compliance program is not just a legal obligation, but also a crucial step in ensuring ethical operations and safeguarding against severe penalties.
Understanding Mandatory Compliance Programs Under the Affordable Care Act
Section 6401(a)(7) of the ACA mandates that enrollment and continued participation in federal healthcare programs are contingent upon establishing and maintaining a comprehensive compliance program. This critical provision directs the Department of Health and Human Services (HHS), in collaboration with the HHS Office of Inspector General (HHS-OIG), to define the essential components – or “core elements” – of these programs through regulatory guidance. Furthermore, the ACA empowers HHS to enforce these requirements rigorously. Non-compliant providers and suppliers face potential disenrollment from federal programs, substantial civil monetary penalties, and other significant sanctions.
For years prior to the ACA, the HHS-OIG had offered voluntary compliance program guidelines to various segments of the healthcare industry. These guidelines, while valuable, were not legally mandated. The ACA transforms compliance from a recommended best practice into a mandatory requirement. Healthcare providers and suppliers must now adhere to industry-specific regulations developed under the auspices of the Act.
The foundation of HHS-OIG’s previous guidance, and likely the basis for future regulations under the ACA, is the framework for “effective” compliance and ethics programs established by the United States Sentencing Commission. Historically, HHS-OIG has adapted these broad guidelines to address specific risks prevalent in different healthcare sectors. This approach, which combines general ethical program criteria with targeted risk mitigation strategies, is expected to continue shaping the Affordable Care Act Compliance Program requirements.
In addition to the overarching compliance program mandate for all providers and suppliers, the ACA, through Section 6102, sets forth even more detailed and legally binding compliance and ethics program requirements specifically for skilled nursing facilities (SNFs) and nursing facilities. These facilities are statutorily obligated to implement compliance and ethics programs that demonstrably prevent and detect criminal, civil, and administrative violations of the ACA, while simultaneously promoting high standards of patient care.
Section 6102 outlines specific elements that SNF and nursing facility compliance programs must incorporate, drawing directly from the Sentencing Commission’s criteria for program effectiveness. These mandatory components include:
- Written Compliance Standards and Procedures: Establishing clear guidelines and operational procedures that reflect ethical and legal standards.
- Compliance-Related Training Programs: Providing regular and comprehensive training to staff on compliance requirements and ethical conduct.
- Auditing and Monitoring Activities: Implementing systematic processes to monitor adherence to compliance standards and detect potential violations, including anonymous reporting mechanisms.
- Screening Procedures (Background Checks): Establishing protocols, such as background checks, to prevent the hiring of individuals with a history of non-compliance or unethical behavior.
- Investigation and Corrective Action: Developing procedures for the thorough investigation of potential violations and the prompt implementation of corrective actions when issues are identified.
- Disciplinary Systems: Establishing fair and consistent disciplinary measures to address compliance violations and hold individuals accountable.
- Periodic Risk Assessments and Program Modification: Conducting regular assessments to identify emerging risks and adapting the compliance program to maintain its effectiveness and meet evolving challenges.
Failure to meet these mandatory Affordable Care Act Compliance Program requirements carries significant consequences. Penalties for non-compliance can include exclusion from participation in federal healthcare programs, which can be financially devastating, as well as substantial civil monetary penalties. These penalties alone should motivate healthcare organizations to rigorously evaluate and enhance their existing compliance and ethics programs, or to develop and implement robust programs where none exist. The enhanced enforcement and integrity provisions within the ACA further amplify the risks of non-compliance, making a proactive and effective compliance program an indispensable element of responsible healthcare operations.
Enhanced Enforcement Provisions Under the Affordable Care Act
Beyond mandating compliance programs, the ACA significantly strengthens the government’s ability to detect and prosecute healthcare fraud, waste, and abuse. While a comprehensive discussion of all enforcement provisions is extensive, key highlights include:
Provider Screening and Enrollment
The ACA mandates stringent screening processes for providers and suppliers seeking to participate in Medicare. HHS is authorized to implement rigorous screening procedures, including state licensure verification, criminal background checks, fingerprinting, unannounced site visits, and database checks. This enhanced scrutiny during enrollment aims to prevent fraudulent actors from entering federal healthcare programs.
This process incorporates several key features:
- Provisional Period of Enhanced Oversight: Newly enrolled providers and suppliers are subject to a provisional period of heightened scrutiny, which may include prepayment claim reviews, payment limitations, and other measures determined by HHS.
- Temporary Enrollment Moratoria: HHS has the authority to impose temporary halts on the enrollment of new providers within specific service or supply categories when fraud risks are identified.
- Mandatory Disclosure of Affiliations: Applicants are required to disclose current and past affiliations with providers or suppliers who have outstanding debts, payment suspensions, exclusions from federal healthcare programs, or revoked billing privileges.
- Authority to Deny or Impose Safeguards Based on Affiliate Disclosures: If disclosed affiliations raise concerns about potential fraud, waste, or abuse, HHS can implement enhanced safeguards or outright deny participation in Medicare.
Suspension of Payments Pending Investigation
The ACA empowers HHS to suspend payments to a provider or supplier while a “credible allegation of fraud” is under government investigation. HHS, in consultation with HHS-OIG, holds the authority to determine the credibility of fraud allegations. This payment suspension power can have a profound and immediate impact on a provider’s operational viability.
Transparency Requirements
The ACA introduces new transparency mandates across various healthcare sectors, including drug and device manufacturers, pharmacy benefit managers, physician practices providing ancillary services, and skilled nursing facilities. These requirements primarily focus on financial relationships and activities, imposing mandatory reporting obligations to government agencies. These reporting requirements significantly enhance the tracking and monitoring of financial interactions within the healthcare system, aiding in the detection of potential conflicts of interest and improper financial arrangements.
Increased Data Access and Integration
The ACA facilitates comprehensive oversight of providers and suppliers by enabling the integration and analysis of diverse data sets. This includes claims data, quality of care metrics, ownership information, certification details, adverse actions, penalties, sanctions, and other program integrity data. The Act mandates HHS to maintain an Integrated Data Repository (IDR) containing claims and payment information from all federal healthcare programs.
The IDR consolidates data from HHS and other federal agencies such as the Social Security Administration, the Department of Veterans Affairs, the Department of Defense, and the Indian Health Service. This integrated data is shared and analyzed across agencies to identify patterns and anomalies indicative of potential fraud, waste, and abuse. HHS-OIG and the Department of Justice are granted access to the IDR for law enforcement and oversight activities, significantly enhancing their investigative capabilities.
Furthermore, the ACA streamlines the collection of data related to final adverse actions against healthcare providers, suppliers, and practitioners by consolidating the Healthcare Integrity and Protection Data Bank into the National Practitioner Databank (NPD). HHS manages this consolidated database, and states are required to contribute specific data to the NPD, creating a more comprehensive and accessible repository of adverse action information.
Changes to Civil Monetary Penalties Statute
The ACA amends the civil monetary penalties statute, introducing a penalty of up to $50,000 for false statements, omissions, or misrepresentations made in applications or contracts to participate or enroll in federal healthcare programs. Violators are also liable for three times the amount falsely claimed. Penalties are also applicable to individuals excluded from federal healthcare programs who prescribe covered items or services, if they “knew or should have known” that a claim would be submitted to Medicare or Medicaid for those items or services.
Overpayment Provisions
The ACA mandates a strict “60-day rule” for overpayments. Providers and suppliers are legally obligated to report and return any identified overpayments within 60 days of discovery. Failure to return overpayments within this timeframe transforms the overpayment into an “obligation,” potentially subjecting the provider to substantial liability under the False Claims Act, as amended in 2009.
Anti-Kickback Statute Reinforcement
The ACA codifies the long-standing Department of Justice position that violations of the Anti-Kickback Statute can serve as the basis for enforcement actions, including treble damages claims under the civil False Claims Act. Importantly, the ACA clarifies that prosecutors are not required to prove that a defendant had explicit knowledge of a violation or specific intent to violate the Anti-Kickback Statute. General criminal intent is sufficient for prosecution.
Amendments to the False Claims Act
The ACA introduces several amendments to the False Claims Act to strengthen its effectiveness in combating healthcare fraud. It narrows the “public disclosure bar” to disclosures solely within federal criminal, civil, or administrative hearings, audits, or investigations, overruling a Supreme Court decision that had broadened the bar to include state proceedings. The Act also grants the Department of Justice the authority to oppose the dismissal of a False Claims Act case even if the allegations have been publicly disclosed and the whistleblower (relator) does not qualify as an “original source” of the information.
Healthcare Fraud Criminal Offense
Similar to the Anti-Kickback Statute amendments, the ACA modifies 18 U.S.C. § 1347 (criminal healthcare fraud) to eliminate the requirement that prosecutors prove a defendant had “actual knowledge” of the healthcare fraud statute or specific intent to violate it. This change simplifies the prosecution of criminal healthcare fraud offenses.
Conclusion: Prioritizing Affordable Care Act Compliance
The Affordable Care Act Compliance Program and its associated enforcement provisions represent a significant escalation in the government’s efforts to combat fraud, waste, and abuse in the healthcare system. This legislative framework reinforces a continuing trend towards mandatory compliance and ethics programs for organizations operating within government-regulated sectors.
In this heightened regulatory environment, robust compliance and ethics programs are not merely advisable, but essential. They serve as an organization’s most effective defense against the substantial financial and reputational risks associated with government audits, investigations, and enforcement actions. With the ACA’s comprehensive anti-fraud measures, healthcare companies are strongly encouraged to prioritize their compliance obligations and ensure their programs are not only in place but are demonstrably effective in meeting all new and existing regulatory demands. Proactive investment in a strong Affordable Care Act Compliance Program is a critical investment in the long-term health and integrity of any healthcare organization.
References
- Patient Protection and Affordable Care Act of 2010, H.R. 3590, March 23, 2010.
- http://www.hklaw.com/publications/Health-Care-Organizations-Targeted-With-Anti-Fraud-Enforcement-Efforts-New-and-ongoing-initiatives-will-affect-oversight-components-of-health-care-reform-06-22-2009/
- H.R. 3590, Sec. 6401 (a)(7).
- H.R. 3590, Sec. 6401 (a)(7).
- H.R. 3590, Sec. 6401 (a)(7).
- http://oig.hhs.gov/fraud/complianceguidance.asp
- 2009 United States Sentencing Commission Guidelines Manual, §8B2.1 Effective Compliance and Ethics Program (2009).
- H.R. 3590, Sec. 6102.
- H.R. 3590, Sec. 6102.
- H.R. 3590, Sec. 6401 (a).
- H.R. 3590, Sec. 6401 (a).
- H.R. 3590, Sec. 6402 (h).
- H.R. 3590, Sec. 6402 (h).
- H.R. 3590, Sec. 6002.
- H.R. 3590, Sec. 6402 (a).
- H.R. 3590, Sec. 6402 (a).
- H.R. 3590, Sec. 6403.
- H.R. 3590, Sec. 6403.
- H.R. 3590, Sec. 6402 (d)(2).
- H.R. 3590, Sec. 6402 (d)(2).
- H.R. 3590, Sec. 6402 (d)(2).
- H.R. 3590, Sec. 6402.
- H.R. 3590, Sec. 6402; see also 31 U.S.C. 3729(b)(3).
- H.R. 3590, Sec. 6402.
- H.R. 3590, Sec. 6402.
- H.R. 3590, Sec. 6402.
- H.R. 3590, Sec. 10104(j).
- H.R. 3590, Sec. 10104(j).
- H.R. 3590, Sec. 10104(j).
- H.R. 3590, Sec. 10606.
