More than two years after first proposing regulations, the Office of Inspector General of the U.S. Department of Health and Human Services issued two final rules updating its (1) civil monetary penalty (CMP) regulations, 81 Fed. Reg. 88,334 (Dec. 7, 2016), and (2) safe harbors under the anti-kickback statute (AKS) and beneficiary inducement prohibitions, 81 Fed. Reg. 88,368 (Dec. 7, 2016). While the latter rule has received more media attention, the CMP final rule includes important guidance on the OIG’s administrative enforcement authorities, including implementing new CMP authorities and clarifying the approach to aggravating and mitigating factors, and is the focus of this article.
For context, the OIG’s CMP regulations, found at 42 C.F.R. part 1003, codify and provide guidance for enforcement of the OIG’s authority under the CMP statute (CMPL), which contains multiple distinct authorities that the OIG uses against a wide range of program violations. The CMP authorities allow the OIG to punish violations that include false claims; contracting with an excluded individual; beneficiary inducements; AKS misconduct; “knowing” Stark Law violations; and violations of the Emergency Medical Treatment and Labor Act (EMTALA), to name just a few. CMPs are imposed as part of a settlement when a provider or supplier follows the OIG’s self-disclosure protocol. In some cases, CMPs are pursued affirmatively and initiated by the OIG, often by the OIG’s new (2015) administrative litigation team.
The CMP final rule updates these regulations with the OIG’s expanded authority under the Affordable Care Act, including a new CMP for violations of the 60-day overpayment refund rule, to impose CMPs and exclusions on providers and suppliers. The CMP final rule also reorganizes part 1003 by subject matter to improve clarity and to provide updated guidance on the aggravating and mitigating factors that the OIG considers when determining the amount of a CMP or whether to impose an exclusion. In the CMP final rule, the OIG adopted the majority of the provisions in its proposed rule, 79 Fed. Reg. 27,080 (May 12, 2014), but revised some of its proposals, generally in response to public comment.
The CMP final rule offers insight into how the OIG may use its newly codified CMP and exclusion authorities as key components of its administrative enforcement efforts.
The CMP regulations set forth base penalty amounts for the various authorities, but those amounts may be adjusted by aggravating factors. For example, the CMP final rule extends the OIG’s existing aggravating factor of actual knowledge to all cases in which the scienter standard to prove a violation is lower than actual knowledge. The OIG had proposed adding an aggravating factor based on a person’s level of intent, but commenters expressed concern that proving, and distinguishing between, different degrees of mental states would be subjective. Commenters were also concerned that physicians and other health care providers might not fully comprehend the changes proposed by the rule and might be disadvantaged when trying to respond. The adoption of the actual knowledge factor should eliminate these uncertainties.
The OIG eliminated its proposal to include a provision that the OIG should exclude an individual or entity from future participation in the federal health care programs where there are aggravating circumstances. Commenters felt the provision suggested that exclusion is mandated when an aggravating factor is present and was superfluous, given the OIG’s authority to exclude even in the absence of aggravating factors. Although the provision would have made it easier for the OIG to establish the bases for exclusions in appeals before administrative law judges, the OIG agreed that the provision was superfluous and reiterated its practice of evaluating conduct on a case-by-case basis.
The OIG had also proposed to limit the mitigating factor of “corrective action” to a self-report of the conduct by submission to the OIG’s self-disclosure protocol. Commenters urged a flexibility for tailored corrective action, but the OIG rejected a more general interpretation of corrective action. The OIG did include submission to the Centers for Medicare and Medicaid Services’ self-referral disclosure protocol as a corrective action in the final rule. It also made a corresponding change to the EMTALA subpart, adding a single mitigating factor of appropriate and timely corrective action, which must include disclosing the violation to CMS prior to CMS’ learning of the violation from a complaint or otherwise.
The OIG dropped its proposed alternate methodology for calculating CMPs and assessments for employing excluded individuals whose services are not directly billed.
In light of this long-awaited CMP final rule, the enforcement stakes are higher for those who may be facing CMPs.
Editor’s Note: This article first appeared in Law360 on December 22, 2016.