HHS' inspector general's office has confirmed it is using a new and more detailed model for corporate integrity agreements, but healthcare lawyers and hospital representatives say it threatens the ability of some hospitals to meet federal compliance demands.
Lawyers and providers say the new agreements are longer term, with stiffer auditing requirements and stricter reporting mandates, making them more costly for hospitals. For some facilities, they could be prohibitively expensive.
CIAs are behavior agreements negotiated between the inspector general's office and healthcare providers accused of violating federal healthcare laws, especially the False Claims Act. They are required as part of settlement agreements to resolve fraud charges. The inspector general's office can threaten hospitals with the ultimate penalty-exclusion from Medicare and Medicaid-to achieve its aims of compliance with federal laws.
The inspector general's office said the new model was implemented about a year ago but denied it is used across-the- board, saying each agreement is negotiated individually. Staffers in the inspector general's office said the agency continuously revises CIAs.
"It's an ongoing process," said spokeswoman Alwyn Cassil.
Some healthcare lawyers don't view the process as progress.
"I've got clients- small, 50-bed hospitals-that say they can afford the civil monetary penalties they've been assessed, but cannot afford to comply with the terms of the corporate integrity agreements being forced on them," said healthcare lawyer Daniel Mulholland III of the Pittsburgh office of Horty, Springer & Mattern. "We're being told through the Department of Justice that these new terms are non-negotiable," Mulholland said. "They've risen to another level of severity now, even from what they were like 12 months ago."
"This is a significant evolution in the history of corporate integrity agreements," said healthcare lawyer Gary Eiland of the Houston office of Vinson & Elkins. He said he's seen the new formats used in five or six recent settlements (See chart).
"I'm a little concerned that if (the inspector general's office) is taking a hard line on this, a lot of hospitals might not be able to afford to comply and will be afraid to disclose problems," Mulholland said.
He said his clients estimated that complying with the new agreements could cost them as much as $250,000 annually beyond the civil monetary penalties they've been assessed, a stiff price tag for cash-strapped rural hospitals. Because each agreement is negotiated individually, the inspector general's office said it cannot determine the average cost of complying with an agreement or the increased cost of the new CIAs.
Eiland said he worries about another bureaucracy-a cadre that monitors newer and tougher settlement agreements and that will become self-sustaining and entrenched within the inspector general's office because of the increased recoveries resulting from the CIAs.
"This is a poor allocation of the inspector general's office resources to develop this new bureaucracy at a time when the industry has embraced the compliance philosophy," he said.
Eiland said he knows the office is using a prototype form because whenever he sees a copy, he notices the same misprints and misspellings.
"It's like they've taken the most onerous settlement on the shelf, changed the names and filled in the blanks. When I see this particular typo, I just know it's going to be bad," Eiland said.
Howard Young, deputy chief of the civil recoveries branch, who manages the compliance unit and monitors agreements, said today's longer and more specific CIAs can be attributed to providers and their lawyers who have repeatedly requested numerous clarifications.
"We wanted to reduce ambiguity. That's the real reason," Young explained. "The providers often ask for more specificity so they know what we want. There's no doubt that our audit and review provisions have become more detailed and sophisticated, largely because our knowledge base has improved greatly, mostly due to statistical sampling. The entities undertaking the audits need that level of specificity to conduct an adequate review."
Cassil said the agreements are designed to prevent the repeat of misconduct that got providers in trouble. She said the number of CIAs has soared to 233 in 1998 from four in 1994. And the agency has bolstered its resources to monitor them. The inspector general is adding seven new employees-three lawyers, three auditors and one program analyst-to support the staff of eight.
While Young said the inspector general's office is seeking consistency and standards in its negotiated settlements, he added: "We're not just pasting in other providers' names and sending them out."
Young and Cassil said the new agreements are in effect for one to five years, with most coming between three and five years. The national investigation projects-such as "lab unbundling"-are standardized at three-year lengths. Individual cases, particularly when significant financial harm was alleged, average five years.