Feds issue updated protocol on fraud self-disclosure

Though it's been an open secret for years, federal officials are today acknowledging for the first time in writing that healthcare companies that turn themselves in for certain types of Medicare fraud will probably only have to pay back 1½ times the amount of money involved.

HHS' inspector general's office is releasing a revamped document called the OIG Provider Self-Disclosure Protocol that describes exactly what a hospital, doctor or supplier must confide to the government in order to avoid prosecution and get a break on potential penalties. Those that self-disclose almost always avoid having costly and embarrassing corporate integrity agreements imposed on them, the protocol says.

Hospitals have been the biggest users of the protocol since it was first created in 1998. They have accounted for more than a third of the roughly 800 resolved disclosures since then, said Tony Maida, deputy chief of the Administrative and Civil Remedies Branch of the OIG Office of Counsel.

The revamped self-disclosure protocol being released today (PDF), says that the three types of fraud most commonly disclosed by hospitals are: submission of false or inflated Medicare bills, employment of people whom the OIG has excluded from Medicare, and payments to doctors to induce referrals of patients for treatment.

All of those violations deal with the office's authority to impose civil monetary penalties, which is used in some cases to punish violations of the anti-kickback statute and the Stark law. HHS can assess penalties of up to three times the loss amount as defined by the government, plus per-violation penalties.

As a reward for turning itself in, a business can limit those potential punishments. “We've determined that a 1.5 multiplier provides a financial incentive, while still being reflective of the fact that we are talking about conduct that implicates a fraud statute,” Maida said.

Medicare requires that hospitals and healthcare companies maintain internal compliance programs that actively look for fraud and less-serious matters. The protocol offers companies a way to resolve civil and criminal liability in cases where compliance programs turn up problems and hospitals are willing to admit mistakes.

Maida said most settlements reached through self-disclosures don't end with the hospital formally admitting wrongdoing. However, the revised protocol says healthcare companies must be willing to acknowledge potential violations when they enter the program.

“Statements such as, 'The government may think there is a violation, but we disagree' raise questions about whether the matter is appropriate for the SDP,” or self-disclosure protocol, the document says.

However, the OIG protocol is intended only for violations that involve intentional conduct on the part of the health system. Simple billing errors and civil matters that only involve the Stark law, for example, can be made through a separate program maintained by the CMS.

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