United States: Sen. Grassley Introduces The Strengthening Program Integrity And Accountability In Health Care Act Of 2011

On March 2, 2011, coinciding with the Senate Finance Committee's hearing regarding health care fraud prevention, Sen. Chuck Grassley (R-Iowa) introduced Senate Bill S.454, the Strengthening Program Integrity and Accountability in Health Care Act of 2011, to amend Titles XVIII and XIX of the Social Security Act to prevent fraud, waste, and abuse under Medicare, Medicaid, and CHIP, and for other purposes (as self-described in the bill). The provisions included in this bill expand the enforcement tools added by last year's Patient Protection and Affordable Care Act (health care reform), and would significantly increase the risks to those providers and suppliers who are caught (rightly or wrongly) in the government's enforcement cross-hairs.

According to Sen. Grassley, the bill would limit tax dollars lost to fraud by giving the government more time to pay Medicare providers when fraud, waste, and abuse are suspected than is allowed under the existing "pay-and-chase" model.

The bill also would enhance coordination among federal agencies responsible for fighting medical identity theft, stop payments for illegal, unapproved drugs, and strengthen enforcement capabilities by expanding the range of individuals subject to penalties. And the bill would require Medicare claims and payment data to be available to the public by provider name for the first time, similar to other federal spending disclosed on www.USAspending.gov.

Following is a summary of the bill's provisions:

Sec. 2 Enhanced Medicare and Medicaid Program Integrity Provisions

The first part of this provision, regarding the suspension of payments pending investigation of credible allegations of fraud, would require the Secretary of the Department of Health and Human Services to suspend Medicare payments to a provider of services or a supplier pending an investigation of credible allegations of fraud, unless the Secretary determines there is good cause not to suspend such payments. As it stands currently, the Secretary has the discretion to suspend payments but is not required to do so. Last year's health care reform provisions added a similar mandatory requirement for Medicaid payments to a provider or supplier under investigation of credible allegations of fraud, by denying federal financial participation payments to the state in circumstances where payments were not suspended unless there was determined to be good cause not to suspend such payments.

The second part of this provision concerns the extension of the number of days in which Medicare Part A and Part B claims are required to be paid. The provision would require the Secretary, upon a determination of the likelihood of fraud, waste, or abuse involving categories of providers of services or suppliers, or individual providers or suppliers, to extend the time that Medicare payments must be made to (1) up to 365 calendar days for claims submitted by categories of providers of services or suppliers, or categories as stratified by geographic area; or (2) such time that the Secretary determines is necessary to ensure that the claims with respect to individual providers of services or suppliers are clean claims. During the delay period, the Secretary would be expressly permitted to impose pre-payment review and other methods of heightened scrutiny of these claims. The provision also would require the Office of Inspector General of the Department of Health and Human Services (OIG) to submit recommendations, at least annually, to the Secretary on which categories of providers to apply the extension of the time period, and the Secretary must submit to the OIG a written response. In addition, the proposal would preclude administrative or judicial review of the Secretary's actions.

Sec. 3 Requirements for the Transmission of Management Implication Reports by the OIG

Demonstrating congressional desire for direct involvement in the efforts to combat waste, fraud, and abuse, this provision would require the OIG to notify the relevant committees of Congress (i.e., the House committees on Ways and Means, Energy, and Commerce and the Senate Committee on Finance) within 30 days after transmitting a management implication report (MIR) to the Secretary and requires the Secretary to respond to the OIG's MIR within 90 days. As explained on Sen. Grassley's Web site, "[a] Management Implication Report (MIR) is a document ... [OIG] produces identifying systematic weaknesses or vulnerabilities in federal programs to fraud, waste, or abuse, and recommending ways to correct or minimize them."

Sec. 4 Medical ID Theft Information Sharing Program and Clearinghouse

This provision would require the Secretary, acting through the Administrator of CMS, to work with the chairman of the FTC to establish an information sharing program regarding beneficiary medical ID theft. The program must include (1) the establishment of methods to identify and detect relevant warning signs of medical ID theft; (2) the establishment of appropriate responses to such warning signs that would mitigate and prevent beneficiary medical ID theft; and (3) the development of a detailed plan to update the program as appropriate.

In addition, to fight beneficiary medical ID theft and to prevent improper payment of claims, this provision would require the Secretary to work with the FTC to establish a clearinghouse at CMS to collect reports of beneficiary medical ID theft from the FTC and other sources.

Sec. 5 Permissive Exclusion From Federal Health Care Programs Expanded to Individuals and Entities Affiliated With Sanctioned Entities

This provision would amend Section 1128(b)(15) of the Social Security Act to expand the individuals and entities the Secretary may exclude from participation in any federal health care program (permissive exclusion) to include individuals or entities affiliated with a sanctioned entity. These would include: (1) any individual who was a person with an ownership or control interest in a sanctioned entity or an affiliated entity of such sanctioned entity at the time of any of the conduct that formed a basis for conviction or exclusion and knew or should have known of such conduct; (2) any individual who was an officer or managing employee of a sanctioned entity or affiliated entity of such sanctioned entity at the time of any of the conduct that formed a basis for the conviction or exclusion; and (3) any affiliated entity of a sanctioned entity. A similar provision proposing to expand the OIG's permissive exclusion authority, H.R. 675, was recently introduced in the House by Rep. Wally Herger.

According to Sen. Grassley's press release, this provision would explicitly apply to Medicare Advantage, Part D, and Medicaid managed care plans as well as their participating providers and suppliers.

Sec. 6 Public Availability of Medicare Claims Data

This provision would require that, by December 31, 2012, the Secretary issue regulations to make Medicare claims and payment data available to the public, including data on payments made to any provider of services or supplier, consistent with applicable information, privacy, security, and disclosure laws, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Sec. 7 Medicaid Exclusion From Participation Relating to Certain Ownership, Control, and Management Affiliations

This provision would require state Medicaid agencies to exclude any individual or entity from participation in the Medicaid program if the individual or entity owns, controls, or manages an entity (or if such entity is owned, controlled, or managed by an individual or entity) that (1) has unpaid overpayments during the period determined by the Secretary or the state agency to be delinquent; (2) is suspended, excluded, or terminated from Medicaid participation during such period; or (3) is affiliated with an individual or entity that has been suspended, excluded, or terminated from Medicaid participation during such period. This provision would essentially reinstate Section 1902(a)(78) of the Social Security Act, which was added by Section 6502 of the health care reform legislation but repealed by the Medicare and Medicaid Extenders Act of 2010; the provision is now proposed as Section 1902(a)(83).

Sec. 8 Payment for Illegal Unapproved Drugs

This provision would prohibit a state from making any payment for any covered outpatient drug unless the state first verifies with the FDA that the covered outpatient drug has been approved by the FDA under a new drug application (NDA), an abbreviated new drug application (ANDA), or that such drug is grandfathered under prior FDA determinations. This provision would be effective beginning January 1, 2012.

This provision also would require the Secretary to make available to the public, on the FDA's Web site, a list of drugs that are not approved under an NDA or ANDA. The list must include the drug, the person who listed the drug, and the authority that does not require the drug to be subject to approval under an NDA or ANDA. This provision also would be effective beginning January 1, 2012.

Sec. 9 Requiring Individuals or Entities That Participate in or Conduct Activities Under Federal Health Care Programs to Comply With Certain Congressional Requests

This provision would require that any individual or entity that participates in or conducts activities under a federal health care program must comply, as a condition of such participation, with any request for documents, information, or interviews submitted by the chairman or the ranking member of a relevant committee of Congress (i.e., the House committees on Ways and Means, Energy, and Commerce and the Senate Committee on Finance).

Impact of the Bill

The introduction of this bill reflects the continued focus of Congress on reducing fraud, waste, and abuse in the federal health care programs. It also expands the tools available to the Secretary for enforcement actions against categories of providers, affiliated entities of sanctioned providers and suppliers, and individuals associated with sanctioned entities. This expansion significantly raises the business risks for an ever-broadening class who may not be directly implicated in accusations of fraud, waste, and abuse but nonetheless may suffer the consequences. All direct and indirect participants in the federal health care programs would be well served to increase their (and their affiliates') focus on compliance with the requirements of these programs. A copy of Sen. Grassley's bill is available at http://www.gpo.gov/fdsys/pkg/BILLS-112s454is/pdf/BILLS-112s454is.pdf.

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