Blowing the whistle on Medicare fraud may become dramatically
more lucrative. On April 29, 2013, the Department of Health and
Human Services (HHS) announced its intention to elevate the maximum
payout for whistleblowers by a multiple of nearly one million.
Specifically, the HHS's Centers for Medicare and Medicaid
Services (CMS) announced it would raise the ceiling for
whistleblower payouts to nearly $10 million from the current cap of
$1,000. By revising the Incentive Reward Program provisions in
§ 420.405 of the Code of Federal Regulations, the proposal
would entitle any Medicare fraud whistleblower whose tip leads to a
recovery to 15 percent of the overpayments recovered, with a cap of
$9.9 million. The goal, according to CMS, is to "increase the
incentive for individuals to report information on individuals and
entities that have or are engaged in sanctionable conduct; improve
our ability to detect new fraud schemes; and help us ensure that
fraudulent entities and individuals do not enroll in or maintain
their enrollment in the Medicare program."
proposed rule contains additional provisions designed
to decrease Medicare fraud, including:
expanding the instances in which a felony conviction can serve
as a basis for disbarment of a provider or supplier's
denying enrollment if the enrolling provider, supplier, or
owner had an ownership relationship with a previously enrolled
provider or supplier that had a Medicare debt;
revocation of Medicare billing privileges upon a determination
that the provider or supplier has a pattern or practice of
submitting claims for services that fail to meet Medicare
limiting the ability of ambulance suppliers to
"backbill" for services performed prior to
According to HHS Secretary Kathleen Sebelius, the proposed rule
is a "signal to Medicare beneficiaries and caregivers, who are
on the frontlines of this fight, that they are critical partners in
helping protect taxpayer dollars."
Many observers, however, are wary of the potential negative
consequences of the proposed rule. Primary among the concerns is a
potential avalanche of mistaken or perhaps even fabricated claims.
With a possible windfall of $10 million dollars, employees will
have little to no incentive to pursue internal reporting
mechanisms, such as company hotlines. By going directly to the
government and bypassing the company entirely, the target of the
tip will lose the opportunity to remediate the problem (if a
problem indeed exists). And, whistleblowers often have only partial
or bad information. The proposed rule provides a powerful
disincentive for the tipster to check the veracity of his claims
internally before contacting CMS.
Another concern is CMS is ill equipped to handle the thousands
of tips which will doubtlessly be received by the government once
the lucrative potential recovery for whistleblowers becomes more
A final note: the enhanced award created in the proposed rule is
an alternative to a financial recovery under the False Claims Act
(FCA). It is not intended to be in addition to awards provided to
whistleblowers under the FCA. The proposed rule clearly provides
that "an individual is not eligible for an [HHS] reward if he
or she has filed a qui tam lawsuit under the federal or
any state False Claims Act," and that the agency will not
"give a reward for the same or substantially similar
information that is the basis of a payment of a share of the
amounts collected under the False Claims Act."
It is uncertain whether this proposed rule will open the
floodgates of unsubstantiated fraud claims. What is clear is
Secretary Sebelius and HHS are intensifying the fight to prevent
Medicare fraud and abuse.
Interested parties may submit comments on this proposal by June
28, 2013. Comments must refer to the file code CMS-6045-P, and may
be submitted electronically through the federal eRulemaking portal,
or by regular mail to Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Attention:
CMS-6045-P, P.O. Box 8013, Baltimore, MD 21244-8013 or Centers for
Medicare & Medicaid Services, Department of Health and
Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue SW., Washington, DC 20201.
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