Proposed New Rules Expand Office of Inspector General’s Authority to Impose Monetary Penalties

In May, the U.S. Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) published proposed rules amending the Civil Monetary Penalty (“CMP”) rules. Generally, the CMP rules allow the OIG to impose monetary penalties on healthcare providers and/or exclude providers from the federal healthcare programs for engaging in certain conduct. For example, knowingly submitting a claim to the federal healthcare programs that the provider knows is false or fraudulent is grounds for the imposition of a CMP. The proposed rules incorporate new authorities for CMPs as set forth in the Patient Protection and Affordable Care Act (“PPACA”), expand the OIG’s ability to exclude individuals from federal healthcare programs, and amend the amount of penalties in certain situations.

While there were already several grounds for which the OIG could impose a CMP, the proposed rules include additional reasons for which the OIG can impose a CMP. First, the proposed rules permit the OIG to impose CMPs on any individual that fails to grant the OIG timely access to records for the purpose of audits, investigations, evaluations, or other OIG statutory functions. The rule grants the OIG flexibility in determining the time period in which a person must respond to the OIG’s request for access based on the facts and circumstances of the specific situation. Failure to comply with the OIG’s request may result in a CMP of up to $15,000 per day for each day that a provider fails to grant access. The proposed rules also permit the OIG to impose CMPs for failing to report and return an overpayment, ordering or prescribing a medical item or service while excluded from the federal healthcare programs, and making false statements in an enrollment application.

The CMP rules currently permit OIG to impose CMPs on providers that employ or contract with an individual who is excluded from the federal healthcare programs. However, the proposed rules change the way in which the penalty is calculated. If the excluded individual provides an item or service that is separately billable to the federal healthcare programs, then the penalty will be based on the value of the separately billable item or service. If, on the other hand, the excluded individual provides an item or service that is not separately billable, then the penalty will be based on the number of days that the provider employed or contracted with the excluded individual and the total costs to the provider for employing or contracting with the individual during the excluded period.

The proposed rules also enhance the OIG’s ability to consider aggravating or mitigating factors. Notably, the proposed rule clarifies that the presence of any single aggravating factor permits the OIG to impose the maximum penalty and exclude the individual form the federal healthcare programs. However, the proposed rule also allows the OIG to consider mitigation factors, including if the provider appropriately self-disclosed to the OIG through the OIG’s Self-Disclosure Protocol. Further, the proposed rule increases the dollar threshold between less and more serious offenses from $1,000 to $5,000.

The OIG already has extensive flexibility with which to impose CMPs and the proposed rules enhance and expand these authorities. However, they also provide clarification as to existing rules and provisions. The OIG has not published final rules, but it is likely that even with changes to the proposed rules, the OIG’s authority will be expanded. And, healthcare providers should be prepared for the additional regulations these rules impose.

Carrie Gilbert is an attorney in the law firm of Dressman Benzinger LaVelle, with offices in Cincinnati, Ohio, Crestview Hills, Kentucky, and Louisville, Kentucky.