Reed Smith Client Alerts

Authors: Joseph W. Metro Paul W. Pitts

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has published a proposed rule that would amend the health care program civil monetary penalty (CMP) regulations (Proposed Rule). Notably, the Proposed Rule would codify the OIG’s expanded statutory authority under the Affordable Care Act (ACA) to impose CMPs on providers and suppliers and would allow for significant penalties in a variety of scenarios. For example, the Proposed Rule would permit the OIG to impose $10,000 per day penalties on providers and suppliers who fail to timely report and return an identified overpayment. Furthermore, the Proposed Rule would allow the OIG to impose $10,000 per day penalties—at the 9-digit NDC level—on drug manufacturers who fail to timely report and certify drug-pricing data. Such proposals could increase the OIG’s ability to leverage substantial penalties beyond that which is permitted under current regulations. Likewise, the OIG would codify its expanded authority under the ACA to permit CMPs for conduct including:

  • Failure to grant OIG timely access to records, upon reasonable request;
  • Ordering or prescribing while excluded when the excluded person knows or should know that the item or service may be paid for by a federal health care program;
  • Making false statements, omissions, or misrepresentations in an enrollment or similar bid or application to participate in a federal health care program; and
  • Making or using a false record or statement that is material to a false or fraudulent claim.

In addition, the OIG proposes to reorganize and clarify current regulations the agency describes as "cumbersome" and "confusing." The OIG estimates that the Proposed Rule would increase the government’s CMP collections, which have ranged from $10.2 million to $26.2 million per year over the past decade. Comments on the Proposed Rule are due July 11, 2014. Our analysis of major provisions of the Proposed Rule follows.

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Client Alert 2014-144