Labs Could See Increased Scrutiny Under Proposed Incentive Reward Program

If the Centers for Medicare and Medicaid Services (CMS) has its way, changes to the Medicare Incentive Reward Program (IRP) that was created as part of the Health Insurance Portability and Accountability Act would significantly increase the number and specificity of the “tips” it receives from Medicare beneficiaries and others. Clinical laboratories and other providers should take note of these proposed changes because they represent another level of scrutiny of their activities. As we know, the qui tam provisions of the False Claims Act (FCA) and its whistleblowers are a primary source of detecting fraud and abuse in the Medicare and Medicaid programs. These proposed changes have the effect of creating a whole new class of whistleblowers without the complexity of having to file a lawsuit and wait years for the outcome. In a proposed rule published in the Federal Register April 29, 2013, CMS has proposed a change in the IRP that significantly increases the reward a person could receive for reporting instances of “sanctionable conduct” in the Medicare program. Currently, a person can receive a reward of 10 percent of the recovered amount, up to $1,000, for providing “tips” about a person or entity who has engaged in sanctionable fraud and abuse against the Medicare program that lead to the successful recovery of funds. Under the proposed changes, the reward amount would be increased to 15 percent of the amount recovered for the first $66 million, up to $9.9 million. The proposed rule also clarifies which individuals are eligible for a reward. Under this program, a person would have to provide specific information that leads to the recovery of funds. The proposal states, “The intent of these provisions is not to provide rewards for ‘simple mistakes’ or unintentional billing errors.” According to comments in the proposed rule, reporting by individuals is a proven tool for the government to detect fraud, waste, and abuse in the Medicare program. The rule points to the success of the whistleblower provisions of the FCA and the success of a similar program the Internal Revenue Service (IRS) uses to reward people who report tax fraud. It also states that while vigilant beneficiaries, caregivers, family members, and others are critical to anti-fraud efforts, many people do not report suspected fraud because they are not monitoring claims for their care or they noticed a suspicious claim but were not motivated to report it. CMS believes that simplified Medicare Summary Notices that include instructions on how to report fraud, coupled with the increased incentives in this proposed rule, will result in more reports. The proposal notes that since the current IRP was put into operation in July 1998, only 18 rewards have been paid for a total of less than $16,000 and amounts collected of less than $3.5 million. In contrast, between 2007 and 2012, the IRS collected almost $1.6 billion and paid approximately $193 million in rewards. Based on this, CMS believes these changes will provide greater incentive to beneficiaries, providers, and others to report sanctionable conduct. Who Is Eligible for a Reward In order for an individual to be eligible to receive a reward, he or she must be the first person to report the activity and the information provided must:

• »Relate to the activities of a specific individual or entity;

• »Specify the time period of the alleged activities; and

• »Include a degree of specificity such that a review or investigation by CMS or law enforcement would result in the imposition of a sanction.

CMS does not give a reward if the individual or entity is already the subject of review or investigation by CMS or law enforcement. The decision of whether a person is eligible to receive a reward will be at CMS’s discretion. CMS Seeking Input CMS is seeking comments on whether it should adopt a reward structure that varies from 15 percent to 30 percent of the amounts collected rather than the flat 15 percent that is being proposed in this rule. CMS seems to prefer the 15 percent flat amount to avoid establishing a new administrative process to adjudicate the size of a reward that could range from 15 percent to 30 percent. The proposed approach also requires the completion of an “attestation” by the reporting individual. The attestation would include a statement that the individual is not participating in the sanctionable conduct and is not otherwise ineligible to receive a reward, that the information furnished is accurate and truthful to the best of their knowledge, and that the individual acknowledges that failing to provide truthful information could subject them to civil and criminal liability. The attestation is an attempt to discourage frivolous or irrelevant reports. CMS is seeking comments on whether it should require an attestation and if so when it should be signed and what it should contain. CMS is also seeking comment on whether there should be an appeals process if it finds an individual is not eligible for a reward and, if so, what the appeals process should look like. The agency would also like to know whether it should consider an individual’s request to waive the full refund of the reward. To be ensured consideration, comments must be received no later than 5 p.m. on June 28, 2013. How Should Laboratories and Other Providers Respond? First and foremost, providers should review this proposed regulation and comment on those areas they find objectionable or overly burdensome. When constructing comments, it is important to look at the rule changes themselves but also to look at the sections describing the information collection requirements and the regulatory impact analysis. If you think CMS is off on these estimates, it does not hurt to point that out to them. This rule represents the potential creation of a new batch of whistleblowers scrutinizing the activities of health care providers, including clinical laboratories. Should this rule be finalized as it is written, providers should train their employees who interact with patients and the public about the IRP. Employees should be made to understand an innocent remark or comment to a patient, or a family member of a patient, can easily be misconstrued as evidence that improper billing or outright fraud is occurring. Another area that should be reviewed is billing sent to patients. It is important that bills be clear and easily understandable by a patient when they include Medicare payments or denials and patient responsibility for any copays or other amounts. It should be emphasized on bills that patients who have any questions should contact the laboratory to resolve the problem. When patients do contact the laboratory, the person they are speaking to should be familiar with those aspects of the bills that your lab sends so he or she can answer questions intelligently and have the authority to resolve problems. Most important, if they tell the patient they will get back to them with an answer or a resolution, they must do so 100 percent of the time.