Children's Hospital Colorado
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Deficit Reduction Act (DRA) of 2005

Section 6032 of the Deficit Reduction Act of 2005 (DRA), effective January 1, 2007, requires entities that make or receive annual Medicaid payments of $5 million or more in any state to establish and disseminate certain written policies applicable to their employees, and to certain contractors and agents (collectively “contractors”). The required policies must provide detailed information and the entities’ policies and procedures for preventing and detecting fraud, waste and abuse. The entities must also provide information to employees and contractors about the Federal False Claims Act and other applicable federal and state false claims laws, the administrative remedies for false claims and statements, and the “whistleblower” protections afforded under such laws.

Additional information about the Deficit Reduction Act of 2005 is available online at the Centers for Medicare and Medicaid Services (CMS) web site at https://www.cms.gov/Regulations-and-Guidance/Legislation/DeficitReductionAct/index.html?redirect=/deficitreductionact.

Children’s Hospital Colorado (CHCO) Compliance Activities

CHCO is committed to its role in preventing and detecting health care fraud, waste and abuse in federal health care programs, and complying with applicable federal and state laws. As a part of this effort, CHCO has a comprehensive compliance program to ensure compliance with the DRA including the following:

  1. Corporate Compliance Program Plan: Document outlining CHCO’s efforts to ensure CHCO acts in accordance with its mission, values and ethical and legal obligations. A primary goal of the Program is to create system-wide awareness of the importance of preventing, detecting, and correcting any fraud, waste or abuse in connection with state and federally funded health care programs and private health plans. The Plan serves as an outline of Program activities related to promoting ethical and legally compliant business practices; to preventing and detecting noncompliant behavior; to resolving noncompliant conduct; and to taking actions necessary to prevent future noncompliance. The Corporate Compliance Program Plan is available upon request.
  2. Code of Conduct: Includes information on CHCO's comprehensive compliance program for the detection and prevention of fraud, waste and abuse. Provided to CHCO employees at hire, Medical Staff providers at credentialing and re-credentialing, and contractors upon engagement (in Orientation and Training Handbook). In addition, all CHCO employees complete an annual compliance training that includes training on the DRA and the Code of Conduct. To review, select the following link: Code of Conduct (.pdf).
  3. Associated Policies (available upon request):
    • Corporate Compliance: Investigations of Potential Fraud and Abuse policy
    • Non-Retaliation in Reporting Misconduct or Variances Policy
  4. Orientation and Training Handbook (Non-Employees and Medical Staff): Includes select information from the full Code of Conduct, with a link to the full Code of Conduct. Provided to all credentialed Medical Staff providers and Non-Employee Staff (including contractors) of CHCO. The Orientation Handbook (Non-Employees and Medical Staff) is available upon request.
  5. State False Claims Laws: A summary of the state False Claims Laws applicable to CHCO (see below) that identify state civil and criminal penalties for false claims and statements along with the whistleblower protections afforded under such laws.

Copies of the information referenced on this website are also available upon request by contacting Compliance and Business Ethics at 720-777-2566 or emailing us at corporate.compliance@childrenscolorado.org.

How to Report Fraud, Waste, and/or Abuse

CHCO, its employees, contractors, agents, and providers are required to cooperate fully with state and federal oversight and prosecutorial agencies. There are several options available to you for reporting fraud, waste, overpayments, and/or abuse.

  1. To CHCO Compliance and Business Ethics:
  2. To a State Regulatory Agency: You can report directly to the State Medicaid Agency (SMA), Medicaid Fraud Control Unit (MFCU), or to other designated state regulatory agencies with oversight over Medicaid fraud, waste, and/or abuse. The CMS website includes state-specific contacts for reporting fraud, waste, and/or abuse for all states, which is available at https://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/FraudAbuseforConsumers/Report_Fraud_and_Suspected_Fraud.html. State-specific information for CHCO’s seven state region is included in the table below under “State Laws.”
  3. To the U.S. Department of Health & Human Services Office of Inspector General: To report fraud in all federal health care programs including Medicare, Medicaid & SCHIP, you can contact the U.S. Department of Health and Human Services (DHHS) Office of Inspector General (OIG):
    • Phone: 1-800-HHS-TIPS (1-800-447-8477)
    • Fax: 1-800-223-8164
    • TTY: 1-800-377-4950
    • Email: HHSTips@oig.hhs.gov
    • Mail: Office of Inspector General U.S. Department of Health & Human Services
      ATTN: HOTLINE
      PO Box 23489
      Washington, DC 20026

Federal and Select State Health Care Fraud and Abuse Laws, Including Whistleblower Protections

FEDERAL LAWS

The Federal False Claims Act

31 U.S.C. §§ 3729–3733

Under the federal False Claims Act, any person or entity that knowingly submits a false or fraudulent claim for payment of United States Government funds, or knowingly retains an overpayment of such funds more than 60 days, is liable for significant penalties and fines. “Knowingly” includes not only actual knowledge but also deliberate ignorance or reckless disregard for the truth or falsity of the information. No specific intent to defraud the government is required.

Generally, the federal False Claims Act applies to any federally funded program. The federal False Claims Act applies, for example, to claims submitted by healthcare providers to Medicare or Medicaid. Depending on the circumstances, some examples of potential federal False Claims Act violations in the health care fraud context include upcoding, billing for unnecessary services, billing for services or items that were not rendered, and billing for services performed by an excluded individual.

Individuals and entities that make false claims are subject to civil sanctions of up to three times the Government’s damages, civil penalties ranging from $5,500 to $11,000 for each false claim, and the costs of the civil action against the entity that submitted the false claims. Violation of the federal False Claims Act may also lead to exclusion from Federal health care programs. Persons who knowingly make a false claim may be subject to be subject to criminal prosecution, and face criminal fines up to $250,000 and imprisonment of up to 5 years.

Civil legal actions for penalties and damages under the federal False Claims Act may be brought not only by the government, but by private persons with knowledge of a false claim, such as competitors or employees of a provider, on behalf of the United States Government under the “qui tam” provision, commonly referred to as the “whistleblower” provision. If the suit is ultimately successful, the whistleblower who initially brought the suit may be awarded a percentage of the funds recovered. In addition, the Government may elect to join the qui tam suit. In this case, if the suit is successful, the percentage of the funds awarded to the whistleblower is lower because the Government will take over the expenses of the suit. However, regardless of whether the Government participates in the lawsuit, the court may reduce the whistleblower’s share of the proceeds if the court finds that the whistleblower planned and initiated the false claims violation. Further, if the whistleblower is convicted of criminal conduct related to his role in the false claims, the whistleblower will be dismissed from the civil action without receiving any portion of the proceeds.

The federal False Claims Act also contains a provision that protects a whistleblower from retaliation by his employer. This applies to any employee who is discharged, demoted, suspended, threatened, harassed, or discriminated against in his employment as a result of the employee’s lawful acts in furtherance of a false claims action. The whistleblower may bring an action in the appropriate federal district court and is entitled to reinstatement with the same seniority status, two times the amount of back pay, interest on the back pay, and compensation for any special damages as a result of the discrimination, such as litigation costs and reasonable attorney’s fees.

The Anti-Kickback Statute

42 U.S.C. § 1320a–7b(b); Safe Harbor Regulations: 42 C.F.R. § 1001.952

The Anti-Kickback Statute prohibits the knowing and willful offer, payment, solicitation, or receipt of any remuneration, in cash or in kind, to induce or in return for referring an individual for the furnishing or arranging of any item or service for which payment may be made under a Federal health care program. Remuneration means anything of value and can include gifts, under-market rent, or payments that are above fair market value for the services provided. The Anti-Kickback Statute provides safe harbors for certain arrangements, such as personal services and rental agreements, investments in ambulatory surgery centers, and payments to bona fide employees. Criminal penalties for violation are a fine of up to $25,000 and imprisonment for up to 5 years. Civil sanctions for violation include exclusion and civil monetary penalties (see below).

The Physician Self-Referral Law

42 U.S.C. § 1395nn; Exception Regulations: 42 C.F.R. §§ 411.350–.389

The Physician Self-Referral Law, commonly referred to as the “Stark Law,” prohibits a physician from making referrals for certain designated health services (DHS) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership, investment, or compensation), unless an exception applies. The Stark Law establishes a number of specific statutory and regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse, such as personal services and rental agreements, non-monetary compensation, medical staff incidental benefits, and payments to bona fide employees. Civil sanctions for violation are refund of all monies to Medicare from referrals during a period of disallowance and civil monetary penalties (see below).

The Exclusion Authorities

42 U.S.C. §§ 1320a–7, 1320c–5; Regulations: 42 C.F.R. pts. 1001 (OIG) and 1002 (State agencies including Medicaid)

OIG has authority to exclude individuals from participating in federal health care programs, including Medicaid, for various reasons. Exclusions can be mandatory, meaning OIG has no choice about whether to exclude, or discretionary, which means the OIG does have a choice. Exclusion is mandatory for convictions of program-related crimes, convictions related to patient abuse, felony convictions related to health care fraud, and felony convictions related to controlled substances. Exclusion is discretionary for loss of license due to professional competence or financial integrity, convictions related to fraud, convictions related to obstruction of an investigation or audit, misdemeanor convictions related to controlled substances, and participation in prohibited conduct such as kickbacks and false statements. Generally, Federal health care programs will not pay for items or services furnished, ordered, prescribed, or supplied by an excluded individual or entity.

The Civil Monetary Penalties Law

42 U.S.C. § 1320a–7a; Regulations: 42 C.F.R. pt. 1003

The Civil Monetary Penalties Law authorizes the OIG to impose civil penalties for violations of the Anti-Kickback Statute and the Stark Law as well as a range of other violations. Penalties range from $10,000 to $50,000 per violation. These violations include, but are not limited to, the following:

  • Submitting false claims;
  • Failing to provide an adequate medical screening examination for patients who present to a hospital emergency department with an emergency condition or in labor; and
  • Making false statements on applications or contracts to participate in a Federal health care program.

The Criminal Health Care Fraud Statute

18 U.S.C. §§ 1347, 1349

The Health Care Fraud Statute makes it a criminal offense to knowingly and willfully execute a scheme to defraud a health care benefit program. Health care fraud is punishable by imprisonment for up to 10 years. It is also subject to criminal fines of up to $250,000. Specific intent to violate this section is not required for conviction.

SELECT STATE LAWS

State
  • State Medicaid Agency (SMA) w/ hyperlink to website
  • Reporting Number
  • State Medicaid Fraud Unit (MFCU ) Agency w/ hyperlink to website
  • Reporting Number
 State Medicaid Agency Bulletin / Notice Criminal and Civil Penalties for False Claims and Statements Qui Tam Actions & Remedies / Whistle-blower Protections
Colorado  
Kansas August 2007 Provider Bulletin #797 Deficit Reduction Act of 2005 Section 6032
https://www.kdhe.ks.gov/DocumentCenter/View/244/Section-6032-of-the-Deficit-Reduction-Act-PDF?bidId=
  • Kan. Stat. Ann. § 75-2973: Kansas whistleblower act; state employee communications with legislators, legislative committees, auditing agencies and others; prohibited acts; relief and appeals, costs. [Applies only to whistleblowers who are state employees]
  • Kan. Stat. Ann. § 75-7506: [Kansas false claims act]; employment retaliation claims
Montana  
Nebraska Nebraska Medicaid Program - Program Integrity - Employee Education About False Claims Recoveries (Deficit Reduction Act of 2005 (DRA) – Section 6032)
http://dhhs.ne.gov/Pages/Program-Integrity-Employee-Education.aspx
New Mexico  
South Dakota Section 6032 of the Deficit Reduction Act of 2005 – Education About False Claims Recovery
http://dss.sd.gov/ medicaid/providers/ archive/2013/ November.htm		 NA
Wyoming  
  • Wyoming does not permit qui tam or whistleblower suits
  • Wyo. Stat. § 42-4-304: Investigations and prosecutions; powers of prosecuting authority; remedies for retaliation; venue; no private right of action.
  • Wyo. Stat. § 9-11-103.: Discrimination against certain employees prohibited; civil action against employer.

Additional Resources:

Centers for Medicare and Medicaid (CMS) Program Integrity: Fraud, Waste & Abuse Toolkit - Healthcare Fraud and Program Integrity: https://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/Medicaid-Integrity-Education/edmic-landing.html

Office of Inspector General (OIG) of the U.S. Department of Health & Human Services (HHS) assistance to the health care industry in its efforts to comply with fraud, waste and abuse laws: http://oig.hhs.gov/compliance/