The “Fraud and Abuse” Enforcement Impact of the Health Care Reform Bill on Community Mental Health Clinics and the Partial Hospitalization Program Services They Provide

(April 1, 2010): On March 21, 2010, the House voted to approve legislation previously passed by the Senate – the “Patient Protection and Affordability Care Act” (PPACA).  President Obama signed the PPACA on March 23, 2010.  On March 25, 2010, both the Senate and House passed a “Reconciliation Act,” approving reconciliation changes to the PPACA. On March 30, 2010, President Obama signed the “Reconciliation Act” passed by Congress.  These two pieces of legislation, collectively referred to as the “Health Care Reform Bill,” constitute the most sweeping changes to our health care system in decades.  While the overall impact of these changes on health care providers is still being evaluated, it is readily apparent that Community Mental Health Centers (CMHCs) are among a select group of providers that have been specifically targeted by the legislation.

(April 1, 2010):  As most CMHCs owners and operators are now aware, the recent health care legislation includes a number of cryptic provisions regarding the requirement that CMHCs provide a significant share of their services (later defined during reconciliation as 40%) to non-Medicare beneficiaries.  Hopefully, these requirements will be repealed prior to their anticipated effective date.  We encourage all CMHC owners to join NABH in its efforts to have these requirements repealed or appropriately modified.

The purpose of this article is to examine several of the legislation’s other provisions which directly impact CMHCs around the country – focusing on the “fraud and abuse” provisions outlined in the Bill.  Please note, these are not the only “fraud and abuse” provisions covered by the PPACA, merely several of the more prominent features of the legislation.

Enrollment Issues:

 The PPACA’s provisions included a renewed emphasis on provider screening efforts. The legislation gave the Secretary, HHS, the authority to require fingerprinting, criminal background checks, random site visits and other provider screening mechanisms.  Moreover, the Secretary, HHS, is now authorized to issue a temporary freeze on the enrollment of new provider applications, including entire categories of providers.  Perhaps most importantly, the Secretary’s decisions in this regard are not subject to judicial review. CMHC owners desiring to expand could be delayed in doing so if the Secretary, HHS decides to limit the number of new CMHCs in the future.

Overpayments and the False Claims Act:

As you will recall, changes to the False Claims Act were passed last year under the Fraud Enforcement and Recovery Act (FERA) which made it clear that any person (including CMHCs) who knowingly concealed or knowingly and improperly avoided an “obligation to pay” would be liable under the False Claims Act’s reverse false claims provisions.  Importantly, the PPACA defined “overpayments” as “any funds that a person receives or retains” under Medicare or Medicaid, to which they are not entitled.  The PPACA further provides that all overpayments must be reported and refunded within 60 days of being identified or the any corresponding cost report is due.  Moreover, the legislation made it clear that a “repayment retained by a person after the deadline for reporting and returning the overpayment” is an “obligation” for purposes of the False Claims Act.   The bottom line is clear – should you identify an overpayment, it must be repaid within 60 days or your CHMC may be liable under the False Claims Act.  Penalties under the False Claims Act include treble damages and penalties of between $5,500 and $11,000 per false claim.

Kickbacks and the False Claims Act:

CMHCs that we work with have diligently worked to ensure that their operational and business practices fully comply with applicable provision of the Federal Anti-Kickback Statute.  Now, more than ever, CMHCs will need to ensure that these efforts to remain compliant with these provisions.  Under the PPACA, it is now crystal clear that violations of the Anti-Kickback Statute (a criminal violation) also constitute a violation of the civil False Claims Act.

As these examples reflect, it is essential that CMHCs have effective Compliance Plans in place – designed to prevent and / or detect CHMC-specific risks.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.