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H.R. 3523 - Health Care Claims Guidance Act - Pending Legislation Which Would Revise False Claims Act As Applied To Healthcare

Georgia Legislation Protecting Healthcare Providers From Unfair Prosecution Under Medicaid Is Enacted

On March 19, 1998, U.S. Representatives Bill McCollum (R-FL) and Bill Delahunt (D-MA), both members of the House Judiciary Committee, introduced H.R. 3523 (click here for full text), the Health Care Claims Guidance Act, which is a bi-partisan effort to amend the Civil War-era False Claims Act as applied to healthcare claims.

The Office of the Inspector General of the United States Department of Health and Human Services ("HHS OIG") has brought several enforcement projects against hospitals and other healthcare providers under the False Claims Act, including the lab unbundling project, the DRG 72-hour window project, and the recently launched pneumonia upcoding project. In these projects, U.S. attorneys send demand letters asserting that the provider may be guilty of fraudulent billing and threatening the imposition of triple damages plus up to $10,000 per claim under the False Claims Act unless the provider quickly settles by paying double damages extrapolated over the six year limitations period under the False Claims Act. Providers feel compelled to settle these matters rather than face the prospect of an automatic $10,000 fine for each erroneous claim, no matter how small.

H.R. 3523 would:

Impose a materiality standard of total claims under which overpayments would result in penalties of no more than the amount of the claims plus interest;

Raise the government's burden of proof from a "preponderance of evidence" to a "clear and convincing" standard;

Prohibit False Claims Act actions from being brought based on claims submitted in reliance on advice given by federal agencies or fiscal intermediaries;

Prohibit False Claims Act actions from being brought based on claims submitted in substantial compliance with an effective compliance plan based on government guidelines.

Some states have already adopted similar legislation to protect healthcare providers from unfair prosecution for alleged false claims under state healthcare programs, such as Medicaid. For example, the 1998 Georgia Legislature overwhelmingly passed HB 1440 (click here for full text) which makes changes to the enforcement powers under the Georgia Medicaid program which are similar to those proposed in H.R. 3523. The Georgia legislation was signed by Governor Miller on April 6, 1998 and becomes effective on July 1, 1998.

H.R. 3523 applies only to actions brought under the False Claims Act and does not affect other federal laws governing healthcare claims. Notwithstanding the pending changes to the Federal False Claims Act and some state-level Medicaid laws, the federal government retains strong enforcement powers to combat false claims under the Social Security Act, as amended by the Health Insurance Portability and Accountability Act of 1996 and the Balanced Budget Act of 1997. H.R. 3523 would affect the ability of the federal government to use the False Claims Act to threaten the severe sanctions against healthcare providers only for periods before January 1, 1997. The federal government will still be able to threaten large sanctions, including up to $10,000 per claim, for periods after January 1, 1997 under the Social Security Act as amended.

The American Hospital Association has established a Web site in support of H.R. 3523 at http://fca.aha.org. As of June 1, 1998, the Act is currently co-sponsored by 181 representatives, although Congressman Fortney ("Pete") Stark (D-CA) is leading a vigorous campaign in opposition to the Act.

I urge all members of the healthcare community to contact their U.S. representatives and senators in support of H.R. 3523. I also strongly recommend that all healthcare providers quickly customize and adopt a simple written compliance program, such as the Model Hospital Compliance Program on this Web site, as recommended by HHS OIG.

Click here to take a quiz to find out if your health care organization has an effective compliance program in place.

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