Deficit Reduction Act's Anti-fraud Policy

A provision in the Deficit Reduction Act of 2005 requires hospitals receiving at least $5 million in payments from a state health plan (Medicaid) to establish detailed, written policies describing the provisions and requirements of certain federal anti-fraud statutes, state anti-fraud statutes, and qui tam or whistleblower provisions at the federal and state level. The hospitals’ policies also must include how these laws are used to combat fraud and the hospitals’ policies and procedures to fight fraud. Not only must hospitals adopt such policies, but the policies also must be included in employee handbooks if hospitals have such a document. Hospitals must have these policies in place by Jan. 1, 2007.

The attached model policy is intended to assist hospitals in complying with this requirement. The DRA requires the policy to provide “detailed” information about the required law. The result is a somewhat lengthy document. The document is being made available to hospitals to use as a template in developing their own policies. This should be done in consultation with compliance officers and hospital legal counsel.

There is no guidance in the DRA about how this policy should be disseminated in a hospital, other than inclusion in an employee handbook. Our best advice, concurred by those commenting on the issue, is the policy should be circulated to the workforce under a cover memo from a member of the hospital’s senior management team. Also, the policy should be circulated to hospital vendors and independent contractors.

Since enactment of the DRA, there has been a dearth of information available suggesting what a policy of this sort should contain, other than the language contained in the DRA itself. The Centers for Medicare & Medicaid recently published the “Comprehensive Medicaid Integrity Plan” which states guidance in developing this policy would be forthcoming. However, to date, no guidance has been provided. When any guidance is provided, it will be sent to MHA-member hospitals with suggestions of changes in this model policy.

This model policy is provided for informational purposes only and is not intended to be legal advice. Each hospital must determine how to modify it and adapt it to its own scheme of policy development. For further information, contact MHA's legal staff.