Corporate Compliance

Deficit Reduction Act of 2005

Compliance Monitor, May 3, 2006

Want to receive articles like this one in your inbox? Subscribe to Compliance Monitor!

The Deficit Reduction Act of 2005 ("DRA"), which was signed into law on February 8, 2006, contains an often overlooked provision that imposes mandatory compliance obligations on any entity that receives or makes annual Medicaid payments of at least $5 million under a state Medicaid plan. Specifically, the DRA requires, as a condition of payment, that all such entities have the following in place as of January 1, 2007:

  • written policies and procedures for all employees (including management), contractors and agents that provide a detailed discussion of the federal False Claims Act, federal administrative remedies for false claims and statements, any state laws pertaining to civil or criminal penalties for false claims and statements and whistleblower protections under such laws, and the role of these laws in preventing and detecting fraud, waste and abuse in federal healthcare programs;
  • written policies and procedures for all employees detailing the entity's methods for detecting and preventing fraud, waste and abuse; and
  • a section in the entity's employee handbook that (a) provides a specific discussion of the laws described above, (b) highlights the right of employees to be protected as whistleblowers, and (c) summarizes the entity's policies and procedures for detecting and preventing fraud, waste and abuse.

    This provision of the DRA is noteworthy because, in stark contrast to previous voluntary compliance recommendations, this is the first law to explicitly require certain healthcare providers and entities to have a compliance program as a "condition of payment" under Medicaid. And while not expressly stated in the DRA, this provision implies that any entity that does not comply with these compliance requirements will not be entitled to submit Medicaid claims, and if it does submit claims without having complied, the entity could potentially be liable for submitting false claims under the federal (and state, if applicable) False Claims Act. Therefore, all providers are strongly encouraged to review their compliance program to ensure that it complies with the requirements set forth in the DRA, or, if there is not one already in place, to implement a compliance program prior to the January 1, 2007 deadline.

    Thanks to Jacqueline H. Finnegan of Garfunkel, Wild & Travis P.C. in Great Neck, NY for today's tip.



    • Want to receive articles like this one in your inbox? Subscribe to Compliance Monitor!

      Strategies for Health Care Compliance

    • Strategies for Health Care Compliance

      News and real-life examples to increase the effectiveness of your compliance program. Strategies for Health Care Compliance...

    • Compliance Monitor

      This HTML e-mail newsletter delivers news on Medicare and Medicaid fraud and abuse, as well as recent documents and targets...

    • Medicare Weekly Update

      Each issue of Medicare Weekly Update includes the latest CMS proposed and final rules, CMS manual revisions, and...

    • Medicare Update for Physician Services

      Medicare Update for Physician Services is a free, monthly e-zine that delivers news and information to help physician...

    Most Popular

    Related Articles