New Fraud and Abuse Provisions of the Health Insurance Portability and Accountability Act of 1996

• Publication year: 1997
• Pages: 81
• Citation: Vol. 26 No. 3 Pg. 81

26 Colo.Law. 81 Colorado Lawyer 1997.

1997, March, Pg. 81. New Fraud and Abuse Provisions of the Health Insurance Portability and Accountability Act of 1996

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81

Vol. 26, No. 3, Pg. 81

The Colorado Lawyer
March 1997
Vol. 26, No. 3 [Page 81]

Specialty Law Columns
Health Law Forum
New Fraud and Abuse Provisions of the Health Insurance Portability and Accountability Act of 1996
by Malia L. Wildman

Column Ed.: Rhonda Teitelbaum of Rothgerber, Appel, Powers & Johnson, Denver - (303) 623-9000

This column is prepared by the Health Law Section of the Colorado Bar Association. Lawyers representing clients in the health care industry are encouraged to submit articles to the column editor for publication. This month's article was written by Malia L. Wildman, Boulder, an attorney practicing with Caplan and Earnest LLC, (303) 443-8010

The Health Insurance Portability and Accountability Act of 1996 ("HIPAA") dramatically changes health insurance practices and amends the health care fraud and abuse laws.1 The accountability provisions of HIPAA include new antifraud and abuse programs, establish a class of criminal health care offenses, and institute tougher civil and criminal penalties for violations. Subject to some limitation, the portability provisions of HIPAA allow workers to move from job to job without losing health insurance coverage due to pre-existing conditions. Finally, individuals may contribute to tax-deductible medical savings accounts created by HIPAA to pay for qualified medical expenses. This article focuses on HIPAA's accountability provisions and analyzes the impact of these provisions on health care providers

New Fraud and Abuse Programs

HIPAA establishes four new programs to facilitate enforcement of fraud and abuse laws and encourage efficiency in health care programs

Fraud and Abuse Control Program

The Fraud and Abuse Control Program ("FACP") is a joint program between the Office of Inspector General ("OIG") of the Department of Health and Human Services ("HHS") and the Attorney General.2 The FACP is designed to coordinate all levels of law enforcement programs with respect to fraud and abuse involving public and private health plans; to conduct investigations relating to the delivery of and payment for health care; to facilitate the enforcement of sanctions; to provide guidance through modified safe harbors, advisory opinions, and special fraud alerts; and to gather information concerning certain final adverse actions against health care providers, suppliers, or practitioners.3

Significantly, the FACP expands OIG jurisdiction beyond Medicare and Medicaid by including both public and private health plans within the scope of the program. The FACP applies to any "health plan." This term is defined as a plan or program that provides health benefits directly or through insurance.4 A "health plan" includes a policy of health insurance, a contract of a service benefit organization, and a membership agreement with a health maintenance organization or other prepaid health plan. The FACP also enlists the Attorney General in combating health care fraud and abuse. Until now, the Attorney General has not specifically targeted health care fraud and abuse under general federal criminal statutes.

To carry out the purposes of the FACP, the Health Care Fraud and Abuse Account has been established within the federal Hospital Insurance Trust Fund to pay for law enforcement efforts targeting fraud and abuse.5 The account will be funded by criminal fines levied in health care offense convictions, civil monetary penalties imposed for health care related infractions, and amounts resulting from the forfeiture of property by reason of a health care offense.

As part of the FACP's program to provide guidance regarding health care fraud and abuse, HHS has been given three new mandates. First, the Secretary must annually solicit proposals for establishing new and modifying existing safe harbors under the anti-kickback act.6 The OIG is required to report to Congress each year on the proposals received and explain the reasons for rejecting those proposals not adopted by the Secretary.7

Second, beginning in February 1997 and ending in August 2000 the Secretary must issue advisory opinions, when requested, on: (1) what constitutes prohibited remuneration under the anti-kickback act; (2) whether an arrangement or proposed arrangement satisfies the statutory exceptions to, or safe harbors under, the anti-kickback act; (3) what constitutes an inducement to reduce or limit services to Medicare or Medicaid beneficiaries within the meaning of 42 U.S.C. § 1320a-7a(b); and (4) whether any activity or proposed...