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April 10, 2007
Deficit Reduction Act of 2005 - Update
CMS recently issued a “Frequently Asked Questions” document
pertaining to the employer education requirements in the Deficit Reduction Act
of 2005 (DRA). This memo updates an earlier IHA memo from December, 2006
explaining the DRA education requirements by highlighting some of the answers
found in the FAQ document. To view the whole FAQ document,
click here.
Recap: Section 6032 of the DRA requires entities receiving at least $5
million in payments from a state health plan (Medicaid) to establish detailed,
written policies and procedures for detecting and preventing fraud, waste and
abuse in government payment programs. Hospital policy and employee handbooks
must describe the provisions and requirements of the federal False Claims Act
and the state laws pertaining to civil or criminal penalties for false claims
and statements, as well as whistleblower protections under such laws. Hospitals
should provide these materials to managers, contractors, and agents, as well as
to all employees. The following points come from the FAQ document issued by CMS
and dated 3-20-07:
Definition of entity: A health system is considered one entity for the
purposes of defining an "entity receiving at least $5 million in payments from
a state health plan," even if all of the hospitals within a health system are
separately incorporated and have different provider numbers.
Calculating the $5 million: To determine whether an entity must comply
with section 6032, only the amounts actually received from a State
Medicaid Agency during one Federal fiscal year should be counted, not patient
pay amounts nor amounts received through a contract with a Medicaid MCO.
Contractors/Agents: The employees of contractors and agents must also
be provided with the hospital policy and education. Contractors and agents
include all contract therapists, physicians (including, but not limited to,
house staff, hospitalists, and independent contractors), and pharmacies. The
requirement also applies to supply vendors that supply products used in the
furnishing of Medicaid health care services. The term "contractors" excludes
businesses or individuals that perform functions not associated with the
provision of Medicaid health care items or services, such as copy or shredding
services, grounds maintenance, or hospital cafeteria and gift shop services.
Dissemination: Until there is more guidance from the state, entities
themselves must determine how, and how often, to disseminate the policy and
procedures for detecting fraud, waste and abuse to all hospital employees,
contractors and agents. Emergency rules filed in the January 12, 2007
Illinois Register by the Department of Healthcare and Family Services
simply state that providers must "provide, and upon demand, present
documentation of, education of employees, contractors, and agents regarding
the False Claims Act that complies with all requirements of 42 USC
1396a(a)(68)."
Staff Contact: Kathleen Pankau:
(630) 276-5598
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