Executive Outlook: Stephen Rose & Barbra Nault on complying with Alaska’s Medicaid False Claims Act

Stephen Rose, Managing Partner of Hall, Render, Killian, Health & Lyman, P.C. Seattle area office and Barbra Nault, Managing Partner of its Anchorage Office join State of Reform to talk about the changes that providers will experience with the implementation of Alaska’s historic Medicaid Reform bill SB 74.  Rose and Nault focus on key issues that could arise as providers work to comply with the new Medicaid false claims and reporting section of this act. Rose and Nault are both licensed to practice law in Alaska.

Nault Rose

Stephen Rose and Barbra Nault, Managing Partners of Hall Render / source: Hall Render

As part of its Medicaid reform package, the Alaska Legislature included a section titled the “Alaska Medical Assistance False Claims and Reporting Act” which includes many significant changes strengthening the State’s ability to detect and punish fraud, waste, and abuse of the Medicaid Program. Alaska healthcare providers need to be aware of changes in the law which can be grouped into two broad categories: (1) implementation of laws that mirror the Federal False Claims Act; and (2) new requirements for self-audits by health care providers. Both of these categories will be discussed in turn.

Alaska Version of the Federal False Claims Act

The Federal Deficit Reduction Act of 2005, created a financial incentive for the States to enact legislation that establishes liability to the State for false or fraudulent claims submitted to the State Medicaid program. The incentive takes the form of a decrease in the Federal medical assistance percentage with respect to any amounts recovered under a State legal action brought under its State False Claims Act. For Alaska, once its State False Claims Act is approved as qualifying by the Federal Department of Justice, this allows the State to increase its match on recoveries by five percent.

The Medicaid reform package passed by the Alaska Legislature includes the “Alaska Medicaid False Claims Act” (“Alaska FCA”) which mirrors the Federal Act. The Alaska FCA identifies five types of claims that would give rise to a false claim:

(1) knowingly submitting a false claim;
(2) knowingly using a false record or statement as part of a claim;
(3) conspiring to have a false claim paid;
(4) knowingly using false information to increase or decrease an obligation to pay money or property to the medical assistance program; and
(5) knowingly entering an agreement with an officer or employee of the State for payment of a claim knowing that information in the agreement is false or fraudulent.

The Alaska FCA establishes civil money penalties for false claims submitted to the State Medicaid program of not less than $5,500 and not more than $11,000, per false claim, plus three times the amount of actual damages, reasonable attorneys’ fees and costs. The Alaska FCA also establishes corporate liability for false claims. AS 09.58.010.

As with the Federal False Claims Act, the Alaska FCA also allows for qui tam actions where private parties bring a legal action in the name of the State alleging violations of the State False Claims Act. If a recovery is made due to the suit brought in the name of the State, the person bringing the suit (“the Relator”) is awarded at least 15 percent but not more than 25 percent of the proceeds recovered where the State Attorney General takes over the action. If the State Attorney General declines to take over the action, the Relator is awarded at least 25 percent but not more than 30 percent of the proceeds recovered, plus full reasonable attorneys’ fees and court costs.

A beneficiary of an intentional or inadvertent submission of a false or fraudulent claim who later discovers the claim is false or fraudulent must disclose the improper payment to the state not later than 60 days after its discovery. It appears reasonable to believe that the State will follow the recent Center for Medicare and Medicaid Services interpretation of when an improper payment is “discovered” or “identified.”

However, healthcare providers need to be aware that if the improper payment is discovered as part of a required self-audit the disclosure to the State may be only 10 business days as discussed below in the next section.

Self-Audits By Health Care Providers

Healthcare providers will still be subject to the Medicaid audits conducted by the Department of Health & Social Services (“DHSS”) under AS 47.05.200 that have been contracted out to a mid-west CPA firm. Providers will also continue to be subject to the Medicaid RAC audits.

In addition to these government administered audits, the State has now created a healthcare provider “duty to identify and repay self-identified overpayments.” AS 47.05.235. Any healthcare provider enrolled in the Medicaid program will now be required to conduct a biennial review or audit of a statistically valid sample of claims submitted to the Medicaid program for reimbursement. If overpayments are identified, the healthcare provider must report the overpayment to DHSS “not later than 10 business days after identification of the overpayment.” The report made to DHSS must specifically identify how the provider intends to repay DHSS.

Medicaid enrolled providers who fail to conduct the biennial audits or who fail to report identified overpayments within 10 business days of their identification are subject to civil money penalties. DHSS is charged with the responsibility of establishing, by regulation, the appropriate civil money penalties for failure to comply with the self-auditing and reporting requirements. The civil money penalties to be established cannot be less than $100 or more than $25,000 for each violation. AS 47.05.250. These new civil money penalties are in addition to any other remedies already available under current law.

Conclusion

As always, an effective Corporate Compliance Plan is one of the best ways a healthcare provider can minimize their exposure under the law, whether its False Claims Act provisions or self-audit requirements. Now would be an excellent time to review and update any Corporate Compliance Plan to ensure that it will address any potential issues the new laws could create.