On March 22, 2007, the Centers for Medicare & Medicaid Service (“CMS”) published additional guidance clarifying several unanswered questions and ambiguous provisions of Section 6032 of the Defi cit Reduction Act of 2005 (the “DRA”). Section 6032 of the DRA (Pub. L. 109-171) requires states to amend their Medicaid plans to require entities that receive or make at least $5 million in annual Medicaid payments (“Covered Entities”) to educate their employees, agents and contractors about federal and state false claims acts and whistleblower protections.

Initially, CMS issued guidance on Section 6032 in a letter to the State Medicaid Directors on December 13, 2006 (“Initial Guidance”) and then conducted a national teleconference to answer questions from providers on January 11, 2007 (the “Teleconference”). After the Teleconference with CMS, there remained several open questions regarding how and when entities must comply with the education requirements of the DRA.

CMS issued additional guidance, attached to a letter to the State Medicaid Directors on March 22, 2007, which answers these questions in a frequently-asked-questions (FAQs) format consisting of seventy-one FAQs. The FAQs prove useful in answering many open questions regarding implementation of Section 6032, even though CMS defers some questions for states to answer in their individual state plan amendments. Along with the FAQs, CMS published the “offi cial description” of the federal False Claims Act provided by the Department of Justice for the purpose of uniformity when implementing the requirements of Section 6032. Thus, Covered Entities should include the “offi cial description” of the federal False Claims Act as part of their educational materials.

FAQs

In the FAQs, CMS confi rmed the date of compliance as January

1, 2007, thereby requiring all Covered Entities to establish written policies and procedures informing employees, contractors and agents about the federal and state false claims and whistleblower laws as a condition of continued Medicaid payments.

In addition to providing an answer to the question about the compliance date, the FAQs clarify several other key questions, including the following:

  • What constitutes an entity covered by Section 6032 of the  DRA?
  • How does one calculate the threshold of $5 million in annual Medicaid payments?
  • Who are considered contractors or agents of an entity?
  • Do contractors or agents of an entity need to adopt the written policies of the entity?
  • To whom, how often, and by what method must an entity disseminate its written policies?
  • How will CMS and the states enforce Section 6032 of the DRA and will an entity have to reissue its policies after its state amends its Medicaid plan?

Recommendation

We recommend entities that make or receive at least $5 million in annual Medicaid payments to review the Initial Guidance, the FAQs and the “offi cial description” of the False Claims Act and, if they have not already done so, to immediately implement the requirements under Section 6032 of the DRA. The CMS website contains links to the State Medicaid Letters, the FAQs and the “offi cial description” of the federal False Claims Act here.