The Supreme Court’s decision upholding most of the Affordable Care Act increased compliance responsibilities for healthcare companies. The ACA amended the False Claims Act (FCA), which was amended in 2009 in the Fraud Enforcement and Recovery Act. The FCA amendments in 2009 and 2010 have had a dramatic impact on businesses.

The 2009 amendments expanded the definition of “claim” and the definition of “obligation” to impose potential liability for the retention of overpayments or for regulatory violations that negatively affect a government program or interest. The ACA’s antifraud provisions added a new definition of “obligation,” requiring repayment of an identified overpayments within 60 days to avoid the presumption of FCA liability. The ACA also provided, as a matter of law, that a violation of the Anti-Kickback law is a violation of the FCA. In addition, the ACA included new transparency requirements which are designed to identify relationships that may pose a conflict of interest.

Medicare/Medicaid Overpayments – The ACA created a new requirement that any entity that has received an overpayment from Medicare or Medicaid must report and return the overpayment to the government within 60 days after the overpayment is identified. The retention of any identified overpayment after the 60-day period constitutes an “obligation” under the FCA, and exposes the company to treble damages and monetary penalties for the knowing retention of such overpayment.

The Centers for Medicare and Medicaid Services (CMS) issues a proposed rule to implement this new requirement. The key issue is how the 60-day clock is triggered – meaning when does a business know of the overpayment. The proposed rule includes a ten-year look back period creating liability for overpayments in the past ten years. The industry is fighting the new rules.

Healthcare companies should expect the final rule to impose significant potential liabilities for retaining any overpayment. Companies need to put in place auditing and refund processes to guard against any retention of payments over 60 days.

Anti-Kickback Statute Liability Exposure — The ACA amendments to the federal Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b, will have a significant impact on healthcare companies. The AKS creates criminal liability where for receipt and payment of anything of value to influence the referral of a federal healthcare program business, including Medicare and Medicaid. The ACA amendments confirm that the False Claims Act covers AKS violations.

FCA liability for AKS violations can be devastating. Compliance officers need to redouble their efforts to ensure compliance with the AKS.

Physician Payment Sunshine Act – The Physician Payment Sunshine Act (Sunshine Act), requires entities — “applicable manufacturers” or “applicable group purchasing organization (GPO)” of drugs, devices, biologicals or medical supplies — to track and report certain payments or other transfers of value to physicians or teaching hospitals. The new rules will be effective January 1, 2013.

Companies will need to plan and implement internal payment tracking and reporting systems. The final rules will be issued soon and companies will need to incorporate any changes. The proposed rules raise some difficult issues, relating to the interpretation of “operating in the United States;” and reporting requirements for third parties, including Continuing Medical Education (CME) providers. Companies will have only 90 days after the final rule is issued to begin internal tracking of relevant payments.