The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has published a final rule to codify the OIG’s expanded authority under the Affordable Care Act (ACA) to impose civil monetary penalties (CMPs) on providers and suppliers under a variety of additional scenarios. For example, for failure to timely report and return an identified overpayment, the final rule permits the OIG to impose a penalty of up to $10,000 for each item or service (rather than $10,000 per day as proposed). Furthermore, the rule establishes up to $10,000 per day penalties—at the National Drug Code (NDC) product Identifier level—for drug manufacturers who fail to timely report and certify drug-pricing data.

Likewise, the final rule codifies the OIG’s expanded authority under the ACA to permit CMPs for conduct including:

  • Failure to grant OIG timely access to records, upon reasonable request;
  • Ordering or prescribing while excluded when the excluded person knows or should know that the item or service may be paid for by a federal health care program;
  • Making false statements, omissions, or misrepresentations in an enrollment or similar bid or application to participate in a federal health care program; and
  • Making or using a false record or statement that is material to a false or fraudulent claim.

The rule addresses when and how these CMPs are applied and the methodology for calculating the penalties. The rule also clarifies existing authorities and reorganizes to improve readability and clarity.

The OIG adopted a number of other modifications based on comments in response to its May 12, 2014 proposed rule. For instance, with regard to aggravating factors for Emergency Medical Treatment and Labor Act (EMTALA) violations, OIG agreed not to include a reference to situations in which the violation ‘‘could have resulted’’ in patient harm, premature discharge, or a need for additional services or subsequent hospital admission; instead, the OIG has clarified that it will include only patient harm or risk of patient harm that resulted from the incident. With regard to penalties for failure to timely report drug pricing data, the OIG removed the reference to 9-digit NDCs and instead gives the OIG discretion to determine the appropriate NDC level at which to calculate penalties.

The final rule is effective January 6, 2017. Reed Smith is preparing a client alert summarizing the rule.