In what could mark the beginning of a "split and scatter" strategy by Congress to convert chunks of the sputtering health reform legislation into a series of smaller stand-alone bills, Sen. Charles Grassley (R-Iowa) introduced the 100+ page "Strengthening Program Integrity and Accountability Act in Health Care " (S. 2964) on January 28, 2010. A fraud and abuse deterrence bill "comprised of reforms with bipartisan support" from the Senate healthcare reform bill, the proposed Grassley legislation also includes several new provisions affecting the federal False Claims Act. Key highlights of the proposed legislation follow below.

Enhanced Provider Screening and Enrollment

Authorizes the Secretary of HHS to (1) standardize the provider enrollment process among the Medicare, Medicaid and CHIP programs; (2) impose additional screening measures, such as criminal background checks, fingerprinting, unannounced site visits, database checks and periods of enhanced oversight; (3) impose a temporary moratorium on enrolling new providers; and (4) set new enrollment and/or re-enrollment disclosure requirements. The new legislation also requires Medicare, Medicaid and CHIP providers to establish compliance programs.

Reporting & Return of Overpayments

Requires overpayments to be reported and returned no later than 60 days after the date on which "the overpayment was identified or the date any corresponding cost report is due." Overpayments reported after this date may be subject to liability under the False Claims Act.

Enhanced Civil Monetary Penalties (CMPs)

Subjects persons who make false statements on enrollment applications for participation in federal healthcare programs or who fail to return an overpayment to a minimum CMP of $50,000 and an assessment of up to three times the amount claimed; mandates that persons who knowingly make, use, or cause to be made or used, any false statement material to a fraudulent claim be subject to CMPs of $50,000 per violation; subjects persons to CMPs of $15,000 per day for failing to grant timely access to the OIG during an audit, investigation or evaluation; increases the number of violations subject to sanctions and CMPs for Medicare Part C (MedicareAdvantage) and D plans.

Required Payment Suspension/Extended Payment Periods

Requires the Secretary of HHS to suspend payments to a provider or supplier pending a fraud investigation and authorizes the Secretary to extend the time that Medicare payments must be made to providers if there is a determination of the likelihood of fraud, waste and abuse.

Additional Funding for Program Integrity/Statistical Reporting  

Increases funding for healthcare fraud activities under the Health Care Fraud and Abuse Control Account (HCFAC) by $10 million each year from 2011 through 2020; requires both Medicare and Medicaid Integrity Program contractors to provide the Secretary of HHS with performance statistics, including the number and amount of overpayments recovered, the number of fraud referrals and the return on investment for such activities.

Self-Referral Disclosure Protocol (SRDP)

Requires the Secretary of HHS, in cooperation with the OIG, to establish an SRDP "to enable healthcare providers and suppliers to disclose actual or potential violations of the physician self-referral law."

Expanded Recovery Audit Contractor (RAC) Program

Expands the RAC program to Medicaid and Medicare Parts C and D by December 2010.

False Claims Act Provisions

New provisions in the proposed legislation related to the federal FCA include a two-year statute of limitations for the filing of claims alleging retaliation under 31 U.S.C. § 3730(h) and a provision to prevent whistleblowers from being dismissed in instances where a corresponding state FCA case not joined by the federal government is filed or in cases where the federal government opposes the dismissal. The new legislation also would amend the "original source" exception to the public disclosure bar allowing whistleblowers to go forward with an FCA case that includes allegations publicly disclosed only if the whistleblower reported the fraud to the government before the disclosure or if the whistleblower provides information to the government that "materially adds" to the publicly disclosed information.