Yesterday the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would dramatically increase the potential reward to an individual who provides a tip leading to the recovery of Medicare funds from a current maximum of $1,000 to a maximum of $9.9 million under the Medicare Incentive Reward Program.  Since 1998, an individual providing information regarding potential Medicare fraud and abuse to the Department of Health & Human Services’ Office of the Inspector General or the Medicare contractor with jurisdiction over the suspected fraudulent provider or supplier may be eligible to receive 10 percent of the Medicare funds ultimately collected from the tip, or $1,000, whichever is less.  Pursuant to the proposed rule CMS issued yesterday, an individual furnishing information that otherwise satisfies the requirements set forth in 42 C.F.R. § 420.405 would be eligible to receive 15 percent of a recovery up to $66 million.  Therefore, a tipster could receive up to a $9.9 million reward for any information provided regarding suspected Medicare fraud and abuse.

In the proposed Medicare Incentive Reward Program rule, CMS explains that it “tentatively project[s] a net increase in recoveries of $24.5 million per year as a result of the proposed changes.”  In addition, CMS notes that it is modeling the proposed Incentive Reward Program changes on a “highly successful” Internal Revenue Services (IRS) reward program that returned “far greater sums than the existing Medicare [Incentive Reward Program].”  Notably, since the implementation of the current Medicare Incentive Reward Program in July 1998, CMS has collected only $3.5 million; in contrast, between 2007 and 2012, the IRS has collected almost $1.6 billion through its reward program.  CMS states in the preamble that it proposes to clarify that it will not pay an award if the same or substantially similar information was the basis for a relators share in a qui tam lawsuit under the federal False Claims Act or a state False Claims Act, or is the basis for a pending state or federal False Claims Act suit.  However, the proposed regulatory language that would codify this change, found at proposed 42 C.F.R. § 420.405(b)(3), does not specify that this provision would apply to state False Claims Acts.

The proposed rule also would pay the reward amount only to the first individual who makes a report.  In addition, among other proposed changes to the regulations found at 42 C.F.R. § 420.405, CMS proposes to emphasize that it has exclusive discretion in determining the amount of a reward and whether the reward criteria are met.  The existing regulation provides for numerous other exceptions and conditions and generally excludes federal and state law enforcement officials, federal government employees, and federal contractors, from eligibility.

CMS also proposes several revisions to Medicare’s provider enrollment regulations, such as:

  • Allowing CMS to deny the enrollment of providers, suppliers, and owners affiliated with an entity that has unpaid Medicare debt;
  • Expanding the instances under which a felony conviction can serve as a basis for denial or revocation of a provider or supplier's enrollment;
  • Enabling CMS to revoke Medicare billing privileges if it determines that the provider or supplier has a pattern or practice of submitting claims for services that fail to meet Medicare requirements; and
  • Limiting the ability of ambulance suppliers to “backbill” for services performed prior to enrollment.

The proposed rule will be published in the April 29, 2013 edition of the Federal Register, and comments will be accepted for 60 days thereafter.