Whistleblowers Benefit From Lack of Reporting Channels

Richard P. Kusserow | July 2014

The Centers for Medicare & Medicaid Services (CMS), plan to increase the reward for a successful tip about Medicare fraud up to $10 million.  In a proposed rule dated April 29, 2013 in the Federal Register, it said anyone who provides specific information leading to the recovery of Medicare funds would potentially be eligible to receive a reward of 15 percent of the total amount recovered, up to $9.9 million.[1]  This would be a significant increase over the current rule, in which the agency offers rewards of 10 percent of the total amount recovered, with a maximum award of $1,000.

CMS stated it “believe[s] this proposed rule would increase the incentive for individuals to report information on individuals and entities that have or are engaged in sanctionable conduct; improve our ability to detect new fraud schemes; and help us ensure that fraudulent entities and individuals do not enroll in or maintain their participation in the Medicare program.”

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The original Medicare Incentive Reward Program (IRP) was created under the authority of Section 203(b) (1) of the Health Insurance Portability and Accountability Act (HIPAA) (P.L. 104-191), which called for the Department of Health and Human Services, parent to CMS, to implement a program to reward individuals who report potential Medicare fraud.  The program established was based on a reward program run by the Internal Revenue Service, which pays for provider tips on violations of the IRS code.

The purpose of the huge increase in rewards is to increase whistleblower reporting, and CMS has projected significant savings for this new program.  The CMS whistleblower program is much simpler than filing qui tam actions with the U.S. Department of Justice (DOJ), with the filings and process being less formal.  The simplicity of the CMS process may encourage would-be qui tam whistleblowers to opt to participate in the IRP, rather than file qui tam actions with the DOJ.  However, the rewards under the DOJ qui tam program are considerably larger than that of the IRP, so the question will be whether the new incentives provided by CMS will reduce or replace qui tam actions.

The proposed rule would strengthen the Medicare provider enrollment process by authorizing enrollment denials under certain situations. Additional provisions would allow for Medicare enrollment denial or revocation if the provider or supplier has been convicted of any federal or state felony in the previous 10 years that CMS considers harmful to the program or engaged in Medicare billing patterns that did not meet Medicare standards.  It would also reduce the ability of ambulance providers to bill Medicare for services provided before they enrolled with Medicare and require providers and suppliers who have their Medicare enrollment revoked to submit any remaining claims within 60 days of the revocation.

The commentary period on the proposed rule ends June 28, 2013.

About the Author

Richard P. Kusserow established Strategic Management Services, LLC, after retiring from being the DHHS Inspector General, and has assisted over 3,000 health care organizations and entities in developing, implementing and assessing compliance programs.