Government crackdown could snag providers for keeping overpayments.

Healthcare providers shouldn’t overlook a new law that makes identifying overpayments from the government a priority. President Barack Obama recently signed the Federal Enforcement and Recovery Act of 2009 to focus on mortgage and banking fraud. But what many may not have known is that also tucked into the legislation is language that could greatly affect healthcare organizations.

Section 4 of the bill, titled “Clarifications to the False Claims Act (FCA) to Reflect the Original Intent of the Law,” makes several changes that apply to healthcare providers.

First, the law defines “obligation” to include the phrase “arising from statute or regulation, or from the retention of any overpayment,” regardless of whether you originally submitted a “false claim.”

This suggests that a provider could be obligated under the False Claims Act if he has, for instance, created backdated medical records to support a claim he's already submitted, according to a release by James G. Sheehan, New York’s Medicaid Inspector General.

Also, “Proof of specific intent to defraud is not required under the FCA,” says attorney Scot T. Hasselman with Reed Smith in Washington, D.C. “The law requires that a person ‘knowingly’ cause the submission of a false claim (or the corollary causes of action). ‘Knowingly’ is defined in several ways, but can include acting in deliberate ignorance or reckless disregard of the truth. This is a fairly low bar for the government to overcome.”

“The law now explicitly creates liability for individuals who improperly avoid an obligation to return an overpayment to the government,” Hasselman says. “So now the low intent standard of the FCA can be applied to a situation where a [provider] has been overpaid, and does not realize that it has been overpaid, if the failure to recognize the overpayment was a result of deliberate ignorance or reckless disregard of the truth.”

In other words, the law makes it easier for the government to come after you, explains attorney Robert Markette Jr. with Milligan & Markette in Indianapolis. Healthcare providers “will want to mind their P’s and Q’s,” he says.

“The bottom line is that providers should be as concerned about underpayments as they are about overpayments and have processes in place to regularly reconcile and return any overpayments to payers,” Hasselman advises.