Ethics Whisperer

Sunday, February 9, 2014

A Big Compliance Mistake

Secretary of the US Department of Health and Human Services Kathleen Sibelius recently announced that health plans offered through exchanges will not be considered Federal health plans – and many breathed a huge sigh of relief. Not so easy.

What the Secretary's announcement means is that plans purchased through exchanges will not be administratively under the oversight of CMS. This is a significant burden avoided. But it is creating a false sense of security among plans and providers who seem to think that this makes compliance an afterthought

In the case of many, probably most, plans purchased through exchanges, Federal dollars in the form of premium subsidies are at issue. When Federal dollars are being spent, the False Claims Act (FCA) applies. This means that although the health plans offered through exchanges are not Federal health plans, they may have the same exposure to both governmental and whistle blower FCA actions that anyone who bills Medicare or Medicaid has. Not only do plans offered through exchanges have this exposure, anyone who bills these plans also may have FCA exposure.

Think about this way. A company which manufactures bullets for the US Department of Defense is not a Federal entity. While DOD may provide oversight, that is a matter of a contractual relationship. But the bullet maker is certainly a potential target of an FCA lawsuit if they bilk the government.

I make it a point to know members of the plaintiff's bar, and, believe me, they are assuming applicability of the FCA to plans offered through exchanges and to those who bill them. It will take a while to see how this works out but it would be foolish to hug the Secretary Sibelius security blanket until this works itself through the court system. Do we really expect the government to demure if an exchange health plan defrauds the government?

In practical terms, this means that plans offered through exchanges have every bit as much reason to have full-blown compliance programs as the hospital down the street. Similarly, those who bill such plans should uphold the same standards as when they bill Medicare.