What Does the Supreme Court’s Decision Mean For New Jersey Healthcare Companies?

July 25, 2012

New Jersey business litigation attorneyAlthough the Affordable Care Act’s new enforcement provisions did not make the nightly news, they present significant legal concerns for New Jersey healthcare entities. Now that the U.S. Supreme Court has upheld the healthcare reform law, New Jersey companies in the healthcare industry, particularly those who submit claims to Medicare and Medicaid, should be taking steps to ensure compliance.

Below are a few provisions of the ACA that should be on every New Jersey healthcare company’s radar:

Providers and suppliers will face increased scrutiny. The ACA implements new screening procedures for providers and suppliers. For example, some providers may be subject to fingerprinting, site visits and criminal background checks before they can begin billing the federal government.

The ACA imposes new compliance obligations. The ACA requires providers and suppliers to establish policies and procedures detailing how they will comply with the new rules and prevent fraud as a condition of enrollment in federal programs like Medicare.

The government will be better equipped to detect fraud. The ACA allocates an additional $350 million over the next ten years to help combat healthcare fraud through the Health Care Fraud and Abuse Control Account (HCFAC). The Act authorizes these funds to be used to hire new officials and agents to investigate fraud.

The legal standard for healthcare fraud will be lower. The ACA expressly lowers the burden of proof required in many healthcare fraud cases.  While the government previously had to prove that the defendant acted “knowingly and willfully,” the ACA provides that “a person need not have actual knowledge of this section or specific intent to commit a violation” of the Anti-Kickback Statute.

The law authorizes additional civil penalties for healthcare fraud. The ACA allows the Secretary of Health and Human Services to withhold payment to any Medicare or Medicaid providers if a credible allegation of fraud has been made and an investigation is pending. Those found to have provided false information on an application to enroll or participate in a Federal health care program can be excluded from participation in those programs.

Criminal penalties for healthcare fraud are also increased. The ACA directs the Sentencing Commission to increase the Federal sentencing guidelines for health care fraud offenses by 20-50% for crimes that involve more than $1,000,000 in losses.  The law also makes obstructing a fraud investigation a crime.

Given the number of new compliance concerns implicated by the ACA, we recommend consulting with an experienced New Jersey business attorney.

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