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financial losses. Beneficiaries pay more in premiums and out-of-pocket costs, businesses pay more to insure their employees, and taxpayers pay more to cover the expenses of government health care programs. Health care fraud and abuse also puts patients and health care employees at risk. Through the provision of medically unnecessary services, including prescription drugs, not in the patient’s best interest, patients are put in harms way. Additionally, operating health care facilities below acceptable standards of quality, healthcare workers are exposed to physical harm. 2. Government response In 1994, the Attorney General of the United States made health care fraud the number two priority of the Department of Justice, second only to violent crime. In addition, recent legislation provides additional funds to combat health care fraud. Federal investigations and conviction rates are rising dramatically. Those agencies examining suspected fraud and abuse have increased the number of auditors and investigators assigned to health care. Additionally, the U.S. District Attorneys and State Attorneys General have joined forces to pursue investigations on a regional basis. For example, in 1996 the federal government passed the Health Insurance Portability and Accountability Act which included numerous provisions intended to address fraud and abuse. These include: • Establishment of a Federal Fraud and Abuse Control Plan • Provides additional funding for DHHS, DOJ and FBI to investigate fraud and abuse (several $100 million) • Enables HHS to contract with newly authorized Medicare Integrity Contractors to conduct activities such as reviewing provider activities, auditing of cost reports, educating providers, and pre-authorizing DME expenditures • Encourages individuals to report omissions • Provides for the establishment of OIG Advisory Opinions and Fraud Alerts • Creates Civil Monetary Penalties of up to $10,000 per fraudulent act (no proof of fraudulent intent required) Compliance Plan 1 - 6 Revised December 12, 2018 B. False Claims Act Enacted soon after the American Civil War and since amended; the Act prohibits anyone from knowingly submitting a false claim to the government. The Act does not require proof of intent to defraud, only a reckless disregard of the truth or falsity of the information. The Act applies to FHCP’s activities as a first tier entity providing services under the Medicare Advantage/Prescription Drug Plan Program. The Act also provides additional guidance on implementing Compliance Plans including: • The Compliance Plan must be in place before an offense is committed • The Compliance Plan must address activities most likely to result in misconduct or mistakes • The Compliance Plan must have a degree of formality that reflects the size and structure of the organization • The Compliance Plan must be comparable to other plans within the industry C. Federal Fraud Civil Remedies Act The Federal Fraud Civil Remedies Act of 1986 allows the federal government to impose civil penalties against any person who makes, submits, or presents false, fictitious or fraudulent claims or written statements to designated federal agencies, including the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services (“CMS”). D. Health Insurance Portability and Accountability Act (HIPAA) While the public focus of this Act was on its creation of a vehicle by which individuals who recently became unemployed could retain access to health insurance, the Act also included numerous unrelated provisions that changed the health care landscape in this country. The most dramatic of the changes are contained within the Administrative Simplification section of Title II-Preventing Health Care Fraud and Abuse; Administrative Simplification; Medical Liability Reform. The Department of Health and Human Services promulgated several rules to implement the Administration Simplification requirements, which deal with electronic data interchange, privacy and security of individuals’ health information, and enforcement. (See FHCP’s Privacy Policies RR007 – RR012). E. Anti-Kickback Statute This statute prohibits the provision, or attempting to provide, offer, solicit, or accept any monetary or non-monetary remuneration for improperly obtaining or rewarding favorable treatment. It also covers a wide variety of payments and incentives to induce referrals or the purchase of services or supplies, such as payments made to a Medicare provider by a supplier to induce the purchase of Part B products from that supplier or payments or other incentives to a provider or contractor, such as a pharmacy, to induce Medicare beneficiaries to enroll in a particular Medicare Advantage or Part D Plan. The statute also: Compliance Plan 1 - 7 Revised December 12, 2018 • Creates 'Safe Harbors' where certain activities are exempted from the provisions of this statute • Creates civil monetary penalties up to twice the amount of each kickback, but not more than $10,000 per violation • Creates criminal penalties that include fines and up to 10 years imprisonment F. Medicare Modernization Act On December 8, 2003, The President signed into law the Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003. This legislation provides seniors and people living with disabilities with a prescription drug benefit, additional plan choices and enhanced benefits under Medicare. Title I of the MMA establishes Medicare’s voluntary outpatient prescription drug benefit, known as Part D because of its placement as Part D of Title XVIII of the Social Security Act. The prescription drug benefit took effect in 2006, and FHCP offers Part D benefits in connection with its participation as a first tier entity under the Medicare Advantage plans (so-called Medicare Advantage-Prescription Drug (“MA-PD”) Plans). Regulations for Medicare Part D are set out in Part 423 of Title 42 of the Code of Federal Regulations, and CMS’s guidance on compliance programs and combating fraud, waste and abuse in Part D is set out in Chapter 9. Title II of the MMA renamed the Medicare+Choice (M+C) Program as the Medicare Advantage (MA) Program and modified the program to enhance private plan and Medicare beneficiary participation. Regulations for the Medicare Advantage Program are set out in Part 422 of Title 42 of the Code of Federal Regulations, and additional guidance is available through the Medicare Managed Care Manual issued by CMS. G. The American Recovery and Reinvestment Act of 2009 abbreviated ARRA (Pub.L. 111- 5) and commonly referred to as the Stimulus, is an economic stimulus package enacted by the 111th United States Congress in February 2009. The Act followed other economic recovery legislation passed in the final year of the Bush presidency including the Economic Stimulus Act of 2008 and the Emergency Economic Stabilization Act of 2008 which created the Troubled Assets Relief Program (TARP). The purposes of ARRA include the following: (1) To preserve and create jobs and promote economic recovery. (2) To assist those most impacted by the recession. (3) To provide investments needed to increase economic efficiency by spurring technological advances in science and health. (4) To invest in transportation, environmental protection, and