Deficit Reduction Act § 6032 Regarding Employee Education About False Claims Act

January 19, 2007

Section 6032 of the Deficit Reduction Act (DRA) of 2005, signed into law February 8, 2006, required entities making or receiving $5 million or more annually in Medicaid payments to develop and maintain written policies for their employees, contractors and agents providing detailed information about the federal False Claims Act, any state laws providing civil and criminal penalties for false claims and statements and any whistleblower protections under federal and state laws. The DRA directed State Medicaid agencies to amend their State Plans to include this education requirement by January 1, 2007.

On January 11, 2007, CMS conducted an open-door forum regarding the DRA provisions, answering questions by many of the more than 800 callers and attempting to clarify statements in its December 13, 2006 letter to State Medicaid Directors providing guidance on the DRA educational requirements.

CMS clarified several critical points during the open-door forum, including the following:

1. All entities meeting the statutory requirements must comply by January 1, 2007 regardless of whether their State Medicaid plans have been amended and approved by CMS. CMS confirmed that no State Medicaid plan amendments have yet been approved. CMS also stated that it does not have authority to provide a grace period for entity compliance with the DRA requirements.
2. Neither Section 6032 nor the CMS guidance requires training on the federal False Claims Act or applicable state laws. Rather, notice of the policies must be provided to entity employees, agents and contractors.

Due to multiple unanswered questions during the forum, CMS agreed to provide additional guidance on Section 6032, including guidance on the following questions:

1. Do entity contractors have a duty to "adopt" the provider's policies, as stated in CMS's December 13 letter?
2. How broad is the scope of the "contractor" definition? CMS seemed to indicate that non-health care services providers, such as lawn care contractors, would not be included within the scope of "contractor". Also, CMS indicated that members of a hospital medical staff who do not have a contract with the hospital would not be considered "contractors."
3. How does a provider determine whether it has met the $5 million threshold, particularly in multi-institutional settings?

Our recommendation is that qualifying providers, as promptly as possible, prepare and distribute to their employees (including management), identified "contractors" and agents their existing policies regarding compliance with the federal False Claims Act, any state false claims laws, and their whistleblower policies. [Please note that Louisiana has a Medicaid false claims statute comparable to the federal False Claims Act although Mississippi does not.] In the event that a provider does not have such policies in place, it should promptly develop those policies.

If you require additional information or assistance with preparing notices and policies, please contact a member of the Phelps Dunbar health care team.