Provider Notice issued 05/03/07

False Claim Act

The purpose of this notice is to inform providers about a new federal requirement pursuant to section 6032 of the Deficit Reduction Act of 2005 (P.L. 109-0171).  This provision establishes section 1902(a)(68) of the Social Security Act (the Act), and relates to "Employee Education About False Claims Recovery."

Under this requirement, entities receiving or making payments totaling at least $5,000,000 annually, for services under a State Plan approved under Title XIX or under any waiver of such plan, must establish written policies for all employees [including management], contractors, or agents of the entity regarding the False Claims Act and other provisions named in the Act.  The federal regulation defines “entity” as:

“... a governmental agency, organization, unit, corporation, partnership or other business arrangement (including any Medicaid managed care organization, irrespective of the form of business structure or arrangement by which it exists), whether for-profit or not-for-profit, which receives or makes payments, under a State plan approved under Title XIX or under any waiver of such plan, totaling at least $5,000,000 annually.”

The federal government required States to implement this requirement effective January 1, 2007.  Illinois has promulgated an administrative rule to do so.  The rule was published in the Illinois Register (31 Ill. Reg. 349) on January 12, 2007.

All medical providers and payees who receive $5,000,000 or more in payments annually for services rendered to medical program participants must comply with the requirements of section 1902(a)(68).  However, the threshold will be measured based upon the aggregate payments received by an entity, even if that entity has multiple provider numbers.  For example, a health system that includes a hospital, skilled nursing facility and home health program and collectively receives more than $5,000,000 in aggregate reimbursement annually will be subject to the "Employee Education About False Claims Recovery" requirement.

It is the responsibility of each entity meeting the annual threshold to establish and disseminate written policies.  The entity’s contractors or agents must also adopt the policies.  The written policies must contain detailed information regarding the entity’s policies and procedures for detecting and preventing waste, fraud and abuse.  The entity shall also include in any existing employee handbook a specific discussion of the laws described in the written policies, and the rights of employees to be protected as whistleblowers.

An entity will have met the annual threshold as of January 1, 2007, if it received or made payments totaling $5,000,000 in federal fiscal year 2006 [October 1, 2005, through September 30, 2006].  Future determinations regarding an entity's responsibility under the Act will be made by January 1 of each subsequent year, based upon the amount of payments an entity either received or made under Title XIX during the preceding federal fiscal year.

The department’s role under the federal regulation is to ensure that entities are in compliance with section 1902(a)(68).  The department recently filed a rule change adding the False Claims Act provision as a requirement under 89 Ill. Adm. Code 140.12, Participation Requirements for Medical Providers.  In addition, the department is in the process of developing monitoring procedures to ensure compliance with section 1902(a)(68) and submitted an amendment to its Title XIX State plan describing the procedures on March 30, 2007.

Providers will receive information on the department’s monitoring plan as it becomes available.  HFS will also share any additional information it may receive on the False Claim Act from the Centers for Medicare and Medicaid.

Your participation in our programs is greatly appreciated.

Theresa A. Eagleson, Administrator
Division of Medical Programs