Are Health-Care Civil Monetary Penalties Going Up?

No one likes to hear about inflation, especially when it comes to government penalties. Yet it appears that’s what's in store for the health-care industry, courtesy of a recent final rule from the Health and Human Services Department. The final rule implements the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, and HHS civil monetary penalties will increase anywhere from 1 percent to 150 percent.

I spoke with Bass, Berry & Sims’ Danielle Sloane, who told me that the increased CMPs will give the government much greater leverage when negotiating health-care settlements. Sloane also said the higher CMPs would likely bring more whistleblower lawsuits, as expected government recoveries will be much higher. “Given those possibilities, I would expect the increases to also drive more voluntary self-disclosures and repayments so as to avoid the financial risks of investigations and settlement,” Sloane said.

The final rule, which was published in the Sept. 6 Federal Register, not only adjusts current CMPs but also will require annual inflation adjustments moving forward. Prior to the final rule, some of the CMPs hadn’t been adjusted since 1972.

Linda Baumann, an attorney with Arent Fox, told me that the size of the various CMP increases was largely related to when the CMPs were established. As an example, the CMP for improper billing by hospitals, critical access hospitals or skilled nursing facilities, which was last adjusted in 1972, increased 150 percent. On the other hand, a CMP associated with making false statements regarding certain benefit payments, which was last updated in 2015, increased only 1 percent.

Stay on top of new developments in health law and regulation with a free trial to the Health Law Resource Center. Learn more about Bloomberg Law and sign up for a free trial.