According to a Ropes & Gray press release, on December 8, 2005, the United States Attorney’s Office for the Northern District of Illinois reached a settlement with Rush University Medical Center in Chicago, under which Rush agreed to repay approximately $1 million to the federal and state governments for inappropriate clinical trials charges submitted to Medicare and Medicaid.  About a quarter of the $1 million payment represents a fine for the improper billing of these federally-funded health care programs. Clinical trials sites that inappropriately bill Medicare could face potential False Claims Act liability, Civil Monetary Penalties Law liability, and exclusion from Federal health care.

New Proposed Regulation

YESTERDAY February 16, 2012, DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services issued CMS-6037-P, proposing changes to 42 CFR Parts 401 and 405, Medicare Program; Reporting and Returning of Overpayments.  The Affordable Care Act established a new section 1128J(d) of the Act entitled "Reporting and Returning of Overpayments."  Under this act Clinical Trials Sites could face potential False Claims Act liability, Civil Monetary Penalties Law liability, and exclusion from Federal health care programs for failure to report and return an overpayment.  In other words, if the clinical trial site bills Medicare and subsequently becomes aware that they should have billed the sponsor they are responsible for reimbursing Medicare or facing significant penalties and / or fines.

Under 42 C.F.R. PART 401—GENERAL ADMINISTRATIVE REQUIREMENTS, CMS proposes establishing a new subpart D in Part 401 and §401.303  includes “Receipt of Medicare payment when another payor had the primary responsibility for payment.”

Penalties for Not Reporting Overpayment

Section 1128J(d) of the Act provides that any overpayment retained by a person after the deadline for reporting and returning the overpayment is an obligation for purposes of 31 U.S.C. 3729. Any person who "knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government" may be found liable under the False Claims Act. (See 31 U.S.C. 3729 et seq.) Proposed §401.305(f) contains a similar statement. Additionally, any person who "knows of an overpayment [as defined in section 1128J(d)(4) of the Act] and does not report and return the overpayment in accordance with such section" may be found liable under the Civil Monetary Penalties Law (section 1128A(a)(10) of the Act) and accordingly could be excluded from participation in Federal health care programs (section 1128A of the Act).

Statute of Limitations is Ten Years

We propose to amend the reopening rules at §405.980(b) to provide that overpayments reported in accordance with §401.305 may be reopened for a period of 10 years.

Encourage and Support Clinical Trials Sponsors Section 111 Reporting

Medicare Consul Services provides reporting services for major pharmaceutical trials sponsors and disturbingly, few of the hundreds of trials sites we have contacted appear to be aware of which trials subjects are enrolled in Medicare.  If the site is not cognizant of that basic fact, it follows that they are at risk of finding themselves in the same position as Rush University.  Clinical trials sites should include this facet in their compliance plan, but fortunately Medicare has stepped up to help out.

Under the Section 111, Mandatory Insurer Reporting (MMSEA), the trial sponsor is responsible for reporting injuries (e.g., Adverse Events and Serious Adverse Events)  and paying for the treatment under 42 U.S.C. § 1395y(b)(2)(A)(ii).  Liability for ongoing treatment (e.g., payment of medical claims) and reporting is similar another injury-oriented type of insurance -- workers’ compensation.  When a trial sponsor reports their obligation, Medicare posts the information on the Common Working File (CWF) and denies medical payments for treatment related to the injury -- enforcing the Medicare Secondary Payer statute that Medicare is always the secondary payer when another plan has an obligation (e.g., consent form) to make payment.

Reduce Risk and and Cost of Compliance

Inappropriate billing and / or failure to reimburse Medicare may be very costly.  Reporting by Clinical Trials Sponsors under Section 111 Mandatory Insurer Reporting will help clinical trials sites reduce their risk and reduce the cost of compliance with existing and newly proposed statutes and regulations.