New Federal Law Requires Employee Fraud and Abuse Education



New provisions of the federal Deficit Reduction Act, which President Bush signed on February 8, 2006, will require providers to take new steps to prevent waste, fraud and abuse. Under the new act, health care providers that receive at least $5 million in Medicaid payments must have a False Claims Employer Education Program. Most health care facilities participating in Medicaid will likely meet that threshold. States will be required to certify to the U.S. Department of Health and Human Services that the state has a mechanism to ensure compliance with this requirement. All entities must establish such a program by January 1, 2007, the effective date of the provision.

The Employee Education Program must include various components, such as:

  • Written policies for the entity that provide detailed information about both federal and any state False Claims Acts, administrative remedies for false claims, whistleblower protections under such laws, and the role of these laws in preventing waste, fraud and abuse in federal health care programs.
  • The written policies must cover all employees, including management, as well as contractors, and any agent of the company.
  • Those written policies must include detailed information regarding the company’s policies for detecting and preventing waste, fraud and abuse.
  • The employee handbook must include a specific discussion of the laws described above, information on the rights of whistleblowers, and the company’s policies for detecting and preventing waste, fraud and abuse.

With the increasing emphasis on fraud and abuse in health care, and an effort by government at both the state and federal level to scrutinize providers closely, clients are advised to review their policies and employee handbooks to ensure that the information required by the new law is included.  Additionally, health care facilities may want to review any changes with counsel to ensure that the company complies with any whistleblower statutes, without overexposing itself to suits by qui tam relators.