On June 18, 2012, the Office of Inspector General for the Department of Health and Human Services (OIG) published a notice in the Federal Register seeking comments and recommendations on how best to revise its self-disclosure protocol to make it more useful in today’s health care regulatory environment. This should come as welcome news to the healthcare provider community because OIG’s protocol was first established in 1998, when the healthcare fraud enforcement landscape was much different. Specifically, the government’s investigation and pursuit of health care fraud has substantially increased over the last 14 years. 1998’s total recoveries from health care fraud of under $500 million compared to last year’s total recoveries of $4.1 billion are good evidence of that change.

The Federal Register notice mentions that since 1998, OIG has resolved over 800 disclosures and recovered over $280 million to the Federal health care programs. These high numbers are likely due in large part to the benefits health care providers and practitioners derive from self-disclosing, namely a lower multiplier on damages (approximately 1.5) and no requirement for a Corporate Integrity Agreement (CIA) in exchange for OIG’s highly sought after exclusion release. For cases settled after an affirmative investigation by the government – rather than a voluntary disclosure – healthcare providers should expect OIG, usually in conjunction with the Department of Justice (DOJ), to demand at least a 2.0 multiplier on the single damages (overpayment) amount. As an example, if the government determines that you received $500,000 in reimbursement that you were not entitled to, OIG would likely settle the self-disclosed matter for a 1.5 multiplier, or $750,000.  However, if the settlement is pursuant to an affirmative investigation and not a voluntary disclosure, OIG and DOJ would likely demand at least “double damages,” or $1 million.

As you can tell by the above, when the overpayment amount is in the six, seven, or even eight figure range, this additional multiplier is extremely costly and takes much needed revenues away from the healthcare provider. Once it is gone, it is gone! In addition to the money saved by a lower multiplier by self-disclosing, providers have also saved millions by avoiding a CIA and the costs associated with retaining an Independent Review Organization to audit or review its submission of claims for reimbursement and report these to the OIG for a period of at least 5 years.

Our Insight, Your Advantage.  Notwithstanding the potential benefits of self-disclosing, not everything is appropriate for OIG’s self-disclosure protocol. In other words, sometimes mistakes or errors happen and these can be resolved administratively through appropriate corrective action that does not involve law enforcement – OIG or DOJ.  Whether disclosure to the OIG is appropriate is based on specific facts and circumstances that should be evaluated carefully with competent counsel. Making the right decision about whether something should be voluntarily disclosed and, if so, to where, could mean millions of dollars to your organization. Thus, the best approach is to proceed cautiously after much deliberation and analysis.

The OIG has set August 17, 2012, as the submission deadline for comments. We expect that OIG will try to make the self-disclosure process more streamlined and efficient to keep up with the current regulatory environment.  We will continue to monitor this development, so stay tuned for additional updates.