Medicare Program; Incentive Programs-Fraud and Abuse

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 420

[HCFA-6144-FC]

RIN 0938-AH86

Medicare Program; Incentive Programs-Fraud and Abuse

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period establishes a program for

payment to individuals who provide information on Medicare fraud and

abuse or other sanctionable activities. This final rule implements

section 203(b) of the Health Insurance Portability and Accountability

Act of 1996.

DATES: Effective date: This final rule is effective July 8, 1998.

Comment period: Comments will be considered if we receive them at the

appropriate address, as provided below, no later than 5 p.m. on August

7. 1998.

ADDRESSES: Mail written comments (1 original and 3 copies) to the

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: HCFA-6144-FC, P.O. Box 26688,

Baltimore, MD 21207-0488.

If you prefer, you may deliver your written comments (1 original

and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 7500 Independence Avenue, SW.,

Washington, DC 20201, or

Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.

FOR FURTHER INFORMATION CONTACT: Delilah Schmitt, (410) 786-4300.

SUPPLEMENTARY INFORMATION: Comments may also be submitted

electronically to

[[Page 31124]]

the following e-mail address: [email protected]. E-mail comments must

include the full name and address of the sender and must be submitted

to the referenced address to be considered. All comments must be

incorporated in the e-mail message because we may not be able to access

attachments. Electronically submitted comments will be available for

public inspection at the Independence Avenue address below.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commenting, please refer

to file code HCFA-6144-FC. Comments received timely will be available

for public inspection as they are received, generally beginning

approximately 3 weeks after publication of a document, in Room 309-G of

the Department's offices at 200 Independence Avenue, SW., Washington,

DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.

(phone: (202) 690-7890).

I. Rewards for Information Relating to Medicare Fraud and Abuse

A. Background

Section 203(b)(1) of the Health Insurance Portability and

Accountability Act of 1996 (Public Law 104-191) instructs the Secretary

to establish a program to encourage individuals to report information

on individuals and entities that are engaged in or have engaged in acts

or omissions that constitute grounds for the imposition of a sanction

under section 1128, 1128A, or 1128B of the Social Security Act (the

Act) or who have otherwise engaged in sanctionable fraud and abuse

against the Medicare program under title XVIII of the Act. By

increasing the incentives for concerned citizens to report evidence of

suspected fraudulent behavior, Congress hopes to protect beneficiaries

and the Medicare Trust Funds.

Section 203(b)(2) of Public Law 104-191 authorizes the Secretary to

pay a reward to individuals who provide information under the program

established under section 203(b)(1) if the information leads to the

recovery of at least $100 (excluding penalties under section 1128B of

the Act) by the Secretary or the Attorney General of the United States.

Public Law 104-191 requires the reward to come from the amounts

collected. The Statute also addresses a suggestion program. We are

still analyzing the most effective methods for implementing this

requirement and will address it in subsequent rulemaking.

B. Provisions of this Final Rule

This rule adds a new Subpart E, consisting of Secs. 420.400 through

420.405, to 42 CFR part 420 (``Program Integrity: Medicare). New

Subpart E includes provisions to implement section 203(b) of Public Law

104-191 and is entitled as ``Rewards for Information Relating to

Medicare Fraud and Abuse''.

Section Sec. 420.400 sets forth the statutory basis and scope of

Subpart E.

Section Sec. 420.405 sets forth our policies regarding, and

procedures for, rewarding individuals for furnishing information

relating to Medicare fraud and abuse. The statute contains no

provisions limiting or restricting our discretion in determining the

rewards to be granted under the program established under section

203(b). Therefore, in paragraph (a) of Sec. 420.405, we specify that

when HCFA exercises its discretion in determining that someone is

eligible for a reward and the reward amount, the reward will be granted

and the individual notified according to the procedures in

Sec. 420.405(d). Further, we specify that we may make a monetary reward

only for information that leads to a minimum recovery of $100 of

Medicare funds from individuals and entities that are engaging in, or

have engaged in, acts or omissions that constitute grounds for the

imposition of a sanction under section 1128, section 1128A, or section

1128B of the Act or that have otherwise engaged in fraud and abuse

against the Medicare program under title XVIII of the Act and for which

there is a sanction provided under law. This provision, which is

specifically mandated in the authorizing statute, ensures that a reward

is paid only if Medicare funds are recovered because of the commission

of certain specifically sanctionable offenses. These include the

defrauding of the Medicare program or the offering of or solicitation

of kickbacks for services payable by Medicare. Individuals who furnish

information concerning actions or omissions for which there are no

sanctions at law are not eligible to receive a reward under this

program even if the information leads to the recovery of Medicare

payments.

Finally, in order to ensure that the program does not duplicate

other Government incentive programs, we also specify, in paragraph (a),

that we may pay rewards only in instances in which a reward is not

otherwise provided at law. That is, if the information furnished

qualifies the participant for a reward under another Government

program, the individual is not entitled to a reward under this program.

Paragraph (b) of Sec. 420.405 specifies the information that would

be required in order for a participant to be eligible to receive a

reward. Section 203(b)(1) of Public Law 104-191 requires that the

reward program discourage the submission of information that is

frivolous or otherwise not relevant or material to the imposition of a

sanction. Such information will not be considered by the Secretary.

Therefore, we have developed criteria to ensure that only individuals

who provide information that directly contributes to the recovery of

Medicare funds from a fraudulent provider or supplier are considered

for a reward. Those criteria are discussed below.

Paragraph (b)(1) of Sec. 420.405 specifies that, in order for an

individual to qualify for a reward, the information furnished by that

individual must relate to a specific situation, individual, or entity,

and must specify the time period of the alleged activities. This

provision is intended to discourage individuals from furnishing

information of a general nature and to ensure that information

submitted be of assistance in the investigation of a specific

sanctionable offense. To be of assistance in the development of an

investigation, information must relate to specific actions by a

specific individual or entity. Any information that is too general in

nature (for example, ``Medicare should look into home health agencies

in Smith County'') is of little or no use in targeting scarce

investigation resources and does not show that the individual has any

specific knowledge of wrongdoing on the part of a certain individual or

entity. An example of the kind of information that would meet the

requirements of this provision would be that a particular home health

agency is billing Medicare for visits not actually furnished.

Paragraph (b)(2) of Sec. 420.405 specifies that we do not give a

reward for the submission of information relating to sanctionable

activities already known or suspected by the Government, its

contractors, or State or local law enforcement agencies. Accordingly,

information relating to an individual or entity that, at the time the

information is provided, is already the subject of a review or

investigation by us, our contractors, or the Office of Inspector

General (OIG), the Department of Justice, the Federal Bureau of

Investigation, or any other Federal, State, or local law enforcement

agency would not serve as the ``basis for the collection'' and could

not be compensated. Paragraph (c) of Sec. 420.405

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sets forth the criteria that an individual must meet in order to be

eligible for a reward. Paragraph (c)(1) provides that any person, other

than one excluded under paragraph (c)(2), is eligible to receive a

reward under the reward program if he or she submits the information in

the prescribed manner (discussed later in this preamble). Accordingly,

Medicare beneficiaries, Medicare providers, and any other individuals

may be eligible to receive awards under this reward program.

Paragraph (c)(2) specifies who is ineligible to receive a reward

under the reward program. Specifically, paragraph (c)(2)(i) provides

that an individual who was or is an immediate family member of an

officer or employee of the Department of Health and Human Services

(HHS) or its contractors, the Social Security Administration, a State

Medicaid agency, the OIG, or the Department of Justice, the Federal

Bureau of Investigation, or any other Federal, State, or local law

enforcement agency at the time he or she came into possession of or

reported information leading to a recovery of Medicare funds is not

eligible to receive a reward. Paragraph (c)(2)(ii) specifies that any

other Federal or State employee or contractor or HHS grantee is not

eligible for a reward if he or she acquired the submitted information

in the course of his or her official duties.

The purpose of the exclusion is to prevent Government employees,

contractors, or grantees from personally profiting from information

gained while doing public business. These individuals may, in the

course of performing their official duties, obtain information relating

to sanctionable offenses by individuals or entities providing services

under the Medicare program. As a responsibility of their position,

however, these individuals are obligated to take the necessary steps to

ensure that this information is reported to the appropriate

authorities. This exclusion also applies to former employees of the

specified organizations if the information in question was obtained

during their employment. Similarly, any other Federal, State, or local

government employee or contractor or HHS grantee is excluded from

receiving a reward under this reward program if the information was

obtained in the course of his or her official duties. As with the

previous exclusion, this exclusion is intended to prevent individuals

from personally profiting from information gained in the course of

conducting public business.

Paragraph (c)(2)(iii) excludes any individual who illegally

obtained the information he or she submitted from receiving a reward

under this program. Paragraph (c)(2)(iv) excludes any participants in

the alleged sanctionable offense with respect to which payment would be

made from receiving a reward under this program. These exclusions are

intended to prevent those who have violated the law from profiting from

their actions at the expense of this program.

Paragraph (d) of Sec. 420.405 sets forth reward notification

procedures. Paragraph (d)(1) specifies that, as a general rule, we

notify an individual of his or her eligibility to receive a reward, by

letter sent to the individual's last known address. Paragraph (d)(1)

further specifies that the notification is sent after Medicare funds

have been recovered and a participant has been determined eligible to

receive a reward. We add that it is the individual's responsibility to

provide all relevant information and to ensure that the reward program

is notified of any changes in that information.

Paragraph (d)(2) provides that an individual has up to 1 year from

the date on the notification letter to claim his or her reward. This

paragraph also specifies that no interest is paid on rewards that are

not immediately claimed.

Paragraph (d)(2) also specifies that, if the participant has become

incapacitated or died, an executor, administrator, or other legal

representative may claim the reward on behalf of the participant or

participant's estate. In order to protect participants from being

defrauded by individuals falsely claiming to be their legal

representatives, we add that the claimant must submit certified copies

of letters testamentary, letters of administration, or other similar

evidence to show his or her authority to claim the reward. Here, again,

we specify that the reward must be claimed within 1 year from the date

on which we mailed notification to the participant.

We have set these 1-year limitations to minimize the administrative

burden associated with the reward program. We believe 1 year is a

reasonable period of time during which an individual may claim his or

her reward. In addition, the 1-year limitation protects the Government

from the administrative and fiscal burden that would be associated with

maintaining claims for a longer or indefinite period. Rewards not

claimed within 1 year from the date of the notification letter will not

be awarded.

In paragraph (e) of Sec. 420.405, we establish the limits on

rewards and set forth the processes by which we determine whether we

will pay a reward and, if a reward is to be paid, the amount of the

reward. Paragraph (e)(1) specifies that, in determining whether we will

pay a reward, and the amount of the reward, we take into consideration

all relevant factors, including the significance of the information

furnished in relation to the ultimate resolution of the case and the

recovery of Medicare funds.

To give participants a realistic expectation of potential reward

amounts, we establish general guidelines for the calculation of the

amount of any reward and a maximum potential reward amount. Since the

primary goal of this program is to preserve and protect the Medicare

Trust Funds, and because the funds used for rewards under the program

will come from recovered trust fund monies, it would be inappropriate

to grant excessive or overly-generous rewards. Therefore,

Sec. 420.405(e)(2) specifies that the amount of a reward represents

what we consider to be adequate compensation in the particular case,

not to exceed 10 percent of the overpayments recovered in the case, or

$1,000, whichever is less. We believe this approach provides adequate

compensation and notification to those individuals who provide

important information on sanctionable activities, while also

establishing an objective limit on Trust Fund disbursements.

We anticipate that some commenters will object to this limit as

being too low. In response, we point out that persons with information

on individuals or entities purportedly defrauding the Medicare program

also have the option of initiating a ``qui tam'' action against the

fraudulent individual or entity in cooperation with the Government. (A

qui tam action is an action brought by a private individual, under a

statute that establishes a penalty for the commission or omission of a

certain act that is recoverable in a civil action. In a qui tam action,

an individual brings the civil action on behalf of him or herself and

the Government, State, or other entity. Part of any collected penalty

goes to the person who brings the civil action.)

We determine reward amounts on a case by case basis. Section

420.405(e)(3) specifies that, if more than one participant provides

information that leads to the recovery of Medicare funds, we allocate

the overall reward (not to exceed 10 percent of the overpayments

recovered in that case or $1,000, whichever is less) among the total

number of participants. Again, this provision is intended to protect

the

[[Page 31126]]

Medicare Trust Funds to the greatest possible extent.

In accordance with section 203(b)(2) of Public Law 104-191,

Sec. 420.405(e)(4) specifies that rewards are based solely on recovered

Medicare payments and not on amounts collected as penalties or fines.

Section 420.405(e)(5) specifies that rewards are awarded only after all

overpayments, fines, and penalties have been collected. It is important

for participants to understand that the investigation, development, and

prosecution or settlement of a fraud case is a complicated and lengthy

process. Given the material and human resource constraints, it is not

unusual for 3 to 5 years to elapse before fraudulently-obtained

Medicare funds are recovered and any applicable fines or penalties

collected. This means that, on average, a participant who provides

information that leads to a Medicare recovery from an individual or

entity that committed a sanctionable offense would have to wait several

years before receiving a reward under this program.

Section 420.405(e)(6) specifies that no person may make any offer

or promise or otherwise bind us or HHS with respect to the payment of

any reward or the amount of the reward.

Paragraph (f) of Sec. 420.405 describes the procedure individuals

must follow when submitting information in order to be eligible to

receive a reward under this program. Paragraph (f)(1) provides that an

individual may submit information to us on individuals and/or entities

allegedly engaging in, or that have allegedly engaged in, fraud and

abuse against the Medicare program by calling the Office of Inspector

General or the Medicare intermediary or carrier that has jurisdiction

over the suspected fraudulent provider or supplier.

Paragraph (f)(2) of Sec. 420.405 adds that an individual interested

in receiving a reward must provide his or her name, address, telephone

number, and any other requested identifying information so that he or

she may be contacted, if necessary, for additional information and,

when applicable, for the payment of a reward upon resolution of the

case. An individual may elect to furnish information to the Office of

the Inspector General, or to the intermediary or carrier anonymously.

However, if an individual elects to do so, he or she would not be

eligible to receive a reward under this program.

Section 420.405(g) specifies that we do not disclose the

participant's identity to any persons except as required by law.

Finally, Sec. 420.405(h) specifies that, if, after an award had been

accepted, the awardee is determined ineligible to receive a reward

under this program, the Government is not liable for the reward and the

awardee must refund all monies received. This provision is intended to

protect the Government from paying rewards to individuals it later

finds were not eligible to participate in the program. For example, the

Government would recover a reward granted to a participant who was

later found to have participated in the sanctionable offense with

respect to which payment was made.

II. Response to Comments

Because of the large number of items of correspondence we normally

receive on Federal Register documents published for comment, we are not

able to acknowledge or respond to them individually. We will consider

all comments we receive by the date and time specified in the DATES

section of this preamble, and, if we proceed with a subsequent

document, we will respond to the comments in the preamble to that

document.

III. Regulatory Impact Analysis

A. Introduction

We have examined the impact of this rule as required by Executive

Order 12866 and the Regulatory Flexibility Act (RFA) (Public Law 96-

354). Executive Order 12866 directs agencies to assess all costs and

benefits of available regulatory alternatives and, when regulation is

necessary, to select regulatory approaches that maximize net benefits

(including potential economic, environmental, public health and safety

effects, distributive impacts, and equity). The RFA requires agencies

to analyze options for regulatory relief of small businesses. For

purposes of the RFA, small entities include small businesses, nonprofit

organizations, and governmental agencies. Most hospitals and most other

providers and suppliers are small entities, either by nonprofit status

or by having revenues of $5 million or less annually. Individuals are

not considered to be small entities.

Section 1102(b) of the Social Security Act requires us to prepare a

regulatory impact analysis for any rule that may have a significant

impact on the operations of a substantial number of small rural

hospitals. This analysis must conform to the provisions of section 603

of the RFA. For purposes of section 1102(b), we define a small rural

hospital as a hospital that is located outside a Metropolitan

Statistical Area and has fewer than 50 beds.

B. Summary of This Rule

This rule establishes a payment system as a means of encouraging

individuals to report instances of suspected fraud and abuse or other

sanctionable activities under the Medicare program. The rule delineates

program parameters, information requirements, eligibility criteria,

establishes an upper limit for payments, defines proportionate

distribution in cases of multiple informants, and outlines the process

and time limitations for obtaining a reward.

C. Discussion of Impact

This rule is expected to affect beneficiaries, their personal

representatives, providers, physicians, other suppliers, and managed

care plans. (We have separate authority to impose intermediate

sanctions against managed care plans participating in the Medicare

program. The law also permits the Office of Inspector General to impose

civil money penalties on the health maintenance organization or

competitive medical plan as set forth in 42 CFR part 1003.) Taxpayers

and the trust fund could also be impacted by this rule.

Beneficiaries as a group are expected to be impacted by this

regulation in a variety of ways. First, beneficiaries are often the

first to recognize and question provider practices. This regulation

encourages these individuals to share such information with the agency

by (1) providing a clearly defined process for submitting information

to the appropriate source and (2) offering a monetary incentive to

support the effort. Secondly, this group would benefit from fraud

reduction through greater confidence in the program and its continued

financial viability. Some beneficiaries may or may not be motivated by

a reward system to report fraudulent provider activity because of a

perceived potential for breaching the provider/patient relationship.

Notwithstanding some minimal hesitancy in reporting fraud,

beneficiaries are already one of our strongest allies in quickly

detecting and providing us with a great many leads about instances of

fraud and abuse in the Medicare program. Beneficiaries are asked to

review the Explanation of Medicare Benefits form, which lists services

and charges and is sent to each beneficiary when a service is

furnished, and report any discrepancies concerning those services to

the Medicare contractor serving their area. Medicare contractors

estimate that of the 130,000 calls they receive yearly concerning

potential fraud and abuse, 94,000 are from beneficiaries, many of whom

call to question the propriety of claims made on their behalf. We

estimate that there will be a 5 or 10 percent increase in the

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volume of calls received as a result of this monetary reward incentive

program. We support this activity by regularly advising beneficiaries

and their representatives about opportunities to preserve trust fund

dollars and how they can help combat fraud and abuse.

Fraud, waste, and abuse in medical care encompass a wide range of

practices, limited only by the scope of human imagination. To the

fraudulent provider of health care services, fee-for-service

reimbursement provides the opportunity for: (1) Billing for services

not provided; (2) billing for a more expensive service than was

actually provided; (3) providing and billing for unnecessary services;

(4) paying kickbacks for referrals, including self-referrals; and (5)

duplicate billing. Two fraudulent schemes involving falsifying records

and overcharging include ``upcoding'' and ``unbundling.'' Upcoding

involves switching primary and secondary diagnoses to substitute more

costly procedures and services than were actually administered to the

patient. Unbundling involves improperly separately billing for

procedures that should be billed for under one code.

Under managed care, fraudulent and abusive practices may include:

(1) Enrolling beneficiaries without their active consent; (2) engaging

in deceptive marketing practices to entice enrollment; (3) denying

medically necessary services; and (4) failure to disclose appeal

rights.

We believe the exact amount of improper billing and health care

fraud are difficult to quantify because of their hidden nature.

However, a Government Accounting Office (GAO) report on Medicare (GAO/

HR-91-10, February 1997) suggests that by reducing unnecessary or

inappropriate payments, the Federal Government would realize large

savings and help dampen the growth in Medicare costs. In this report,

the GAO states that estimates of the costs of fraud and abuse, ranging

from 3 to 10 percent, have been cited for health expenditures

nationwide, ``so applying this range to Medicare suggests that such

losses in fiscal year 1996 could range from $6 billion to as much as

$20 billion.'' Program savings would be offset by the amount of

incentives awarded under this rule. The total amount of awards made in

any year is unknown but is expected to be nominal.

Overall, we expect that providers and suppliers will benefit

qualitatively from this rule. Not only do many providers and suppliers

perceive that their reputations are tarnished by the few dishonest

providers and suppliers that take advantage of the Medicare program,

but some providers may have ideas that could minimize the impact of

this adverse behavior. The media often focus on the most egregious

cases of Medicare fraud and abuse, leaving the public with the

misperception that physicians and other health care practitioners

routinely make improper claims. This rule encourages individuals to

report instances of suspected fraud and abuse. As the number of

dishonest providers and suppliers and improper claims diminishes,

ethical providers and suppliers will benefit.

This rule could be considered to have a negative impact on any

provider or supplier that routinely submits questionable claims and

those that have been receiving inappropriate payments, including

managed care plans. Since one objective of this rule is to eliminate

improper payments, we will not analyze the effect the rule may have on

unscrupulous providers or suppliers. We do not believe that this rule

will reduce a provider's or supplier's legitimate income from Medicare.

The reporting of instances of suspected fraud and abuse or other

sanctionable activities is not expected to impose a paperwork burden on

individuals participating in this award program. Beneficiaries and

other participating entities are expected to rely upon existing record

collection, record keeping, review and reporting processes similar to

those already in use.

D. Conclusion

We conclude that money would be saved, and the solvency of the

Trust Funds extended as a result of this rule. The growing complexity

of the Medicare program easily lends itself to objective critiques by

those who are most affected by the myriad of Medicare statutes,

provisions, and guidelines. In addition, the dynamic nature of fraud

and abuse, as illustrated by the fact that wrongdoers continue to find

ways to evade safeguards, supports the need for constant vigilance and

increasingly sophisticated ways to protect against ``gaming'' of the

system.

Based on the above analysis, we have determined, and certify, that

this rule will not have a significant economic impact on a substantial

number of small entities. We also have determined, and certify, that

this rule will not have a significant impact on the operations of a

substantial number of small rural hospitals. In accordance with the

provisions of Executive Order 12866, this rule was not reviewed by the

Office of Management and Budget.

E. Waiver of Proposed Rulemaking

We ordinarily publish a notice of proposed rulemaking in the

Federal Register and invite public comment on the proposed rule. The

notice of proposed rulemaking includes a reference to the legal

authority under which the rule is proposed, and the terms and

substances of the proposed rule or a description of the subjects and

issues involved. This procedure can be waived, however, if an agency

finds good cause that a notice-and-comment procedure is impracticable,

unnecessary, or contrary to the public interest and incorporates a

statement of the finding and its reasons in the rule issued.

Publishing this rule expeditiously to supplement activities that

identify and curtail fraud and abuse activities that reduce the

monetary drain on the Medicare trust fund is in the public interest.

Specifically, we anticipate that the implementation of this rule will

encourage individuals to report potentially fraudulent and abusive

activities and we anticipate that such reports will facilitate

expeditious recovery of money owed to the Medicare trust funds. Further

delaying implementation of this program in order to give the public an

opportunity to comment would deprive individuals of the financial

incentives that Congress intended to provide to individuals who come

forward with relevant information. Additional delay following the

publication of a proposed rule may cause some individuals to withhold

information necessary to support the Government's efforts until final

rules are effective. Because the delay may make it more difficult to

successfully complete investigation of those cases, waiving notice and

comment clearly is within the public interest.

Therefore, we find good cause to waive the notice of proposed

rulemaking and to issue this final rule with comment period. We are

providing a 60-day comment period for public comment.

List of Subjects in 42 CFR Part 420

Fraud, Health facilities, Health professions, Incentive programs,

Medicare.

For the reasons set forth in the preamble, 42 CFR part 420 is

amended as set forth below:

PART 420--PROGRAM INTEGRITY: MEDICARE

1. The authority citation for part 420 continues to read as

follows:

[[Page 31128]]

Authority: Secs. 1102 and 1871 of the Social Security Act (42

U.S.C. 1302 and 1395hh).

2. A new subpart E is added to part 420 to read as follows:

Subpart E--Rewards for Information Relating to Medicare Fraud and Abuse

Sec.

420.400 Basis and scope.

420.405 Rewards for information relating to Medicare fraud and

abuse.

Subpart E--Rewards for Information Relating to Medicare Fraud and

Abuse

Sec. 420.400 Basis and scope.

This subpart implements section 203 (b) of Public Law 104-191,

which requires the establishment of a program to encourage individuals

to report suspected cases of fraud and abuse. Sections 203 (b) of

Public Law 104-191 also provides the authority for HCFA to reward

individuals for reporting fraud and abuse. This subpart sets forth

procedures for rewarding individuals.

Sec. 420.405 Rewards for information relating to Medicare fraud and

abuse.

(a) General rule. HCFA pays a monetary reward for information that

leads to the recovery of at least $100 of Medicare funds from

individuals and entities that are engaging in, or have engaged in, acts

or omissions that constitute grounds for the imposition of a sanction

under section 1128, section 1128A, or section 1128B of the Act or that

have otherwise engaged in sanctionable fraud and abuse against the

Medicare program. The determination of whether an individual meets the

criteria for an award, and the amount of the award, is at the

discretion of HCFA. HCFA pays rewards only if a reward is not otherwise

provided for by law. When HCFA applies the criteria specified in

paragraphs (b), (c), and (e) of this section to determine the

eligibility and the amount of the reward, it notifies the recipient as

specified in paragraph (d) of this section.

(b) Information eligible for reward. (1) In order for an individual

to be eligible to receive a reward, the information he or she supplied

must relate to the activities of a specific individual or entity and

must specify the time period of the alleged activities.

(2) HCFA does not give a reward for information relating to an

individual or entity that, at the time the information is provided, is

already the subject of a review or investigation by HCFA or its

contractors, or the OIG, the Department of Justice, the Federal Bureau

of Investigation, or any other Federal, State, or local law enforcement

agency.

(c) Persons eligible to receive a reward--(1) General rule. Any

person (other than one excluded under paragraph (c)(2) of this section)

is eligible to receive a reward under this section if the person

submits the information in the manner set forth in paragraph (f) of

this section.

(2) Excluded individuals. (i) An individual who was, or is an

immediate family member of, an officer or employee of HHS or its

contractors, the SSA, the OIG, a State Medicaid Agency, or the

Department of Justice, the Federal Bureau of Investigation, or any

other Federal, State, or local law enforcement agency at the time he or

she came into possession of, or divulged, information leading to a

recovery of Medicare funds is not eligible to receive a reward under

this section.

(ii) Any other Federal or State employee or contractor or an HHS

grantee is not eligible for a reward under this section if the

information submitted came to his or her knowledge in the course of his

or her official duties.

(iii) An individual who illegally obtained the information he or

she submitted is excluded from receiving a reward under this section.

(iv) An individual who participated in the sanctionable offense

with respect to which payment would be made is excluded from receiving

a reward under this section.

(d) Notification of eligibility--(1) General rule. After all

Medicare funds have been recovered and HCFA has determined a

participant eligible to receive a reward under the provisions of this

section, it notifies the informant of his or her eligibility, by mail,

at the most recent address supplied by the individual. It is the

individual's responsibility to ensure that the reward program has been

notified of any change in his or her address or other relevant personal

information (for example, change of name, phone number).

(2) Special circumstances. (i) If the individual has relocated to

an unknown address, the individual or his or her legal representative

may claim the reward by contacting HCFA within 1 year from the date on

which HCFA first attempted to notify the individual about a reward.

HCFA does not consider the individual or his or her legal

representative eligible for a reward more than 1 year after the date on

which it first attempted to give notice. HCFA does not pay interest on

rewards that are not immediately claimed.

(ii) If the individual has become incapacitated or has died, an

executor, administrator, or other legal representative may claim the

reward on behalf of the individual or the individual's estate. The

claimant must submit certified copies of the letters testamentary,

letters of administration, or other similar evidence to show his or her

authority to claim the reward. The claim must be filed within 1 year

from the date on which HCFA first gave or attempted to give notice of

the reward.

(e) Amount and payment of reward. (1) In determining whether it

will pay a reward and, if so, the amount of the reward, HCFA takes into

account all relevant factors, including the significance of the

information furnished in relation to the ultimate resolution of the

case and the recovery of Medicare funds.

(2) The amount of a reward represents what HCFA considers to be

adequate compensation in the particular case, not to exceed 10 percent

of the overpayments recovered in the case or $1,000, whichever is less.

(3) If more than one person is eligible to receive a reward in a

particular case, HCFA allocates the total reward amount (not to exceed

10 percent of the overpayments recovered in that case or $1,000,

whichever is less) among the participants.

(4) HCFA bases rewards only on recovered Medicare payments and not

on amounts collected as penalties or fines.

(5) HCFA makes payments as promptly as the circumstances of the

case permit, but not until it has collected all Medicare overpayments,

fines, and penalties.

(6) No person may make any offer or promise or otherwise bind HCFA

or HHS with respect to the payment of any reward under this section or

the amount of the reward.

(f) Submission of information. (1) An individual may submit

information on persons or entities engaging in, or that have engaged

in, fraud and abuse against the Medicare program to the Office of the

Inspector General, or to the Medicare intermediary or carrier that has

jurisdiction over the suspected fraudulent provider or supplier.

(2) A participant interested in receiving a reward must provide his

or her name, address, telephone number, and any other requested

identifying information so that he or she may be contacted, if

necessary, for additional information and, when applicable, for the

payment of a reward upon resolution of the case.

(g) Confidentiality. HCFA does not reveal a participant's identity

to any person, except as required by law.

(h) Finding of ineligibility after reward is accepted. If, after a

reward is accepted, HCFA finds that the awardee was ineligible to

receive the reward, the

[[Page 31129]]

Government is not liable for the reward and the awardee must refund all

monies received.

(Catalog of Federal Domestic Assistance Program No. 93.774,

Medicare--Supplementary Medical Insurance Program)

Dated: April 4, 1998.

Nancy-Ann Min DeParle,

Administrator, Health Care Financing Administration.

Dated: June 2, 1998.

Donna E. Shalala,

Secretary.

[FR Doc. 98-15155 Filed 6-3-98; 1:19 pm]

BILLING CODE 4120-01-P