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May 19, 2014

The Affordable Care Act: Five Hidden Dangers for Healthcare Providers

The Affordable Care Act (“ACA”) now mandates suspension of a provider’s Medicaid payments where there is a credible allegation of fraud, thereby lowering the standard of proof for states seeking to suspend Medicaid payments based on a suspicion of fraud. Although the changes went into effect in March 2011, their impact is beginning to be felt by providers across the country. These changes are particularly important given the now-mandatory referral to law enforcement whenever payments have been suspended.

For a more detailed analysis, please see “Hidden Dangers Embedded in the Affordable Care Act for Healthcare Providers Receiving Medicaid Payments.

The ACA changed the Medicaid payment suspension rules in several important ways:

  1. It is now mandatory for states to suspend a provider’s medicaid payment if there are “credible allegations of fraud.” States that fail to suspend payments risk losing federal funding unless the situation falls into one of the good faith exceptions articulated in the regulations. In Massachusetts, that suspension can extend to “any provider under common ownership.”

  2. The burden of proof for suspending providers’ payments is now lower. The previous rule maintained that Medicaid may withhold payments based on “reliable evidence” of fraud. Under the new rules, states must withhold payments if there is a “credible allegation” of fraud. What constitutes “credible allegation” isn’t fully clear. The attached article discusses this in more depth.

  3. It is now mandatory for state Medicaid agencies to report a suspension to law enforcement. According to the new rule, when a state Medicaid agency such as MassHealth suspends payments, the state Medicaid agency must make a fraud referral to the Medicaid Fraud Control Unit.

  4. Information gleaned from data mining related to claims can constitute a “credible allegation of fraud.” Combining these automated claims reviews with lower standards for showing fraud for payment suspension purposes could cause a large increase in suspensions and referrals.

  5. Suspensions of Medicaid payments may be lengthy, and lack a clear end date.

We will not clearly understand the impact of the new rules until legal challenges help to define their implications. There are few cases in Massachusetts litigating Medicaid payment suspensions. For example, some attorneys who represent providers have complained that these suspensions violate due process. However, it is clear that the combination of a lower threshold for suspending payments, mandatory referrals to law enforcement, and predictive analytics will greatly affect providers in Massachusetts and elsewhere.


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