The Affordable Care Act contains a number of provisions that affect long-term care providers. Perhaps the most well-known of these is the “employer mandate” that requires employers over a certain size to offer health insurance to all of their eligible employees. This provision has the potential to significantly affect costs for providers who fall under its jurisdiction. However, there is a lesser known provision in the law that could also have a major impact on providers that are affected by it. This provision deals with audits and it is now in the process of being implemented.

Under current law, long-term care (LTC) providers can be banned from Medicare and Medicaid if they are convicted of obstructing a criminal investigation. A provision in the Affordable Care Act (ACA) extends this power so that the government can now also expel any LTC provider or individual who is found guilty of obstructing an audit. ACA defines obstruction as “any false statement, omission, or misrepresentation of a material fact in any application, agreement, bid, or contract to participate or enroll as a provider of services or supplier under a Federal health care program.” The Department of Health and Human Services Office of Inspector General has been tasked with implementing this provision. Accordingly, it has recently published a proposed rule in the Federal Register on this provision and it is now accepting comments on it from providers and any other interested parties.

In addition to addressing the obstruction of audits, the proposed rule also includes changes that clarify existing regulations, and recommends changing the “aggravating factor” amounts that exist under current law. Right now, aggravating factor thresholds of $1,500 and $5,000 are used to determine how long a provider can be banned from Medicare and Medicaid. For example, a provider whose criminal conduct causes financial losses that exceed $5,000 will receive a longer ban than a provider whose conduct does not reach that threshold. Under the proposed rule, this figure would increase to $15,000. The last time the threshold was increased was in 2002 and it is being increased again in recognition of the fact that healthcare spending has gone up significantly since then; at $1,500 and $5,000 there is the potential to ensnare a provider that made an honest mistake that could result in the overly harsh punishment of being banned from Medicare and Medicaid. At a threshold of $15,000 this is less likely to occur because a provider would most likely have to intentionally commit a crime in order to cause a financial loss of that size. Indeed, the rule states as much with its comment that “We believe this updated amount is an appropriate threshold that is consistent with rationale behind the original amount and provides a realistic marker for determining whether someone is untrustworthy.”

As the proposed rule is debated, LTC providers who depend on Medicare and Medicaid for significant amounts of their revenues should feel free to comment on it through the July 8 commenting period and, once it is finalized, they should also make sure that their compliance procedures include measures that will prevent their employees from mistakenly violating the rule. In the meantime, LTC providers should also continue to focus on taking advantage of the strong demand for senior housing that exists today by looking to the Chicago-based financing firm Cambridge Realty Capital for assistance in financing projects, acquisitions, joint ventures, and other transactions that will help them grow and improve their financial position.

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