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Some audits end badly. The provider must pay back all that was received for improper claims, for example. But it might not end there. There remains the possibility of civil money penalties under 42 U.S. Code § 1320a–7a, and complete exclusion from any healthcare program that gets even part of its funding from the federal government.    

Civil money penalties can be crippling. In addition to paying back any funds received for improper claims, the provider may be fined an additional three times that amount. In some cases, providers may be penalized up to $2,000 per improper claim.

The Threat of Exclusion

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) also can exclude the provider from any facility funded by the federal government. This means being locked out of Medicare and Medicaid. In such cases the provider’s name is placed on a “do not do business with” list, and for all practical purposes, this leads to the end of their medical work. If a felony is involved, there is a mandatory five-year exclusion, and some are excluded for as many as 40 years.

This means that at the same time the provider is saddled with a giant payback demand and penalty, it may face exclusion from working. 

The administrative law governing these cases is harsh. Billing in good faith, making mistakes, or reliance on billing experts does not relieve liability. The corporate shell of an LLC will not prevent this liability from following the doctor and gobbling up personal assets. Having a track record of performing community service and displaying good character is considered irrelevant. Since they are not bound by the federal rules of evidence, hearings may include hearsay. In one case, the doctor responsible for filing improper claims had died, and the remaining members of his group practice had paid back all of the required restitution. They were hoping to work to pay off the giant penalties. Nevertheless, they were all excluded. 

What is a Corporate Integrity Agreement?

The corporate integrity agreement (CIA) may be the only way to forestall exclusion. The provider agrees to the CIA obligations in exchange for an OIG agreement that it won’t seek to exclude the provider. The CIA is a document that outlines the obligations a healthcare provider agrees to as part of a civil settlement. 

The OIG started the CIA program to help some providers get back on track. The number of CIAs has increased steadily. In the five-year period from 2009 to 2014, their use went up by more than 10 times. 

Though they are designed to get a provider back on the path of compliance, there is no right to a CIA, and approval is not automatic. CIAs are put in place only at the discretion of the OIG. 

Obligations of the Healthcare Provider

Among the more popular components of a CIA are: 

  • Mandatory hiring of a permanent compliance officer;
  • Written standard operating procedures for all activities;
  • Extensive training and education activities for all employees;
  • Hiring an independent review organization (IRO) to double-check filed claims;
  • Detailed retention of records (liable to inspection);
  • Systematic claims review and validation;
  • Numerous mandatory disclosures that includes tracking of excluded service providers; and
  • A number of annual reports and certifications.

CIAs place a heavy burden on the healthcare provider, and failure to comply with the terms brings heavy penalties.

Although burdensome to put in place, the CIA minimizes the chance a practitioner will be audited ever again.

Challenges to Implementing a Corporate Integrity Agreement

Our interviews indicate that providers needing to set up a CIA face a number of hurdles. The most significant complaint is the cost and complexity of putting everything into place and the inherent difficulty of designing the mandatory procedures that must be completely documented. There is no standard CIA. Each is customized to fit the particular circumstances of the provider.

This work is done with a combination of legal expertise, feedback from the IRO, and use of consultants. None are particularly cheap, but the provider often has no choice. 

As the CIA is being put in place, and in spite of the wide-ranging and predictable complaints, our interviews reveal that after a time, the healthcare provider comes to appreciate its protection against further audits.

And for those lucky providers not being audited, CIAs might be studied to learn best practices for staying in compliance with federal rules and regulations. 

About the Author 

Edward M. Roche, Ph.D., J.D. is the director of scientific intelligence at Barraclough NY LLC., a firm that provides litigation support and expert testimony for healthcare providers who have been audited. 

Contact the Author 


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