Relating to administrative remedies for certain fraud and abuse violations under Medicaid; providing administrative penalties.

Contracts

• Vendor Indemnification: Update Master Service Agreements (MSAs) with third-party billing and revenue cycle vendors. You must require full indemnification for administrative penalties caused by their coding errors or "reckless" data entry.
• MCO Agreements: Managed Care Organizations must review downstream provider contracts to ensure mechanisms exist to pass through penalties if a provider’s failure causes the MCO to violate network adequacy or reporting statutes.

Hiring/Training

• Credentialing Verification: Implement automated pre-claim checks. Section 4(b)(13) explicitly penalizes claims for services by personnel not licensed *in the manner claimed*.
• Employee Handbooks: Update disciplinary policies to classify "conscious indifference" regarding documentation as grounds for immediate termination to demonstrate an effective corporate compliance program.

Reporting & Record-Keeping

• Government Response Protocol: Establish a protocol for immediate response to OIG requests. Under Section 4(c-1), obstruction or failure to provide records now triggers a separate violation for each day the refusal continues.
• The "$500 Rule": Audit document retention systems. Failure to maintain documentation to support a claim (technical/clerical errors) now triggers a penalty of recoupment OR up to $500 per violation.

Fees & Costs

• Insurance Gaps: Review Professional Liability and Directors & Officers (D&O) policies. Many standard policies exclude "administrative penalties" or fraud where "reckless disregard" is the standard. You likely face a coverage gap for these new statutory fines.
• Penalty Exposure: Liability calculation is now: Recoupment + Interest + 2x Damages + Penalty ($5,000–$15,000 per claim).