Inflation Adjustments Increase Civil Monetary Penalties Imposed by HHS

In late 2016, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services issued an interim final rule updating its civil monetary penalty (CMP) regulations to adjust for inflation [81 Fed. Reg. 61538 (September 6, 2016)]. By way of background, the OIG has authority to impose civil monetary penalties against healthcare providers for a wide range of program violations [42 C.F.R. Part 1003]. These penalty increases include, among others, the Stark Law, the Anti-Kickback Statute, the Emergency Medical Treatment and Labor Act (EMTALA) and the Health Insurance Portability and Accountability Act (HIPAA). CMPs also increased for skilled nursing facilities and clinical laboratories.  The new maximum penalties apply to any fines assessed after August 1, 2016, stemming from violations that took place after November 2, 2015. The new CMP rates reflect an initial “‘catch-up’ adjustment” and will continue to be updated annually.

Some civil monetary penalties will nearly double due to inflation adjustments. The 45-page announcement in the Federal Register includes a table that sets out, for each category, the pre-inflation CMP, the date of last penalty figure or adjustment, the percentage increase, the amount of the increase and the revised CMP.

The adjustments will raise the maximum penalties skilled nursing facilities face for a broad range of violations.  This marks the first time that the CMPs have been adjusted since 1987. CMPs that will increase under the rule include penalties for individuals who notify skilled nursing facilities when a survey is going to be conducted, penalties for failing to report a crime against a resident, penalties for non-compliance violations, penalties for improper billing and penalties per instance of a skilled nursing facility failing to meet certification requirements. (CMS has published this table for calculation of CMP adjustments.)

HIPAA covered entities now face maximum penalties of $55,010 per violation of HIPAA’s administrative simplification provisions, with an annual cap of $1,650,300. The previous maximum penalties were $50,000 per violation and an annual cap of $1,500,000.

Fines for EMTALA violations have more than doubled.  Hospitals with 100 beds or more that violate the regulations may incur penalties of up to $103,139 for each violation, a drastic increase from the previous $50,000 penalty.  Hospitals with fewer than 100 beds may incur penalties of up to $51,570, up from $25,000. Physicians who fail to fulfill their on-call obligations are also subject to increased penalties up to $51,570 per violation.

Healthcare facilities and providers are encouraged to review the updated list of penalties for compliance purposes.