Deficit Reduction Act (DRA)

The Deficit Reduction Act of 2005 (DRA) requires all entities that receive $5 million or more in annual Medicaid payments to establish specific written policies.

Deficit Reduction Act of 2005

Section 6032 of the Deficit Reduction Act of 2005 (DRA), effective January 1, 2007, requires all entities that receive $5 million or more in annual Medicaid payments to establish written policies that provide detailed information about the Federal False Claims Act, the administrative remedies for false claims and statements, applicable state laws that provide civil or criminal penalties for making false claims and statements, the “whistleblower” protections afforded under such laws and the role of such laws in preventing and detecting fraud, waste and abuse in federal health care programs. Entities shall establish these written policies for all employees (including management), and for any contractor or agent of the entity.

According to CMS, “an entity includes organizational units (a governmental agency, organization, unit, corporation, partnership, or other business arrangement) and individuals, as long as the organizational unit or individual receives or makes payments totaling at least $5 million annually under a Title XIX State Plan, State Plan waiver, or Title XIX demonstration. It is the responsibility of each entity to establish and disseminate written policies which must also be adopted by its contractors or agents. Written policies may be on paper or in electronic form, but must be readily available to all employees, contractors, or agents. For purposes of determining whether an individual or organization must comply with section 6032 as an entity or as a contractor:

a) if a provider is directly paid $5 million in a Federal fiscal year from the State Medicaid Agency, the provider would qualify as an entity, and must comply as such, regardless of whether the provider also contracts with a Medicaid Managed Care Organization (MCO); or

b) if a provider contracts with a Medicaid MCO that has met the $5 million threshold, but the provider itself receives less than $5 million annually directly from the State Medicaid Agency, then the provider must comply as a contractor of the Medicaid MCO, regardless of the amount it is paid by the Medicaid MCO for Medicaid patients.”

When Magellan is considered the entity under the DRA, Magellan is required to establish and to disseminate these policies to its employees, contractors, agents or other persons who furnish, or otherwise authorize the furnishing of, health care items or services; perform billing or coding functions; or are involved in the monitoring of health care services provided by Magellan. According to CMS, “for purposes of section 6032 compliance, an entity’s contractors and agents, including independent contractors, must abide by the entity’s policies to the extent applicable.”

Failure to comply may disqualify contractors, agents or other persons from receiving reimbursement for the period of non-compliance. Knowing non-compliance may violate the Federal False Claims Act as well as disqualify contractors from participation in federal health care programs.

Magellan’s Compliance Activities

Magellan is committed to its role in preventing and detecting healthcare fraud, waste and abuse and complying with applicable federal and state laws. As a part of this effort, Magellan has a comprehensive compliance program to ensure compliance with the DRA including the following:

  •  Medicaid Program Integrity & Compliance Program Policy that outlines Magellan’s comprehensive compliance program for the detection and prevention of fraud, waste and abuse in the Medicaid program.
  • A False Claims and Whistleblower Protection policy that includes a summary of the Federal False Claims Act, federal whistleblower protections and the federal administrative remedies for Federal False Claims.
  • A Code of Conduct that includes information on Magellan’s Compliance program. All Magellan employees must complete an annual training on Magellan’s Code of Conduct. This training includes information on the Federal False Claims Act, applicable state false claims laws including civil or criminal penalties for making false claims and statements, the “whistleblower” protections afforded under such laws and the role of such laws in preventing and detecting fraud, waste and abuse.
  • A summary of the State False Claims Laws that identify state civil and criminal penalties for false claims and statements along with the whistleblower protections afforded under such laws.

Copies of our False Claims and Whistleblower Protection policy, Medicaid Program Integrity & Compliance Program policy, State False Claims Laws summary and Code of Conduct Handbook are also available upon request by contacting the Compliance Hotline at (800) 915-2108 or emailing us at compliance@magellanhealth.com.

Additional information about the education requirement (Section 6032) of the Deficit Reduction Act of 2005 is available online at the Centers for Medicare and Medicaid Services (CMS) web site. We provided a few links below.

CMS – Final Guidance Regarding Employee Education for False Claims Recovery (03/22/2007):

CMS – Employee Education About False Claims Recovery (12/13/2006):