On September 13, 2017, Senator Bernie Sanders (I-VT) introduced his “Medicare for All Act of 2017” which, as the name implies, would expand Medicare to cover nearly every American. Although it is unlikely that the bill will pass, is the bill does raise a thought-provoking consideration as to what a single-payer system could look like in the United States. One can imagine the collective rejoice of hospitals having fully insured patient populations. But how would hospital compliance efforts change under a single payer system?

For decades, the federal government has been concerned about fraud, waste, and abuse in the Medicare program. However, the government’s health care fraud enforcement efforts have strengthened over the past decade. In Fiscal Year (FY) 2016 alone, the Medicare Fraud Strike Force (a coordinated effort between the Department of Justice (DOJ) and Department of Health and Human Services’ Office of Inspector General (OIG)) recovered over $2.5 billion in health care fraud-related False Claims Act judgments and settlements, and attained additional administrative impositions in health care fraud cases and proceedings. Additionally, the OIG excluded a total of 3,635 individuals and entities from federal health care programs.

The Medicare-for-All proposal recognizes the need for continued fraud and abuse monitoring efforts under an expansive single-payer system. Subtitle B, Section 411 of the bill would provide for the “Control of Fraud and Abuse under Universal Medicare Program.” The provision states:

The following sections of the Social Security Act shall apply to [the Medicare-for-All Act] in the same manner as they apply to State medical assistance plans under title XIX of such Act:
(1) Section 1128 (relating to exclusion of individuals and entities).
(2) Section 1128A (civil monetary penalties).
(3) Section 1128B (criminal penalties).
(4) Section 1124 (relating to disclosure of ownership and related information).
(5) Section 1126 (relating to disclosure of certain owners).

These are familiar laws for a hospital compliance department and legal counsel. Section 1128B (the Anti-Kickback Statute) prohibits the offer, payment, solicitation, or receipt of remuneration (i.e., anything of value) in an effort to induce or reward the referral of federal health care program business. Section 1128A provides for the imposition of civil monetary penalties (CMPs), which currently amount to $15,072 per claim for beneficiary inducements or the submission of false claims. These penalties can add up quickly, especially given that CMPs are increased each year to match the rate of inflation. Million and multi-million dollar OIG settlements are commonplace. If a hospital’s payor mix goes from 60% federal (Medicare/Medicaid) to 100% federal, the resulting settlements and paybacks could balloon.

One can also imagine the power and influence the OIG could yield in investigations where the hospital fears exclusion from the only payor source available. Yet, this consideration, in turn, raises a question as to whether the government would have the manpower, the resources, and the funding to administer the inevitable significant increase in the number claims and potential false claims under Medicare for All. If one considers the current Recovery Audit Contractor programs and the years-long backlog of Medicare administrative appeals, the answer is probably no.

As the saying goes, “an ounce of prevention is worth a pound of cure.” Under a single-payer system, hospitals would need to step up their compliance efforts to counteract the increase in potential liability. Hospitals would surely need to grow the size, scope, and funding of their compliance departments. It is worth noting, however, that increases in compliance costs could be offset by reductions in other areas, such as charity care spending or bad debt.

The Medicare-for-All proposal presents interesting questions regarding the federal government’s ability to handle and oversee healthcare provided to nearly every American, and regarding health care providers’ ability to handle a potential payback when almost every dollar in the door would come from a single payor – the federal government.

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