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OIG Releases Guidance Regarding Voluntary Fraud Disclosure

The Department of Health and Human Services' Office of the Inspector General (OIG) issued guidelines on October 21, 1998, relating to the voluntary disclosure of "health care fraud." These guidelines, entitled the "Provider Self-Disclosure Protocol," replace a more limited program previously in effect, and will apply to any health care provider, in any jurisdiction, regarding disclosure pertaining to Medicare, Medicaid, or any other federally funded health care program.

The OIG makes no grand promises regarding the effect of voluntary disclosure, but merely states that self-reporting of wrongdoing "could be a mitigating factor" in the OIG's recommendations to prosecuting agencies, and in regard to the exercise of the OIG's permissive authority to exclude providers from the Medicare and Medicaid programs. As a general matter, the OIG holds out that full disclosure and cooperation will generally benefit the provider.

Specific benefits of self-disclosure are reported as:

1. The provider may be allowed to perform a self-audit, thus minimizing the cost and disruption of a full scale federal audit and investigation.

2. The provider may be allowed to perform future compliance audits internally, rather than through an independent legal or accounting firm.

Importantly, the guidelines provide that a provider who is already subject to government inquiry will not automatically be precluded from obtaining the benefits of the voluntary reporting program, so long as disclosure is made in good faith. This is a major distinguishing factor from earlier, more limited self-disclosure programs.

The new guidelines specify the place and manner of reporting. The disclosing provider will also be required to allow the OIG access to audit workpapers and other supporting documents, without the assertion of privilege, although the OIG will not "normally" request documents subject to the attorney-client privilege.

While guarantees of the benefits of participating in the new self-disclosure program are few, if any, the new program has the potential to work for health care providers, if the government can demonstrate that the benefits of self-reporting are, in fact, tangible.

Clearly, entities reporting under these guidelines must be treated fairly and receive less "punishment" than entities whose problems are identified by the government. The difficulty with presenting such proof, however, is that uneven sanction actions may make it difficult to establish a "baseline" for comparing self-reporting versus government identification of problems.

An additional benefit of the self-reporting program, not mentioned in the guidelines, is that qui tam actions, that is, suits by private parties, such as former employees who turn in a provider, will likely be cut off by self-reporting. As these actions are becoming more and more popular, a health care provider may be purchasing a lot of insurance by self-reporting under the new program.


December 21, 1998




Rosen, Barry F.


Health Care