Deficit Reduction Act of The Deficit Reduction Act of

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					                    OKLAHOMA ASSOCIATION OF HOMES AND SERVICES FOR THE AGING




                                        Deficit Reduction Act of 2005
The Deficit Reduction Act of 2005 (DRA) was signed by the President in February 2006. The
Congressional Budget Office estimates that the Medicaid provisions alone of the DRA will reduce federal
spending by $6.9 billion over the next five years. The Medicaid provisions of the DRA make significant
changes in a number of areas.

                        Provisions Affecting Long-Term Care Medicaid
There are a number of issues that relate to Medicaid eligibility. The starting point for determin ing
Medicaid eligibility for nursing home care for an individual is whether the individual meets the income
and resource requirements for Medicaid. While there are numerous other eligibility requirements, these
are the two requirements that raise the vast majority of issues encountered in Medicaid eligibility.

For 2006, the income limit for a nursing home and the elderly waiver is $1,809 monthly. The resource
limit remains at $2,000 for a single person and $3,000 for a couple when both need longterm care.

Financial eligibility for Medicaid is determined at the county Department of Human Services offices.
However, the Deficit Reduction Act of 2005 increases the need for nursing facilities to pay attention to
the financial situation of its residents and potential residents.

Change to Transfer of Assets
Increases the look-back period to 60 months, for all transfers: The look-back period for assets
transferred at less than fair market value is lengthened to five years.
- Currently when determining Medicaid eligibility the look-back is 60 months for transfers to a trust but
  only 36 months for any other transfer. Iowa also has a five year look back period when referring the
  case to the Department of Inspections and Appeals to establish a debt against the person that received
  the transfer.
  -- The law in Iowa requires that all transfers by a person applying for Medicaid during the five-year
     period prior to application for Medicaid, creates a presumption on the person who receives the asset
     that the intent was to enable the transferor to obtain Medicaid eligibility. Therefore, the person who
     receives the asset has to provide by “clear and convincing” evidence that the transfer was not made
     to obtain Medicaid. (Iowa Code 249F.1)
Change in Beginning Date for Transfer of Assets Penalty:
- The penalty for these asset transfers, exclusion from Medicaid eligibility, will begin on the first day of
  the month when a person is receiving long-term care and would otherwise be eligible for Medicaid
  except for the asset transfer. In other words, the penalty period does not begin until the resident is out
  of funds – i.e. cannot afford to pay for the nursing home services.
- Previously, the penalty period would begin on the date on which an uncompensated transfer was made.
  Under that approach, many transfers made during the look back period did not actually give rise to
  assessment of a penalty.
- The intent of this change is to prevent people from making a transfer and then "waiting out" the
  penalty period before applying for Medicaid.
- As noted above, under the Deficit Reduction Act of 2005 the penalty period begins on the date on
  which the individual has applied and is otherwise qualified for Medicaid. This is a dramatic change.




Deficit Reduction Act of 2005, page 1
Gifts:
- Under the new law individuals in need of long-term care will be penalized for any gifts they have
   made during the extended look back period, regardless of the purpose of the gift.
- It is immaterial that the gift, even a moderate amount was made exclusively for a purpose other than to
  receive Medicaid payments.
- However, Senator Charles Grassley wrote a letter to Michael Leavitt, the Secretary of the Department
  of Health and Human Services stating:
  Congress made these changes in the law to prevent people from transferring assets to improperly
  obtain Medicaid coverage not to prevent people from making legitimate donations to charities or
  helping family members in need. CMS should be directed to promptly issue guidance and regulations
  to stipulate the types of transfers that should be presumed to be for a legitimate purpose and therefore
  not subject to penalty unless the state has cause to believe that the individual made the transfer with
  the specific intent to hide those assets and improperly qualify for Medicaid. Examples of the kinds of
  asset transfers that should be presumed to be legitimate ones would include regular donations to
  churches and charities, or helping family members with such things as medical and educational
  expenses.
- The asset transfer provisions would apply to transfers made after the date of enactment of this budget
  legislation. (February 8, 2006)
Undue Hardship Waiver:
- The law provides an “undue hardship” waiver of the penalty if the asset transfer penalty would deprive
  an individual of medical care necessary to preserve health or life, or of food, clothing, shelter or other
  necessities.
- Nursing facilities could apply for a hardship waiver on behalf of a resident.
- While the application was pending, the facility could receive bed hold payments, but for no more than
  30 days.

Partial Months of Ineligibility:
- The period of ineligibility imposed for asset transfers is calculated by dividing the amount transferred
  by the statewide average cost of care to come up with the number of months that an individual could
  have paid their own facility care, if they had not transferred assets. Currently, when doing this
  calculation, DHS rounds down or drops any partial month. The Deficit Reduction Act requires DHS
  to apply additional days of ineligibility for the partial month.
Accumulate Multiple Transfers Into One Period of Ineligibility:
- The Deficit Reduction Act allows multiple transfers made within the look-back period to be added
  together and treated as one large transfer. Currently DHS would only total all transfers when the
  penalty period for one transfer overlaps the next transfer. This allowed Deficit Reduction Act of 2005,
  people to make multiple transfers of less than the statewide average and no penalty period was ever
  imposed.
Notes and Loans Considere d an Asset Transfer:
- The Deficit Reduction Act adds additional restrictions to the use of funds for making a loan, or
  purchase of a mortgage or promissory note. Iowa’s current rules such as receiving fair market value
  still apply. In addition, loans, mortgages, and promissory notes will be considered a transfer for less
  than fair market value unless:
  • Repayment terms are actuarially sound (the expected return on the annuity is commensurate with
      the life expectancy of the beneficiary),
  • They require equal payments with no deferral or balloon payment, and
  • The loan, mortgage, or note can’t be canceled upon the lender’s death.



Deficit Reduction Act of 2005, page 2
   If the loan, mortgage, or promissory note does not meet these requirements, the outstanding balance at
   the time of application for Medicaid is considered an asset transferred for less than fair market value.
Purchase of Life Estate Considered a Transfer of Assets:
- The Deficit Reduction Act adds additional restrictions to the use of funds for purchasing a life estate.
  Iowa’s current rules, such as the requirement to receive fair market value, still apply. The purchase of a
  life estate may also be considered a transfer for less than fair market value unless the purchase of the
  life estate is made on a home where the person continued to live for one year after making the
  purchase.

Examples:
- Old Law: A mother transfers $11,000 each to her sons on July 1, 2003. The mother applies for
  Medicaid nursing home coverage on February 1, 2006, and is otherwise qualified for Medicaid
  coverage.
  Assume that the average monthly cost of nursing home care in Iowa is $4,000. (Actual Average
  Monthly Statewide Cost of Nursing Facility Services for the Period July 1, 2006 – June 30, 2007 is
  $4,021.31.)
  The transfer was uncompensated and occurred during the 36-month look back period. The penalty
  calculation is then used. Dividing the amount of the transfer by the average monthly cost of care
  ($22,000/$4,000 = 5.5) results in the number of month’s the mother's penalty period would last.
  However, DHS previously would drop the partial month to the penalty period. Therefore, the penalty
  period would be only five months. Also, under the old law, the mother’s penalty period would begin
  on July 1, 2003 (the first day of the first month of transfer) and would run through November 1, 2003.
  (Five months).
  Result: The mother’s penalty period has expired by the time of the application for Medicaid. The
  mother qualifies for Medicaid.
- New/Current law: Assume the same facts as above except that the mother applies for Medicaid
  coverage on March 1, 2009 and made the gifts to her children on July 1, 2006.The new law produces a
  different result. While the calculation of the penalty period remains the same, DHS will not round
  down or drop the partial month. Therefore, the 5.5 month penalty period does not begin running until
  March 1, 2009. As a result, the mother is eligible for Medicaid coverage as of March 1, 2009, she will
  be denied Medicaid coverage until mid-August of 2009.
How is the mother going to pay for the nursing home care?
   1.    The family can pay
   2.    Nursing Facility may attempt to discharge for failure to pay
   3.    Charity Care provided by the nursing facility
   4.    Undue Hardship Waiver
Changes in Relation to Purchase of Annuities:
- Individuals applying for Medicaid coverage of long-term care would have to disclose their interest in
  any annuities, whether or not the annuity was irrevocable. To be eligible for Medicaid, individuals
  would have to make the state a remainder beneficiary under the trust for the amount of health care
  provided to the individual. States would have to take into account the amounts of any withdrawals
  from the annuity account in determining the individual’s eligibility for Medicaid coverage.
- Additional restrictions also apply to certain types of annuities. If the annuity does not meet these
  criteria, it is considered a transfer for less than fair market value.
- Assets counting against eligibility for Medicaid would include balloon annuities and the purchase of a
  life estate in another individual’s home.




Deficit Reduction Act of 2005, page 3
“Income First” Rule for Community Spouse Support
- Iowa used to follow the “Resource First” rule for the community spouse. The resources for both
   spouses are totaled and divided in half for the community spouse. Typically, th is allowed the
   applicants to request an appeal to an administrative law judge to request the inclusion of only the
   resources of the community spouse and not the spouse in the institution. In the past, typically the wife
   was the community spouse and had little or no income or compensation. This allowed for protection of
   the husband’s income or compensation.
- Now, lower amounts will be protected because during the appeal the income or compensation of both
   spouses will be considered. Transfers from an instit utionalized spouse to meet the needs of a spouse
   living in the community would be made first from the institutionalized spouse’s income. The
   institutionalized spouse’s assets would only be tapped if his/her income was not available.
- According to the Iowa Department of Human Services this will affect one-third (1/3) of couples with
  community spouses. This would require that the institutional spouse spend down and be private pay
  for an average of 2 to 6 months longer.

Changes in Resource Exemptions:
  Home equity:
   - Individuals with more than $500,000 in home equity would not be eligible for Medicaid coverage
     of long-term care. States could use higher home equity amounts in determining Medicaid eligibility,
     but the absolute limit would be $750,000. The amounts would be indexed to inflation beginning in
     2011.
   - This prohibition would not apply to homes in which the individual’s spouse or minor or
     permanently disabled child was living in the home.
   - The prohibition would not apply to individuals who take out reverse mortgage or home equity
     loans.
   - Hardship waivers of the prohibition are authorized

   CCRCs
   - Admission contracts may require residents to spend on their own care the assets declared as
     available in the application for admission before a resident applies for Medicaid coverage.
   - Entrance fees are to be considered a resource available for the resident’s care if:
     1. the contract allows for that use of the fee,
     2. the fee is refundable, and
     3. the entrance fee does not give the resident an ownership interest in the CCRC.
Documentation of Citizenship:
The Deficit Reduction Act of 2005 requires Medicaid applicants and recipients to furnish documentation
proving they are U.S. citizens or nationals as of July 1, 2006.

Acceptable documentation for "national" status is documents issued by the U.S. Citizenship and
Immigration Services. Acceptable documentation for U.S. citizenship is:
- a U.S. passport or,
- most commonly, a birth certificate in combination with some other identification, such as a driver's
  license.
   Under the legislation, a driver's license alone is not sufficient identification unless the state that issued
   the license has verified the person's citizenship before issuing the license. An Iowa driver's license
   does not meet this standard.




Deficit Reduction Act of 2005, page 4
- In rare instances where the state is unable to obtain the preferred documents as proof of citizenship,
  CMS is allowing the use of written affidavit signed by two US citizens who have personal knowledge
  of the beneficiary’s citizenship status.
- In addition, CMS guidance directs the state to give the beneficiary “reasonable opportunity” to present
  the required documents at time of application or redetermination.
   A Medicaid application will not be approved after July 1, 2006 unless the applicant has furnished the
   required verification. The requirement will be imposed on people receiving Medicaid benefits at the
   time of their next eligibility review. If acceptable verification is not furnished at that time, the person's
   Medicaid eligibility will end. Iowa DHS did not however, that DHS has one year to get acceptable
   verification for current Medicaid recipients.
Medicaid Integrity Program:
The DRA created the Medicaid Integrity Program (MIP) which dramatically increases both CMS’
obligations and resources to combat fraud and abuse.
- $5 Million in FY 2006;
- An additional $50 Million in each of FY 07 & 08; and
- $75 Million annually in FY 09 and each year after.
- CMS to hire 100 new full time employees “whose duties consist solely of protecting the integrity of
  the Medicaid program.”
Legislative Requirements:
- CMS to contract with an entity to conduct Medicaid oversight through reviews, audits, identification
  of overpayments and education.
- The entity is to develop a comprehensive 5 year Medicaid integrity plan.
- Annual reports to be provided to Congress
- Provides additional funding to the Office on the Inspector General of the Department of Health and
  Human Services for Medicaid fraud and abuse control activities.


                                        “Rebalancing Efforts”
Expand Access to HCBS Services:
- The DRA establishes an opportunity for the state to provide home and community-based services as an
  optional Medicaid benefit that would not require a waiver and that meets certain other requirements for
  individuals whose income does not exceed 150 percent of the federal poverty level.
- The state is also required to submit to the Secretary a projection of the number of individuals to be
  served under the option, and may limit the number of individuals who are eligible for such services.
Level of Care:
- The state may provide this option to individuals without determining that but for the provision of such
  services; the person would require the level of care provided in a hospital, nursing home, or ICF-MR.
- States are required to establish a needs-based level of care criteria for determining an individual's
  eligibility for the HCBS option established by this provision, and the specific HCBS the individual
  will receive.

More Stringent Level of Care:
- The State must also establish a needs-based level of care criteria for determining whether an individual
  requires the level of care provided in a hospital, nursing home, ICF-MR, or under a waiver of the state



Deficit Reduction Act of 2005, page 5
  plan, that is more stringent than the needs-based criteria for the HCBS option established by this
  provision.
- Federal Medicaid funding will continue to be available for individuals who are receiving Medicaid in
  an institution or home and community-based setting (under a HCBS waiver program or Section 1115
  demonstration) as of the effective date of the Medicaid state plan amendment, without regard to
  whether the individuals satisfy the more stringent eligibility criteria established under that paragraph
  until the individual is discharged from the institution or waiver program, or no longer requires such
  level of care.
Independent Evaluation:
- The state is required to use an independent evaluation for determining an individual's eligibility for
  HCBS. The independent evaluation must include an assessment of the needs of the individual to:
   (1) determine a necessary level of services and supports consistent with the individual's physical and
       mental capacity;
   (2) prevent unnecessary or inappropriate care, and (3) establish an individualized care plan for the
       individual.
   The assessment must include:
   (1) an objective evaluation of an individual's inability or need for significant assistance to perform two
       or more activities of daily living as defined in the Internal Revenue Service code;
   (2) a face-to-face evaluation of the individual by an individual trained in the assessment and
       evaluation of individuals whose physical or mental conditions trigger a potential need for HCBS;
   (3) where appropriate, consultation with the individual's family, spouse, guardian, or other responsible
       individual;
  (4) consultation with all treating and consulting health and support professionals caring for the
      individual;
  (5) an examination of the individual's relevant history and medical records, and care and support
      needs guided by best practices and research on effective strategies that result in improved health
      and quality of life outcomes.
- Self Direction: The assessment must also evaluate the ability of the individual or individual's
  representative to self-direct the purchase and control of HCBS if he/she elects this option, and if such
  an option is covered by the state.
- Quality Assurance: The state must ensure that the provision of home and community-based services
  meets federal and state guidelines for quality assurance. The state must establish standards for the
  conduct of the independent evaluation to prevent conflicts of interest, and must allow for at least
  annual redetermination of eligibility and appeals using the process for appeals under the State Plan.
- Presumptive Eligibility: States may elect to provide for a period of presumptive eligibility(not to
  exceed 60 days) for individuals that the state has reason to believe may be eligible for home and
  community-based services. The covered activities include carrying out the independent evaluation and
  assessment and, if eligible, the specific services the individual will receive.
- State wideness/Income & Resource Rules: In covering this benefit, a state may elect not to comply
  with existing Medicaid requirements related to state wideness and the income and resource rules
  applicable in the community, but only for purposes of providing home and community-based services
  in accordance with this benefit. This option should not be construed as applying to those receiving
  Medicaid in an institution as a result of a determination that the individual requires the level of care in
  a hospital, nursing facility or ICF/MR.
This provision will be effective on January 1, 2007.
- Will some be Left Out: Currently, to receive nursing facility or HCBS waiver services the income
  cannot exceed 300% of SSI. This is approximately 200% of poverty level. It appears that those
  between 150% - 200% of federal poverty level may only get waiver services because some will meet



Deficit Reduction Act of 2005, page 6
  the new level of care and others will not. The Iowa DHS does not know the number of people that this
  would affect.
- Iowa DHS: The Iowa Department of Human Services sees significant opportunities, but is undecided
  on the issue and has a number of things to consider.
Cash and Counseling:
- States would be authorized to provide Medicaid coverage for “self-directed personal assistance
  services” to individuals who otherwise would be eligible for coverage of home and community based
  services. States could create this opportunity without needing are quest for waiver.
- Under this program, individuals would choose their own care providers and could hire, fire, supervise,
  and otherwise manage those who provide services.
- Individuals could use their budgets to purchase items such as accessibility ramps and microwaves that
  increase independence but are not covered by Medicaid.
- States would have to provide appropriate assessment and counseling in the development of a service
  plan and budget.
- States could limit the populations eligible for and the number of individuals served under this program.
- Individuals are not eligible to participate in the self-direction program if they live in a “home or
  property that is owned, operated, or controlled by a provider of services, not related by blood or
  marriage”.
   -- This language has significant implications for who may be ineligible to participate in the self-
      direction program because their house is controlled by a services provider.
   -- However, DHS plans to move forward with their proposed Cash & Counseling model in Iowa
      called the “Consumer Choice Option”. This option gives people who are eligible for Medicaid
      Home and Community Based Services (HCBS) Waivers more choice and control in managing their
      daily lives. The “Consumer Choice Option” will be available to all HCBS Waiver participants no
      matter their location.
Money Follows the Person Rebalancing Demonstration:
- Authorizes the Secretary of Health and Human Services to award competitive grants to:
  -- Increase the use of home and community-based services rather than institution long term services
   -- Eliminate barriers that prevent or restrict the flexible use of Medicaid funds to enable beneficiaries
      to receive services in the setting of their choice; and
   -- Assure continued access to community-services to individuals who have transitioned out of an
      institution.
- DRA provides for enhanced FMAP for an individual’s cost for 12 months from the date of institutional
  discharge; after 12 months, state continues services at regular FMAP.
- Eligible participants are Medicaid beneficiaries in institutions for residency period set by the state (6
  months to 2 years).
- Federal share of HCBS services is increased to 75-90% depending on the state.
- States could provide for “self-directed personal assistance services” for individuals who otherwise
  would be eligible for coverage of home and community based services, allowing individuals to choose
  their own care providers and hire, fire, supervise, and otherwise manage those who provide services.
- Procedures would have to be in place to assure quality services.
- States would have to show increased spending on home and community based services under their
  Medicaid programs.




Deficit Reduction Act of 2005, page 7
Expansion of Long-Term Care Partnership Program:
- For many years, a variety of policy makers have sought to increase the role of private long term care
  insurance in financing long-term care services. In the early 1990’s, Congress established the Long-
  Term Care Partnership program. Four states (California, Connecticut, Indiana, and New York)
  established programs. Congress established a moratorium on the establishment of new programs in
  1993.
- The DRA lifts the moratorium and permits all states to establish partnership programs. All states
  would be permitted to offer the partnerships that provide incentives for individuals to buy qualifying
  long-term care insurance policies. Individuals who exhausted their policy benefits would qualify for
  Medicaid while sheltering assets up to the amount of the policy.
- Unanswered Question: What happens to individuals who already have long-term care insurance
  coverage when the state adopts a partnership program? The DRA contains no provision on this issue.
  Indiana and Connecticut did not grandfather in existing policy holders.

                                              Medicare
Nursing home bad debt:
- Under this policy, Medicare reimburses certain providers for debt unpaid by beneficiaries for
  coinsurance and deductibles. Historically, CMS has reimbursed certain providers for 100percent of
  this bad debt. SNFs are among the Medicare entities that are currently being reimbursed for 100
  percent of beneficiary's bad debt.
- The DRC reduces the payment for the allowable bad debts attributable to Medicare deductibles and
  coinsurance amounts by 30 percent for services furnished in SNFs on or after October 1, 2005.
- Reduces reimbursement for patients covered by Medicare alone to 70%.
- Bad debt payments for individuals who are dually eligible for Medicare and Medicaid remain at 100
  percent.

Therapy caps:
- The Balanced Budget Act of 1997 established annual per beneficiary payment limits for all outpatient
  therapy services provided by non-hospital providers. The limits applied to services provided by
  independent therapists as well as to those provided by comprehensive outpatient rehabilitation
  facilities (CORFs) and other rehabilitation agencies. The limits did not apply to outpatient services
  provided by hospitals.
- Beginning in 1999, there were two beneficiary limits. The first was a $1,500 per beneficiary annual
  cap for all outpatient physical therapy services and speech language pathology services. The second
  was a $1,500 per beneficiary annual cap for all out patient occupational therapy services. Beginning in
  2002, the amount would increase by the Medicare economic index (MEI) rounded to the nearest
  multiple of $10.
   -- The Balanced Budget Refinement Act of 1999 (BBRA) suspended application of the limits for
      2000 and 2001.
   -- The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of2000 (BIPA)
      extended the suspension through 2002.
   -- Implementation of the provision was delayed until September 2003.
   -- The caps were implemented from September 1, 2003 through December 7, 2003.MMA reinstated
      the moratorium from December 8, 2003 through December 31, 2005.
   -- The caps are slated to go into effect beginning January 1, 2006. In the November2005 final
      physician fee schedule regulation for 2006 CMS announced that the caps would be $1,740 in 2006.




Deficit Reduction Act of 2005, page 8
- The DRA allows the current moratorium to expire, putting the caps back into effect as of January 1,
  2006.
- However, Medicare beneficiaries would be permitted to apply for coverage of therapy in excess of the
  caps if they needed it. If CMS does not deny the application within ten days, it will be considered to
  have been approved.
Home health reimbursement
- The Medicare home health prospective payment system, which was implemented on October 1, 2000,
  provides a standardized payment for a 60-day episode of care furnished to a Medicare beneficiary.
  Medicare's payment is adjusted to reflect the type and intensity of care furnished and area wages as
  measured by the hospital wage index.
- Each year Medicare's payment to home health agencies is updated by the projected annual change in
  the home health market basket (HHMB), with specified reductions in some years. For the last three
  calendar quarters of 2004 through 2006, the home health update is the HHMB minus 0.8 percentage
  points. In 2007 and subsequent years, the payment update for home health agencies is equal to the full
  HHMB.
- The Medicare Prescription Drug Improvement and Modernization act of 2003 provided for a one-year
  5 percent additional payment for home health services furnished in rural areas. The temporary payment
  began for episodes and visits ending on or after April 1, 2004 and before April 1, 2005. It was made
  without regard to certain budget neutrality provisions and was not included in the base for
  determination of payment updates.
- The DRA freezes home health rates in 2006.
- There would be also be a 5% add-on for rural home health agencies in 2006.

75% rule
- Inpatient rehabilitation facilities (IRFs) are either freestanding hospitals or distinct part units of other
  hospitals that are exempt from Medicare's inpatient prospective payment system(IPPS) used to pay
  short-term general hospitals. Since 1983, CMS has required that a facility must treat a certain
  proportion of patients with specified medical conditions in order to qualify as an IRF and receive
  higher Medicare payments.
- The rule was suspended temporarily and reissued in 2004 with a revised set of qualifying conditions
  and a transition period for the compliance threshold as follows:
   --   50 percent from July 1, 2004 and before July 1, 2005;
   --   60 percent from July 1, 2005 and before July 1, 2006;
   --   65 percent from July 1, 2006 and before July 1, 2007; and
   --   75 percent from July 1, 2007 and thereafter.
- In April 2005, the Government Accountability Office issued a final report recommending that the
  Centers for Medicare and Medicaid Services (CMS) refine the rule to describe more thoroughly the
  subgroups of patients within a condition that require IRF services, possibly using functional status or
  other factors in addition to condition, to help ensure that IRFs can be classified appropriately and that
  only patients needing IRF services are admitted.
- The DRA establishes the compliance threshold at:
   -- 60 percent during the 12-month period beginning on July 1, 2006;
   -- 65 percent during the 12-month period beginning on July 1, 2007; and
   -- 5 percent beginning on July 1, 2008 and subsequently.




Deficit Reduction Act of 2005, page 9
                                          Other Provisions
Employee Education about False Claims Recovery:
- Under the federal False Claims Act, anyone who knowingly submits a false claim to the federal
  government is liable for damages up to three times the amount of the government's damages plus
  mandatory penalties of $5,500 to $11,000 for each false claim submitted. Under qui tam
  (whistleblower) provisions of the act, private citizens with knowledge of potential violations
  (`relators') may file suit on behalf of the government and are entitled to receive a share of the proceeds
  of the action or settlement of the claim (ranging from 15percent to 30 percent, depending on whether
  or not the government elects to participate in the case).
- Under the DRA a state would be required to provide that any entity that receives annual Medicaid
  payments of at least $5 million, as a condition of receiving such payments, must:
   (1) establish written policies, procedures, and protocols for training of all employees of the entity, and
       of any contractor or agent of the entity, that includes a detailed discussion of the federal False
       Claims Act, federal administrative remedies for false claims and statements, any state laws
       pertaining to civil or criminal penalties for false claims and statements, and whistleblower
       protections under such laws, with respect to the role of such laws in preventing and detecting
       fraud, waste, and abuse in federal health care programs,
   (2) include in such written materials detailed provis ions and training regarding the entity's policies and
       procedures for detecting and preventing fraud, waste, and abuse, and
   (3) include in any employee handbook for the entity a specific discussion of such laws, the rights of
       employees to be protected as whistleblowers, and the entity's polic ies and procedures for detecting
       and preventing fraud, waste, and abuse.
- The provision would be effective January 1, 2007, except that in the case of a state which the Secretary
  of HHS determines that state legislation is required for compliance, the state would not be regarded as
  failing to comply solely on the basis of its failure to meet the requirements before the first day of the
  first calendar quarter beginning after the close of the first regular session of the state legislature that
  begins after the date of enactment of the bill.




Deficit Reduction Act of 2005, page 10