Penalties and Assessments for Failure to Screen
Are You Obligated by Law to Screen for Excluded Individuals and Entities?
Under Federal law, health care providers are NOT required by statute or regulation to screen employees, contractors, vendors, etc. against Federal and State exclusion and debarment databases. Problem solved, right? Unfortunately, the fact that there are no Federal statutes which obligate health care providers and suppliers to screen their staff, does not mean that they are not subject to penalties if an excluded individual or entity is employed or engaged in a contractual capacity. Potential adverse actions that can result from this conduct may include the imposition of Civil Monetary Penalties (CMPs), Assessments, and / or liability under the Civil False Claims Act. Each of these potential adverse consequences are outlined below.
Potential Civil Monetary Penalty (CMP) Liability.
The ability of the government to impose CMPs on individuals and entities who have engaged fraud and other wrongful conduct with respect to the Medicare and Medicaid programs was first enacted by Congress in 1981. Congress enacted the CMP law, (outlined under Section 1128A of the Social Security Act), as one of several administrative remedies to combat Medicare and Medicaid fraud and abuse. The law authorized the Secretary to impose penalties and assessments on persons who defrauded Medicare or Medicaid or engaged in certain other wrongful conduct.
The CMP law also authorized the Secretary, HHS, to exclude persons from Federal health care programs (as defined in Section 1128B(f)(1) of the Social Security Act) and to direct the appropriate State agency to exclude the person from participating in any State health care programs (as defined in Section 1128(h) of the Social Security Act). Congress later expanded the CMP law and the scope of exclusion to apply to all Federal health care programs, but the CMP applicable to beneficiary inducements remains limited to Medicare and State health care program beneficiaries. Since 1981, Congress has created various other CMP authorities covering numerous types of fraud and abuse. The Office of Inspector General (OIG) has the authority to seek Civil Monetary Penalties (CMPs) against an individual or entity based on a wide variety of prohibited conduct involving excluded parties.
At their very core, CMPs are “remedial measures designed to protect the Federal health care programs from any person whose continued participation in the programs constitutes a risk to the programs and their beneficiaries.” [i] As the chart below shows, significant CMP penalties can be imposed by the OIG for each violation of applicable exclusion regulations.
[i] See “A Provider’s Guide to OIG Exclusions,” by Paul Weidenfeld.
[i] Federal Register, Vol. 87, No. 52. (March 17, 2022). 15102.
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Basis for Civil Money Penalty
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2022 Maximum Adjusted Civil Money Penalty
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Presentation of claim for item or service by excluded party. 42 C.F.R. §1003.200(a)(3)
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$22,427
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Excluded party retaining ownership or control. 42 C.F.R. §1003.200(b)(3)
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$22,427
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Arranges or contracts with an excluded party. 42 C.F.R. §1003.200(b)(4)
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$22,427
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Orders or prescribes medicine from excluded person. 42 C.F.R. §1003.200(b)(6)
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$22,427
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MCO employs or contracts with an excluded party. 42 C.F.R. §1003.400(b)(2)
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$25,000
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Potential Assessments for OIG Exclusion Violations.
In addition to its authority to impose CMPs, the OIG is also authorized to impose assessments for OIG exclusion violations. Assessments differ from CMPs in that they are not considered to be sanctions. Rather, assessments are intended to be imposed “in lieu of damages sustained by the Department or the State agency because of the violation.”[i] Although assessments are not intended to be a sanction or penalty, the imposition of an assessment can still be quite costly. Examples of assessments that may be pursued by the OIG are set out below.
[i] 42 C.F.R. § 1003.130.
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Basis for Assessments by the OIG
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Potential Assessments
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Presentation of claim for item or service by excluded party. 42 C.F.R. §1003.200(a)(3)
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Three times the amount claimed for each item or service.
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Excluded party retaining ownership or control. 42 C.F.R. §1003.200(b)(3)
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Three times the amount claimed for each item or service.
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Arranges or contracts with an excluded party. 42 C.F.R. §1003.200(b)(4)
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Three times each billable service or three times total cost of the excluded person that furnishes or provides non-separately billed services.
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Orders or prescribes medicine from excluded person. 42 C.F.R. §1003.200(b)(6)
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$25,000 for each billable violation.
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MCO employs or contracts with an excluded party. 42 C.F.R. §1003.400(b)(2)
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$25,000 for each billable violation.
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Potential Overpayment and False Claims Act Liability for Exclusion Violations:
At a minimum, services submitted for payment in violation of the exclusion regulations constitute an overpayment and must be repaid to the government. Should an individual or entity “knowingly” fail to promptly report and repay an exclusion-related overpayment, such action may result in liability under the civil False Claims Act.[i]
[i] Exclusion violations can also give rise to potential False Claims Act (FCA) liability under the Fraud Enforcement Recovery Act of 2009 (FERA) and the Affordable Care Act of 2010 (ACA). FERA expands the scope of “reverse false claims” liability under the FCA by making the retention of an “obligation” to the government a false claim, and the ACA specifically states that retained overpayments are legal “obligations” under FERA.
Related FAQs.
- What is a Civil Monetary Penalty (CMP)? In the context of an exclusion action, the OIG has been given the authority to seek to impose penalties against individuals and entities that have improperly employed an excluded party OR entered into a business relationship with an excluded contractor, vendor or agent. With respect to exclusions, the OIG’s CMP authorities are set out at 42 C.F.R. parts 1003.
- Can you appeal the imposition of an Assessment or a CMP? Yes! Individuals and entities may, in fact, appeal the proposed imposition of an assessment or CMPs. The regulations governing the appeals process are set out under 42 C.F.R. § 1005 et seq.
- What are Some of the Factors Considered by the OIG when Imposing Assessments or CMPs? When considering the imposition of penalties and assessments, the OIG considers the nature and circumstances of the violation, the degree of culpability of the individual being assessed, the history of prior offenses, other wrongful conduct (if any) and any other matters the OIG deems relevant to its determination.[i] Relevant mitigating and aggravating factors contained in the regulations and discussed in subsequent OIG guidance include the following:
Mitigating Factors:
- The services or violation subject to assessments and penalties were of the same type and occurred during a short period of time, there were few such services or violations AND the total amount claimed for such items or services was less than $5,000.[ii]
- If a person took appropriate and timely corrective action in response to the violation.[iii]
Aggravating Circumstances:
- The violations were of several types or occurred over a lengthy period of time.[iv]
- There were many such items or services or violations (or the nature and circumstances indicate a pattern of claims or requests for payment for such items or services or a pattern of violations).[v]
- The amount claimed or requested for such items or services, or the amount of the overpayment was $50,000 or more.[vi]
- The violation resulted, or could have resulted, in patient harm, premature discharge, or a need for additional services or subsequent hospital admission. [vii]
- The amount or type of financial, ownership, or control interest or the degree of responsibility a person has in an entity was substantial with respect to an action brought under 1003.200(b)(3).[viii]
Contact us for a free quote and to sign you up for our screening services. We feel confident that you will be satisfied with Exclusion Screening’s services and that you will stay with us as a client. Give us a call. (800) 294-0952.
[i] 42 C.F.R. § 1003.140(a).
[ii] 42 C.F.R. § 1003.220(a).
[iii] 42 C.F.R. § 1003.140(a)(2).
[iv] 42 C.F.R. § 1003.220(b)(1).
[v] 42 C.F.R. § 1003.220(b)(2).
[vi] 42 C.F.R. § 1003.220(b)(3).
[vii] 42 C.F.R. § 1003.220(b)(4).
[viii] 42 C.F.R. § 1003.220(b)(5).
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[1] See “A Provider’s Guide to OIG Exclusions,” by Paul Weidenfeld.
[2] Federal Register, Vol. 87, No. 52. (March 17, 2022). 15102.
[3] 42 C.F.R. § 1003.130.
[4] Exclusion violations can also give rise to potential False Claims Act (FCA) liability under the Fraud Enforcement Recovery Act of 2009 (FERA) and the Affordable Care Act of 2010 (ACA). FERA expands the scope of “reverse false claims” liability under the FCA by making the retention of an “obligation” to the government a false claim, and the ACA specifically states that retained overpayments are legal “obligations” under FERA.
[5] 42 C.F.R. § 1003.140(a).
[6] 42 C.F.R. § 1003.220(a).
[7] 42 C.F.R. § 1003.140(a)(2).
[8] 42 C.F.R. § 1003.220(b)(1).
[9] 42 C.F.R. § 1003.220(b)(2).
[10] 42 C.F.R. § 1003.220(b)(3).
[11] 42 C.F.R. § 1003.220(b)(4).
[12] 42 C.F.R. § 1003.220(b)(5).
Are you unsure your screening requirements depending on your business and location? Our FREE Consultation has you covered. It includes: An overview of exclusions in addition to an overview of your exclusion requirements, and a demonstration of our product and service (SAFER) will be performed prior to a presentation of your personalized solutions. This consultation for your benefit only!