Can a Medicare Provider or Supplier Hire an Excluded Individual or Enter in a Contract with an Excluded Entity?

Hiring Federally Excluded Individuals(October 9, 2019):  Should you choose to participate in the Medicare and / or Medicaid programs, you must comply with a wide variety of program integrity requirements. One obligation in particular is often missed by physician practices, home health agencies, hospices and laboratories – the “screening” of employees, contractors and agents to ensure that the provider or supplier has not employed or entered into a business relationship with an individual or entity that has been excluded from participation in Federal health care programs.[1]  Does that mean that a Medicare provider can never employ an excluded individual or entity?  Not necessarily.  In this article, we will examine how the Department of Health & Human Services (HHS), Office of Inspector General (OIG) has interpreted the impact and scope of an exclusion action.

I. How Did Your Exclusion Screening Obligations Arise?

When reviewing mandatory exclusion screening obligations with health care providers and suppliers, we are regularly asked – How did this obligation arise?  As described below, as a participating provider in the Medicare and / or Medicaid program, you have been prohibited from employing (or contracting with) any individual or entity that has been excluded from participation in Federal health benefit programs for more than 40 years. A brief overview of the evolution of your statutory and regulatory exclusion screening obligation is set out below:
  • Medicare-Medicaid Anti-Fraud and Abuse Amendments. The statutory basis for the mandatory exclusion (from Medicare, Medicaid and other Federal health care programs) of physicians and other practitioners convicted of certain crimes was first enacted as part of the “Medicare-Medicaid Anti-Fraud and Abuse Amendments”[2]of 1977.  
  • Civil Monetary Penalties Law. The initial 1977 legislation discussed above was soon followed in 1981 by passage of the “Civil Monetary Penalties Law,”[3] which authorized the OIG to impose Civil Monetary Penalties (CMPs), assessments, and program exclusion actions against any party that submitted false, fraudulent or improper claims to Medicare or Medicaid for payment.
  • Medicare and Medicaid Patient and Program Protection Act.  In 1987, Congress passed legislation which expanded the OIG’s administrative authorities.  Section 1128(a) of the Act[4] outlined a number of adverse actions[5] which mandated the exclusion of an individual or entity from participation in Federal health care programs.  The agency’s expanded authorities included the establishment of additional mandatory and discretionary basis’ for excluding individuals or entities.  Finally, Section 214 set out the minimum period of exclusion that could be assessed against “practitioners and persons failing to meet statutory obligations.”
  • Health Insurance Portability and Accountability Act (HIPAA).[6]  Among its many landmark privacy and enforcement provisions, HIPAA also included statutory provisions related to the permissive exclusion of individuals and entities. For instance, under Section 212, the legislation established a minimum period of exclusion for certain individuals and entities subject to permissive exclusion from Medicare and State health care programs.  Additionally, Section 213 covers the permissive exclusion of individuals with ownership or a controlling interest in sanctioned entities.   
  • Balanced Budget Act (BBA of 1997).[7]  Under the BBA of 1997, Congress expanded the authorities under which an individual or entity could be excluded from participating in Medicare, Medicaid and other Federal health care programs. For instance, under Section 4301, individuals convicted of three or more health care related crimes became subject to permanent exclusion and pursuant to Section 4302, the Secretary could refuse to enter into Medicare agreements with individuals or entities convicted of felonies.  Finally, Section 4303 revised the Act to permit the Secretary of HHS (through the OIG), to exclude entities controlled by a family member of a sanctioned individual.  The BBA of 1997 also amended the CMPs that could be assessed against persons that contract with excluded individuals.
Hiring Excluded Individuals
  • Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs.[8]  This guidance was issued in an effort to help “affected parties better understand the scope of payment prohibitions that apply to items and services provided to Federal program beneficiaries, and to provide guidance to individuals and entities that have been excluded from the Federal health care programs and to those who employ or contract with an excluded individual or entity to provide such items or services.”
  • Medicare Prescription Drug, Improvement, and Modernization Act of 2003.[9]  Under 42 USC 1314, Section 949, the Secretary, HHS (after consulting with the OIG) was given the authority to waive the exclusion of an individual or entity if the “individual or entity is the sole community physician or sole source of essential specialized services in a community,” AND the party’s exclusion would impose a hardship on individuals entitled to benefits.
  • Solicitation of Information and Recommendations for Supplementing the Guidance Provided in the Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs. In November 2010, the OIG published a notice in the Federal Register, advising the public that it intended to update its 1999 guidance, “Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs,” and it sought comments from the public with respect to the development of the updated guidance.  As the request for comments noted:
With time it has become even more apparent that exclusion has a significant impact, not only on those who have been excluded but also on entities that have employed or contracted with excluded persons and been faced with liability for overpayments and civil monetary penalties as a result. As OIG’s compliance and enforcement activities in this area have increased, many health care providers have discovered that they employ excluded individuals and have self-disclosed to the OIG.”[10]
  • Patient Protection and Affordable Care Act of 2010.[11] Under Section 6401, the Affordable Care Act imposed increased disclosure requirements on health care providers and supplier participating in the Medicare, Medicaid and / or CHIP programs.[12]  Among the new disclosure requirements was the fact that excluded “affiliations” now had to be disclosed to CMS. 
  • Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (Special Advisory Bulletin).[13]  In May 2013, the OIG released an updated Special Advisory Bulletin addressing the effect of exclusion from participation in Federal health care programs. The updated 2013 guidance goes into considerable detail describing the scope and effect of an exclusion action items or services furnished (1) by an excluded person, or (2) at the medical direction or on the prescription of an excluded person.  The guidance also discusses the scope and frequency of a provider’s screening obligations.

II. What is the Practical Effect of Exclusion from Federal Health Care Programs:

Simply stated, an exclusion action is perhaps the most severe administrative remedy that can be imposed on an individual or entity by the OIG. If an individual is excluded by the OIG from participating in Medicare, Medicaid and other Federal health care programs, he or she cannot be hired or contracted to work for any entity that participates in any of these programs. From a practical standpoint, the government does not want any Federal health care monies to be used to pay any of the salary or benefits of an excluded individual.  This “payment prohibition” serves as complete ban and applies to all methods of Federal program reimbursement” regardless of whether the reimbursement results from an itemized claim, an entry on a cost report or is included in a capitated payment to an entity.[14]  As the OIG’s 2013 Special Advisory Bulletin notes, the broad payment prohibition applied to excluded parties includes, but is not limited to the following:
  • Management, administrative or any leadership roles;
  • Surgical support or other activities that indirectly support care; 
  • Claims processing and information technology; 
  • Transportation services including ambulance company dispatchers;
  • Selling, delivering or refilling orders for medical devices
 
Notably, even the work of an unpaid volunteer who is an excluded party can trigger CMP liability if the services provided are not “wholly unrelated to Federal Health Care Programs.” [15]  In consideration of these broad prohibitions, you may ask “Can a Medicare provider ever hire an excluded individual”?  As discussed below, there are only four limited circumstances under which a participating provider can hire an excluded individual and avoid overpayment and CMP liability.  Moreover, it is very difficult to qualify for any of the exceptions that have been identified.

III. When Can a Medicare Provider or Supplier Employ an Excluded Individual?

Exception #1If Federal health care programs do not pay, either directly or indirectly, for any of the items or services being provided by the excluded individual, then a participating provider may employ or contract with an excluded person to provide those items or services.[16]    Unfortunately, this exception is far easier to describe than it is to appropriately arrange.  Two challenges immediately arise.  First, how will a participating provider be able to ensure that an excluded party will not be paid, either directly or indirectly, with reimbursement monies paid by Medicare, Medicaid and / or another Federal health benefits program? Second, how can a participating provider ensure that all of the items or services provided by an excluded individual “relate solely to non-Federal health benefit program patients?”  [17]

Exception #2If an employer employs or contracts with an excluded person to furnish items or services solely to non-Federal health care beneficiaries, a participating provider would not be subject to CMP liability.  As in the first example, this business arrangement is theoretically possible but would likely provide difficult to properly execute.  Prior to entering into this type of arrangement, we strongly recommend that the participating provide seek an Advisory Opinion from the OIG to verify that the duties, structure and payment practices would not trigger CMP liability.

Exception #3Seek an exclusion “Waiver” under Section 1128A(i)(5) of the Act. At the outset, it is important to note that an excluded individual does not have the authority to “request” a waiver of his or her exclusion action by the OIG.  If a mandatory exclusion action is based on violation of 42 CFR §1001.101(a), (c) or (d), the Administrator of a Federal health care program has the authority to request an exclusion waiver from the OIG.[18]  However, even the Federal health care Administrator does not the authority to seek an exclusion waiver if the exclusion action has been based on a conviction under Federal or State law of a criminal offense related to the neglect or abuse of a patient (as outlined under 42 CFR §1001.101(b)). 
In order to request an exclusion waiver from the OIG, the Administrator of a Federal health care program must first determine that:
“(1) The individual or entity is the sole community physician or the sole source of essential specialized services in a community; and
(2) The exclusion would impose a hardship on beneficiaries (as defined in section 1128A(i)(5) of the Act) of that program.”
If an exclusion action has been based on one of the OIG’s permissive exclusion authorities, the OIG can only grant a waiver of the exclusion action if the agency determines that imposition of the exclusion would not be in the public interest.[19] 

Exception #4:  Seek an Advisory Opinion from the OIG.  To the extent that you believe that a proposed arrangement which contemplates the employment of an excluded individual would not constitute grounds for the imposition of CMP sanctions, you may submit a request for an Advisory Opinion from the OIG.  From our review, it appears that there have only been three Advisory Opinion requests seeking guidance from the OIG on this issue since the issuance of the initial guidance in 1998.  Two of the Advisory Opinions involved the proposed employment of an excluded individual and the remaining Advisory Opinion examined whether a participating provider could purchase real estate that was owned and managed, in part, by an excluded individual.  The three Advisory Opinions examining the excluded party issue include:  
  • OIG Advisory Opinion No. 01-16: Issued September 2001 / Posted October 5, 2001.
  • OIG Advisory Opinion No. 03-01: Issued January 13, 2003 / Posted January 21, 2003.
  • OIG Advisory Opinion No. 19-05: Issued September 6, 2019 / Posted September 11, 2019.
Notably, the OIG held that none of the three proposed arrangements involving an excluded party would give rise to CMP sanctions. Before you jump to conclusions, however, we recommend that you read the specific factual scenarios involved in each of the requests for Advisory Opinion.  None of the proposed arrangements encompass situations that would be controversial or questionable in light of the financial and reimbursement relationship between the participating provider and the excluded individual.

IV. Recommendations for Medicare Providers Seeking to Employ an Excluded Party:

As a general rule, a Medicare provider cannot employ an excluded party. Yes, there are exceptions to this rule, but as described above, each of the primary exceptions discussed are quite narrow in scope and involve very fact specific scenarios where an excluded individual would not be providing services to Medicare beneficiaries and would not be paid, directly or indirectly from monies received in reimbursement from Medicare, Medicaid or Federal health care program claims.  It is important to keep in mind that only Exception #3 (Seeking a Waiver) and Exception #4 (Requesting an Advisory Opinion) offer any real opportunity to reduce the high level of risk that you will face if choose to employ an excluded individual or enter into a contract with an excluded entity. 

Exception #1 and Exception #2 are cited by the OIG in its 2013 Special Advisory Bulletin as possible factual scenarios where it may be possible to employ an excluded individual in a position that is sufficiently walled-off from the provision of services to Federal health care program beneficiaries, where no Federal funds are used to pay the individual’s salary, benefits, overhead and other costs. Unfortunately, even if such a position may initially be possible, over time there is a real possibility that the such barriers will erode.  Should this occur, your organization may face significant CMPs, possible False Claims Act penalties and damages, and other adverse administrative actions.  The bottom line is simple:

It is a Bad Idea to Try and Support the Employment of an Excluded Individual Based on the Reasoning Set out in Exception #1 and / or Exception #2.
 
Should you choose to proceed down this path, we strongly recommend that you contact experienced health law counsel (such as the folks at Liles Parker PLLC) for guidance and to determine if such as seeking a waiver or requesting an Advisory Opinion, a viable alternative with considerably less risk.

In the meantime, it is essential that you ensure that your employees, contractors, agents and vendors have not been excluded from participating in the Medicare, Medicaid or other Federal health care programs.   The folks at Exclusion Screening can help.  Give us a call at:  1 (800) 294-0952.



[1] Now codified at Section 1128B(f) of the Social Security Act (the Act), the term “Federal health care program” means:
“(1) any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government (other than the health insurance program under chapter 89 of title 5, United States Code); or
(2) any State health care program, as defined in section 1128(h).”
[5] Generally, these mandatory exclusion actions included: (1) Conviction of Program-Related Crimes, and (2) Conviction Relating to Patient Abuse.  The legislation also covered a number of “permissive” exclusion actions.  These included:  (1) Conviction Related to Fraud; (2) Conviction Related to Obstruction of an Investigation; (3) Conviction Related to Controlled Substance; (4) License Revocation or Suspension; (5) Exclusion or Suspension Under Federal or State Health Care Program; (6) Claims for Excessive Charges or Unnecessary Services and Failure of Certain Organizations to Furnish Medically Necessary Services; (7) Fraud, Kickbacks and other Prohibited Practices; (8) Entities Controlled by a Sanctioned Individual; and (9) Failure to Disclose Required Information; (10) Failure to Supply Requested Information on Subcontractors of Suppliers; (11) Failure to Supply Payment Information; (12) Failure to Grant Immediate Access; (13) Failure to Take Corrective Action; and, (14) Default of Health Education Loan or Scholarship Obligations.
[6] Health Insurance Portability and Accountability Act of 1996, Public Law 104-191.  (August 21, 1996). 
[7] Balanced Budget Act (BBA) of 1997, Public Law 105–33.
[8] 64 FR 52791 (September 30, 1999).
[9] Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108-173.  (December 8, 2003).
[10] 74 FR 69452, 69453 (November 10, 2010).
[11] Patient Protection and Affordable Care Act of 2010, Public Law 111-148. June 9, 2010.
[12] For a more detailed discussion on these disclosure requirements, see the article outlining the Final Rule entitled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.” 
[13] Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs.  Issued May 8, 2013.
[14] Ibid, at pgs. 6 and 7.
[15] Ibid, at pgs. 11 and 12.
[16] Ibid, at pg. 12.
[17] Id.
[18] 42 CFR 1001.1801(a).
[19] 42 CFR 1001.1801(c).

Pennsylvania Doctor Excluded in Connection with Quality of Care


(September 26, 2019): 
Over the past year, both State and Federal law enforcement investigators and prosecutors have gone to considerable lengths to publicize the government’s fight against opioid abuse.  While much of this fight has focused on the manufacturers of prescription opioid products, the improper prescribing practices of physicians and other medical professionals found to be prescribing these drugs “without any legitimate purpose and outside the usual course of professional practice” have been repeatedly highlighted in criminal prosecutions by U.S. Attorney’s Offices around the country.  A recent case against a Philadelphia-area cardiologist provides a classic example of how improper opioid prescribing practices can lead to criminal prosecution, civil penalties AND severe administrative sanctions (in this case, exclusion from participation in Federal health care programs).  The article examines how the cardiologists was identified and steps you should take to reduce your level of risk in this regard.

 I. Background of the Case:

Like many big cities, Philadelphia has a problem with illegal drugs.  Despite the city’s efforts to curb illicit drug use, unintentional drug overdoses have steadily grown since 2010 and have only slightly tapered-off from their all-time high since 2017.[1]

Social Security Act 1128(b)(6)
While the percentage of opioid-related deaths changes from quarter to quarter, it is estimated that approximately 80% of all unintentional drug deaths in Philadelphia are due to opioid misuse and overdose.  In response to the opioid abuse crisis in Philadelphia and other areas of the country, a multi-agency team of Federal and State investigators and prosecutors, known as the Medicare Fraud Strike Force[2] (Philadelphia Strike Force) has been targeting physicians, nurse practitioners and other medical professionals who have been improperly prescribing and / or distributing opioids.  In this particular case, the prescribing practices of this Philadelphia cardiologist (defendant) were identified by the Philadelphia Strike Force as warranting further review.  Upon investigation, the government alleged that from 2016 to 2018, the defendant wrote a number of prescriptions for oxycodone and / or benzodiazepine to patients without a legitimate medical purpose.  

In light of the allegations presented, the U.S. Attorney’s Office pursued both civil and criminal claims against the cardiologist.  It is important to keep in mind that the Department of Justice has long instructed its prosecutors to pursue parallel criminal and civil actions against a defendant, when appropriate.  As Title 9, Section 27 of the Justice Manual[3] provides:

Department policy is that criminal prosecutors and civil trial counsel should timely communicate, coordinate, and cooperate with one another and agency attorneys to the fullest extent appropriate to the case and permissible by law, whenever an alleged offense or violation of federal law gives rise to the potential for criminal, civil, regulatory, and/or agency administrative parallel (simultaneous or successive) proceedings. By working together in this way, the Department can better protect the government’s interests (including deterrence of future misconduct and restoration of program integrity) and secure the full range of the government’s remedies (including incarceration, fines, penalties, damages, restitution to victims, asset seizure, civil and criminal forfeiture, and exclusion and debarment).”  (emphasis added). 

The Justice Manual guidance further notes that:
“Courts have recognized that “[t]here is nothing improper about the government undertaking simultaneous criminal and civil investigations provided that we use those proceedings and associated investigative tools for their proper purposes and in appropriate ways.”  (emphasis added).

II. Criminal Prosecution for Violations of 21 USC §841(a)(1) and (b)(1)(C):

In March 2019, the defendant pleaded guilty to eight felony counts of the unlawful distribution and dispensing of a controlled substance, in violation of 21 USC §841(a)(1) and (b)(1)(C).   The defendant’s sentencing is scheduled to take place later this year.  As a result of the criminal conviction, the defendant may be sentenced to prison for a significant period of time AND assessed criminal fines for his unlawful conduct.

III.  Civil Liability under the False Claims Act, 31 USC §3729:

Notably, it does not appear that the defendant entered into a “global” settlement at the time he decided to plead guilty to the criminal charges discussed above.  As a result, any civil and / or administrative actions that the government might choose to pursue remained active.  On July 1, 2019, the defendant agreed to enter into a False Claims Act settlement with the government and pay $107,584 in penalties and damages to the government.   

IV. Administrative Actions Taken Against the Defendant:

As part of his civil settlement reached with the government, the defendant cardiologist agreed to:
  • Surrender his medical license and Drug Enforcement Administration Certificate of Registration and further agreed not to seek to renew or reinstate either one in the future.
  • Be excluded from participation in Federal Health programs.
As HHS-OIG’s records reflects, the defendant was excluded from participation in Federal health care programs on July 18, 2019.  The basis for exclusion cited by the government is Section 1128(b)(6) of the Social Security Act – Quality of Care.

As you will recall, under Section 1128 of the Social Security Act, if an individual or entity is convicted of certain crimes, the Department of Health and Human Services (HHS), Office of Inspector General (OIG) is required by law to exclude the individual or entity from participation in Federal health care programs.  These types of actions are referred to as “Mandatory Exclusions.”  The bases for imposing a mandatory exclusion are set out in Section 1128(a)(1) through Section 1128(c)(3)(G)(ii).  In contrast to mandatory exclusion actions, there are also a number of “Permissive Exclusion” authorities that may be used (at the agency’s discretion) by HHS-OIG to bar an individual or entity from participating in Federal health benefit programs.  The permissive exclusion authorities that may be exercised by HHS-OIG are covered in the Social Security Act from Section 1128(b)(1)(A) through 1128(b)(16).  HSS-OIG may also exercise its permissive exclusion authority under Social Security Section 1156, if a provider fails to meet its obligations to provide medically necessary services that meet the professional recognized standards of care.
In this particular case, HHS-OIG chose to exercise its permissive exclusion authority under Section 1128(b)(6) of the Social Security Act – Quality of CareThis particular basis for excluding an individual or entity can be assessed if a defendant or target is alleged to have submitted:
“Claims for excessive charges, unnecessary services or services which fail to meet professionally recognized standards of health care, or failure of an HMO to furnish medically necessary services.”
Under this statutory provision, an individual or entity can be excluded for a minimum period of one year.  In light of the allegations presented, the defendant cardiologist was excluded from participation by HHS-OIG for a total of seven years.[4]

V. Impact of Medicare Exclusion on the Defendant’s Career:

As the case synopsis above reflects, Federal law enforcement prosecuted the defendant in this case to the full extent of their abilities.  In addition to facing incarceration, the defendant was also assessed penalties and damages of more than $107,000 under the False Claims Act.  While the criminal and civil actions taken against the defendant are quite serious, the cardiologist’s problems are further magnified by the fact that he has also been excluded from participation in Federal health care programs.  At the end of the day, it is quite conceivable that the U.S. Sentencing Guidelines, the defendant’s criminal sentence will be relatively brief.  Depending upon the terms of his civil / administrative settlement, he may be free to seek licensure in another state upon his release from jail. 

VI. Final Thoughts:

Even assuming that the defendant regains licensure in another state, the administrative exclusion action taken against him will effectively bar him from enrolling in Federal health care benefit programs for the entire period that he remains excluded.  While excluded, he will not be eligible to work for any provider or supplier who participates in one or more Federal health care plans.  Should a health care provider or supplier choose to employ the defendant (an excluded party), each of the claims submitted to Medicare, Medicaid and other government plans may be subject to significant civil monetary penalties. 

How can you protect your practice?  Consistent with your obligations under the law, it is imperative that you screen your employees, agents, contractors and vendors against all of the 43 exclusion databases currently in operation.  Unfortunately, it is practically impossible for a medical practice or other entity to screen one or more of its employees against all 43 databases.  Luckily, the folks at Exclusion Screening can take this time-consuming (and often frustrating) task off of your shoulders.  Give us a call at 1 (800) 294-0952 for a complimentary discussion of your screening needs and a quote.


[2] The government’s Medicare Fraud Strike Force is primarily composed of Federal agents and investigators of the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the Federal Bureau of Investigation (FBI), along with Federal prosecutors working for U.S. Attorneys Offices around the country.  First established in March 2007, the Strike Force has been instrumental in investigating and prosecuting cases of health care fraud, waste and abuse. 
[4] “Pennsylvania physician Agrees to Voluntary Exclusion” https://oig.hhs.gov/fraud/enforcement/cmp/cmp-ae.asp

A Provider’s Guide to OIG Exclusions

A Provider’s Guide to OIG Exclusions

Federal Exclusion Regulations and Enforcement Authorities, and How Providers Can Avoid Risk with Proper Exclusion Screening–Part 1

Paul S. Weidenfeld, JD

This article was originally written by Paul Weidenfeld and published by GreenBranch Publishing.  This article is Part I from a 2-Part article originally published by GreenBranch Publishing on their website.

OIG ExclusionOffice of Inspector General (OIG) exclusions[1] are one of the most powerful weapons available to the law enforcement in its efforts to fight healthcare fraud. Individuals and entities subject to an OIG exclusion are barred from participation in all Federal healthcare benefit programs, resulting in a payment prohibition on all items and services they provide, whether directly or indirectly. Additionally, providers that employ or contract with excluded individuals or entities risk the imposition of civil money penalties, overpayment liability, and even potential exposure under the False Claims Act. However, even though OIG exclusions are one of law enforcement’s oldest tools, many providers often fail to appreciate their compliance obligations and the risks associated with employing or contracting with excluded individuals or entities. Indeed, many providers take only minimal efforts to screen their employees and contractors to ensure compliance—and some make no effort at all. This article seeks to educate providers on the existing legal and regulatory framework, the risks and potential consequences of a failure to comply with those laws and regulations, and how best to comply and avoid those risks.[2]

LEGISLATIVE BACKGROUND

Congress initially authorized the use of exclusions as an enforcement tool in the battle against healthcare fraud over 40 years ago with the passage of the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977. The bill granted the Department of Health, Education and Welfare, which later became the Department of Health and Human Services (HHS), the authority to exclude physicians and others convicted of crimes related to Medicare and Medicaid from participating in those programs.[3] In 1981, the Civil Money Penalties Law (Public Law 97-35 [codified at section 1128A of the SSA]) extended the authority to impose penalties to providers that submitted claims for items or services that had been furnished by an excluded entity, and the Secretary of HHS delegated his exclusion authority to its Office of Inspector General (OIG) in 1988 (53 Fed. Reg. 12,993 (April 20, 1988)). The current framework of mandatory and permissive exclusions was then established by the Medicare and Medicaid Patient and Program Protection Act of 1987.

In 1995, Attorney General Janet Reno declared healthcare fraud to be one of the top priorities of the Department of Justice, second only to violent crime.[4] Shortly thereafter, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L.105-33, 111 Stat.1936, enacted August 21, 1996) extended the OIG’s exclusion authority to all Federal healthcare programs.[5] The Balanced Budget Act of 1997 (BBA) (Pub.L.105-33, 111 Stal. 251. enacted August 5, 1997) expanded the OIG’s Civil Money Penalty (CMP) authority to apply to providers that employed or contracted with entities subject to an OIG exclusion. Prior to the passage of the BBA, the OIG could impose penalties only on excluded entities or persons who submitted claims on their behalf. The OIG’s permissive exclusion authorities were expanded in both the Medicare Modernization Act of 2003 (MMA) (Public Law No: 108-173, enacted December 8, 2003) and the 2010 Affordable Care Act (ACA). Initially passed as the “Patient Protection and Affordable Care Act,” Pub. L. No 111-148 (2010), and shortly thereafter amended by the “Health Care and Education Reconciliation Act of 2010,” Pub. L. No. 111-152 (2010), these two pieces of legislation are collectively referred to as the “Affordable Care Act” (ACA).

WHAT IS AN OIG EXCLUSION? WHAT IS ITS IMPACT?

OIG exclusions are final administrative actions that bar individuals and entities from any and all participation in Medicare, Medicaid, and all other federal healthcare programs.[6] They are imposed “to protect beneficiaries…stem fraud and abuse…ensure that federal health care programs are protected…and help make sure excluded individuals are not involved in any way in the care of federal program beneficiaries.”[7] Excluded entities are deemed, as a matter of fact and law, to pose unacceptable risks to federal healthcare programs and to the patients they serve.

The effect of an OIG Exclusion is extremely broad. Federal healthcare programs, broadly defined to include “any plan or program that provides health benefits either directly or indirectly, will not pay for “any items or services” that are “furnished” by an excluded individual or entity, or at the medical direction or on the prescription of an excluded person. (see 42 C.F.R. 1001.1901(b), 42 C.F.R. § 1001.10). “Items or services” include any item, device, drug, biological, supply, or service—including management or administrative services; and they are “furnished” if provided or supplied, either directly or indirectly, by an individual or entity; and an “indirect claim” is “furnished” even if a non-excluded provider submits the claim if an excluded entity actually provided the service in the first place.[8]

The “payment prohibition” is a complete payment ban applicable to “all methods of Federal program reimbursement” regardless of whether it is from an itemized claim, cost report, capitated payment, or other bundled payment. It extends beyond direct patient care and includes, for example, services performed by excluded individuals who work for or under an arrangement with a hospital, nursing home, home health agency, or managed care entity where they are separately billed or part of a bundled payment. (See 2013 Special Advisory, at pages 6 and 7.) The following are examples of activities identified by the OIG in the Special Advisory as potentially problematic and susceptible to the imposition of civil money penalties if not properly screened for exclusions:
  • Management, administrative or any leadership roles;
  • Surgical support such as the preparation of a surgical tray that indirectly assists in care;
  • Claims processing and information technology;
  • Providing transportation services with excluded ambulance drivers or by employing excluded ambulance company dispatchers;
  • Selling, delivering or refilling orders for medical devices or equipment (whether reimbursed directly or indirectly);
  • Review of treatment plans, and other support services, whether billed separately or as part of a bundled payment.
Even unpaid volunteers can trigger overpayment and CMP liability if the items or services they furnish are not “wholly unrelated to Federal Health Care Programs” and the provider “does not ensure that appropriate exclusion screening was performed!” (Emphasis added, 2013 OIG Special Advisory, at 11-12, 16; see also Advisory Opinion No. 18-01.)

The payment prohibition also extends to providers that furnish items or services on the basis of orders or prescriptions they receive from others. Thus, in addition to screening their own employees, vendors, and contractors, providers such as laboratories, imaging centers, and pharmacies “should ensure, at the point of service, that the ordering or prescribing physician is not excluded. A failure to do so on their part would violate the payment prohibition and could result in both overpayments and CMPs. (2013 Advisory, page 8.)

TYPES OF OIG EXCLUSIONS

There are two types of OIG Exclusions – Mandatory and Permissive. Mandatory Exclusions are identified in Sections 1128(a)(1) – 1128(a)(4) of the Social Security Act (SSA), (42 U.S.C. §1320a-7(a)(1)-(4)) and they are imposed as a result of convictions for program fraud, patient abuse and certain drug offenses.  Permissive exclusions, on the other hand, are discretionary and can be imposed for broad range of conduct. These are identified in §1128(b)(1)–§1128(b)(16) and §1156 of the Act. [9] 

Figure 1. All Exclusions 2013-2017

The following figures provide a general breakdown of OIG Exclusions over the last five years. Figure 1A illustrates that permissive exclusions based on licensing disciplinary actions and mandatory exclusions based on federal health care fraud convictions accounted for over 75% of all exclusions during this period (41% and 35% respectively). The first chart also illustrates that mandatory exclusions accounted for 55% of all exclusions.

Figure 2 breaks down exclusions by “specialty” as labeled by the OIG in the LEIE postings.[10] It shows that nurses, nurse aides, personal care providers, home health care aides and physicians account for almost two-thirds of all exclusions over the last five years.  Taken together, these two charts demonstrate the OIG’s dual focus on patient safety and program integrity.

Mandatory Exclusions

Figure 2. All Exclusions by Specialty

Sections 1128(a)1-(a4) of the Social Security Act identify the four legal basis which warrant the imposition of a mandatory exclusion by the Office of Inspector General. They are:

  • 1128(a)(1): Conviction related to the delivery of an item or services to a Federal or State Health Care Program;
  • 1128(a)(2): Conviction under State or Federal law relating to neglect or abuse of patients in connection with the delivery of a health care item or service;
  • 1128(a)(3): Felony conviction relating to health care fraud program (other than Medicare or Medicaid); and,
  • 1128(a)(4): Felony conviction relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

It is important to note that though a mandatory exclusion under sections 1128(a)(1) and (a)(2) must be based on a “conviction,” the term is extremely broadly defined. “Nolo contendere” pleas, for example, qualify as convictions under this section; even dispositions under first offender programs and deferred adjudications – programs where no finding of guilt is ever entered – satisfy the conviction requirement for purposes of the Act.  In addition, Section 1128 is satisfied by any “State, Federal or Local Court.” (See §§ 1128(i)(1)- (i)(4) of the Social Security Act.) Thus, it has been held that a deferred adjudication agreement in a local court for misdemeanor theft is a sufficient basis for the imposition of a mandatory exclusion under (a)(1) because it was related to Medicaid services. (Department of Health and Human Service, Departmental Appeals Board Civil Remedies Division, Okwilagwe v. The Office of Inspector General, Docket No. C-13-322, Decision No. CR2920, September 6, 2013.) The same standards would apply to exclusions under (a)(2).

Mandatory exclusions be must be imposed for at least five years, however they are often imposed for much longer periods if warranted by the underlying facts and circumstances. Once a mandatory exclusion is imposed, the person must wait at least five years before applying for reinstatement if this is their first exclusion, but ten years must pass before reinstatement may be sought after a second mandatory exclusion, and a third mandatory exclusion is permanent. If the OIG seeks to impose a mandatory exclusion, the only viable defense that can be raised is the length of the exclusion is subject to challenge. (42 C.F.R. 402.214.)

Finally, it is worth noting that the “balance” of mandatory to permissive exclusions appears to be changing. The current composition of all exclusions on the List of Excluded Individuals and Entities (LEIE) is 47% mandatory and 53% permissive, but Figure 1B shows us that during the period 2013 to 2017 the percentages essentially switched as mandatory exclusions increased from 47% to 55%. And in 2017 the mandatory exclusions increased to almost 63% of all exclusions.[11]  Althought these data are relatively new and there is no ready explanation, it is a trend worth watching.

Permissive Exclusions

The OIG’s permissive exclusion authority has been expanded a number of times over the years, and the imposition of permissive OIG exclusions includes convictions for obstructing heatlhcare investigatiosn adn/or audits, improper certification for items or services, and making false statements or misrepresentations in applicatiosn to participate in Medicare.[12] The following is a list of the permissive exclusions as found on the OIG website:[13]

Table 1. Permissive Exclusions

Figure 3. Compliance Risk Spectrum.

Unlike its mandatory exclusion authority which is virtually automatic when specific convictions occur, the OIG has the discretion to impose permissive exclusions over a wide range of conduct (or misconduct). OIG guidance on the implementation of its permissive exclusion authority, begins with a presumption favoring exclusion under certain circumstances. The guidance outlines a “compliance risk spectrum” that is based on the risks posed to patients and to federal health care programs. The factors to be considered include a company’s underlying conduct during the investigation, in addition to current and historical compliance efforts.[14]  The OIG also issued specific guidance with respect to the imposition of permissive exclusions based on an excluded individual’s ongoing role or interest in a company.[15]

Although the OIG is authorized to impose permissive exclusions over a wide range of conduct, figure 4 shows that the agency actually invokes its permissive exclusion authority over a narrow range of persons and limited circumstances. For example, Figure 4A shows that nurse and nurse aides alone account for approximately 70% of all permissive exclusions, with “other licensed professionals” (mostly therapists, mid-level providers and counselors) and physicians accounting for 16% and 9% respectively.  As nurses and nurse aides are the persons in the best positions to impact both patient care and claims arising from that care, it is not surprising that they comprise a significant percentage of the exclusions. However, it is somewhat surprising that business owners only account for 3% of all permissive exclusions.   

Figure 4. Entities Subject to Permissive Exclusions 2013-2017 and Percentage Breakdown

Figure 5. All Permissive Exclusions by Basis (2013-2017)

As seen in Chart 5, despite the many permissive exclusion options available to the OIG, the vast majority of permissive exclusions it has imposed over the last five years (a surprisingly high 90%) were based on final disciplinary actions such as license suspensions and revocations that had been taken by a State licensing board. The only other measurable bases were health care fraud misdemeanors, State exclusions, fraud or kickbacks, and defaults on student loans – though none of which accounted for more than 3% of the permissive exclusions imposed.




Process, Finality and Appeal Rights for OIG Exclusions

The process of imposing and appealing an exclusion depends upon the exclusion the OIG seeks to impose as is governed by 42 C.F.R. §§ 1001.2001- 1001.2007.  When the OIG seeks to impose a mandatory exclusion, it may initiate the process by sending the party a Notice of Intent to Exclude, which identifies the basis for the proposed exclusion, describes the potential effect of an exclusion, and gives the individual or entity 30 days to respond in writing with relevant information or evidence.  At this stage in a mandatory exclusion, there is no provision for a hearing.  Indeed, the OIG can skip the “Notice of Intent” when seeking a mandatory exclusion and begin the process with a “Notice of Exclusion.”  This must include the basis and length of the exclusion, the earliest reinstatement date, the requirements for reinstatement, and the excluded party’s appeal rights.  When the OIG seeks a permissive exclusion, in most instances it begins the process with a “Notice of Intent to Exclude.” However, if the OIG seeks to exclude based on something other than an underlying final determination (such as a license revocation or State exclusion action), the process may include a “Notice of Proposal to Exclude.”

Exclusions may be appealed first to an Administrative Law Judge (ALJ), then to the Departmental Appeals Board (DAB), and then to a United States District Court. However, appeals of exclusions are limited to two issues: (1) whether the OIG had a “basis for the imposition of the sanction,” and (2) whether the length of the exclusion is unreasonable. 42 C.F.R. 402.214. In addition, an ALJ considering these issues is prohibited from reviewing the “exercise of discretion” by the OIG, 42 C.F.R. §1005.4(c)(7), and if the sanction is based on a “prior determination,” the underlying basis may not be attacked if a “final decision was made.” § 1001.2007(d).  As a result, most exclusion appeals, particularly those of mandatory exclusions, are focused on the length of the exclusion.

Mandatory exclusions are final 20 after the Notice of Exclusion. They are not stayed pending the outcome of the appeal upon finality. The OIG posts the exclusion on the LEIE, and it sends notices of the exclusion to various State and Federal interests including, but not limited to, State licensing boards, State health programs, medical societies, Medicaid fraud control units, and the National Practitioner Data Bank. 

Enforcement Tools for Exclusion Violations

“Exclusion Violations” are actions taken by an individual or entity in contravention of the “payment prohibition” as defined in 42 C.F.R. § 1001.1901, and the authority to impose CMPs and assessments is delegated by the Secretary to the OIG pursuant to 42 CFR § 1003.150.  The specific exclusion violations for which the OIG has the authority to impose civil money penalties and assessments are presented in Table 2.

Table 2. Civil Monetary Penalties and Assessments

 

Most of the exclusion cases pursued by the OIG have been for violations of § 1003.200(b)(4) —employing or contracting with an individual or entity. Recently, however, the OIG has been actively investigating and pursuing cases involving the ordering and prescribing of medicine from excluded persons.  42 C.F.R. § 1003.200(b)(6). Investigations involving the direct submission of a large number of claims by an excluded person (such as an excluded physician continuing to practice medicine and submit claims in violation of § 1003.200(a)(3)), or the retention of ownership or control through fraudulent representations in violation of § 1003.200(b)(3)) are fewer in number, and those that have been reported have typically resulted in criminal and/or false claims act resolutions. To date, there have been few, if any, enforcement actions involving MCOs, Medicare Advantage (MA) or Part D contracting organizations that have been reported.

Civil Money Penalties for Exclusion Violations

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.”[16] designed to protect program integrity and patient safety. They are the favored weapon of the OIG in its enforcement of exclusion violations. As stated in the 2016 final rule amending CMP authorities and incorporating new ones:

“The CMP authorities in this part, as a general matter, aim to redress fraud on the Federal health care programs by recovering funds, protecting the programs and beneficiaries from untrustworthy providers and suppliers, and deterring improper conduct by others. Accordingly, it is highly relevant if the conduct put beneficiaries at risk of patient harm.”[17]

Tabel 3 identifies the OIG’s CMP authority for each exclusion violation.[18]  As can be seen, the OIG may impose a penalty of up to $10,000 for each individual violation of § 1003.200(a)(3) and § 1003.200(b)(6); up to $10,000 for each day § 1003.210(b)(3) is violated; and up to $10,000 for each item or service provided, furnished, ordered, or prescribed in violation of § 1003.200(b)(4). MCOs, MA, and Part D contracting organizations that employ or contract with excluded persons or entities face a penalty of $25,000 for each offense. [19]

Table 3. CMP Authority For Each Exclusion Violation

 

Assessment Authority of the OIG for 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; instead, they may be imposed “in lieu of damages sustained by the Department or the State agency because of the violation.” 42 C.F.R. § 1003.130. [20]  That is, assessments act as a proxy for damages presumed to have been sustained by either the Federal or State agency as a consequence of the violation, and the OIG is specifically authorized to impose them in exclusion violations in 42 C.F.R. § 1003.210 and § 1003.410. Section 1129 of the Social Security Act [42 U.S.C. § 1320a–8(a)(1)].  Since assessments are considered to be a form of restitution and not a penalty or sanction, the OIG theoretically could impose both a CMP and an assessment for an exclusion violation. Table 4 Shows the assessment amounts the OIG is authorized to impose for exclusion violations.

Table 4. Assessment Amounts Authorized by the OIG

The assessment provisions for employing or contracting with excluded individuals were recently amended in an effort to recognize the difference in effect between exclusions involving direct billers (such as a doctor) and those involving persons that provide support services not directly billed (such as an aide).[21] The amended assessment regulations permit an assessment to be as much as three times the amount of each service billed for employing or contracting with a person that provides directly billable services,  whereas the assessment for persons that provide a “non-separately-billable” service is limited to three times the amount of the costs associated with that individual.  As will be discussed later, this is consistent with the methodology of calculating the federal “loss” in self-disclosures involving exclusion violations.

FACTORS IN IMPOSING PENTALTIES AND ASSESSMENTS

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. 42 C.F.R. § 1004.140(a). Relevant mitigating and aggravating factors contained in the regulation and discussed in subsequent OIG guidance include the following:[22]

Mitigating Factors:

  • If the length of time was short and the amount claimed was less than $5,000.

Aggravating circumstances:

  • There were several violations, or a pattern, over a lengthy period of time;
  • The ownership, control, or responsibility implicated §1003.200(b)(3);
  • The amount claimed or requested for such items was $50,000 or more;
  • The violation caused or could have caused, adverse patient consequences.

Appeal Rights for Civil Money Penalties and Assessments

The appeal rights of parties with respect to CMPs and assessments are found in 42 C.F.R. § 1005 et seq.  Parties have the right to request a hearing before an ALJ to challenge the imposition of penalties and assessments if they make a written request within 60 days of receiving notice of the sanction. The process allows for representation by counsel, discovery rights, the right to present and cross examine witnesses, a hearing, and the right to present oral and written arguments to the ALJ.  The ALJ has full authority over the pre-hearing process and the hearing itself.  However, the ALJ does not have the authority to compel negotiations, enjoin the Secretary in any way, invalidate existing regulations, or refuse to follow them.  The ALJ is also not permitted to review the exercise of discretion by the OIG to impose a CMP or assessment. At the conclusion of the hearing, the ALJ issues an “initial decision” which includes findings of fact and conclusions of law in which he may increase or reduce penalties and assessments. 

An “Initial Decision” can be appealed to the DAB; a timely appeal stays the imposition of a CMP. The DAB has broad authority in the manner in which it handles the appeal.  It can decline to review the case; increase, reduce, or remand a penalty or assessment determined by the ALJ; and remand the matter to the ALJ for consideration of additional evidence.  The decision of the DAB is final 60 days from issuance unless it involves a remand, and the parties have the right to appeal the DAB ruling to federal district court. A stay of the imposition of a CMP may be requested during the federal appeal process. However, the request goes to the ALJ that imposed the penalty in the first instance, and the ALJ is not authorized to grant the stay unless a bond or other security is posted.

Potential Overpayment and False Claims Act Liability for Exclusion Violations

Providers have the burden of ensuring that they comply with exclusion-related regulations and that they do not employ or contract with an excluded individual or entity. Those that fail in this obligation are at risk for overpayment liability regardless of whether they have actual knowledge of the person’s status at the time of their transaction. As the OIG states: “If a hospital contracts with a staffing agency for temporary or per diem nurses, the hospital will be subject to overpayment liability … if the nurse furnishes items or services reimbursed by a federal health care program. 2013 Special Advisory, at 15. 

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).[23]  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. Thus, since providers “know” they have a legal obligation to ensure compliance with exclusion regulations and that overpayments result from exclusion violations, any failure of compliance that results in an overpayment may be viewed as the result of conduct that constituted a “reckless disregard” or a “deliberate ignorance” of the rules – and that therefore violated the FCA.

ABOUT THE AUTHOR

Provider's Guide to OIG ExclusionsPaul Weidenfeld is a former federal healthcare fraud prosecutor and Department of Justice National Health Care Fraud Coordinator. His principle area of practice is healthcare fraud and abuse and the Federal False Claims Act, and he has represented providers and individuals in healthcare matters since leaving government in 2006. He is currently “Of Counsel” to the firm of Liles Parker. Mr. Weidenfeld also has an extensive litigation background that includes numerous trials and appeals and appearances before the United States Supreme Court, the Federal 5tht Circuit Court of Appeals, and the Louisiana Supreme Court. He has received recognition both as a prosecutor and as defense counsel and has been recipient of numerous awards. These include Nightingale’s Outstanding Healthcare Litigators, the Attorney General Award for Fraud Prevention, the Office of Inspector General Cooperative Achievement Award, and the National “Case of the Year” honors by the NHCAA. In 2014, Mr. Weidenfeld cofounded Exclusion Screening, LLC. Exclusion Screening helps providers navigate the difficulties and issues related to the screening for excluded individual and entities, and along the way he has become one of the foremost experts in the field of IG exclusions and Exclusion-related issues.


[1]
“OIG” in this paper refers to “Office of Inspector General, Department of Health and Human Services” unless otherwise stated.  The term “OIG Exclusion” is used as shorthand for an administrative action taken by the OIG barring an individual or entity from participating in Federal health care programs pursuant to §1128(a)(1)-(4), (b)(1)-(b)(16) or §1156 of the Social Security Act (SSA).
[2] This article focuses on exclusions from a regulatory and enforcement perspective, but exclusions also play a critical role in compliance and risk management programs. See, e.g., HCCA, Measuring Compliance Program Effectiveness: A Resource Guide (Jan. 2017), available at ttps://oig.hhs.gov/compliance/compliance-resource-portal/files/HCCA-OIG-Resource-Guide.pdf. (guidance reconfigures the traditional “Seven Elements of an Effective Compliance Program” and makes the “Screening and Evaluation of Employees, Physicians, Vendors and other Agents” an element unto itself – or the new “Seventh Element of Compliance”).
[3] The Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, Public Law 95142.  In 1979, the Department of Health Education and Welfare was renamed the Department of Health and Human Services (HHS).
[4]See e.g. Crackdown on Health Care Fraud, https://www.nytimes.com/1995/12/22/us/in-crackdown-on-health-care-fraud-us-focuses-on-training-hospitals-and-clinics.html.
[5] In addition to establishing the principle of insurance portability, HIPAA contained several provisions related to health care fraud enforcement, including containing legislation that significantly increased the ability of law enforcement agencies to obtain and share information and establishing the Health Care Fraud and Abuse Fund (HCFAC) as a permanent funding source specifically designated for health care fraud enforcement.
[6] The effect of an OIG Exclusion is addressed in the Special Advisory Bulletin on the Effects of Exclusion from Federal Health Care Programs,” issued September 2, 1999, and in the “Updated Special Advisory Bulletin on the Effect of Exclusions from Participation in Federal Health Care Programs,” issued May 8, 2013.  Hereinafter, the initial advisory will be referred to as the “1999 Special Advisory” and the update will be referred to as the “Updated Special Advisory” or the “2013 Special Advisory.”  The 1999 Special Advisory can be found at: https://oig.hhs.gov/fraud/docs/alertsandbulletins/effected.htm; the 2013 Updated Special Advisory can be found at https://oig.hhs.gov/exclusions/files/sab-05092013.pdf. 
[7] Inspector General June Gibbs Brown, in the press release for the 1999 Special Advisory.   
[8] See 42 C.F.R. § 1001.10. Definitional changes were made to direct and indirect claims pursuant to rulemaking authority granted to the OIG in the MMA and the ACA; See also, OIG Advisory Opinion No. 18-01 at 5 (Feb. 20, 2018) available at https://oig.hhs.gov/fraud/docs/advisoryopinions/2018/AdvOpn18-01.pdf.
[9] The Data in the figures in this section come from the exclusion data reportered in the List of Excluded Individuals/Entities (LEIE) by calendar year.
[10] The data in the charts in this section comes from exclusion data reported in the List of Excluded Individuals/Entities (LEIE).
[11] These calculatiosn are based on the composition of the LEIE through December 31, 2017.
[12] See, §§ 1128(c)(3)(G)(i) and (G)ii of the SSA. See also 82 Fed. Reg. 4100.
[13] See https://oig.hhs.gov
[14] See Criteria for implementing section 1128(b)(7) exclusion authority (April 18, 2016) available at https://oig.hhs.gov/exclusions/files/1128b7exclusion-criteria.pdf. The OIG breaks these down into “high risk factors,” “low risk factors,” and factors that have “no effect.” High risk factors include the impact on beneficiaries cooperation, and whether an adverse licensing action occurred. “Lower risk” factors include acceptance of responsibility and self-disclosure. Factors that are “expected,” and thsu have “no effect”, are coopearation in the investigation and having a compliance plan with the seven elements of compliance.
[15] See Guidance for the Implentation of its Permissive Exclusion Authority Under Sectino 1128(b)(15) at 1, available at https://oig.hhs.gov/fraud/exclusions/files/permissive_excl_under_1128b15_10192010.pdf. The guidance was issued because 1128(b)(15) provides for exclusion based on whether the individual in question is either an owner or an officer or a managing employee and the analysis is different for each.
[16] Criteria for implementing section 1128(b)(7) exlcusion authority (April 18, 2016) avialable at https://oig.hhs.gov/exclusions/files/1128b7exclusion-criteria.pdf.See also 81 Fed. Reg. 88, 334 (Dec. 7, 2016): “In 1981, Congress enacted the CMPL, section 1128A of the Act (42 U.S.C. §1320a-7a), as one of several administrative remedies to combat fraud and abuse in Medicare and medicaid”
[17]Id. 81 Fed. Reg. at 88.
[18] This is a listing of the CMP authorities related to exclusion violations. A complete listing of the OIGs CMP authorities can be found on the OIG’s website, or at 42 C.F.R. § 1003.210. 
[19] The OIG may also impose a penalty or, when applicable, an assessment, against a Medicare Advantage or Part D contracting organization with a contract under section 1857 or 1860D-12 of the SSA if any of its employees, agents, or contracting providers violate § 1003.400(a) – (d). 
[20] The penalty amounts for CMPs and assessments are updated annually and are published at 45 C.F.R. § 102.
[21] A discussion of the change is found in 81 Fed. Reg. 88, 334 (Dec. 7, 2016). 
[22] See 42 CFR § 1004.140(c); see also Criteria for implementing section 1128(b)(7) exclusion authority (April 18, 2016), available at https://oig.hhs.gov/exclusions/files/1128b7exclusion-criteria.pdf..
[23]See § 3729(a)(1) of the Fraud Enforcement Recovery Act of 2009 and § 6401of the Affordable Care Act (2010).

What to Know About the New CMS Preclusion List

By: Cason Liles

New CMS Preclusion List(February 12, 2019) Beginning April 1, 2019, CMS’s new Preclusion List will go into effect subsequently barring many healthcare professionals from receiving payment for Medicare Advantage (MA) items and services or Part D drugs furnished or prescribed to Medicare beneficiaries. But what is the Preclusion List? Who is on it? Why was created? Don’t worry, we’re going to break down everything you need to know about this new CMS action and how it can affect your organization.

 I. What is the Preclusion List?  

The Preclusion List is a list generated by CMS that contains the names of prescribers, individuals, and or entities that are unable to receive payment for Medicare Advantage (MA) items and service and or Part D drugs prescribed or provided to Medicare beneficiaries.

 II. How Does Someone End up on The Preclusion List?  

CMS has given two ways for which someone can end up on the Preclusion List. The first one way is if you:

“Are currently revoked from Medicare, are under an active reenrollment bar, and CMS has determined that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program”

 However, even if you are not revoked from Medicare, you still may find yourself on the Preclusion List. CMS is also precluding anyone that has:

“… Engaged in behavior for which CMS could have revoked the prescriber, individual or entity to the extent applicable if they had been enrolled in Medicare, and CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program. Such conduct includes, but are not limited to, felony convictions AND Office of Inspector General (OIG) exclusions.”


 III. Why was the Preclusion List Created?  

In April of 2018, within the Federal Register Rules and Regulations update, the Department of Health and Human Services released information on policy changes to Medicare programs. In which, they discussed the Preclusion List and their reasoning for establishing the new rule. It seems that CMS has given a few reasons for putting this new rule into effect:
  • “To focus on preventing payment for Part D drugs prescribed by demonstrably problematic prescribers”
  • “Reduce the burden on Part D prescribers and Medicare Advantage providers without compromising our program integrity efforts.” And to
  • “To replace the Medicare Advantage (MA) and prescriber enrollment requirements.”
By doing this, CMS believes that it will save $34.4 million dollars in 2019. These savings would be derived from the removal of the requirements for Part D prescribers and Medicare Advantage providers and suppliers to enroll in Medicare prior to providing health care services and items.

 IV. How do I Know if I am Precluded?  

Unlike the Office of Inspector General’s (OIG) monthly exclusion list, the Preclusion list will not be shared publicly. Precluded providers however will receive notice in a variety of ways. First, CMS will issue an initial email notification to the precluded providers using their email addressed which they provided to either the Provider Enrollment, Chain and Ownership System (PECOS), the National Provider Plan and Enumeration System (NPPES), or from the Medicare enrollment system of record. The Medicare Administrative Contractor (MAC) will also follow up by sending a written notice through the mail to the precluded provider before they are added to the Preclusion List. Within this letter you will also be informed on why exactly you are precluded, the date that your preclusion will go into effect, and your applicable appeal rights.

 V. Are Dentists at Risk of Being Precluded?  

YES.
If a dentist has been revoked from Medicare, is under an active re-enrollment bar, and CMS has found that the actions that led to their original revocation is a risk to the integrity of the Medicare program or has engaged in behavior for which CMS could have excluded them from participating in Medicare if they had enrolled.
 
 VI. When will the Preclusion List go into Effect?  

The first list of providers that were to be precluded were published and were sent notice on January 1, 2019. However, beginning April 1, 2019 Part D sponsors will become required to reject any prescriptions for Medicare Part D drugs that are prescribed by an individual or entity that is on the Preclusion List. Medicare Advantage (MA) plans will also become required to deny payments for any healthcare service or item that was provided by and individual or entity that is on the Preclusion List.

 VII. Is This the Same as the OIG’s Exclusion List?  

The OIG Exclusion List is NOT the same as this new CMS List. That being said, there is some overlap. If you have been excluded, you can still find yourself on the Preclusion List if you fall into the either of the two criteria listed above under the “How Does Someone End up on The Preclusion List? ” section. As you can see in the diagram below, there is some overlap, but not much.

New CMS Preclusion List


 VIII. How can I Screen for Precluded Individuals or Entities?  
Unfortunately, access to the Preclusion List is Extremely Restricted. However, under certain circumstances, we here at Exclusion Screening, LLC can provide guidance and help. Contact us info@exclusionscreening.com or give us a call at (800)-294-0952 for a free consultation and quote.

A Review of OIG Enforcement Actions in Fiscal Year 2018

By Cason Liles

OIG in Fiscal Year 2018(February 6, 2019): The Department of Health and Human Services (HHS), Office of Inspector General (OIG) is an independent, objective law enforcement and investigative agency that is responsible for protecting the financial integrity of the more than 300 programs that are administered by HHS.  Collectively, these programs represent approximately 24% of the Federal budget.  Although OIG is responsible for investigating allegations of fraud, waste and abuse related to literally hundreds of HHS programs, most of OIG’s investigative and enforcement activities arise out the Medicare and Medicaid programs.  Simply put, OIG’s mission is fighting fraud, waste and abuse.  In the pursuit of this mission, OIG aggressively investigates allegations of wrongdoing to identify and recover improper payments made to health care providers, suppliers and other parties who have engaged in fraudulent, wasteful or abusive conduct.  One of the key tools used by OIG to protect patients and safeguard the financial integrity of the Medicare and Medicaid programs is its authority to exclude individuals and entities from participation in Medicare, Medicare and other Federal health care benefit programs.  This article examines a number of the exclusion-related enforcement actions taken by the OIG in Fiscal Year (FY) 2018.  

 I. An Overview of FY 2018 Exclusion Actions:  


At the outset, it is important to keep in mind that “exclusion” actions aren’t new.  They were first mandated in 1977 as part of the “Medicare-Medicaid Anti-Fraud and Abuse Amendments,” Public Law 95-142.  The responsibility for imposing mandatory and permissive exclusion actions rests with OIG.  As in prior years, OIG aggressively exercised its exclusion authorities in FY 2018 and excluded 2,712 individuals and entities from participating in Federal health care benefit programs.  A number of the more noteworthy exclusion actions taken in FY 2018 are outlined below:


 II. Noteworthy Civil Monetary Penalty and Affirmative Exclusion Actions Taken by OIG in FY 2018:  


Oklahoma.
 
(January 2018). Assisted Living Facility Settles Case Involving Excluded Individual.  In this case, an Oklahoma assisted living facility (ALF) improperly employed an excluded individual who was hired to work as an “Admissions Specialist.”  As a result of the organization’s wrongful employment of this excluded individual (likely caused by a failure to properly screen all of its staff), the ALF may have faced significant civil monetary penalties (CMPs).  Ultimately, the ALF entered into a settlement agreement with OIG and agreed to pay more than $96,000.  This case illustrates the importance of screening ALLemployees, not merely direct patient caregivers such as physicians, nurses, medical assistants and other licensed health care professionals. 


Oklahoma.
 
(February 2018). Management Company Settles Case Involving Excluded Individual.  An organization that owns and manages a skilled nursing facility in Oklahoma City, Oklahoma, was alleged to have hired a licensed practical nurse (LPN) who was excluded from participating in any Federal health care program. An OIG investigation found that this individual had provided items or services that were reimbursed by Federal health care programs. This resulted in the skilled nursing facility entering into a settlement agreement with OIG and agreed to pay more than $140,000 to the government.


New Jersey.
 
(March 2018). Pharmacy and Owner Settle Case Involving Excluded Individual.  In this New Jersey case, a pharmacy and its owner were alleged to have employed a pharmacist who was excluded from participating in Federal health care benefit programs. Upon investigation it was found that this excluded pharmacist had provided items or services to patients that were reimbursed by Federal health care programs. The pharmacy entered into a settlement agreement with OIG and agreed to pay more than $300,000 to the government.


Pennsylvania.
 
(March 2018). Physician Agrees to Voluntary Exclusion.  In this case, a Pennsylvania physician accepted an exclusion from participation in all Federal health care programs for 10 yearsunder 42 U.S.C. § 1320a-7(b)(6)(B).[1]OIG alleged that the physician had  issued opioid prescriptions to patients that were in excess of their needs and fell substantially short of the professionally recognized standards of care. This cause illustrates just how serious the OIG currently is when dealing with these opioid-related issues.


New Jersey.
(September 2018).  New Jersey Health Center Pays Penalties for Improperly Employing an Excluded Individual.  In this New Jersey case, a community health center was alleged to have improperly employed a physician who was excluded from participation in Federal health care benefit programs. Notably, the excluded physician was found to be working in quality assurance and risk management.  Additionally, the excluded physician had provided items and services that were ultimately billed to Federal health care programs. As a result of this wrongful hire, the community health center entered into a settlement agreement with OIG that required the organization to pay more than $98,000.

 
Illinois. (September 2018).  Psychologist Agrees to 20-Year Exclusion.  In this Illinois case, a licensed psychologist was alleged to have billed for psychological services that were either: (1) not provided as claimed; (2) false or fraudulent because the dates of service billed were times when either the patient was hospitalized, OR the psychologist was travelling out of the state. Based on the allegations, the psychologist agreed to be excluded from participation in all Federal health care programs for a period of 20 years under 42 U.S.C. § 1320a-7(b)(7).[2]


Tennessee.
 
(September 2018).  Advanced Practice Nurse (APRN) Agrees to 10-Year Exclusion.In this Tennessee case, an advanced practice nurse (APRN) agreed to be excluded from participation in Federal health care benefit programs for 10 yearsunder 42 U.S.C. § 1320a-7(b)(6)(B) and42 U.S.C. § 1320a-7(b)(6).[3]  Importantly, this particular exclusion action was imposed due the APRN’s inappropriate opioid prescribing practices.  It is also worth noting that the OIG further alleged that the APRN prescribed controlled substances without appropriately documenting: (1) A clear objective finding of a chronic pain source to justify the ongoing and increasing prescribing; (2) Attempts to identify the etiology of reported pain; (3) A thorough history or adequately inquiring into potential substance abuse history; or (4) A written treatment plan with regard to the use of the prescriptions.  If OIG audits your controlled substance prescribing practices, the agency will be looking for each of these items in the record.


 III.   Noteworthy Exclusion Self-Disclosures Reported to OIG in 2018:  


Hawaii.
 
(January 2018). General Hospital Self-Discloses Employment of Excluded Individual. After voluntarily self-disclosing the employment of an excluded individual, a Hawaii based hospital agreed to pay $100,000 for accusations of violating the Civil Monetary Penalties Law. OIG alleged that the hospital knew or should have known that the individual had been excluded from participation as a provider in Federal health care benefit programs.


Rhode Island.
 
(March 2018). Nursing Home Self-Discloses Employment of Excluded Individual.  A nursing home in Rhode Island learned that it had improperly employed an individual who was excluded from participation in Federal health care benefit programs. After subsequently choosing self-disclosing of this employment to OIG, the nursing and rehabilitation center agreed to pay more than $42,000 to resolve violations of the Civil Monetary Penalties Law.


Ohio.
(April 2018). Ohio County Health District Self-Discloses the Improper Employment of Excluded Individual.  In this Ohio case, a County Health District agreed to pay more than $55,000 for alleged violations of the Civil Monetary Penalties Law. The County Health District voluntarily disclosed that it had improperly employed an individual that it knew or should have known was excluded from participation in Federal health care benefit programs.


Texas.
(September 2018). Rehabilitation Center in Texas Self-Discloses Employment of Excluded Individual.  In this Texas case, arehabilitation and care center learned that their organization had unwittingly hired an individual that had been excluded from participation in Federal health benefits programs.  To their credit, the rehabilitation center self-disclosed the violation directly to OIG.  Ultimately, the rehabilitation center was required to pay more than $129,000 in civil monetary penalties to the government in connection with this wrongful employment.


 IV.
Points to Consider:  


 
As several of the cases above reflect, opioid related audits and investigations are increasingly resulting in OIG exercising its permissive exclusion authority under 42 U.S.C. § 1320a-7(b)(6).  It is important to keep in mind that this statutory provision can be applied to practically any situation where a health care provider’s services “fail to meet professionally recognized standards of health care.”  Now, more than ever before, it is imperative that health care providers remain up-to-date with respect to the standards of care applicable in their specific field of practice.  Additionally, their compliance with applicable standards of care must be fully and accurately documented their actions in the patient’s medical records.


Health care providers and suppliers MUST ensure that they are taking the appropriate steps to ensure that their employees, agents, contractors and vendors have not been excluded from participation in Federal health benefit programs. Based on the OIG’s actions in 2018, we should fully expect for the agency to continue to increasingly focus on exclusion-related administrative actions in 2019.


Is your practice or health care organization meeting its screening obligations?  Call the experienced staff at Exclusion Screening for help with your screening needs.

[1]42 U.S.C. § 1320a-7(b)(6)(B) permits the OIG to impose a permissive action if an individual or entity has furnished or caused to be furnished items or services to patients (whether or not eligible for benefits under subchapter XVIII of this chapter or under a State health care program) substantially in excess of the needs of such patients or of a quality which fails to meet professionally recognized standards of health care.”

[2]42 U.S.C. § 1320a-7(b)(7) is one of the permissive exclusion authorities that may be exercised (at the discretion of OIG). This permissive exclusion authority is used when excluding an individual or entity for Fraud, kickbacks, and other prohibited activities.”

[3]42 U.S.C. § 1320a-7(b)(6) is another one of the permissive exclusion authorities that may be imposed, at the sole discretion of OIG.  This permissive exclusion authority is used when excluding an individual for the wrongful submission of Claims for excessive charges, unnecessary services or services which fail to meet professionally recognized standards of health care, or failure of an HMO to furnish medically necessary services.”

Concealing Information Regarding an Excluded Party and Lying on a Medicare CMS-855a Enrollment Application Will Swiftly Make a Bad Situation Even Worse!

CMS-855a Enrollment Application(January 8, 2019): Since first being enacted in 1965, Congress has enacted a number of measures to safeguard the financial integrity of the Medicare and Medicaid programs. The Medicare-Medicaid Anti-violations Fraud and Abuse Amendments of 1977 (Public Law 95-142) are among the most significant. In addition to making of the Federal Anti-Kickback Statute a felony, the legislation also mandated that physicians and other practitioners convicted of program-related crimes be excluded from participating in Medicare and Medicaid.  Since 1977, the scope of mandatory and permissive bases that can result in program exclusion has expanded significantly. Exclusion actions are the proverbial “kryptonite” of administrative sanctions that may be imposed on health care providers and suppliers.  As the exclusion statute now stands, if a health care provider or supplier is excluded from participation in Medicare, Medicaid or other Federal health care benefit plans, no payment can be made for any of the services or items “furnished, ordered, or prescribed by an excluded individual or entity.”[1]

From a practical standpoint an excluded individual or entity cannot bill or work for any practice or entity that bills Federal health care benefit programs. The Department of Health and Human Services (HHS), Office of Inspector General (OIG), is the agency responsible for imposing Federal exclusion actions[2] that are mandated[3] under the law. At its discretion, the OIG may also choose to pursue an exclusion action against individuals and entities that have been subjected to a number of other adverse actions.[4] Although both mandatory and permissive exclusion actions are administrative in nature, the seriousness of an exclusion action cannot be understated. This article examines a recent case where the failure to disclose the ownership of a home health agency by excluded individuals resulted in the indictment and conviction of the agency’s owners and two members of the agency’s staff.

 I. The Medicare Enrollment Process is the First Line of Defense to Prevent Program Fraud:

Among its many responsibilities, the Centers for Medicare and Medicaid Services (CMS) is responsible for administering the Medicare, Medicaid and Children’s Health Insurance Program (CHIP) health care benefits programs. To serve as a participating provider or supplier in the Medicare program, an enrollment application must first be completed.[5]  The specific enrollment application form to be completed, varies depending on the type of provider or supplier entity. For example, home health agencies are required to complete enrollment application CMS-855A.[6] 

A number of items in the enrollment application are specifically intended to identify various adverse actions that may have been imposed against an entity, its owners or managers.  For example, applicants must disclose whether the provider or supplier has a history of any final adverse actions, such as convictions, exclusion actions, revocation actions, or suspensions. Administrative adverse legal actions that must be reported are listed on page 16 of the CMS-855a.  As the application states, the following administrative adverse actions must be disclosed:


If the applicant has a history of one or more final adverse legal actions (either a qualifying conviction or one of the administrative actions listed above), the actions must be detailed in SECTION 3 of the CMS-855a.



Finally, SECTION 15 of the CMS-855a requires that applicants attest to the following: 
SECTION 15, further requires that applicants certify that all of the information contained in CMS-855a is “true, correct and complete. . .”

 II. What’s the Best Way to Make an Administrative Exclusion Action Even Worse? Lie About it:

A recent criminal prosecution out of the Northern District of Texas provides a real-life example of how a health care provider can make things go from bad to worse.  In that case, the concealment of an administrative exclusion action, along with the falsification of Medicare and Medicaid enrollment and re-validation paperwork, resulted in the criminal prosecution and conviction of four individuals associated with this north Texas home health agency.  A chronology of the case is set out below:
  • April 2001. A north Texas-based home health agency (referred to as “NTHHA”) was incorporated as a Texas limited liability company with a business address in Garland, Texas. After being incorporated, NTHAA applied to become a participating home health provider in the Medicare program. The agency also applied to provide Personal Assistance Services (PAS) to Medicaid beneficiaries. The home health agency was owned by Defendant #1 (who also served as Administrator and Director of the agency), and his wife, Defendant #4. 
  • April 2010. The owner of NTHAA (Defendant #1) and one of the agency’s management officials who served as an Administrator / Director of the agency (Defendant #2) were facing state felony charges associated with the delivery of a health care item under the Medicaid program. More specifically, the Medicaid Fraud Control Unit (MFCU) of the Texas Attorney General’s Office conducted an investigation of the defendants in connection with defendants both played roles in the wrongful billing of
  • November 2011. Defendant #3 (an Administrator and Registered Nurse for NTHHA), signed and submitted a Medicare re-validation application for NTHHA. The government alleged that the application submitted by Defendant #3 concealed and failed to disclose that Defendant #1 was an owner of the home health agency and that Defendant #2 was a manager at the same agency. Moreover, Defendant #3 failed to disclose that both Defendant #1 and Defendant #2 had been indicted on felony charges associated with the delivery of a health care item.
  • March 2012. Defendant #1 filed a Texas Franchise Tax Public Information Report for NTHAA and failed to identify himself as an officer, director or member of the home health agency.
  • June 2012. Defendants #1 and #2 pled guilty Texas State District Court to a Class A Misdemeanor Offense of Attempted Theft, in violation of PENAL CODE ANN. § 31.03, related to their 2010 indictment. The defendants were placed on community supervision for one year and an Order of Deferred Adjudication was entered by the District Court. In approximately December 2012, the defendants were granted early discharge from their community service obligations the District Court dismissed all of the proceedings, including the indictments against the defendants.
  • January 2013. The OIG notified Defendants #1 and #2 that they were being excluded from participation from Medicare, Medicaid and all Federal health care benefit programs for a period of 5 years pursuant to Section 1128(a)(1) of the Social Security Act, 42 U.S.C. § 1320a-7(a)(1). Both defendants appealed the exclusion, but the 5-year period of administrative exclusion was upheld by the Administrative Law Judge assigned to hear their respective cases. 
  • April 2013. Defendant #1 signed and filed a Texas Franchise Tax Public Information Report for NTHAA which listed himself as an Administrator and Director of NTHHA.
  • May 2013. Defendant #3 signed and submitted a contract re enrollment application with the Texas Department of Aging and Disability Services (DADS). The re-enrollment application falsely certified that no persons with an ownership interest or managerial role at NTHHA had been convicted of a crime relating to a Federal health care program.  During this time period, Defendant #3 also falsely certified that none of the principals, including officers, directors, owners, partners, or person’s having a primarily management or supervisory responsibility in NTHHA were presently excluded from participation in the Medicare or Medicaid programs.
  • May 2014. Defendant #1 signed and filed a Texas Franchise Tax Public Information Report for NTHAA which listed himself as an Administrator and Director of NTHHA.
  • May 2015. Defendant #1 signed and filed a Texas Franchise Tax Public Information Report for NTHAA which listed himself as an Administrator and Director of NTHHA.
  • September 2015. Defendant #1 opened a bank account under the name of the home health agency, NTHHA. 
  • October 2015. Defendant #3 signed and submitted a Medicaid Advantage Plan provider application for NTHHA which falsely certified that no employees of the agency had been, or were currently excluded, from participation in a government program such as Medicare or Medicaid. The Medicaid Advantage Plan provider application submitted also falsely certified that no representatives of NTHAA had pled guilty to any legal action. Finally, Defendant #3 concealed and failed to disclose that Defendants #1 and #2 had no ownership interests and managerial roles in NTHAA.
  • October 2015. Defendant signed and submitted a provider application to a second Medicaid Advantage Plan, certifying that NTHHA had not been excluded under its current or former name or business identity from any Federal or State health care program.
  • January 2013 – May 2016. Despite their exclusion in January 2015, Defendant #1 and Defendant #2, continued to submit home health and PAS claims to Medicare and Medicaid for payment through May 2016. More than $4 million was billed to the Medicare and Medicaid during this period and Defendant #1 paid himself approximately $346,000 from NTHHA’s bank accounts.   Moreover, during this period, Defendant #1 paid Defendant #2 approximately $77,000 from NTHHA bank accounts.
  • June 2016. In June 2016, a Federal Grand Jury in the Northern District of Texas indicted Defendant #1, Defendant #2, and Defendant #3 (an Administrator and Registered Nurse for NTHHA) for “Conspiracy to Commit Health Care Fraud.”  (Violation of 18 U.S.C. 1349) and (18 U.S.C. 1347).  The government alleged that from approximately April 2010 through May 2016, the three defendants conspired to defraud the Medicare and Medicaid program by making materially false and fraudulent representation and promises in connection with the delivery of services billed to the Medicare and Medicaid programs.
  • December 2017. A Superseding Indictment by a Federal Grand Jury was issued in this case, charging Defendant #1 and Defendant #3 with additional counts of “False Statements in Health Care Matters.” (Violation of 18 U.S.C. 1035). Two unindicted physician co-conspirators were also named in the Superseding Indictment. Additionally, an additional defendant was added to the indictment. Defendant #4 (the wife of Defendant #1) was indicted for one count of “Conspiracy to Commit Health Care Fraud” for her role in the concealment of and falsification of ownership interests in NTHAA.

  • October 2018. After a six-day trial, a Federal jury found that: (A) Defendant #1 was guilty of Conspiracy to Commit Health Care Fraud and of making a False Statement for his role in concealing his ownership interest in NTHAA; (B) Defendant #2 was guilty of Conspiracy to Commit Health Care Fraud for his role in concealing his ownership interest in NTHAA; and (C) Defendant #3 was guilty of Conspiracy to Commit Health Care Fraud and of making a False Statement for her role in concealing the ownership interests of Defendant #1 and Defendant #2.  Defendant #3 was also found to have falsely certified that no one associated with home health agency was excluded.  Moreover, she supposedly indicated that another party owned NTHAA, when in fact, Defendant #1 and Defendant #2 were both excluded parties and had an ownership interest in the agency. 

 III.  How Did a State Class A Misdemeanor That Was Ultimately Dismissed Lead to an OIG Exclusion Action?

 In the case discussed above, the OIG excluded Defendants #1 and #2 from participation in the Medicare and Medicaid programs for 5 years, citing the mandatory exclusion requirements of Social Security Act, 1128(a)(1).
Let this sink in for a moment . . . the defendants pled guilty to a state Class A Misdemeanor in Texas District Court, and the charges, including the indictment, were later dismissed pursuant to an Order of Deferred Adjudication by the Texas State District Court.  Nevertheless, the OIG really had no choice but to exclude the defendants. 
The mandatory exclusions of Defendant 1# and Defendant #2 were brought under Section 1128(a)(1) of the Social Security Act, 42 U.S.C. § 1320a-7(a)(1). This provision of the Act requires the exclusion of any individual or entity convicted of a criminal offense related to the delivery of an item or service under the Medicare or Medicaid programs.[7] Importantly, this mandatory exclusion provision is not limited to only felony convictions.  It also covers misdemeanor convictions. Additionally, it is important to note that the Social Security Act defines “conviction” as including a number of situations.  A summary of actions that qualify as a conviction is set out below:

Social Security Act § 1128(i)(1): When a judgment of conviction has been entered against the individual by a Federal, State, or local court.

Social Security Act § 1128(i)(2): When there has been a finding of guilt against the individual by a Federal, State, or local court. 

Social Security Act § 1128(i)(3): When a plea of guilty or nolo contendere by the individual has been accepted by a Federal, State, or local court.

Social Security Act § 1128(i)(4): When the individual has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld

Simply put, the OIG was required by law to exclude Defendant #1 and Defendant #2 from the Medicare program for 5 years, despite the fact that the conviction was a state misdemeanor that was ultimately discussed pursuant to an Order of Deferred Adjudication.

 IV. Lessons Learned:

Lesson #1. Always consider the administrative ramifications of accepting a plea agreement. Even if the charges are later dismissed under a deferred adjudication agreement. pleading guilty to a Class A misdemeanor will lead to an individual’s mandatory exclusion from participating in the Medicare program if the underlying criminal offense was related to the delivery of an item or service under the Medicare or Medicaid programs.  In this case, the OIG had no choice but to exclude these individuals from the Medicare program for 5 years under Section 1128(a)(1) of the Social Security Act.  

Lesson #2.  Medicare and Medicaid providers need to exercise caution when completing Medicare and Medicaid program enrollment applications.  As this case reflects, Federal prosecutors won’t hesitate to pursue false or deceitful conduct that has been taken to hide an excluded party’s ownership interest or involvement with a health care entity. Although an exclusion action is only an administrative sanction, if you are excluded from participation in the Medicare program and attempt to set up a “straw owner” in an effort to hide your ownership interest in a health care entity, you risk turning an administrative sanction into a criminal case.

 V. Concluding Remarks:

In this case, the defendants’ worst enemies were, in fact, themselves.  After being excluded form participation in the Medicare program. The defendants failed to properly divest and dissociate themselves from the home health agency.  Instead, they essentially doubled-down and took steps to conceal their ownership and involvement with the home health agency. This false and deceitful conduct ultimately led to their indictment on federal criminal charges.  Additionally, their actions led to the criminal involvement of another home health agency management official (Defendant #3), and the agency owner’s wife (Defendant #4).  Ultimately, all four individuals were convicted of “Conspiracy to Commit Health Care Fraud,” making a“False Statement,” or both counts. All of the defendants are currently awaiting sentencing.

As a participating provider or supplier in the Medicare, Medicaid or other Federal health care program, you have an affirmative obligation to ensure that no owners, employees, agents or contractors have been excluded from participation in one or more of these programs.  The folks at Exclusion Screening can greatly assist you in meeting those obligations. They can be reached at:  1 (800) 294-0952.

[2]States also have the ability to exclude individual and entities from participating the state’s Medicaid program.
[3]Mandatory exclusion actions must be imposed by the OIG if an individual or entity is convicted of a number of felony criminal health care related statutes or convictions related to fraud, theft of other financial misconduct.  A list of mandatory exclusion bases can be found in the following article.
[4]Permissive exclusion actions are not required by law but may be pursued at the option of the OIG.  A list of permissive exclusion bases can be found in the following article.  
[5]After successfully enrolling in the Medicare program, 42 CFR §424.515 requires that in order to maintain Medicare billing privileges, a provider or supplier (other than a DMEPOS supplier) must resubmit and recertify the accuracy of its enrollment information generally every 5 years. DMEPOS Suppliers must revalidate at least every three years.
[6]A copy of CMS-855A can be found here.
[7]See, Tamara Brown, DAB No. 2195 (2008); Thelma Walley, DAB No. 1367; Boris Lipovsky, M.D., DAB No. 1363 (1992); Lyle Kai, R.Ph., DAB CR1262 (2004), rev’d on other grounds, DAB No. 1979 (2005); see also Russell Mark Posner, DAB No. 2033, at 5-6 (2006).

What Providers Need to Know About Medicaid Exclusions in Texas: Exclusion Screening Requirements and Best Practices for Compliance

Texas Medicaid Exclusions(December 17, 2018):   The Texas Medicaid Program will not pay for any item or service furnished directly or indirectly by individuals or entities that have been excluded from a State or Federal health care program.  This results in a broad “Payment Prohibition” that is enforced by the Texas Health and Human Services Commission, Office of Inspector General (HHSC-OIG) through a comprehensive regulatory scheme that includes the imposition of strict provider exclusion screening requirements. This article will discuss how providers are impacted by these regulations and the exclusion screening obligations they impose; the risks of compliance failures; and it will suggest best practices to help providers to help providers comply with their obligations and avoid those risks.

I. What is a Medicaid Exclusion?
Exclusions” are final administrative action by a State or Federal agency that bars an individual or entity from participating in one of its benefit programs. When a State forecloses participation in its Medicaid programs, that action is often referred to as a “Medicaid Exclusion.” Similarly, when the Department of Health and Human Services (HHS), Office of Inspector General (OIG) bars participation in Medicare program, that is commonly referred to as a “Medicare Exclusion.”  Texas Medicaid Exclusions are posted on database maintained on the Texas HHSC-OIG website, and Medicare Exclusions are posted on the OIG’s “List of Excluded Individuals and Entities” (LEIE) which is maintained on its website.

II. Who Gets Excluded? Why are Exclusions Imposed?
Medicaid Exclusions in Texas are imposed by HHSC-OIG pursuant to Texas Administrative Code articles §371.1705 (Mandatory Exclusions) and §371.1707 (Permissive Exclusions). The primary reasons for the agency to take this action are:
  • A conviction for program-related fraud, or patient abuse,
  • Adverse actions by licensing boards such as the Board of Nursing or the Medical Board,
  • Being excluded by from the Medicare program.[1]

Texas Medicaid ExclusionsSince exclusions are designed to protect patients and the programs that serve them, it is not surprising to see that that most are based on fraud, adverse license board actions or exclusions imposed by the OIG. The chart showing the breakdown of exclusions in Texas by occupation over the  last five years is also consistent with this focus as Nurses account for almost half  of all exclusions during that period. However, when added to others who receive  licenses (physicians, pharmacists, etc.) those with a license account for almost  three fourths of all exclusions in Texas.



III.  What is the Effect of a Medicaid Exclusion?
“Exclusions [are] one of the most important tools we have to protect beneficiaries and stem fraud and abuse [and]…ensure that Medicare, Medicaid and other federal health care programs are protected. [W]e need…to help make sure excluded individuals are not involved in any way in the care of… beneficiaries.” Inspector General June Gibbs Brown,[2]
Medicaid Exclusions imposed by HHSC-OIG “restrict individuals (and entities) from receiving any reimbursement for items or services furnished, ordered, or prescribed.” Texas Medicaid Provider Enrollment Manual, 1.3.1.  This sanction is commonly referred to as a “Payment Prohibition,” and TAC Rule §371.1705(e)(4) describes the effect of sanction as follows:
  • The person or entity will not be reimbursed for any item or service they may furnish.
  • The person or entity may not bill or receive payment, directly or indirectly, from any Title V, XIX, or XX, or other HHS programs, or from the Medicaid program.
  • The person or entity may not assess care, or order or prescribe services to Title V, XIX, or XX, or other HHS programs recipients either directly or indirectly.
  • A clinic, group, corporation, or other entity is not allowed to submit claims for any assessments, services, or items provided by a person who is excluded from participation.
  • Any entity that employs or contracts with an excluded entity may not include those costs in any form of payment (i.e. a cost report, document used to determine payment rates, etc.).
  • Excluded parties that submit claims are subject to administrative damages and penalties.
States also must terminate the participation of any provider that has been terminated for cause from any other State Medicaid program pursuant.  The requirement, contained in Section 6501 of the Affordable Care Act, is intended to strengthen Medicaid program integrity by stopping providers excluded in one State from moving to another and providing services there. Thus, stated simply, a Medicaid Exclusion in Texas makes an individual radioactive when it comes to providing services in Texas or in any other State benefit program. 

IV. Provider Exclusion Screening Requirements:[3]
Medicaid Exclusions are only effective if the payment prohibition is enforced and Texas seeks to achieve this goal largely by imposing extensive “exclusion screening” obligations on its Medicaid providers.  These exclusion screening requirements are outlined and described below:

A. Texas Medicaid Enrollment Manual: Basic Screening Obligations
Section 1.3.1 of the Texas Provider Enrollment Medicaid Manual states that current providers and applicants “must screen their employees and contractors every month” as a “condition of the provider’s enrollment or re-enrollment into state health-care programs.”  Providers are advised that they can accomplish this by searching the Texas Medicaid Exclusion List and the LEIE – the Medicare Exclusion List. The Texas list is searchable and it can also be downloaded from the HHSC-OIG website at: https://oig.hhsc.state.tx.us/Exclusions/Search.asp.  The LEIE can be downloaded from the HHS-OIG website at http://www.oig.hhs.gov/fraud/exclusions.asp, and it is also a searchable database.


While the primary part of the Medicaid Manual does not refer to screening upon hire, there are a large number of programs that operate under the umbrella of the Medicaid Program with manuals of their own that supplement the main Provider Enrollment Manual.[4] The manuals of at least 20 of these “programs within the program” have a an appendix that states that requires providers screen upon hiring and contracting, and least monthly thereafter, to ensure compliance with Federal regulations at 42 CFR 1001.1901(b) and State Medicaid Director Letter #09-001 from the Centers for Medicare & Medicaid Services (CMS).

B. Texas Admin. Code § 352.5: Screening Requirements with Enrollment and Re-Enrollment And Expands the Scope of the Exclusion Screening Obligation.
TAC § 352.5 applies specifically to enrollment and re-enrollment, but it expands the scope of the obligation of provider exclusion screening in two ways.  The regulation adds “owners and managers” to employees and contractors as those who have to be screened, but, more importantly, it seemingly expands the scope of the screening requirement to “participation in a program under Title XVIII, XIX, or XXI of the Social Security Act.”  As Titles XVIII, XIX, and XXI refer to the Medicare Program, the Medicaid Program and the State Children’s Health Program (CHIPs), the regulation clearly seems to require providers to screen every State Exclusion List in addition to the Texas Medicaid Exclusion List and the LEIE.

C. Screening Obligations Arising from Disclosure Obligations in the Enrollment Process
The application also process expands the scope and extent of the obligation to screen on the part of providers – though it does so in a different way.  As part of the process, all “principals” and “subcontractors” [5] of the applicant are required to fill out a Provider Information Form (PIF-2) and state whether they have ever been excluded or debarred from any state or federal program, and the applicant must attest that he has carefully reviewed the information in the PIF-2 and “certify it is current, complete, and correct.
This is a significant expansion of the provider exclusion screening obligation because, as can be seen in FN5, the definition of people that may qualify as either a principal or subcontractor is very broad and could result in the inclusion of a large number of who might only be remotely connected to the applicant.  As such, a prudent applicant will not rely on his personal knowledge of the principal or contractor or on their answers on the form; instead, he will screen each principal or subcontractor to ensure their exclusion status.  Additionally, the fact that the question is whether they have ever been excluded or debarred from “any state or federal program” strongly supports the view that TAC § 352.5 intends to require broad screening that includes all State Exclusion Lists.

D. The Provider Agreement Confirms Exclusion Screening Compliance
The Texas Medicaid Provider Agreement itself, the final step of the enrollment chain, also contains significant exclusion screening provisions.  For example, Paragraph 1.2.1 states:
 
By signing this Agreement, Provider certifies that the provider and its principals have not been excluded, suspended, debarred, revoked or any other synonymous action from participation in any program under Title XVIII (Medicare), Title XIX (Medicaid), or under the provisions of Executive Order 12549, relating to federal contracting. Provider further certifies that the provider and its principals have also not been excluded, suspended, debarred, revoked or any other synonymous action from participation in any other state or federal health-care program.

Paragraph 9.1 affirms provider’s compliance with TAC § 352.5 stating:

Provider, in accordance with TAC 352.5 (b)(1), has conducted an internal review to confirm that neither the applicant or the re-enrolling provider, nor any of its employees, owners, managing partners, or contractors (as applicable), have been excluded from participation in a program under Title XVIII, XIX, or XXI of the Social Security Act.

[Provider] attest[s] that an internal review was conducted to confirm that neither the applicant or the re-enrolling provider nor any of its employees, owners, managing partners, contractors have been excluded from participation in a program under the Title XVIII, XIX, or XXI of the Social Security Act. 
Yes    No   

Paragraph 12.1 states: By signing below, Provider acknowledges and certifies:

(c) Provider has carefully reviewed all of the information submitted in connection with its application to participate in the Medicaid program, including the provider information forms…and certifies that this information is current, complete, and correct.

(d) Provider agrees to review and update any information in the application to maintain compliance with and eligibility in the Medicaid program and continued participation therein.

V.
Enforcement:
Excluded individuals and entities may not “bill or receive payment, directly or indirectly, from any Title V, XIX, or XX, or other HHS programs, or from the Medicaid program.” This limitation includes assessing care, ordering or prescribing services, having a separate entity indirectly submitting claims, and being employed by a third party who then includes those costs in cost reports or some other form of payment. TAC § 371.1705. Violations can result in federal civil money penalty or criminal liability under § 1128A and § 1128B of the Social Security Act, and the imposition of administrative damages and/or penalties by the State (TAC § 371.1655).
The HHSC-OIG is responsible for enforcing state laws and regulations relating to the Medicaid program and can assess the following as damages and penalties for exclusion violations pursuant to §32.039 (1) the amount paid plus interest from the date on which the payment was made; and (2)  an administrative penalty up to twice the amount paid; and (3) not more than $10,000 for each violation.[6]
HHSC-OIG’s Chief Counsel division is primarily involved in Medicaid exclusion enforcement.  The General Law section within the HHSC-OIG is responsible for taking initial actions that relate to excluding providers, and the Litigation Section actually processes provider enrollment terminations and exclusions.  The Medicaid Program Integrity division (MPI) may also be involved in investigating potential exclusions and referring them to the Litigation Section. 

VI. Best Practices for Complying with the Texas Medicaid Exclusion Screening Requirements:
Compliance with exclusion screening requirements is of critical. Providers that fail to ensure the exclusion status of their owners, managers, employees and contractors risk overpayment liability,
the imposition of civil money penalties, and even possible criminal consequences.  Only proper exclusion screening can help providers mitigate or avoid these risks, and this section will suggest some practices which providers should consider including in their compliance plans. 

A. Screen all Employees.
Medicaid does not pay for services furnished directly or indirectly by an excluded entity. The same rule applies to Medicare, and the payment prohibition is broadly interpreted by federal authorities to include administrators, IT support personnel – even unpaid volunteers – if any of the services they provide contribute to any reimbursements that are received.[7] Texas Medicaid would almost certainly adopt a similar formulation and providers can try to identify employees that do not contribute to state or federal reimbursements.  But the scope of the payment prohibition is so broad that caution dictates against trying to “pick and choose” who to screen and it is a best practice for providers to screen all of their direct employees.

B. Owner, Officer, Manager and Director Screening.
As previously discussed, those who own and/or manage are included in the required screening and disclosure obligations imposed by Texas Admin. Code § 352.5, the mandatory disclosure requirements in the application process, and the provider agreement itself. Further, sections 1.2.2 and 12.1 of the provider agreement imposes an ongoing obligation on providers to report any changes in status of the disclosing individuals and entities.  As such, owners, officers, directors, managing employees and agents should also be included in the provider’s screening program.

C. Exclusion Screening of Contractors.
When deciding which contractors to screen, it is helpful to keep in mind that the aim of exclusion enforcement is to protect programs and their beneficiaries from untrustworthy providers and to deter improper conduct by others. As such, it is highly relevant if the conduct by the contractor is integral to care and creates a risk of patient harm.[8]  Guidance on translating this into a meaningful policy can be found in Corporate Integrity Agreements between providers and HHS-OIG confected in false claims act settlements the Special Advisory cited in footnotes 7 and 8. With this in mind, the following is offered to help providers develop their exclusion screening programs:
The contractors that provide the following (or similar) services should be screened as they would likely be viewed as persons who directly or indirectly support claims:[9]
  • Ambulance and other transportation service providers
  • IT and Security providers and their technicians
  • Medical equipment suppliers, Pharmacies and their Pharmacists, Labs
  • Direct service providers and agencies providing temporary direct services providers.
In most CIAs there are specific carve-outs for vendors whose sole connection to the provider is selling or providing supplies or equipment for which the vendor does not bill.  This is a common-sense exception that removes uncertainty with regard to a large class of vendors who provide supplies for which the provider is ultimately reimbursed.  The OIG will also allow providers to delegate the screening obligation to their contractors, but it does so with the following caveats: 1) the provider must insist on documentation that it has been performed, and 2) the provider remains responsible for their exclusion status and for any overpayment liability.
   
D. Special Rules for Billers and Coders.
Billers and third-party billing companies receive “special attention” when it comes to exclusion screening. It recognizes that providers may have to delegate their screening obligation to the billing contractor (particularly if it is a large one) and provides guidelines to be followed, however, it makes clear that the provide remains legally responsible for any overpayment liability. The OIG guidelines are found below, and providers should consider adopting some or all of them:
  • Require the biller to have (and produce) a policy of not employing excluded persons
  • Require the biller to screen its employees upon hire and monthly thereafter and maintain documentation of its screening
  • Require the biller to provide training to its employees in connection with the applicable requirements and preparation of the claims they are submitting
E. Screening Should be Done on Hire or Contract Initiation, and Monthly Thereafter.
As previously discussed on pages 2 and 3, providers must screen upon hire and monthly thereafter. This is supported by Section 1.3.1 of the Texas Provider Enrollment Medicaid Manual, Appendices to more than 20 individual Medicaid program provider manuals, 42 CFR 1001.1901(b) and State Medicaid Director Letter #09-001 from the Centers for Medicare & Medicaid Services (CMS).

F. Providers Should Screen all State Medicaid Exclusion Lists and the LEIE.
Based on the obligations contained in TAC § 352.5, the disclosure obligations in PIF-2, and the screening obligations identified in the Provider Agreement, providers should screen all 40 State Exclusion Lists as well as the LEIE – the Medicare Exclusion list.
It is also noted that Section 6501 of the ACA states that if a provider or entity is excluded from any State Medicaid program, then that provider or entity is excluded from participating in all State programs.[10]  Though it has not been fully settled as to how the statute will be implemented, this is completely consistent with the requirements of the authorities cited above.

G. Providers Should Hire a Vendor to Fulfill their Exclusion Screening Requirements.
Some providers are able to perform the “basic” screening obligation of checking the Texas Medicaid Exclusion List and the LEIE upon hire and monthly thereafter; but providers that attempt to screen all 40 State Exclusion Lists are almost certainly going to find the task to be insurmountable. The difficulty stems from several factors: there is no uniformity in in the list formats (they could be in WORD, Excel or PDF); each list contains different fields on information; States have different reasons and standards for including people on their list; and some States may have little to identify the person or entity beyond a name and city. In short, as with many other necessary services, providers need specialized assistance to meet a regulatory obligation. 
There are a number of reputable exclusion screening vendors, but providers should be aware that vendors, and the services they provide, can vary significantly.  Some vendors, for example, assist in investigating whether potential matches are actual matches whereas others may not; there can be differences in the sophistication of their software and the ability to identify “potential matches” when names are similar but not a “perfect match;” and the ease of access can differ.[11]

VIII.  Closing Comments:
The goal of this article was to help providers gain a better understanding of Medicaid Exclusions in Texas.  Exclusions are imposed on people and entities that pose risks to the Program and its beneficiaries, and that is why Texas Medicaid will not pay for any item or service furnished by them, whether directly or indirectly.  The article is also intended to help providers gain an understanding of their exclusion screening obligations and how they can fulfill them. 

——–
[1] As found on the HHSSC-OIG website: https://oig.hhsc.texas.gov/exclusions.  This chart was derived from an analysis of the Texas Exclusion List which can be found at the web address sighted above.
[2] Press Release announcing the issuance of the OIG’s “Special Advisory Bulletin on the Effects of Exclusion from Federal Health Care Programs, issued September 29, 1999. 
[3] “Exclusion Screening” refers to any process by which a provider determines if an individual or entity is barred from participating in a State of Federal benefit program due to his inclusion on one or more exclusion lists. The Medicare Exclusion List maintained by HHS-OIG is formally called the List of Excluded Individuals and Entities (LEIE) and 40 States have their own separate Medicaid Exclusion Lists. The remaining States rely on the LEIE, and each State has its own unique set of Exclusion Screening requirements.   
[4] The list is found on the HHSC-OIG website at: https://hhs.texas.gov/lawsregulation/handbooks/nfp/appendices/ appendix-vi-list-excluded-individuals-entities-leie. The programs to which it directly applies includes, but is not limited to, the following: the Community Living Assistance and Support Services Program Provider Manual (CLASS) as Appendix IX, the Deaf Blind with Multiple Disabilities  Program Manual (DBMD) as Appendix IV, the Medicaid Hospice Provider Manual (MHPM) as Appendix VII, the Medically Dependent Children Program Provider Manual (MDCP-PM) as Appendix X, the Nursing Facility Provider Manual (NFPM): as Appendix VI, and the Texas  Home Living Program Handbook (TxHmL): Appendix IV.
[5] Broadly defined in PIF-2 to include the following:
  • Those with direct or indirect ownership or control of 5% or more of the applicant;
  • Officers and directors, limited and non-limited partners, and all shareholders;
  • Managing employees or agents who exercise operational or managerial control, or who directly or indirectly manage the conduct of day-to-day operations;
  • Anyone with express or apparent authority to act for or on behalf of the provider;
  • Anyone with delegated management functions or responsibility for providing medical care; and,
  • Fiscal agents who can enter into a contract or agreement, or purchase of real
[6] If the violation impacts an elderly or disabled person (as defined by section 48.02 of the Human Resources Code), or a person less than 18 years of age, the penalty increases to between $5,000 and $15,000 per claim.
[7] Special Advisory Bulletin on the Effect of Exclusions from Participation in Federal Health Care Programs,” issued May 8, 2013.
[8] 81 Fed. Reg. 88, 334 (Dec. 7, 2016), See also, the Special Advisory Bulletin cited in FN 7.
[9] This a list of examples and not intended in any way to be a complete list.
[10] 42 U.S.C. § 1396(a)
[11] As noted in footnote 1, the author is a co-founder of Exclusion Screening, LLC, a third-party vendor of exclusion screening services.

OIG Exclusion Case Study: The Impact of a False Claims Act Judgment.

OIG Exclusion Case Study(August 23, 2018): In 2008, after learning that a Texas-based laboratory services company was submitting false claims to the Medicare program, a private citizen filed suit, on behalf of the United States, against the laboratory services company under the qui tam provisions of the civil False Claims Act. The qui tam provisions of the False Claims Act (31 U.S.C. §§ 3729 – 3733) allow private parties, commonly referred to as “whistleblowers” or “relators” to sue individuals and entities on behalf of the government if the defendants have “knowingly” submitted false claims to the government for payment.[1] In this case, the United States intervened in the case against the laboratory services company in 2011. In April 2018, the U.S. District Judge hearing the case ruled against the laboratory and its physician owner and awarded the United States $30.5 million for violations of the False Claims Act. Although there are a number of lessons (especially with respect to individual liability) to be learned from the underlying case, the purpose of this article to examine the collateral administrative actions that were taken against the physician owner and the laboratory services company.

I. Parallel Administrative Action — OIG Exclusion Action Overview: 

In a letter dated August 21, 2015, the Department of Health and Human Services, Office of Inspector General (OIG) proposed to exclude the laboratory services company, and its owner, from participation in Medicare, Medicaid, and other Federal health programs under 1128(b)(7)[2] of the Social Security Act, for a period of 15 years. The OIG based its proposed exclusion action on the submission of claims from August 2009 to January 2010, that the laboratory and its owner (referred to as Petitioners in the administrative case), “ knew or should have known were not provided as claims and were false or fraudulent.”
[3]

II. Why Did the OIG Exercise its Exclusion Authority Under 1128(b)(7)? 

More often than not, when dealing with allegations of the civil False Claims Act, the OIG will choose to exercise its permissive discretion to exclude an individual or entity under Section 1128(b)(7) of the Social Security Act.[4] In this particular case, the OIG did, in fact, exercise its authority to exclude the Petitioners for 15 years.

III. Petitioners’ Appeal of the OIG’s Exclusion Decision: 

In response to the proposed OIG exclusion action, in October 2015, the Petitioners filed a timely request for a hearing before an Administrative Law Judge (ALJ). Additionally, due to the unavailability of the ALJ first assigned to hear the case, a different ALJ was appointed to handle the hearing on June 2017. Throughout this period (from late 2015 to early March 2018), both sides actively engaged in discovery and a lively exchange of motions ensued. Finally, in late March 2018, the substitute ALJ assigned to take over the case conducted an in-person hearing on the exclusion action.

IV. Issues Considered by the Administrative Law Judge:  

Simply stated, the ALJ hearing the case was required to consider two issues:
ISSUE #1: Did the OIG have a basis to exclude the Petitioners from participating in Medicare, Medicaid and all other federal care programs for 15 years under 42 U.S.C. §1320a-7(b)(7)? As set out under 42 U.S.C. §1320a-7(b)(7), the Secretary may exclude individuals and entities from participation in any federal health care program (as defined in section 1320a-7(b)(f)[5]) if the Secretary determines that individual or entity has committed fraud, kickbacks and / or other prohibited activities.[6]
As the ALJ’s opinion notes, after conducting the administrative hearing in this case, a U.S. District Court with jurisdiction over the parallel civil qui tam case issued a summary judgment decision against the Petitioners, finding the liable for violations of the False Claims Act. Despite the fact that the elements considered by the U.S. District Court were essentially the same as those to be considered by the ALJ when addressing the exclusion action, the ALJ chose not to broadly apply judicial estoppel in this case. This decision appears to have been primarily based on the fact that the time frames considered by the two forums were different. The ALJ also noted that he was charged to conduct a de novo review of the evidence when assessing the exclusion decision by the OIG. The ALJ therefore ruled that it was more appropriate for him to issue a decision based on the merits. Upon consideration of the evidence in this case, the ALJ found that:

(1) Petitioners presented or caused to be presented to an agency of the United States the claims at issue in this case.
(2) The claims Petitioners presented or caused to be presented to Medicare were false.
(3) Petitioners should have known that the claims for services they presented or caused to be presented to Medicare were false. 
(4) Petitioners’ equitable defenses do not serve to undermine the OIG’s basis for excluding them. 
(5) The statute of limitations is not implicated by discussion of Petitioners’ conduct preceding the six-year timeframe that forms the basis of the proposed exclusion.[7]

In light of these findings, after conducting a de novo review of the evidence, the ALJ found that the OIG did, in fact, have a basis for excluding the Petitioners based solely on the claims they submitted within the six-year statute of limitations.
ISSUE #2: Was the 15-year exclusion period reasonable? Therefore, when deciding whether the period of exclusion imposed by the OIG was “reasonable,” the ALJ assessed the following five criteria outlined under 42 C.F.R. §1001.901(b)(1)-(5): [8]

(1) The nature and circumstances surrounding the actions that are the basis for liability, including the period of time over which the acts occurred, the number of acts, whether there is evidence of a pattern and the amount claimed; As the ALJ noted when reviewing the conduct at issue, during the period of time examined by the U.S. District Court, the Petitioners submitted more than 26,000 claims that resulted in more than $10 million in losses to the government. Even if the ALJ limited his review to the relevant conduct during the six-year period covered during this administrative hearing, the Petitioners still submitted 571 improper claims to Medicare. Additionally, despite the Petitioners’ assertions to the contrary, the ALJ found that the Petitioners’ conduct did, in fact, represent a pattern of improper behavior.

(2) The degree of culpability; When considering the Petitioners’ degree of culpability, the ALJ found that the physician owner and the lab were “highly culpable.The ALJ further found that the Petitioners were not victims of careless billing by others. Rather, he ruled that the physician owner was closely involved in the lab’s operations and exercised significant control over the organization’s billing staff. As the ALJ wrote: “There is nothing in the record to suggest Petitioners were simply absentee landlords who had no agency concerning their billing scheme. . . “

(3) Whether the individual or entity has a documented history of criminal, civil or administrative wrongdoing (The lack of any prior record is to be considered neutral);  Although the recent U.S. District Court ruling against the Petitioners for more than $30 million squarely fits within this regulatory factor, the judgment could not have been considered at the time of the exclusion action by the OIG because it had not been rendered at that time. As a result, there was no prior history of wrongdoing that the OIG could have considered. Having said that, there is nothing in the regulation that limits the OIG’s consideration of improper wrongdoing to only actions that have resulted in a judgment. Therefore, the ALJ held that it was proper for the OIG to consider the Petitioners documented conduct when it assessed the 15-year period of exclusion.  

(4) The individual or entity has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion; Although the ALJ in this case declined to consider the U.S. District Court ruling as res judicata, the OIG still argued that the ALJ consider the ruling on the False Claims Act constituted an “adverse action.” After considering the positions advanced by the parties, the ALJ held that the requirements set out under 42 C.F.R. §1001.901(b)(4)[9] had not been met, primarily because the ALJ was not persuaded that a ruling by a Federal U.S. District Court could be considered an adverse action by a “agency or board.” Based on this assessment, the ALJ chose not to consider this factor in his analysis of the reasonableness of a “15-year” exclusion.

(5) Other Matters as Justice May Require. Several points were advanced by the Petitioners when addressing this factor. First, Petitioners argued that the Medicare program need no protection from them. Noting that they had improperly billed the Medicare program for millions of dollars, the ALJ concluded that should not be trusted to access program funds. The Petitioners also argued that if they excluded from participation, it would negatively impact patient access to lab care. The ALJ noted that the Petitioners failed to show that there was lack of laboratory facilities in the Houston area. Therefore, Petitioners absence would not negatively impact patients. In fact, the ALJ concluded that the Medicare “will undoubtedly be better off without them.” After considering the evidence, the ALJ found that an exclusion period of 15 years was reasonable in this case. Notably, the ALJ stated that the “circumstances surrounding Petitioners’ billing scheme indicate Petitioners are highly untrustworthy.” The ALJ further found that the mitigating evidence presented by the Petitioners kept the period of exclusion from be much lengthier than the 15-year period of excluded assessed by the OIG.

V. Points Learned from this Exclusion Case: 

Point #1.  Impact of a False Claims Act Judgment. The administrative collateral risks associated with violations of the False Claims Act cannot be underestimated. In this case, where the False Claims Act violations went to trial and resulted in a judgment, the OIG had no reason to waive its permissive exclusion authority. How could this have been avoided? It is important to keep in mind that the vast majority of cases brought by whistleblowers / relators under the civil False Claims Act are not intervened by the government and result in the dismissal of the case. Of the False Claims Act cases that are intervened, most result in a settlement with the government. When settling a False Claims Act case, defense counsel will often seek to wrap-up any outstanding administrative risks (such as exclusion) as well. In order to waive its permissive exclusion authority, the OIG typically requires that health care providers and entities enter into a Corporate Integrity Agreement (CIA) as part of the settlement. In this case, for whatever reason, the False Claims Act case was not settled and went to trial, resulting in a significant judgment and the imposition of a 15-year exclusion.  

Point #2: Issue Preclusion is a Real Possibility. As you will recall, the U.S. District Court in the associated False Claims Act case granted the OIG’s Motion for Summary Judgment. In asserting its arguments in the administrative hearing, the OIG urged the ALJ to narrowly apply estoppel and rely on the District Court’s finding that the claims submitted by the Petitioners were false. The ALJ cited several reasons for not adopting the District Court’s holding in this regard. Nevertheless, it isn’t much of a stretch to imagine a slightly different set of facts, where issue preclusion may have been granted. For instance, if the judgment was final and the time period of the claims at issue were the same, the ALJ may have been persuaded to apply estoppel in this case.

Point #3: ALJs will Give Broad Deference to the OIG When Assessing the Reasonableness of an Exclusion Action. It is important to remember that when making this type of determination, an ALJ is limited to a significant extent and cannot substitute his judgment for that of the OIG. Instead, the ALJ can only consider whether the period of exclusion was within a “reasonable range.”[10] As discussed in the Federal Register more than 25 years ago:

The OIG’s broad discretion is also reflected in the language of § 1001.2007(a)(2), restricting the ALI’s authority to review the length of an exclusion imposed by the OIG. Under that section, the ALI’s authority is limited to reviewing whether the length is unreasonable. So long as the amount of time chosen by the OIG is within a reasonable range, based on demonstrated criteria, the ALI has no authority to change it under this rule. We believe that the deference § 1001.2007(a)(2) grants to the OIG is appropriate, given the OIG’s vast experience in implementing exclusions under these authorities.[11]

VI. Conclusion: 

This case illustrates the collateral impact of a False Claims Act judgment on the participation status of a health care provider. While the judgment itself is serious, being excluded from participation in federal health care programs is as serious, if not more serious, than the judgment. As excluded parties, the physician owner and the lab are effectively out of business. Moreover, the physician owner may find it difficult to obtain employment from another provider due to his exclusion status. Unfortunately, there is a very real chance that these actions are merely the proverbial “tip of the iceberg” in terms of what lies ahead for the physician owner and the lab. The exclusion action qualifies as an adverse action and will be reported to the National Practitioner Databank (if it has not already been reported). Additionally, to the extent that the physician owner and the lab are participating providers in any private payor insurance programs, it is very likely that they have an affirmative obligation to notify the plans of both the False Claims Act judgment and the exclusion action (depending on how their participation agreement is worded). This can result in both private payor audits of similar claims and in termination of a provider’s participation in the payor’s plan.  
How should you react if faced with a similar situation? Contact your health lawyer and make sure that you are prepared to address the various collateral administrative adverse actions that may flow from a False Claims Act judgment and / or an being excluded from participation in federal health care programs. Considering your options at the initiation of a False Claims Act investigation may help you avoid some of the consequences discussed above.

 

OIG ExclusionRobert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law. Liles Parker attorneys represent health care providers and suppliers around the country in connection with UPIC audits, ZPIC audits, OIG investigations and Medicare exclusion actions. Is your practice facing alleged violations of the False Claims Act? We can help. For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

 

[1] Under the qui tam provisions of the False Claims Act, whistleblowers can are entitled to receive 15% to 25% of any recovery if the United States intervenes in the case, or 25% to 30% if the government declines to intervene in the case that the whistleblower has brought. Defendants who violate the civil False Claims Act are liable for three times the government’s damages plus significant civil penalties for each false claim that was improperly submitted for payment.

[2] Section 1128(b)(7) of the Social Security Act

[3] ALJ decision, citing Petitioner’s Request for Hearing, Ex. A at 2.

[4] In those cases where the OIG concludes that exclusion is not necessary in order to protect the integrity of the Medicare program, it will typically require that the individual and / or entity enter into a Corporate Integrity Agreement (CIA). The purpose of the CIA is to strengthen the provider’s compliance program and reduce the level of risk to the Medicare program.

[5] Under 42 U.S.C. §1320a-7(b)(f), “Federal health care program” is defined as:

(1) any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government (other than the health insurance program under Chapter 89 of Title 5); or

(2) any State health care program, as defined in section 1320a-7(h).

[6] The Secretary has delegated the authority to impose an exclusion to the OIG, pursuant to: 42 C.F.R. §1001.901(a).

[7] 42 C.F.R. §1001.901(b)(1)-(5).

[8] An abbreviated set of these five criteria were set out in the OIG’s Final Rule, ”Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Office of Inspector General’s Civil Monetary Penalty Rule.” See 81 Fed. Reg. 88,334 (Dec. 7, 2016). The full regulatory language of 42 C.F.R. §1001.901(b)(1)-(5) reads as follows:

“(b) Length of exclusion. In determining the length of an exclusion imposed in accordance with this section, the OIG will consider the following factors—

(1) The nature and circumstances surrounding the actions that are the basis for liability, including the period of time over which the acts occurred, the number of acts, whether there is evidence of a pattern and the amount claimed;

(2) The degree of culpability;

(3) Whether the individual or entity has a documented history of criminal, civil or administrative wrongdoing (The lack of any prior record is to be considered neutral);

(4) The individual or entity has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion; or

(5) Other matters as justice may require.”

[9] Under 42 C.F.R. §1001.901(b)(4), an “individual or entity has been the subject of any other adverse action by any Federal, State or local government agency or board, if the adverse action is based on the same set of circumstances that serves as the basis for the imposition of the exclusion.”

[10] Craig Richard Wilder, DAB No. 2416 at 8.

[11] Federal Register Final Rule, “Health Care Programs; Fraud and Abuse; Amendments to OIG Exclusion and CMP Authorities Resulting from Public Law 100-93. 57 Fed. Reg. 3298, 3321 (January 29, 1992).

Health Care Providers Should Consider the Ramifications of “Taking a Plea” in a Criminal Case or Agreeing to a Licensure Action. It May Trigger a Mandatory or Permissive OIG Exclusion Action.

(July 16, 2018):  Perhaps the most severe administrative sanction available under the Social Security Act stems from the authority of the Secretary for the Department of Health and Human Services (HHS) to exclude individuals and entities from participating in Federal and State health benefits programs.[1]  The Secretary has delegated[2] this authority to the HHS, Office of Inspector General (OIG)[3]. As a recent comprehensive, first-of-its-kind study by ExclusionScreening.com found that during the period 2013 to 2017, approximately 90% of the permissive OIG exclusion actions taken were based on an adverse administrative action taken against a healthcare provider’s license.  This article examines a decision issued earlier this year by the HHS Departmental Appeals Board (DAB or Board) where the Board examined a licensure-related exclusion action in considerable detail.  

 I.  Brief Overview of OIG Licensure-Related Exclusion Actions: 

With the passage of the Medicare-Medicaid Anti-Fraud and Abuse Amendments[4] in 1977, mandatory OIG exclusion became mandated in cases where a physician and other practitioner has been convicted of program-related crimes. (now codified at section 1128 of the Social Security Act).  Since that time, various additional bases for both mandatory[5] and permissive[6] exclusion have been enacted. Collectively assessed, the most frequent statutory basis relied on by the OIG when seeking to exclude an individual from participation in Federal and State health care programs is “42 USC §1320a-7(b)(4) License Revocation or Suspension.[7]”  As this provision set out:

“Any individual or entity—
(A) whose license to provide health care has been revoked or suspended by any State licensing authority, or who otherwise lost such a license or the right to apply for or renew such a license, for reasons bearing on the individual’s or entity’s professional competence, professional performance, or financial integrity, or
 
(B) who surrendered such a license while a formal disciplinary proceeding was pending before such an authority and the proceeding concerned the individual’s or entity’s professional competence, professional performance, or financial integrity.”

   OIG Exclusion Check

 II.  Case Study: DAB ALJ Decision No. CR4985
[8]; DAB Appellate Div. Decision #2848.[9] 

In this case, a Virginia-licensed Chiropractor pled guilty in 2016 to one count of manufacturing marijuana, a felony. He was sentenced by the Court to 5 years of incarceration (4 years and 11 months suspended) and ordered him to pay a $2,500.  Based on this felony conviction, the Virginia Board of Medicine suspended the individual’s license to practice chiropractic indefinitely.[10]
  • The OIG excluded the individual under 42 USC §1320a-7(b)(4).
The OIG based its exclusion on the indefinite suspension, which links reinstatement to the term of the licensure suspension. The OIG cited 42 USC §1320a-7(b)(4) as its basis for exclusion. 
  • ALJ review of the OIG’s exclusion action.
The Chiropractor (Petitioner) subsequently filed a timely request for review by an Administrative Law Judge (ALJ).  Both the OIG and the Petitioner subsequently filed arguments and related documentation in support of their position.  Notably, the Petitioner’s submissions included (but were not limited to) a copy of his North Carolina chiropractic license and certificates showing his successful completion of chiropractic training courses.  As the ALJ’s decision reflects, after the record had closed, the Petitioner submitted additional documentation, including a letter attesting to his competence and a copy of his active North Carolina chiropractic license.  The ALJ refused to admit the additional materials into record based on the fact that were not submitted in a timely fashion and were irrelevant.  
Further complicating the case was the fact while the matter was pending before the ALJ, the OIG issued a second exclusion notice, advising the Petitioner that pursuant to section 1128(a)(4) of the Social Security Act (as codified at 42 USC §1320a-7(a)(4)), he was being mandatorily excluded from program participation for five years. As set out under 42 USC §1320a-7(a) Mandatory exclusion

 
“The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1320a-7b(f) of this title). . . ”
Since this mandatory exclusion action was based on the Petitioner’s felony conviction of a criminal offense related to the manufacture, distribution, prescription, or dispensing of a controlled substance, it fell under the following exclusion provision:
 
“(4) Felony conviction relating to controlled substances:
 
Any individual or entity that has been convicted for an offense which occurred after August 21, 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”

Notably the Petitioner does not appear to have appealed the five-year exclusion action. 
Upon consideration of the facts and the evidence, the ALJ sustained the OIG’s decision to exclude the Petitioner from participating in Medicare, Medicaid, and other federal health care programs.
  • Appellate review of the ALJ’s decision.
The Petitioner appealed the ALJ’s decision sustaining the OIG’s decision to exclude him from participation in Medicare, Medicaid and all Federal health care programs. As the ALJ’s ruling reflects, the Petitioner was to be excluded as least until he regained his Virginia chiropractic license. On appeal, the Petitioner raised several issues that were addressed by the Appellate Board:

Petitioner Issue #1:  First, the Petitioner argued that the time frame for exclusion was not adequately addressed by the judge.  The Petitioner further stated that he “did not agree with the length of exclusion because it was excessive and unjust.”

Board Response to #1: As the Board noted in its appellate ruling, in situations where the OIG has excluded an individual’s health care license is revoked or suspended for reasons bearing on the individual’s professional competence, professional performance or financial integrity, the Social Security Act does not delegate an ALJ the discretion to set the length of the exclusion for less than the period during which the individual’s license is suspended. (See, Social Security Act Act § 1128(c)(3)(E); 42 C.F.R. § 1001.501(b)). 

Petitioner Issue #2:  Petitioner argued that the ALJ failed to consider letters from patients and colleagues attesting to the Petitioner’s professional competence and good character in support of a reduction in the length of Petitioner’s exclusion.
 
Board Response to #2: As the Board noted in its decision, neither it nor the ALJ has the authority to consider the letters from the Petitioner’s patients and colleagues attesting to his professional competence and good character for the purpose of reducing the length of Petitioner’s exclusion.  Simply put, equitable arguments and evidence submitted in an effort to obtain a reduction in the length of exclusion cannot be considered.

Petitioner Issue #3:  The Petitioner’s appeal also raised the imposition of a second and separate OIG five-year exclusion action (based on 1128(a)(4) of the Social Security Act; 42 USC §1320a-7(a)) that was imposed while the Petitioner’s appeal was pending before the ALJ.  In the Board proceeding, the Petitioner argued that he was “appealing the five-year exclusion because it is excessive and unreasonable in [his] case.”  He further stated that he was “requesting that [his] exclusion remain as originally reported: three years or until I regain my Virginia license because that would support my position for Inclusion.”

Board Response to #3:  As the Board noted in its decision, the Petitioner only appealed the initial permissive exclusion action under 1128(b)(4), 42 USC §1320a-7(b)(4).  There was no evidence that the Petitioner had requested an ALJ hearing to contest the OIG’s second exclusion action brought under 1128(a)(4) of the Social Security Act; 42 USC §1320a-7(a).  As a result, the Board could not consider the second exclusion action.
  • Lessons to be learned from this case.
Both the ALJ and Board decisions in this case really highlight the lack of discretion that these adjudicators have when it comes to “adjusting” or “reducing” a health care provider’s length of exclusion for less than the period during which the individual’s license is suspended.  As the case noted, the Petitioner was also licensed in North Carolina, and presumably there were no restrictions on his North Carolina.[11]  Unfortunately, the fact that the Petitioner was fully licensed in North Carolina was irrelevant to the decisions of both the ALJ and the Board.  As 42 C.F.R. § 1001.501(b) expressly provides: 

“(b)Length of exclusion.
(1) Except as provided in paragraph (b)(2) of this section, an exclusion imposed in accordance with this section will not be for a period of time less than the period during which an individual’s or entity’s license is revoked, suspended, or otherwise not in effect as a result of, or in connection with, a State licensing agency action.  (Emphasis Added).

So, what should a health care provider do if he or she receives notice that the OIG is seeking to exclude him or her based on a licensure suspension action?  It is important to keep in mind that a licensure-based exclusion action is a permissive action that may or may not be pursued by the OIG.  To the extent that there is any chance to convince the OIG that the agency should decline to exercise it permissive exclusion authority, now is the time for your legal counsel to make its pitch.

Once the OIG has formally exercised its permissive exclusion authority, the restrictions set forth under 42 C.F.R. § 1001.501(b) must be applied.  Neither an ALJ nor the Board has the discretion to deviate from the time period requirements imposed by statute.  Although the OIG rarely waives its discretion to pursue a permissive licensure-based exclusion action, providers should.

This case also serves as a stark reminder that neither an ALJ nor the Board is in a position to “weigh” the equities in a licensure-based exclusion case when assessing the length of time imposed for the exclusion.  Adjudicators are required by statute to determine whether an exclusion determination made by the OIG was consistent with the law.  Equitable arguments and evidence such as those submitted by the Petitioner in this case cannot be considered in a licensure-based exclusion case.  An individual cannot have an exclusion lifted until his or her license is reinstated.  Period. 

In recent years, the number of exclusion actions imposed by the OIG has continued to grow. While there is little or no flexibility with respect to some of the bases for exclusion, every case is based on a unique set of facts, some of which may present opportunities to negotiate a more favorable period of exclusion with OIG, or even avoid exclusion all together. 

We strongly recommend that you contact experienced health law counsel at the first sign that you may be excluded from participation in Federal and State health care programs.  In terms of strategy, a health care provider’s best course of action is to engage experienced health law counsel at the earliest opportunity, preferably before an adverse action has been taken against your professional license.  A comprehensive response strategy is essential so that you possible minimize the adverse collateral effects of an adverse licensure action.  The attorneys at Liles Parker have extensive experience representing health care providers in exclusion-related proceedings. 


OIG ExclusionRobert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers around the country in connection with UPIC audits, OIG exclusion actions and state licensure board disciplinary proceedings.  Has an exclusion action been proposed against your license?  We can help.  For a free initial consultation regarding your situation, call Robert at:  1 (800) 475-1906.

[1] The term “Federal health care programs” is defined under Section 1128B(f) of the Social Security Act as:
(1) any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government (other than the health insurance program under chapter 89 of title 5, United States Code); or
(2) any State health care program, as defined in section 1128(h).
42 U.S.C. § 1320a-7b(f) (2012).
[2]See Updated: Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs, U.S. Dep’t of Health & Human Servs.: Office of Inspector Gen., at 2-3 (May 8, 2013) (stating that . . . the Secretary has delegated authority to OIG to exclude from participation in Medicare, Medicaid, and other Federal health care programs persons that have engaged in fraud or abuse and to impose civil money penalties (CMPs) for certain misconduct related to Federal health care programs”).
[3] The OIG maintains a website containing up-to-date information on federal health care program exclusion rules, which can be found at http://oig.hhs.gov/fraud/exclusions.asp.
[4] While Public Law 95-142’s “exclusion” provisions are important, the legislation is best known for its impact on the Federal Anti-Kickback Statute.  More specifically, the legislation made violations of the Federal Anti-Kickback Statute a felony. It also made those who offered remuneration for referrals and those who received them, subject to various penalties.
[5] Under the government’s mandatory exclusion authority (as set out under Section 1128(a) of the Social Security Act), any individual or entity convicted of certain offenses must be excluded from participation in federal health care programs.  The length of a mandatory exclusion action taken can last a minimum of five years.
[6] Depending on the circumstances, OIG may also exercise “permissive” or discretionary authority to exclude an entity or an individual from participation in federal health care programs.
[7] Under 42 USC §1320a-7(b)(4), any individual or entity whose professional license to provide health care has been revoked or suspended, or has lost the right to apply for a license, CAN be excluded from participation, at OIG’s options.
[8] DAB ALJ Decision No. CR4985, dated December 13, 2017.
[9] DAB Appellate Div. Decision No. 2848, dated February 6, 2018.
[10] Under the Virginia Code, the Board of Medicine may suspend a license indefinitely for “acts of unprofessional conduct,” which include “knowingly and willfully” committing a felony; violating any statute or regulation relating to the manufacture, distribution, dispensing, or administration of drugs; and conviction of a felony.  See Virginia Code §§ 54.1-2915(A)(10), (17), and (20).
[11] This is an interesting point raised by the Petitioner. In some states, the revocation of a professional license is permanent and can only be reinstated upon the submission of a new application.  Even then the state board has the discretion of whether or not to consider the new application.  Theoretically, a health care provider could be licensed in 49 states and still be excluded due to a suspension action in the 50th state.
As an aside, the public record does not address whether North Carolina, like many states, normally imposes reciprocal disciplinary actions based on those taken in other jurisdictions.

Dental OIG Exclusions – A Review of 2017 Actions.

Dental OIG exclusion(January 12, 2018):  The Medicare and Medicaid programs are both essential, yet costly health benefit programs sponsored in whole or in part by the Federal government.  With Medicare and Medicaid costing $686 and $368 billion each year, respectively, the government has dedicated experienced investigators, auditors and prosecutors to ferret out incidents of health care fraud and abuse. While most health care fraud administrative, civil and / or criminal cases are brought against medical providers, dental providers and the members of their staff are increasingly finding that their actions are under scrutiny by Federal and State regulators. A prime example is illustrated by the various “dental OIG exclusion” actions taken against dentists and dentist office staff last year during 2017.[1] 

I. What is an “Exclusion” Action?

Simply put, under certain circumstances, the Department of Health and Human Services, Office of Inspector General, Office of Inspector General (HHS-OIG) is mandated by law to exclude” individuals and entities from participating in Federally funded health care program under 1128 of the Social Security Act (SSA),[2] and from Medicare and State health care programs under section 1156 of the SSA. Under other circumstances, HHS-OIG exercises the discretionary authority to decide whether or not to exclude a party.

During 2017, HHS-OIG took a number of administrative exclusions actions against dentists and dental practice personnel in order to meet their statutory obligations.  As set out below, a brief description of the exclusion actions taken against dental professionals, along the frequency of their occurrence are described in the section below.

II.  Exclusion Actions Taken Against Dentists and Dental Staff in 2017:

With the exception of the permanent revocation of one’s professional license, there is perhaps no administrative sanction that may be taken against a health care provider that is more serious than an exclusion action.  As we will discuss later in this article, the collateral impact of an exclusion action can be financially devastating to your dental practice.  In any event, there are a number of mandatory and permissive bases upon which HHS-OIG can base an exclusion action.  Depending on the reason for exclusion, an individual or entity can be excluded from an undetermined minimum period up to a permanent exclusion from participating in Federal health benefits programs.

Dentists and dental staff members are subject to exclusion and are regularly sanctioned by HHS-OIG.  During 2017, a handful of dental professionals were placed on HHS-OIG’s exclusion list most months but the reasons for exclusion were primarily grouped into the categories for exclusion described below:

42 U.S.C. §1320a-7(b)(14): Default on health education loan or scholarship obligations.  50% of all exclusions against dentists / dental staff. The largest group of dentists and dental office personnel excluded by HHS-OIG in 2017 were sanctioned on the basis of their default of one or more Federally-secured health education loans. Approximately 53.13% of the dental professionals and staff were excluded on this basis.  This is especially noteworthy when you consider the fact that only 2.38% of the total number of health care providers and other individuals excluded by HHS-OIG in 2017 were on the basis of a similar loan default.  Although it is never a “good” thing to be excluded from participating in Federal health benefits programs, health care providers who are excluded under this this provision are eligible to apply for reinstatement as soon as they resolve they resolve their loan default with the Federal government.  In the overall exclusion scheme, this is by far the most benign of all exclusion authorities. 

42 U.S.C. § 1320a-7(a)(1): Conviction of program-related crimes. 18.75% of all exclusions against dentists / dental staff.  This mandatory exclusion provision was the second most frequent basis cited by HHS-OIG when sanctioning dentists and dental staff in 2017.  As an example, in one case, a Charleston, WV dentist admitted that he improperly engaged in upcoding with respect to at least 7,490 tooth extractions.  These extractions led to more than $1.3 million in billings. He further admitted that if those extractions were medically necessary, and if had actually performed the procedures he claimed, then he should have been paid only $599,200.  He next admitted that he submitted other false bills and improperly received payment.  As part of his plea agreement, the dentist agreed to pay $738,067 in restitution.  He also entered into a separate civil settlement agreed to be excluded from participation in the Medicare and Medicaid programs for 13 years.  Notably, across the board, among all health care providers and individuals, 42 U.S.C. § 1320a-7(a)(1) was used as a basis for excluding individuals, in 39.09% of all cases.  In contrast, it was only cited in 18.75% of the cases involving dentists and dental staff.

42 U.S.C. § 1320a-7(a)(3):  Felony conviction relating to health care fraud. 3.13% of all exclusions against dentists / dental staff.  This mandatory exclusion provision requires that HHS-OIG exclude an individual who is convicted of felony health care fraud for a minimum of 5 years.  In one 2017 case citing this basis for exclusion, a long-time claims manager in a dental practice went to the State Dental Board to complain that the dentist for whom she worked was engaging in fraud.  She alleged that he was billing Delta Health Systems[3] for dental services not rendered, performing medically-unnecessary dental services and offering cash and noncash incentives to his staff to make appointments. The claims manager was then implicated in the wrongdoing and both the dentist and the claims manager were charged with Federal crimes. The claims manager was subsequently sentenced to 21 months in prison and the dentist for whom she worked was sentenced to three years, 10 months in prison.  Both defendants were ordered to jointly pay $726,300 in restitution.  3.13% of the exclusion actions against dentists and dental staff were on the basis of 42 U.S.C. § 1320a-7(a)(3).  Similarly, 7.68% of the exclusion actions taken against all health care providers by HHS-OIG were on this basis. 

42 U.S.C. § 1320a-7(b)(4): License revocation, suspension, or surrender. 12.50% of all exclusions against dentists / dental staff.  Under this basis for permissive exclusion, HHS-OIG may choose to exclude a provider if the provider’s license is revoked, suspended or surrendered. In one 2017 case, the State of Utah alleged that the one of its licensed dentists had engaged in unprofessional conduct.  The conduct supposedly included using controlled substances from prescriptions written to family members, treating family members for opioid addiction without being trained to do so, having a conviction for impaired driving and providing false information on an application.  The dentist’s licenses were revoked, the revocations were stayed and the dentist’s licenses were placed on probation for five years. Based on the licensure actions taken, HHS-OIG exercised its permissive exclusion authority under 42 U.S.C. § 1320a-7(b)(4).  Globally, licensure-based exclusion actions constituted 30.81% of the actions taken by HHS-OIG against health care providers and other individuals during 2017.  In contrast, only 12.50% of the exclusion actions against dentists and dental staff were based an underlying licensure disciplinary action.

42 U.S.C. § 1320a-7(a)(4): Felony conviction relating to controlled substance. 6.25% of all exclusions against dentists / dental staff.  This mandatory basis for exclusion was only cited 6.25% of the time by HHS-OIG when sanctioning dentists and dental staff.  Consistent with its finding for dentists, HHS-OIG only based exclusions on this authority 5.63% of the time among all health care providers (and other individuals) during 2017.  In one of the cases we reviewed, a South Dakota dentist pleaded guilty to a charge of “Obtaining Possession of Controlled Substance by Fraud or Deception,” a Class 4 Felony.  In light of the plea, HHS-OIG was required by law to exclude the dentist from participation in Federal health benefits program for a minimum of 5 years.[4]  

Two other bases for exclusion, 42 U.S.C. § 1320a-7(b)(3): Misdemeanor conviction relating to controlled substance, and 42 U.S.C. § 1128b7:  Fraud, kickbacks, and other prohibited activities, were infrequently cited by HHS-OIG in connection with exclusion actions it took against dentists during 2017.  None of the other mandatory or permissive exclusion authorities were relied upon by HHS-OIG when sanctioning dentists and / or dental personnel during 2017.

III.  Impact of Exclusion on Dentists and Dental Staff:

Former Federal prosecutor and the current Compliance Officer for Exclusion Screening, Paul Weidenfeld, best described the impact of an exclusion action when he stated:

“If an individual is excluded from participating in Federal health benefits programs, for all practical purposes, they are likely unemployable by anyone who accepts insurance from Medicare, Medicaid, TriCare, FEHBP or another health benefit program that is funded in whole or in part by Federal funds. Moreover, each year we are seeing more and more private payors insist that their participating providers screen out any excluded employees, contractors, vendors and agents.
 
Ultimately, this is a matter of RISK.  You must screen your staff, vendors, agents and contractors every 30 days.  The last thing you want is to have a staff member with either a suspended / revoked license or a felony conviction for fraud or patient abuse working in your practice without your express knowledge.”

A. Are Your Lax Practices Exposing You to CMPs?


In 1981, Congress enacted the Civil Monetary Penalties (CMP) law, Public Law 97-35 codified at section 1128A of the Social Security Act).  Under this statute, HHS-OIG was authorized to impose CMPs against any individual or entity found to have submitted claims for payment by Medicare or Medicaid for items or services furnished by an excluded individual.  Since first being passed, there have been several additional statutes further expanding HHS-OIG’s authority to assess CMPs.  As it now stands, if a health care provider fails to properly screen to ensure that no excluded individuals are employed, virtually every claim that an excluded individual is associated with will be regarded as “tainted” and will be subject to CMPs.

B. Don’t Judge a Book by Its Cover – Screen All Applicants Before Bringing on New Hires.

Merely asking an applicant on their application if they are currently excluded from Medicare or Medicaid (or have ever been excluded from Medicare or Medicaid) is totally insufficient.  After filling out one or two applications for employment, individuals who have been excluded are savvy enough to realize that anytime they check the box “YES,” they will not even qualify for an interview.  As a result, over the last year, our Firm has handled several voluntary disclosure matters where an applicant lied about his exclusion status in order to get a job.  Six to a year later, the provider learned that the new employee was excluded and had been excluded when initially hired at the practice.  The lesson to be learned is simple – you cannot rely on any assertions made by an applicant regarding the applicant’s exclusion status.  You need to verify it yourself, prior to onboarding a new hire.

C. Exclusions are Not Restricted to Merely Licensed Professionals:

The impact of an exclusion action on a health care provider’s ability to conduct business can be significant.  Moreover, the severe consequences of exclusion have been a constant warning of HHS-OIG since it first published its Special Advisory Bulletin in 1999 entitled “The Effect of Exclusion From Participation in Federal Health Care Programs. 
Importantly, virtually anyone can be excluded from participation Federal health care programs.  Moreover, the adverse impact of an exclusion action is not merely limited to licensed individuals such as dentists, oral surgeons and / or dental hygienists.  Non-clinical staff who furnish administrative and management services that are payable by the Federal health care programs are also affected by an exclusion action and can expose your dental practice to liability.  As HHS-OIG’s “Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs” goes on to further clarify:
“. . . an excluded individual may not provide other types of administrative and management services, such as health information technology services and support, strategic planning, billing and accounting, staff training, and human resources, unless wholly unrelated to Federal health care programs.”

D. Exclusion Actions are Reported to the NPDB:

If an individual is excluded from participation in Federal health care benefits programs, HHS-OIG considers the matter to be a reportable event and will report the administrative sanction to the National Practitioner Databank (NPDB) for inclusion in its system.  As a result, all payors (both public and private), will be notified of the adverse action.   Since most dental practices participate in at least one dental insurance program, you are likely required to notify the payor of any adverse actions brought against you within 30 – 60 days of the event (the time to report varies from contract to contract).  Dentists placed in this position often find it difficult to effectively respond to private payor inquiries regarding an exclusion order.  If the dentist notifies a payor immediately after being excluded, most payors will initiate their own administrative review of the facts to determine whether they want to continue to allow the provider to continue work as a participating provider.  If a dentist fails to notify the payor of the exclusion action within the 30-60 day deadline imposed under the parties’ contract, a payor will typically initiate a termination action based on the provider’s breach of its contractual obligations.

IV.  The Solution – Reducing Your Level of Risk:

To reduce your level of risk, a dental provider should screen its applicants, clinical staff, administrative staff, contractors, vendors and agents on a monthly basis.  At the time of the writing of this article, there a total of 40 different databases that need to be checked.  These 40 databases include:

(1) List of Excluded Individuals and Entities (LEIE). Maintained by HHS-OIG.
(2) System for Award Management (SAM). Maintained by the General Services Administration.
(3) 38 State Medicaid Exclusion Registries. Maintained by either the State Attorney General’s Office or the State Medicaid Fraud Control Unit (MFCU).

Neither the Federal nor the State governments currently maintain a “consolidated” database that incorporates all of the Medicare and Medicaid exclusion actions into a single records system that can easily be checked by providers.   From a practical standpoint, it is rarely cost-effective for a provider to check all 40 databases on an individual basis.  Therefore, we strongly recommend that you utilize the services of an organization such as www.exclusionscreening.com.  Their services are inexpensive yet comprehensive.   

V.  Conclusion:

The implementation of an effective screening program is perhaps the least expensive step you can take to help bring your dental practice into at least partial compliance.  Although, it won’t satisfy all of your obligations as a health care provider, it is a significant step in the right direction and can greatly reduce your level of overall risk.  We therefore strongly recommend that you fully comply with the recommendations of HHS-OIG and screen your employees, contractors, agents and vendors every 30 days.  If handling this task is too burdensome to complete in-house, use the services of a company like Exclusion Screening.  

 

Healthcare AttorneyRobert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at Liles Parker, PLLCLiles Parker is a health law firm representing dentists and dental practices around the country in connection with Medicare, Medicaid and private payor audits.  We also represent dentists in State Dental Board disciplinary actions.  For a complimentary consultation, give Robert a call at: (202) 298-8750.

 

[1] Please keep in mind, the List of Excluded Individuals and Entities (LEIE) that is maintained by HHS-OIG only includes Medicare exclusion actions and other exclusion actions that have been reported to it by one of the states.  Despite their obligation to do so, many states do not report all or some of the exclusion actions they have taken against health care providers, individuals and entities.  For a complete analysis of the exclusion actions taken against dentists and dental staff in 2017, a review of each of the state exclusion actions taken must also be conducted.

[2] Under the provisions of the 1977 Medicare-Medicaid Anti-Fraud and Abuse Amendments, Public Law 95-142 (now codified at Section 1128 of the Social Security Act), physicians and other practitioners convicted of program-related crimes were first excluded from participation in the Medicare and Medicaid programs.
[3] In this case, Delta Health Systems was the program administrator for United Parcel Service Inc. (UPS) employees.
[4] It is also worth noting that in a case where a pharmacist entered into an agreement to plead guilty if the state would not oppose a “deferred judgment,” HHS-OIG still took the position that it was appropriate to exclude the pharmacist from participation from participation in Federal health benefits programs. Unfortunately, the author does not give a citation for the case. HHS-OIG may have exercised its exclusion authority under one of the applicable permissive exclusion provisions.   
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