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.

Personal Care Service Aides and Attendants Excluded in 2017


personal care services (January 22, 2018): With 2017 behind us, it can be quite helpful to review the Medicare “exclusion” actions taken by the Department of Health and Human Services, Office of Inspector General (HHS-OIG) to gauge the level of regulatory exclusion risk presented by aides and attendants working for personal care agencies around the country.  As a review of these actions will show, personal care services aides and attendants were among the most frequent type of health care provider excluded from participating in Federal health care benefits program by HHS-OIG during calendar year 2017. 

It is therefore essential that owners of personal care agencies take affirmative steps to  ensure that they have robust, effective systems in prevent excluded individuals from being hired or otherwise engaged to care for Medicaid beneficiaries.  To accomplish this, agencies must screen their employees, vendors or contractors against all Federal and State exclusion lists every 30 days.  An overview of the 2017 exclusion actions taken against personal care aides and attendants is set out below.

 I. What is an “Exclusion” Action? 

The “exclusion” of individuals or entities from participation in Federally-funded programs is covered under § 1128 of the Social Security Act. When an individual or entity is excluded from participation, the excluded party is essentially barred from Federal health benefits programs. This makes them untouchable by almost any healthcare related entity. With the exception of losing one’s professional license (for instance, if you are a licensed physician, nurse or pharmacist), being excluded is the most severe administrative sanction that can be taken against an individual or entity.  Not only is an excluded party barred from participating in government health benefits programs, he / she cannot even work for a party that participates in one or more government health benefits programs.

 II. Overview of Personal Care Service Aides and Attendants “Excluded” During 2017” 

There are a number of mandatory and permissive authorities upon which HHS-OIG can base an exclusion action.  Depending on the reason for exclusion, an individual or entity can be excluded for an undetermined minimum period up to a permanent exclusion from participating in Federal health benefits programs. During 2017, a number of personal care aides and attendants were placed on HHS-OIG’s exclusion list.  The reasons for exclusion were primarily grouped into the categories for exclusion described below:   

42 U.S.C. § 1320a-7(a)(1): Conviction of program-related crimes 71.73% of all exclusions against personal care providers. Personal care providers were excluded under this mandatory exclusion statute more than any other type of exclusion. For reference only 40.13% of persons excluded across all areas of medical practice areas were excluded under this variety of exclusion. Of the cases reviewed, the personal care aides excluded under this statutory basis were most often charged with theft or billing for services not rendered.  For example, in one of the cases reviewed, a Virginia personal care attendant plead guilty to defrauding Medicaid. Over a four year span the attendant was alleged to have been billing Medicaid while out working at a part time job. The attendant in this case supposedly defrauded Medicaid thousands of dollars.  Since the individual was excluded under one of the “mandatory” statutory bases, the personal care attendant was excluded for a minimum of 5 years. This type of case comprised 71.73% of all personal care exclusions in 2017.

42 U.S.C. § 1320a-7(b)(5): Exclusion or suspension under federal or state health care program 18.06% of all exclusions against personal care providers.  Last year, HHS-OIG cited this statutory basis when excluding 18.06% of the personal care aides and attendants from participating in Federal health benefit programs. In comparison, this statutory basis was only cited in 3.17% of the universe of 2017 exclusions.

42 U.S.C. § 1320a-7(a)(3):  Felony conviction relating to health care fraud 1.83% of all exclusions against personal care providersIn 2017 1.83% of excluded personal care providers were excluded under this statute which is much smaller than the 7.59% rate of total.

42 U.S.C. § 1320a-7(a)(4): Felony conviction relating to controlled substance 26% of all exclusions against personal care providersThis category of exclusion is the rarest for personal care at .26% while it represents 5.97% of total healthcare exclusions. It generally describes highly overt incidents in which a provider was directly involved with the illegal acquisition or sale of controlled substances. Persons excluded under this statute are excluded for drug related crimes and generally including conspiracy, direct sale of controlled substances, or other means of improperly handling controlled substances.

 III.  Are Your Agency’s Screening Practices Exposing You to Civil Monetary Penalties? 

Personal Care Services
When considering your affirmative obligation to “screen” employees, contractors, vendors and other eligible parties against Federal and State exclusion lists, it is important to keep in mind that the government has been “excluding” physicians and other individuals and entities convicted from program related crimes from participating in the Medicare and Medicaid programs for more than 30 years.[1] With the subsequent passage of the Civil Monetary Penalties Law in 1981, HHS-OIG received statutory authorization to impose civil monetary penalties, issue assessments and pursue program exclusions actions against individuals and entities that submit false, fraudulent and / or improper claims for Medicare or Medicaid payment.[2]   

Simply speaking, an excluded person (or an organization employing an excluded person) is in violation of the exclusion rules if the excluded person furnishes to Federally-funded health care program beneficiaries items or services for which Federal health care program payment is then sought.   In the case of Medicaid-eligible personal care services, since the Medicaid is funded, in part, by the Federal government, the program qualifies as a Federal health care program.
You may face severe penalties if your organization employs or contracts with an excluded individual or entity and subsequently bills for tainted services provided to Medicaid beneficiaries.  For example, in 2017,[3] under 42 C.F.R. §1003.210(a)(1), the civil monetary penalty that may be imposed against a health care provider or supplier for ordering or prescribing medical or other item or service during a period in which the person was excluded was $11,052 per violation. 

Notably, the penalties that can be assessed by HHS-OIG if an organization is found to have improperly employed or contracted with an excluded individual party or individual are substantially more severe if the organization is a Medicare Advantage Organization or an HMO. Under 42 C.F.R. §1003.410, the penalty faced by a Medicare Advantage organization in 2017 was $37,396 per violation.  Similarly, under 42 C.F.R. §1003.410, the penalty faced by an HMO was $48,114 per violation.

 IV. What Steps Should Your Personal Care Services Agency Take to Limit its Level of Risk? 

From a risk standpoint, it isn’t sufficient to merely include a question in your employment application asking applicants if they are currently (or have ever been) excluded from participation in a Federal or State health benefits program OR been debarred from a Federal program. Even the most detailed applications for employment can prove useless if your personal care services agency’s due diligence efforts are ineffective.  People lie. Sorry, that’s just how it is.  A 2017 survey by conducted by HireRight found that 85% of job applicants lied or misrepresented one of more facts on their resumes or job application forms during screening.  As HireRight wrote:

Eighty five percent of survey respondents uncovered a lie or misrepresentation on a candidate’s resume or job application during the screening processup from 66% five years ago.”

So what is the answer?  The ONLY way to reduce your level of regulatory risk with respect to the accidental or unknowing employment or engagement of an individual or contracting entity is to make sure that all Federal and State exclusion databases are screened every 30 days.

 V. Conclusion: 

Government oversight of your agency’s operations will only increase in the future. As we have seen in the case of exclusions enforcement, over the last three decades, the government’s efforts focused on the improper provision of care and / or submission of claims by excluded parties has risen each year.  Today, thirty-eight states currently maintain a state exclusion database of individuals and entities that have been excluded from participating in Medicaid and other Federally-funded health benefits programs.  The number of states maintaining Medicaid exclusion databases varies from year to year, but is steadily increasing.  We anticipate that within the next five years, almost all states will have implemented a Medicaid exclusion database.  Unfortunately, there isn’t a government-sponsored site that consolidates the 40+ databases you need to be checking on a monthly basis.  Therefore, we strongly recommend that you utilize the services of an organization such as www.exclusionscreening.com.  Their services are inexpensive yet comprehensive.  

The monthly exclusion screening of your employees, contractors and vendors is an important component of your Compliance Program. In fact, it is likely one of the least expensive steps you can take TODAY to significantly reduce your level of regulatory risk.   We recommend you contact the folks at Exclusion Screening to obtain a complimentary assessment of your organization’s needs.

OIG ExclusionRobert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at Liles Parker, PLLC.  Liles Parker is a health law firm representing personal care agencies and other health care providers around the country in connection with Medicare, Medicaid and private payor audits.  For a complimentary consultation, give Robert a call at: (202) 298-8750.




[1]
The Medicare-Medicaid Anti-Fraud and Abuse Amendments, Public Law 95-142 (now codified at section 1128 of the Social Security Act) was enacted into law in 1977. 
[2] This legislation was followed four years later with the passage of the Civil Monetary Penalties Law (CMPL), Public Law 97-35 (codified at section 1128A of the Act).  This legislation provided HHS-OIG with the authority to pursue a range of administrative sanctions, up to and including exclusion, against individuals and entities found to have submitted false, fraudulent or improper claims to the government for payment.  
[3] Under the Federal Civil Penalties Inflation Adjustment Act Improvement Act of 2015, HHS is required to make annual inflation related increases to its CMP regulations.  We do not anticipate these updated regulations to be issued for 2018 until February or later of this year.

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.   

ZPIC AUDITS CAN LEAD TO OIG EXCLUSIONS!

 
Is Your Practice Being Audited by a ZPIC? Did You Know it Can Lead to an OIG Exclusion?


Zone Program Integrity Contractors (ZPICs) are among the most aggressive program integrity entities employed by the Centers for Medicare and Medicaid Services (CMS).  As most healthcare providers are aware, ZPICs regularly place physician practices on prepayment review and sometimes conduct post payment audits of previously paid claims.  However, did you know that ZPICs are also supposed to play a role when it comes to “exclusions”

According to Sec. 4.19.2.2 of the Medicare Program Integrity Manual (MPIM) reflects, ZPICs are actually REQUIRED by CMS to review and evaluate cases to determine if they warrant exclusion action.  And if in its estimation exclusion is warranted, they must make a recommendation to the Office of Inspector General (OIG) for consideration.

Section 2.2 lists a number of examples of the types of cases that would be suitable for the ZPIC to make an exclusion recommendation.  Some of them, such as convictions of program related offenses under (§1128(a)) and convictions related to patient abuse or the sale and use of drugs (§1128(b) are common sense and would likely have already resulted in the initiation of an exclusion action, but a number of others may surprise you.  Below you will find a partial list:
  • Providers who have a pattern of adverse QIO, AC, or MAC findings.
  • Providers whose claims must be reviewed continually and are subsequently denied because of repeated instances of overutilization.
  • Providers who have been the subject of previous cases that were not accepted for prosecution because of the low dollar value.
  • Providers who furnish or cause to be furnished items or services that are substantially in excess of the beneficiary’s needs or are of a quality that does not meet professionally recognized standards of health care (whether or not eligible for benefits under Medicare, Medicaid, title V or title XX).
  • Providers who are the subject of prepayment review for an extended period of time (longer than 6 months) who have not corrected their pattern of practice after receiving educational/warning letters.
ZPICs that make exclusion recommendations are required to consider a number of factors and are supposed to consider alternatives in an effort to change the provider’s conduct.  And, of course, the final authority to exclude a provider from participation in Federal health benefits programs lies with the OIG.  But it is important for you to keep in mind that this is yet another risk area your practice may face in the event of a ZPIC audit. 

Unfortunately, this is only one of the additional risks that your practice may face.  For additional information on ZPIC audits, we recommend you review the recent article by Robert W. Liles entitled “UPIC / ZPIC Referrals to State Licensure Boards, Professional Societies, State Surveyors, QIOs and to the OIG for Exclusion Consideration.”  it provides a nice preview on inter-agency referrals of complaints by ZPICs.  Be reached at: (202) 298-8750.

About the AuthorCo-Founder, Exclusion Screening
Paul Weidenfeld is a long time health care lawyer who has specialized in litigation arising out or, or relating to healthcare fraud and the False Claims Act. A former federal prosecutor and National Health Care Fraud Coordinator for the Department of Justice, Paul is a frequent speaker who has earned recognition both as a Federal Prosecutor and as a member of the private bar.  Paul is also a co-founder of 
Exclusion Screening, LLC, a company that offers providers a simple, cost effective way to meet their exclusion screening obligations.

Pharmacies Targeted for Exclusion Violations by OIG and States

By Catalina Jandorf

OIG Exclusion

In what appears to be a growing enforcement trend, the Department of Health and Human Services, Office of Inspector General (HHS/OIG) and State Medicaid Fraud Units are aggressively pursuing pharmacy retailers for exclusion violations.  In recent investigations, pharmacies are being targeted for failing to screen prescribers as well as employing pharmacists who have been excluded from Federal and State health care programs.  This new focus has resulted in sizable settlement recoveries, and evidences a broadening of the scope of Federal and State exclusion enforcement efforts.

Significant State Exclusion Enforcement Actions

New York Attorney General Eric T. Schneiderman entered into an agreement with a pharmacy in May 2016 to resolve allegations that it had billed Medicaid for prescriptions written by an excluded Medicaid provider.  Between April 2010 and January 2013, the pharmacy submitted and received payment for approximately 4,600 Medicaid claims for prescriptions written by an excluded physician.  Under Medicaid rules, prior to filling a prescription pharmacies are required to first determine whether the prescriber’s services are eligible for reimbursement.  In this case, they had not done so and had filled and delivered prescriptions written by a provider ineligible to receive Medicaid reimbursement.  As a result of the settlement, the pharmacy agreed to pay New York State $442,000 plus $36,000 in damages pursuant to the New York False Claims Act.  In a statement, A.G. Schneiderman says, “My office will continue working to root out Medicaid fraud and recover unlawfully claimed funds, so that Medicaid can continue providing critical services for those in need.”  The Attorney General’s Medicaid Fraud Control Unit (MFCU) investigated, prosecuted, and entered into a resolution independent of any OIG investigation.  The prescriber in this case was excluded under the New York State list first and then under the GSA’s System for Award Management (SAM), but never appeared on the OIG’s List of Excluded Individuals and Entities (LEIE).  This is significant since the State used its own enforcement authority to target this pharmacy and launch its own investigation without any Federal involvement.

However, this is not the first time the States have expressed an interest in pursuing exclusion violations against a pharmacy.  In a prior case from 2011, a large national retail pharmacy entered into a $1 million settlement with the U.S. Attorney’s Office in the District of New Jersey in connection to allegations that it had employed a pharmacist who had been banned from participating in Federal health care programs due to a drug conviction.  The excluded pharmacist had worked at three pharmacy locations in New Jersey and New York for a period of about four years and ending in July 2009.  Prior to his employment, he had been convicted of attempted criminal sale of a controlled substance, and as a result had been excluded from Federal health care programs in September 2005.  Any claims he had submitted while employed by the company were deemed false.  An investigation concluded that the pharmacy was responsible for the amount billed by the excluded individual because it failed to investigate whether he was banned from Federal health programs.  Although the company claims that it maintains a comprehensive pre-employment screening process, it did not follow its own protocols to determine if the conviction excluded the individual from the programs.  If these two cases are any indication, it appears as if the States will be taking more of an initiative in pursuing their own enforcement actions against pharmacies in the future.

Federal Enforcement Efforts Initiated by OIG

The Federal governState Exclusionment has also remained vigilant in cases involving excluded pharmacists.  In August 2016, a Texas pharmacy and pharmacy manager entered into a $30,000 settlement agreement with OIG.  Their investigation reveals that the excluded individual, a store manager and pharmacy technician, had provided items or services that were billed to Federal health care programs.  In another case from January 2015, a Minnesota pharmacist entered into a nearly $100,000 settlement agreement with OIG.  The settlement resolved allegations that from March 2006 to July 2013, the pharmacist owned and managed a pharmacy that participated in Federal health care programs while he was excluded from participating in those programs.

We have previously reported on a case in which OIG entered into a massive settlement with an Ohio-based corporation that operates pharmacies and supermarkets in thirty-four states, in connection to its employment of excluded pharmacists.  In December 2015, the company self-disclosed to Office of Inspector General that they employed and utilized pharmacists who were banned from participation in Federal health care programs.  An investigation confirmed that the company had employed fourteen individuals that were debarred and therefore could not submit claims for items or services they furnished.  In addition to employing excluded pharmacists, the settlement alleges that the company had filled prescriptions from eighty-four excluded providers.  According to OIG’s May 2013 Special Advisory Bulletin, insurance claims for items or services provided by, or at the medical direction of or on the prescription of debarred individuals are not reimbursable.  The company agreed in a civil settlement to pay Federal health care programs $21.5 million in restitution and penalties, and almost $1 million more to the Office of Personnel Management (OPM) for employing individuals who had been debarred from participating in the Federal Employee Health Benefit Program (FEHBP).

Takeaways

These cases highlight some recent trends in enforcement actions against pharmacies that employ excluded pharmacists and fail to properly screen prescribers.  It is evident that both State and Federal entities are interested in pursuing exclusion violations, and have been doing so independent of each other.  Even the most stringent pre-employment background checks can result in omitted excluded individuals, and consequently the pharmacy itself would be liable for submitting false claims.  Pharmacies especially can be susceptible to substantial settlement amounts because of the large volume of prescriptions they handle every day, and since it can be very costly and time-consuming to screen every prescriber.

Screening employees, vendors, and contractors against the LEIE and the SAM, as well as all 38 State lists every month is critical to avoid being found liable of an exclusion violation and consequently having to pay a large settlement amount.  To eliminate the risk of having to self-disclose or undergo a State or Federal investigation, contact the Exclusion Experts at 1-800-294-0952 or online for a free consultation.

OIG Imposes Record Penalties for Exclusion Violations

exclusion violations
OIG Imposes Record $21.5 Million in Penalties for Exclusion Violations!

The OIG imposed a record $21.5 million civil money penalties and restitution against an Ohio corporation that operates pharmacies and supermarkets in 34 states for exclusion violations involving the employment of excluded individuals and fulfilling prescriptions by excluded prescribers! The settlement alleged that the company filled prescriptions from 84 excluded pharmacists and directly employed 14 pharmacists that had been excluded from federal health care programs.

The Office of Personnel Management participated in the investigation through its Office of Inspector General and confirmed that 14 direct employees had been debarred from participating in the Federal Employee Health Benefit Program (FEHBP).  OPM received over $314,000 in penalties and $628,000 in restitution as part of the settlement.

Federal Health Care Programs do not pay for items or services that are provided, either directly or indirectly, by excluded individuals and the Office of Inspector General also has the authority to impose Civil Money Penalties on providers that knowingly submit such claims. Providers that fail to screen on a monthly basis to identify excluded employees or vendors are considered to have knowningly submitted such claims related to such persons or entities.

When the OIG announced last June that it had created a Special Litigation Unit dedicated to enhancing its enforcement of OIG Exclusion Requirements and Civil Money Penalty, it put the provider community on notice of its continuing commitment to enforce exclusion screening requirements and punish exclusion violations. Since that time, it has announced over 50 settlements involving the employment of exclusion individuals including a number of recent large settlements.

OIG Exclusion

Paul Weidenfeld, Co-Founder and CEO of Exclusion Screening, LLC, is the author of this article. He is a longtime health care lawyer whose practice has focused on False Claims Act cases and health care fraud matters generally. Contact Paul should you have any  questions at: pweidenfeld@exclusionscreening.com or 1-800-294-0952.

Auditing a Compliance Hotline Provider

Compliance Hotline Auditing

Under the Affordable Care Act, medical service providers must establish compliance programs to enroll in the Federal health care programs. HHS has neither issued regulations on the core requirements of these compliance plans nor set a date for mandatory compliance. Providers, however, should consider adopting a compliance hotline program prior to the mandate not only because a requirement is imminent, but also to prevent fraud and demonstrate good faith.

Elements of an Effective Compliance Program

One of the seven elements of an effective compliance program is developing open lines of communication. CMS recommends that lines of communication run in multiple directions and include a process for anonymous reporting to provide an outlet for employees who may fear retaliation.

Many providers utilize an outside vendor to facilitate anonymous reporting. If you elect to use an outside vendor, you should choose a well-managed hotline that is focused on the health care sector. In addition, your organization should periodically audit the hotline to measure its effectiveness.

Considerations of a Compliance Hotline Auditing

When auditing a compliance hotline vendor you should consider (a) does the hotline have established policies and procedures, (b) how is the hotline managed, and (c) does the hotline meet its goals.

Some questions you might use to review the hotline’s management, operation, and effectiveness include:

  1. Does the hotline follow its established policies and procedures?
  2. Do the policies discuss how to document and follow-up calls?
  3. Does the hotline act on calls and/or emails promptly?
  4. Does the hotline follow up with callers who provide contact information?
  5. Are hotline administrators properly trained to answer calls and ask appropriate questions?
  6. Does your department tasked with reviewing hotline reports receive reports in a timely manner?
  7. Are the reports provided by the hotline detailed enough to allow your organization to follow up and investigate?
  8. Is caller anonymity being protected?
  9. Are hotline files protected?

In addition, you should also evaluate your office’s internal use of the hotline by considering the questions below.

  1. Are employees aware and reminded that the hotline is available?
  2. Does the department tasked with handling reports follow up properly?
  3. Are your employees using the hotline?
  4. Do employees seem confident about the effectiveness of the hotline?
  5. Does the department handling hotline reports file and protect reports appropriately?

If you answered “no,” to one or more of these questions, it may be time to consider a new vendor. Call Exclusion Screening, LLC today to discuss our ComplianceHotline, which is staffed by Certified Medical Compliance Officers, today at 1-800-294-0952.

Compliance Hotline Auditing

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article.

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