A Provider’s Guide to OIG Exclusions: Part 2

Provider's guide to OIG Exclusions

Federal Exclusion Regulations and Enforcement Authorities, and How Providers Can Avoid Risk with Proper Exclusion Screening–Part 2

Paul S. Weidenfeld, JD

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

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

ENFORCEMENT OF OIG EXCLUSION VIOLATIONS

he Office of Inspector General (OIG) credits the 1999 Special Advisory as the “beginning” of its initiative to ensure compliance and enforcement of exclusions (2013 Special Advisory, at pg 2), but the updates to the OIG’s Self-Disclosure Protocol and its Special Advisory on the Effect of Exclusions in 2013 more accurately mark the beginning of the OIG’s focus on exclusion enforcement.[1] Before the Special Advisory was updated, for example, the OIG routinely suggested that providers screen employees and those with whom they had contracts on an annual basis, whereas the Updated Advisory requires monthly screening of a significantly expanded universe of persons and entities. And until the OIG issued its Updated Self-Disclosure Protocol only weeks earlier, there was no established protocol for providers to self-disclose exclusion violations. Read together, and in conjunction with the investigation and repayment obligations in the Affordable Care Act (ACA), these three principles form the foundation upon which exclusion enforcement is based.

Enforcement matters come to the OIG’s attention in a variety of ways. In addition to its inherent authority to initiate investigations, the OIG receives hotline tips, referrals from its sister agencies,[2] referrals from various CMS contractors, self-referrals from providers wishing to avoid civil monetary penalties (CMPs), and whistleblower actions, to name just some. With respect to exclusion enforcement, however, the OIG historically has relied heavily on self- disclosures. Indeed, until the 2013 Updates, the OIG rarely initiated investigations based on exclusion violations on its own. In the years leading up to the 2013 Updates, the OIG reported the following numbers of exclusion settlements based on an investigation it had initiated: seven in 2010; three in 2011; ten in 2012; and none in 2013 prior to the publication of the updates.

Since 2013, however, some change has been evident. The number of reported settlements based on OIG investigations increased to a high of 26 in 2015; both the Office of Evaluations and Inspections and the Office of Audit have reported separate “exclusion initiatives”; and in 2015, the OIG established a special litigation unit that focused on the imposition of civil monetary penalties and exclusions.

Many providers are under the mistaken impression that the OIG’s enforcement efforts are focused on physicians and other direct billers, and therefore think that their credentialing process adequately screens for exclusions. This can be a costly mistake.[3]

Figure 1:
Table 1:

Figure 1 reflects OIG enforcement efforts in cases in which the agency initiated the investigation. It shows the OIG’s focus on institutions that provide a lot of care and then submit a lot of claims for that care.

Table 1 shows that the OIG’s enforcement net extends far wider than doctors and other direct billers. Although there is an emphasis on non-billing, direct care providers, the chart shows that no position is “safe” when it comes to imposing CMPs for excluded employees.

Although the imposition of CMPs is the favored enforcement methodology, a growing number of cases involving exclusions have resulted in False Claims Act (FCA) cases and criminal convictions. For example, a joint federal/state investigation in Tennessee involving an excluded private duty nurse who worked for a home health agency resulted in a $6.5 million settlement. In addition, the OIG has brought a number of FCA cases in which the principal allegations involved businesses operated by excluded persons

Finally, recent enforcement efforts with respect to the requirement that providers ensure the exclusion status of physicians, pharmacies, and labs at the point of service have been increasing. This has resulted in a number of settlements with pharmacies based on the employment of excluded pharmacists or excluded support personnel. For example, in one of the settlements, a pharmacy chain paid $21.5 million in settlement because it had employed a large number of excluded pharmacists.[4] States also have taken an interest in this issue; for example, the Attorney General of New York settled with a pharmacy for $442,000 to resolve allegations that the pharmacy had been fulfilling prescriptions written by an excluded physician.

AVOIDING CIVIL MONEY PENALTIES AND OVERPAYMENT LIABILITY: COMPLIANCE WITH FEDERAL EXCLUSION SCREENING REQUIREMENTS

Exclusion enforcement is based on the simple principle that providers are responsible for ensuring the exclusion status of their employees and those with whom they do business. As a consequence, claims for items or services furnished by excluded individuals or entities result in regulatory violations subject to the imposition of civil money penalties, and all federal reimbursements for such items or services violate the payment prohibition and constitute overpayments.[5] Only proper exclusion screening can help providers avoid these risks, and this section seeks to help providers understand their federal screening obligations. Much of the content in this section relies on the guidance contained in the 2013 Special Advisory,[6] but it relies as well on subsequent guidance issued by the OIG, and on Corporate Integrity Agreements (CIAs) that have been imposed by the OIG as part of recent False Claims Act settlements.[7]

Which Employees Should be Screened for OIG Exclusions?

Employees must be screened for exclusions if they furnish any item or service that is payable directly or indirectly, whether in whole or in part, by a federal healthcare program. The OIG recommends the following process for providers to use in determining which employees should be screened:

Review each job category or contractual relationship to determine whether the item or service being provided is directly or indirectly, in whole or in part, payable by a federal healthcare program. If the answer is yes, then the best mechanism for limiting CMP liability is to screen all persons that perform under that contract or that are in that job category. (2013 Special Advisory, at 15-16).

Because all the relevant terms are broadly defined (see footnote 9 and pages 2 and 3, infra,) and as the process is as time-consuming and difficult to follow as it is broad, providers are best served by screening all of their direct employees unless they can identify specific employees who work in a separate, identifiable division wholly unrelated to federal healthcare programs. Caution dictates against “picking and choosing” who to screen unless a “quarantine” can be guaranteed.[8] In addition, corporate integrity agreements include owners, officers, directors, managing employees, agents, and active medical staff as those who should be screened regardless of whether they are employed directly or indirectly.

Exclusion Screening of Vendors and Contractors

The OIG suggests that providers use the same analysis in determining “whether or not to screen contractors, subcontractors, and the employees of contractors” that it uses for its own employees. This standard is unrealistic in many circumstances, and although the OIG does not acknowledge the difficulty of its suggestion, it goes on to states that “The risk of potential CMP liability is greatest for those persons that provide items or services integral to the provision of patient care because it is more likely that such items or services are payable by the Federal health care programs.” (See 2013 Special Advisory at 16.) The dual focus of patient safety and program integrity was again emphasized in the amendment of CMP rules in 2017. The new 2017 rules are a valuable guide in determining whom to screen.

The CMP authorities in this part, as a general matter, aim to redress fraud on the federal health care programs by recovering funds, protecting the programs and beneficiaries from untrustworthy providers and suppliers, and deterring improper conduct by others. Accordingly, it is highly relevant if the conduct put beneficiaries at risk of patient harm (81 Fed. Reg. 88, 334 (Dec. 7, 2016)).

CIA’s from OIG settlements can contain indirect acknowledgments by the OIG as to the broad nature of the screening obligation is outlined in the guidance. In most of these documents, there is a specific provision stating that providers do not need to screen 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.

Applying the guidance and understanding of the concerns of the OIG, the contractors and vendors who are likely candidates for exclusion screening are those that provide the following services:

  • Ambulance and other transportation service providers;
  • IT solution providers;
  • Security providers and their technicians;
  • Medical equipment suppliers;
  • Food service workers;
  • Lab technicians;
  • Billers and coders;
  • Pharmacists;
  • Nurses, physicians, and other individuals provided by staffing agencies; and
  • Physician groups that provide emergency room coverage.

For obvious reasons, the OIG is highly focused on screening billers and third-party billing companies. In most CIAs, OIG will only allow providers to delegate the exclusion screening function to their billing company if it does not have an ownership or controlling interest in the billing company and it certifies that the following conditions have been met:

  1. The billing company has a policy of not employing persons who are excluded, suspended, or otherwise ineligible to participate in Medicare or other federal healthcare programs;
  2. The company screens its employees upon hire and monthly thereafter against the List of Excluded Individuals/Entities (LEIE);
  3. The company provides proof of its screening activities; and
  4. The billing company provides training in the applicable requirements of the federal healthcare programs to those employees involved in the preparation and submission of claims to federal healthcare programs.

 

How Often Should Providers Screen?

Providers are responsible for ensuring the exclusion status of employees, vendors, and contractors at all times and at the point of service, and they should screen accordingly. Thus, exclusion screening should be performed prior to employment or to the initiation of a business relationship. Exclusion screening also should be performed without regard to the person’s status or “whether or by whom” exclusion screening had previously been performed.

In order to ensure ongoing compliance with the obligation to ensure an “exclusion free” workforce, screening also must be performed “regularly” thereafter. Providers sometimes question the necessity of ongoing screening, but the reasons for it are obvious: exclusion is not a static condition, and someone who is not excluded at the time of hire can certainly become excluded at a later date. This is particularly the case if an exclusion is based on a licensing action that was pending at the time of employment but not resolved until sometime after the employment relationship began. Also, and perhaps most importantly, regular screening is required.

Although there are no statutes or regulations that expressly state exactly what constitutes “regular screening,” the OIG has unequivocally expressed its view that monthly screening “best minimizes potential overpayment and CMP liability” (2013 Special Advisory at 15). In addition, the OIG notes that in June of 2008, CMS issued a State Medicaid Director Letter (SMDL #08-003) that provided guidance to Medicaid directors on checking providers and contractors for excluded individuals,[9] and that CMS issued a follow-up directive in 2009 (SMDL #09-001) providing further guidance to the states and, essentially, mandating that screening be done upon hire and monthly thereafter.[10] The OIG also notes that LEIE is updated monthly. Finally, there is the practical consideration that removing an excluded employee as soon as possible is the best action a practice can take for business.[11]

Which Federal Exclusion Lists Should be Screened?

The OIG requires that providers screen its LEIE. It does not, however, require providers to screen the Government Service Administration’s System for Award Management (GSA/SAM), because the OIG has no authority to impose penalties or assessments based on an individual’s or entity’s inclusion on a separate federal agency’s debarment list or on a state exclusion or debarment list.

Although searching the LEIE can satisfy the OIG’s screening requirement, providers that participate in state Medicaid Programs should understand that every state has its own set of exclusion regulations and exclusion screening requirements. Indeed, at last count, 40 states had their own exclusion lists, which had to be screened in addition to the LEIE. Medicaid providers need to consult the relevant rules and regulations in the state, or states, in which they participate.[12]

It is also noted that Section 6501 of the ACA specifically 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 (42 U.S.C. § 1396(a)). Although it has not been fully settled as to how the statute will be implemented, it is worth noting and considering when determining which databases to screen. Many screening services routinely screen all such databases instead of screening individual states.

Additional Recommended Practices

The following policies and procedures are all found in either CIAs or other materials published by the OIG. They are not required, but they do reflect practices that providers might consider including as part of exclusion screening program:

  • Have a provision on maintaining documentation of its exclusion screening activities in its document retention policy;
  • Have a written policy requiring the disclosure of any exclusion or any other adverse action that occurs during the course of their employment, including any state exclusions, suspensions, licensing actions, revocations and debarments; and
  • Have a written policy requiring employees to report the existence of any pending or proposed exclusions or adverse action that might cause an exclusion.

THE SCREENING PROCESS

How Difficult Is It to Actually Screen?

The actual process of screening employees, vendors, and contractors against the LEIE is a cumbersome one. Providers can either manually input names into the OIG website or download the entire exclusion list from the website and compare it with their employee list—but both options provide significant challenges. If a provider decides to manually input the names, for example, he or she is limited to five names or four entities at a time. Any potential match requires an additional step for confirmation, and unless the submitted name is an exact match with the name in the LEIE, it will not register as a potential exclusion. Providers that elect to download the entire list, the other option, also face serious challenges. There are over 65,000 names on the LEIE, and many providers simply don’t have the technical expertise to compare lists—particularly where the names may not result in perfect matches. In addition, the OIG requires that the screening process be documented by screenshots or otherwise, which would not be easily accomplished by either screening methodology.

Can Providers Rely on Others to Screen?

The OIG recognizes that providers will sometimes seek to delegate their screening obligation to contractors such as staffing agencies. When that occurs, the OIG again advises the provider to demand and maintain documentation that the screening was performed, and it also reminds providers that a delegation of the responsibility to screen does not equate to a delegation of the liability attached to that obligation. For example, the OIG states in its 2013 Advisory that even when a third party reliably and effectively screens for excluded individuals, those that rely on them are still “responsible for overpayments and CMPs” (at page 8).

Regardless of whether and by whom screening is performed and the status of the person . . . the provider is subject to overpayment liability for any items or services furnished by any excluded person for which the provider received federal healthcare program reimbursement and may be subject to CMP liability if the provider does not ensure that an appropriate exclusion screening was performed (2013 Special Advisory, at 16).

Does It Make Sense for Providers to Hire a Third-Party Vendor to Perform Screening?

Hiring a third-party vendor to screen for exclusions does not solve all of a provider’s screening issues and problems, but it is a relatively inexpensive alternative that solves most of them. Reputable exclusion screening vendors can do all of the work inherent in screening, including the verification of potential matches, so that providers don’t need to waste employee time manually entering tens (or hundreds, or thousands) of names. These vendors should have sophisticated software that is able to identify “potential matches” when names are not a “perfect match,” and they should also maintain records of all screening activities. Another important advantage of having a vendor perform exclusion screening is that they should be able to screen the various state exclusion lists at little or no additional cost. Finally, even though a provider cannot delegate its overpayment liability, having a third party that regularly screens all names can provide strong defenses against the imposition of any civil money penalties.[13]

SELF-DISCLOSING EXCLUSION VIOLATIONS

The OIG’s updated Self-Disclosure Protocol issued added a new section for self-disclosing exclusion violations and a formula for calculating single damages.[14] In addition to creating a path for self-disclosures and injecting some certainty into the process, the updated protocol clarified the OIG’s expectation that providers fully comply with exclusion regulations and its intention to enforce the exclusion regulations if providers fail to do so.

The protocol requires that providers fully investigate the matter and submit their findings in a narrative that includes the following information:

  • Identification information regarding the excluded individual, including license and provider identification information (if any);
  • Job duties, and their dates of service;
  • A description of the screening that took place both prior to and after employment began;
  • How the problem was discovered or and the corrective actions taken; and
  • A calculation of the loss (see following section).

Calculation of the “Loss”

Prior to the update, calculating the “loss” for exclusion violations was particularly problematic if the employee provided services that indirectly contributed to the submission of a claim but were not billable in of themselves (e.g., nurses, surgical assistants) or if the employee provided

services that supported the organization but were not connected with any specific claims (e.g., administrative, IT, or housekeeping services). Providers were at a loss when attempting to calculate the single damages of exclusion violations associated such individuals. To calculate the loss for an excluded shift supervisor, would every service provided during every shift while the shift supervisor was employed be tainted and constitute an overpayment? How would one calculate the overpayment amount for a biller or coder, or a coding or billing supervisor?

The revised protocol directly addressed this issue of how to self-disclose by creating a simple, workable methodology that could be used to generate an amount, which would then serve as a proxy for the single damages. Specifically, the formula requires providers to do the following:

  1. Identify the total cost of employment for the excluded person or persons (including benefits, etc.) during the period of employment;
  2. Calculate the provider’s payer mix (by the unit in which the person worked if possible, or by the entire entity if not); and
  3. Simply multiply the cost by the federal mix.

The result can then be used as a “proxy” for the single damages and as a basis for “compromising the OIG’s CMP authority.” Because the calculation considers the contribution of the excluded employee during the exclusion period and the extent of the federal contribution to the organization, it provides a generally proportionate result in matters involving non-billing employees that provide services that contribute to claims to federal healthcare payers.[15]

REINSTATEMENT

Reinstatement at the conclusion of an exclusion period is not automatic. Applications may be submitted 90 days prior to the reinstatement date. However, in many permissive exclusions, the reinstatement date is dependent on external factors that are unknown at the time of the exclusion. For example, when a person is excluded based on a license revocation, he or she is not eligible for reinstatement until he or she has regained the license referenced in the exclusion or an equivalent license in another state. Alternatively, if the person does not regain his or her license, he or she may seek reinstatement if a minimum of three years has passed and the action was not based on patient abuse or neglect (42 CFR § 1001.501(b)-(c)). An OIG exclusion based on a state healthcare program exclusion also is linked in length to that action, but a person subject to an exclusion on this basis is not eligible for reinstatement until the state exclusion is lifted—unless the basis of that action was an OIG exclusion in the first place (42 CFR § 1001.601(b)).

If the OIG determines that the provider is eligible for reinstatement, the OIG will send the provider a number of forms and releases of information to be completed, notarized, and returned. In evaluating reinstatement requests, the OIG considers the following:

  • Conduct of the individual or entity prior to, and after, the exclusion;
  • Whether there are reasonable assurances that the conduct that formed the basis for the original exclusion will not recur;
  • Whether all fines and all debts due have been repaid or if there are satisfactory arrangements for those that have not ;
  • The benefits of reinstatement to federal healthcare programs and its beneficiaries; and
  • Whether CMS has determined that the individual or entity complies with, or has made satisfactory arrangements to fulfill, all the applicable conditions of participation (42 C.F.R. § 1001.3002).

Once it has completed its review, the OIG will notify the applicant of its decision. If an application for reinstatement is denied, the excluded individual or entity has 30 days to submit documentary evidence and written argument against the continued exclusion. He or she also may make a request to present written evidence and oral argument to an OIG official. After evaluating the submission, the OIG will send the provider written notice of its final decision. If the OIG confirms its decision to deny reinstatement, the decision is not subject to administrative or judicial review, and the provider must wait at least one year to submit another request for reinstatement (42 C.F.R. § 1001.3004).

WAIVERS

The OIG has the authority to grant a “waiver” of an exclusion under certain limited circumstances as found in 42 C.F.R. § 1001.1801, et seq. The request must come from the administrator of a federal healthcare program who is “directly responsible” for administering that program under certain limited circumstances. It may not be made on behalf of someone excluded for abuse or neglect. If the request is made on behalf of a person who has been the subject of a mandatory exclusion, the administrator must determine that: (1) the individual or entity is the sole source of an essential specialized service in a community, and (2) that the exclusion would impose a hardship to the beneficiaries of that program. Requests made on behalf of persons or entities subject to a permissive exclusion must also be made by a program administrator. However, the waiver may be granted if the “OIG determines that imposition of the exclusion would not be in the public interest” (42 CFR § 10011801(c)). If a waiver is granted, it is applicable only to the program (or programs if made by more than one) for which it has been requested, and if the basis for the waiver ceases to exist, it is rescinded. The decision to grant, deny, or rescind a waiver is not subject to administrative or judicial review (§ 10011801(c)).

CLOSING COMMENTS

The primary goal of this article is to give providers a comprehensive reference guide on the existing legal and regulatory framework of OIG exclusions and the risks and potential consequences of exclusion violations, and to make suggestions on compliance strategies to avoid those risks. However, providers are reminded that there are additional good reasons for having a rigorous and effective exclusion screening program. State Medicaid programs, for example, often have screening requirements that are more rigorous than those of the OIG; and, finally, in light of the fact that almost all exclusions are imposed for reasons related to fraud, abuse, or drugs, providers should also assess the potential risks excluded entities pose to their patients and their organization.  

>> Click here to read part 1 of this article!

ABOUT THE AUTHOR

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



REFERENCES AND ENDNOTES

 

[1] The self disclosure protocol was updated on April 17, 2013, and the Special Advisory was updated May 3, 2013.
[2] The Office of Evaluations and Inspections (OIG/OEI) and the Office of Audit (OIG/OA).
[3] The table cited is intended to be a demonstrative sample of settlements. Settlements of exclusion civil money penalty cases are reported and published on the OIG website, https://oig.hhs.gov/fraud/ enforcement/cmp/index.asp.
[4] Cases referenced herein have been reported and published on https://oig.hhs.gov/fraud/enforcement.
[5] Overpayments that are not the result of a regulatory violation can occur if a provider properly screens and an employee is added to the LEIE while employed. This would limit the overpayment and not result in a CMP.
[6] The updated Bulletin was issued, in part, to provide guidance “on the scope and frequency of screening employees and contractors” See 2013 Special Advisory at 1.
[7] CIAs are imposed by the OIG in lieu of their imposing administrative remedies in cases involving FCA investigations. As such, requirements in them are sometimes concrete examples of OIG interpretations and expectations, and therefore they can be useful as “guidance.”
[8] Meaning to take actions sufficient to ensure that the employee does not touch federally reimbursed services. But even if it were possible that a provider could meet this test, the scope of the payment prohibition is so broad that it is unlikely that it would be worth the effort to remove them from the screening list.
[9] See https://downloads.cms.gov/cmsgov/archived-downloads/ SMDL/downloads/SMD061208.pdf
[10] See https://downloads.cms.gov/cmsgov/archived-downloads/ SMDL/downloads/SMD011609.pdf
[11] In addition to meeting its regulatory obligations, a proper exclusion screening program can also provide significant benefits to compliance and risk management programs. See HCCA, Measuring Compliance Program Effectiveness: A Resource Guide (Jan. 2017), available at https://oig.hhs.gov/compliance/compliance-resource-portal/files/ HCCA-OIG-Resource-Guide.pdf.
[12] States, at a minimum, require that providers screen the LEIE and the state list (if there is one). However, they may also require providers to screen additional state lists and/or additional Federal debarment lists.
[13] The author is a cofounder of Exclusion Screening, LLC, a third-party vendor of exclusion screening services.
[14] See OIG’s Provider Self-Disclosure Protocol (April 17, 2013). https:// oig.hhs.gov/compliance/self-disclosure-info/files/Provider-Self- Disclosure-Protocol.pdf.
[15] The result is generally proportionate to the violation because of the loss increases in proportion to the employment of the excluded employee, the amount of salary paid to that person, and the payer mix of the entity. For example, the loss involving an excluded nursing aide that was discovered soon after hire by a provider with a 25% federal payer mix would be minimal compared with that involving an excluded administrator or management employee who worked for a provider with a 75% federal payer mix for a period of months or possibly even years before discovery.

 

 

 

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

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

I. How Did Your Exclusion Screening Obligations Arise?

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

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

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

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

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

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

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

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

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

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

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

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

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



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

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 screening.wpengine.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.

Pain Management Prescribing Practices and Audits


(August 16, 2017):
Earlier this summer, the U.S. Department of Justice (DOJ) executed its most extensive “health care fraud takedown” to date, initially arresting 412 licensed healthcare providers, doctors, and nurses alleged to have engaged in fraudulent conduct.  As Attorney General Jeff Sessions stated at that time, We are sending a clear message to criminals across this country: We will find you. We will bring you to justice. And you will pay a very high price for what you have done.” Of the 412 individuals arrested, approximately 120 of the defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. The charges aggressively targeted pain management providers billing Medicare, Medicaid, and TRICARE for medically unnecessary prescription drugs and compounded medications that often were never even purchased and / or distributed to beneficiaries. Many of the charges brought against pain management professionals have alleged that these individuals have contributed to the nation’s current opioid epidemic through the unlawful distribution of opioids and other prescription narcotics.


I.  Pain Management Providers Around the Country are Being Targeted by DOJ:

To be clear, there is, in fact, a significant problem with prescription opioid abuse and diversion.  In the first six months of 2017, there have been a number of federal enforcement cases brought against pain management physicians, practices and clinics for a wide variety of opioid-related violations.  Several of these include:

February 2017:  In this Pennsylvania case, a pain management physician pleaded guilty to selling prescriptions for controlled substances in exchange for cash payments.  The government further alleged that many of the customers who went to the clinic were drug dealers or addicts who sold the medications they were prescribed.  It was further alleged that neither the defendant nor the other pain management professionals charged in the case conducted medical or mental health examinations as required by law. The government alleged that during the period that this conspiracy took place, the defendant physician illegally sold over $5 million worth of controlled substances.

March 2017:  Two Michigan physicians providing care to pain management patients were found guilty by a jury for allegedly running a “pill mill” supplying narcotics to drug-seeking individuals.  More specifically, the government argued that the evidence showed that the physicians wrote prescriptions for Schedule II narcotics to individuals outside of the course of professional medical practice and for no legitimate purpose.  The government further claimed that the clinic’s physicians prescribed over 1.5 million oxycodone pills and charged customers $250 cash for a 30-day supply of narcotics.

April 2017:  In this Louisiana case, a physician and former co-owner of a pain management practice pleaded guilty to several criminal counts.  The physician was alleged to have run a “pill mill” where he prescribed controlled substances to drug abusers and seekers for a flat fee, even though there no legitimate medical purpose for the prescriptions.

May 2017:  In this Missouri case, a medical resident pleaded guilty to writing over 70 false prescriptions.  The government reported that the defendant wrote opioid prescriptions using the names of six separate persons, despite the fact that he did not have a physician-patient relationship with any of them.

June 2017:  In this New York case, a criminal complaint was unsealed against a family practice physician with no specialized training in pain management, who is alleged to have written more than 14,000 prescriptions, totaling more than 2.2 million oxycodone pills, between approximately 2012 and 2017.  The government has alleged that thousands of illegal prescriptions were written that did not have a legitimate medical purpose.

July 2017:  This Tennessee-based pain management practice settled False Claims Act violations for $312,000.  The pain practice was alleged to have caused the submission of false claims to Medicare and TennCare for medically unnecessary urine drug tests. The settlement also resolves allegations that the [pain practice] caused the submission of false claims to Medicare and TennCare for non-Food & Drug Administration. . . approved pharmaceuticals. . . “The United States’ investigation was initiated after extensive data analysis identified [the practice] as a potential outlier in the provision of urine drug testing to Medicare patients.”

As you will notice, the standard that DOJ repeatedly cites is that a prescription is illegal if it has no “legitimate medical purpose” and / or is outside the “usual course of his professional practice.”  From a practical standpoint, if your prescribing practices fall into one of these categories, DOJ is likely to argue that your practices are below the applicable standard of care and are indicative of a crime. Typical statutory offenses charged in criminal pain management diversion and / or trafficking cases include:

Drug Trafficking (21 U.S.C. §§ 84l).  Typically charged when alleging that a party knowingly and intentionally, prescribed controlled substances, not for a legitimate medical purpose and not in the usual course of professional practice.

Health Care Fraud (18 U.S.C. § 1347).  It is unlawful for any person to knowingly: (1) defraud any health care benefit program; or (2) obtain by false pretenses any money or property owned or under the control of a health care benefit program.   Any person convicted under this statute could be fined and/or imprisoned for a maximum of 10 years.  If the offense resulted in serious bodily injury, then the eligible term of imprisonment is increased to 20 years.  If the offense resulted in death, then the maximum term of imprisonment is increased to life.

Aggravated Identity Theft (18 U.S.C. § 1028A).  Under this statute, whoever during and in relation to any felony enumerated in subsection (c) [predicate offense], . . . knowingly transfers, possesses, or uses without lawful authority a means of identification of another person, shall, in addition to the punishment provided for such [predicate offense], be sentenced to a term of imprisonment of 2 years. . .

Examples of the 60 predicate offenses include: 18 U.S.C. 1001 (relating to false statements or entries generally), 18 U.S.C. 1035 (relating to false statements relating to health care matters), 18 U.S.C. 1347 (relating to health care fraud) 18 U.S.C. 1343 (relating to wire fraud) 18 U.S.C. 1341 (relating to mail fraud)

Obstruction of a Federal Audit (18 U.S.C. § 1516).  It is illegal to intentionally influence, or obstruct a federal auditor in the course of performing his or her official duties relating to any person or organization receiving more than of $100,000 from the federal government in any one-year period.  The penalty for violating this section is the imposition of a fine and/or a maximum of five years imprisonment.  A federal auditor is any person employed for the purpose of conducting an audit or quality assurance inspection on behalf of the federal government.

Obstruction of a Criminal Investigation into Health Care Offenses (18 U.S.C. § 1518).  It is unlawful to prevent, obstruct, or delay the communication of information relating to a federal health care offense to a criminal investigator. Any person convicted for violating this statute could face a fine and / or up to five years imprisonment. 

Prohibition Against Kickbacks (Anti-Kickback Statute) (42 U.S.C. § 1320a–7b(b)). The federal Anti-Kickback Statute makes it a crime to knowingly and willfully offer, pay, solicit, or receive remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to purposefully induce or reward referrals of items or services payable by a federal health care program. Simply put, it is against the law to pay or provide anything of value in an effort to induce referrals or business related to a federal health care program.

II.  What is Behind the Current Crackdown on Improper Opioid Prescribing Practices?

The DOJ currently believes that these pain management medications are a large contributing factor to the ongoing opioid epidemic. The DOJ believes that opioid medications are being over prescribed and are not being used for the intended purposes, but are ending up on the streets for illegal sale and use. From 1999 to 2015, more than 183,000 patients died from overdoses related to prescription opioids with over 30,000 of those deaths occurring in 2015. Almost half of those deaths from 2015 being from prescription opioid overdose. With nearly 2 million Americans either abusing or dependent on opioids, the Center for Disease Control and Prevention (CDC) took significant steps last year to address the growing problem of opioid abuse in this country. In March 2016, the agency published its CDC Guideline for Prescribing Opioids for Chronic Pain (CDC Guideline). Since the issuance of the CDC Guideline, a growing number of states have either adopted this voluntary guidance or implemented similar restrictions on the prescribing practices of physicians, nurse practitioners and physician assistants in their respective states.

III.  The Role of Medicare Part D:

Medicare Part D is an optional prescription drug program for Medicare beneficiaries. As of 2016 it covered more than 40 million individuals. While Medicare Part D can be very beneficial when it comes to helping its beneficiaries handle their pain management it can also easily be taken advantage of. While Medicare part D was aimed at providing medication for beneficiaries, it has substantially contributed to the opioid crisis through over prescription as well as the redirection of prescriptions for unlawful and abusive purposes, such as recreational use and the sale of opioids.

The CDC recently posted guidelines for medical prescription providers on how to prescribe opioids to patients with chronic pain. The CDC cautions providers on prescribing patients more than 90mg or more of morphine per day, any higher dosage and the patient becomes at risk for overdose or fatality.  A result of over prescription of opioids was one third of all beneficiaries receiving at least one prescription opioid through Medicare Part D in 2016. In total, approximately 14 and a half million people received opioid prescriptions, out of a total of 43.6 million Part D beneficiaries. These 14.4 million prescriptions totaled $4.1 billion for nearly 80 million prescriptions.

Several states such as Alabama and Mississippi have significantly higher proportions of opioid prescriptions for Medicare Part B beneficiaries, 46% and 45% respectively. Approximately 10% of Medicare Part B recipients received one or more opioids on a regular basis, with 5 million beneficiaries receiving opioids for three months or more in 2016.  More than half a million beneficiaries received high amounts of opioids through Part D in 2016. All of these beneficiaries received a morphine equivalent dose (MED) of greater than 120mg per day for at least 3 months[1].

IV.  Conclusion:

To be clear, the government’s interest in opioid and controlled substance prescribing practices isn’t new.  A cursory look at the list of administrative sanctions taken by almost any state’s Medical Board and / or Dental Board will confirm that pain medications have been, and will likely continue to be, a significant problem.  Unfortunately, the number of opioid-related complaint referrals has risen over the practices. Nevertheless, prescribing practices of Federal and state regulators are carefully monitoring the opioid prescribing practices of qualified physicians, nurse practitioners, physician assistants, podiatrists and dentists in their respective jurisdiction. Despite the fact that the CDC March 2016 guidance is “voluntary,” we recommend that pain management professionals review their prescribing practices and verify whether their particular practices are consistent with the recommendations set out in the CDC’s March 2016 guidance.  Additionally, you should ensure that your opioid prescribing practices also comply with any requirements established by your state legislature and any state licensing authorities.

[1] United States of America. U.S. Department of Health & Human Services. Office of Inspector General. HHS OIG Data Brief OEI-02-17-00250.

The New “Seventh Element” of Compliance: Screening and Evaluating Employee Suitability!


Co-Founder, Exclusion Screening, Element of ComplianceThe recently issued Resource Guide for Measuring Compliance Program Effectiveness, reconfigures the traditional formulation of the “Seven Elements of an Effective Compliance Program by making the “Screening and Evaluation of Employees, Physicians, Vendors and other Agents” an element unto itself – or the new “Seventh Element of Compliance!” The Resource Guide, a product of roundtable discussions by staff members of the Office of Inspector General and compliance professionals and prepared under the auspices of the Health Care Compliance Association (HCCA), serves to once again underscore the critical role of exclusion screening and background checks in compliance

The Importance of the Hiring Process in Health Care

Employee suitability is critically important in healthcare because most of a provider’s operational costs, and almost all of his risks, are directly related to his employees. Whereas most industries are trying to respond to a wide range of risks over which they have little or no forewarning or control (for example, the impact of weather, the availability of supplies or critical equipment, or the failure of equipment they neither own or operate), the majority of risks to health care providers are mostly known and directly related to employee conduct or misconduct (medical malpractice, patient safety, financial fraud, drug diversion, regulatory violations, data and record security, etc.)

The hiring process in healthcare also important because of the value that employees can provide for an organization. “Good” employees enhance the value of organizations; they perceive potential risk and report or fix it, they provide important modeling for new employees, they care for patients in a way that engenders loyalty, they pitch-in, they are honest and show up for work! And so on. Thus, while employees are often the source of loss and cost – they can also represent a sustainable resource that gives an organization a competitive advantage. Viewed in this context, the importance of the hiring process and determining the suitability of employees to a provider’s compliance program becomes clearer still.

Exclusion Screening and Background Checks

An important aspect of determining an applicants overall suitability is “screening” them with Federal and State Exclusion and Sanction Lists. The Resource Guide holds forth that screening should be accomplished upon hire and monthly thereafter, and the importance of thorough screening cannot be overstated as most exclusions are imposed as a result of conduct connected to fraud, patient abuse or neglect, or the sale or abuse of drugs or fraud. Further, regardless of “why” an OIG Exclusion is imposed, persons or entities excluded from Federal Health Care Programs are deemed as a matter of administrative law to “pose unacceptable risks to patient safety and/or to the financial integrity of government programs.”

Exclusion Violation Enforcement

Federal Health Care Programs will not pay for any items or services furnished or provided, directly or indirectly, by an excluded individual or entity. This broad “payment prohibition,” which can extend even to volunteers, renders anyone who is excluded “radioactive“ when it comes to health care. Any claim connected to an excluded person is a potential overpayments, employing or contracting with an excluded person can result in the imposition of civil money penalties, and there have even been False Claims Act cases brought against providers that have used excluded persons.

The OIG signaled that enforcement of exclusion violation was going to be an agency priority in 2013 when it issued its “Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs” and revised the “Self-Disclosure Protocol.” Since that time, it has created a special unit tasked with exclusion enforcement as a priority and sought to expand its exclusion authority on several occasions.

Conclusion

The risks and benefits associated with the hiring process are significant; a fact emphasized all the more by the addition of “Screening and Evaluation of Employees, Physicians, Vendors and other Agents” as the new 7th Element for Evaluating the Effectiveness of Compliance Plans. Providers are urged to do thorough screening as part of their hiring process and to take all possible actions toward ensuring a positive work force, and to avail themselves of the assistance of reputable vendors to assist them in this process.

About the Author
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.

What Medical Practices Need to Know About OIG Exclusion Screening

OIG Exclusion

By Paul Weidenfeld [1] The Office of Inspector General (OIG) has steadily increased its enforcement of OIG Exclusion violations since the issuance of its Special Advisory stressing the effect of an OIG Exclusion in May, 2013. Among other things, they have created a special unit to focus specifically on  Civil Money Penalties (CMPs) (its favored enforcement tool), supported numerous prosecutions by both its Office of Audit and its Office of Evaluations and Inspections, and sought greater regulatory authority from Congress. This article was originally directed (and is still intended) to give a basic tutorial on what an exclusion is, how it effects them, and what they can do to protect themselves.

I.  What is an OIG Exclusion?

The Department of Health and Human Services (HHS) is responsible for administering the Medicare and Medicaid Programs and it decides who may receive benefits under these programs as well as who will be allowed to provide them. When it is determined that a person or entity will not be permitted to provide services to the program, that person or entity is said to be “excluded.” The authority to exclude individuals and entities from Federal health care programs has been delegated by the Secretary of HHS to the OIG.[2]

There are two types of OIG exclusions, mandatory and permissive, and both have the effect of barring an individual or entity from participating in all Federal health care programs until such time, if ever, that their privilege has been reinstated.[3]  Mandatory exclusions last a minimum of 5 years and must be imposed if a person or entity is convicted of certain criminal offenses. These include, among others, offenses related to defrauding Federal or State health care programs, felony convictions for other health care related offenses, most drug related felony convictions, and patient abuse or neglect.

Permissive exclusion authority implicates a much wider range of conduct. The type of conduct for which permissive exclusions may be imposed include misdemeanor convictions related to defrauding health care fraud programs; drug related misdemeanors; suspension, revocation or surrender of a health care license based on competence, performance, or financial integrity; providing unnecessary or substandard services; submitting false claims; defaulting on health education loans or student loans, and so on.

II.  What is the Impact of an OIG Exclusion?

The impact of an OIG exclusion extends to any provider who employs or contracts with the excluded person or entity. The regulation that grants OIG the exclusion authority states that payments cannot be made for items or services furnished “by an excluded individual or entity, or at the medical direction or on the prescription of a physician or other authorized individual who is excluded when the person furnishing such item or service knew or had reason to know of the exclusion.” 42 CFR § 1001.1901(b)

Though the language of the regulation appears to be directed at excluded persons who provide direct, billable services, the OIG broadly interprets the regulation to create a “payment prohibition” that includes virtually any item or service performed by an excluded person that contributes to any claim for reimbursement from any Federal or State Health Care Program.[4] For example, the OIG considers the preparation of a surgical tray or the inputting of information into a computer by an excluded person in violation of the prohibition. Similarly, administrative and management services, IT support, and even strategic planning would also be problematic. Even an excluded volunteer’s assistance might trigger the prohibition unless his activities were “wholly unrelated to Federal health care programs.”[5]

As indicated earlier, the favored enforcement tool is the imposition of civil penalties pursuant to 42 CFR §1003.102(a)(2). Though this regulation also appears to be restrictive in nature,[6]  the OIG interprets it to authorize CMPs for the failure of providers to screen their employees, vendors and contractors for exclusions. In its view, any time an “excluded person participates in any way in the furnishing of items or services that are payable by a Federal health care program,” [7] a  employer/provider that fails to screen will be held to have “known” — or “should have known” — of the exclusion.[8]

III.  OIG Exclusion Screening Requirements

Federal screening requirements are contained in the May, 2013 Special Advisory Bulletin.[9] The Advisory Bulletin states that in order for a provider to “avoid potential CMP liability,” they must check the List of Excluded Individuals and Entities (LEIE) to “determine the exclusion status” of their current employees, vendors and contractors. This can be done, according to the Bulletin’s guidance, by reviewing “each job category or contractual relationship to determine whether the item or service being provided is directly or indirectly, in whole or in part, payable by a Federal health care program,” and then “screen everyone that perform[s] under that contract or in that job category.[10] 

While the OIG concedes that it does not have the authority to require that screening be performed every 30 days, it makes it clear that providers who fail to screen their employees, contractors, or vendors monthly risk the imposition of CMPs and overpayment liability. In addition, the OIG observes that the LEIE is updated on a monthly basis, that CMS mandated monthly screening for all State Medicaid Units in 2009 and 2011, and it requires monthly screening in all of its corporate integrity agreements.

IV. Are the OIG Exclusion Requirements Difficult to Meet?

The logistics of the screening process are extremely challenging for most providers despite the fact that the LEIE is a “searchable and downloadable database that can assist in identifying excluded employees.”[11]  Providers can elect to use the “search function” of the LEIE, but can only screen five employees at a time and each name must be entered manually. In addition, potential matches can only be verified individually by entering the social security number. This may work well if a provider only has to screen a handful of employees or contractors, but how would this work out if a provider has 200, 2,000, or even 20,000 employees?

The alternative, downloading the LEIE database and comparing the employee list to it, is equally problematic. Most providers simply do not have the capability to download the LEIE (which contains almost 60,000 names) and compare it with their own employee database in any reliable, or economically viable way. Another issue is the requirement that providers apply the same standard to contractors and sub-contractors as to their own employees. Contractors are unlikely to want to share their employee lists, and a provider would not want to screen the employee list of a large contractor. While the OIG does seem to recognize the issue by suggesting that providers can “choose to rely [on] screening conducted by the contractor,” it immediately follows the suggestion by reminding providers that they remain responsible for both overpayment liability and CMPs if they fail to ensure that “appropriate exclusion screening” has been conducted.[12]

V.  State Exclusion Requirements

It is important to remember that the OIG’s guidance addresses only federal concerns. While the OIG may be satisfied with just screening the LEIE on a  “regular” basis, there are only a handful of State Medicaid Programs that would find that this satisfied their requirements. Indeed, most States require, at a minimum, that providers screen their State Exclusion List (37 States have them) in addition to the LEIE, and many also require screening of the GSA/SAM[13] and/or other State specific exclusions lists (such as sex offender lists, elder abuse lists, etc.).

States also commonly include additional screening requirements through their provider agreements — some of which can be quite onerous. For example, in some States, applicants are required to certify that no employees or contractors are “suspended, or excluded from Medicare, Medicaid or other Health Care Program in any state”.[14] Additionally, State exclusion lists have a wide range of formats that vary from excel spreadsheets to unsearchable PDF documents further adding to the problems with screening.

For additional information refer to OIG Exclusion and State Exclusion Lists: Which Exclusion Lists Need to Be Screened? What Is the Difference Between Them?

VI.  Outsourcing of Exclusion Screening is a Simple, and Affordable Solution

Exclusion Screening, LLC was created because we recognized the difficulties providers faced when seeking to comply with their exclusion screening obligations.  We were determined to provide a simple, cost effective solution to the problem and we feel strongly that we accomplished our goal.  

Exclusion Screening is simple (we do all the work), cost effective (likely to cost less than the monthly cost of the water delivered to your office), and best of all, it is a complete solution to your screening needs. Call or email me if you have any questions at: pweidenfeld@exclusionscreening.com or 1-800-294-0952.

 

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. 


[1] This is an update of an article that was first published in by the National Alliance of Medical Auditing Specialists (NAMAS) and posted on this website in November, 2014. It was done with the assistance of Jonathan Culpepper.

[2] Sections 1128 and 1156 of the Social Security Act. Though loosely defined to include any program that provides any health benefits, the most significant of these programs are Medicare and TRICARE. Medicaid exclusions are left to the State Fraud Control Units.

[3] Mandatory exclusions are found at 42 USC § 1320a-7; permissive exclusions at 42 USC § 1320a-7(b).

[4] The Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs issued May, 8, 2013 replaced and superseded the 1999 Bulletin and states: “This payment prohibition applies to all methods of Federal health care program payment, whether from itemized claims, cost reports, fee schedules, capitated payments, a prospective payment system or other bundled payment, or other payment system and applies even if the payment is made to a State agency or a person that is not excluded (at page 6 of the Bulletin).

[5] These are examples taken from the Special Advisory Bulletin, id.

[6] The regulation seems to be explaining the circumstances under which CMPs are available, not extending them stating that they may be assessed where a person making a claim stating: “knew, or should have known, that the claim was false or fraudulent, including a claim for any item or service furnished by an excluded individual employed by or otherwise under contract with that person.”

[7] Id. at 11.

[8] This is the language that appears in the OIG press releases announcing settlements of exclusion violations.

[9] Special Advisory Bulletin, at 13-18.

[10] Id. at 15-16.

[11] Id. at 14.

[12] Id. at 16.

[13] The System for Award Management (SAM) is the Official U.S. Government system that consolidated the capabilities of the CCR/FedReg, ORCA, and EPLS which were pre-existing debarment databases.

[14] See, for example, Rule § 352.5 of the Texas Administrative Code which specifically requires such a certification and the Louisiana Medicaid Provider Agreement.

Who Is to Blame for Gaps in OIG and State Exclusion Lists? What Is the Impact on Providers?

 

The failure to report excludable offenses by state Medicaid offices and licensing boards is a longstanding issue for the OIG. Recent OIG audits and reports have confirmed these state failures to report. For example, an OIG study released in August found that over 12% of terminated providers were able to continue participating in other state Medicaid programs because states were not sharing terminated provider information. In addition, two recent Medicaid Fraud Control Unit (MFCU) audits discovered that they routinely failed to timely report conviction information to the OIG and sometimes did not report them at all.[1] Reporting failures lead to gaps in the OIG Exclusion List (LEIE) because the OIG cannot exclude an individual if the OIG is never informed of the state’s conviction, termination, or suspension of providers. Such failures to report are important because the information that would have been reported can lead to exclusion violations, which are listed on the LEIE. But, state compliance failures are not the only cause of gaps in OIG and State exclusion lists – as we discuss, no matter who is at fault, the provider may pay for anyone’s mistake.

The OIG Exclusion List Has Limited Search Capabilities

One important reason providers should not rely on screening only the LEIE is that its search function is extremely narrow.  If an excluded individual uses a different name, such as a middle or maiden name, an LEIE search using the person’s first and last names my not produce any results.[2]  For example, J. A.[3] was excluded from participation on Georgia’s state exclusion list in August 2015. However, a search for “J.A.” on the LEIE currently produces zero results. 

J.A. LEIE_Redacted

Conversely, when we searched J.A. on SAFERTM, our proprietary exclusion database, we not only found a match on the Georgia list (“J.A.”), but we also found a match on the LEIE and SAM databases for “R.J.A.”. Interestingly, “J.A.” has the same middle and last name as “R.J.A.,” they are both Georgia residents, and they were both excluded from participation in April 2015. Like many states, the identifying information on Georgia’s list is sparse. Nevertheless, it is extremely likely that R.J.A. and J.A. are the same person, which a provider would have missed if he only searched the LEIE for J.A.

J.A.SAFER_Redacted

Reported Cases May Not Be Picked Up by OIG

Florida’s Agency for Health Care Administration publishes monthly press releases which identify persons terminated from participation in Florida Medicaid.  It expressly states that the exclusion information was “reported to the federal government for placement on the federal exclusion list,” and named providers appear on Florida’s Excluded Provider List.  When we conducted a SAFERTM search for G.B., who was listed on the April 2015 memo as “terminated from participation,” the only two “hits” were from Florida’s state exclusion list.  

G.B. SAFER_Redacted

However, an LEIE search for G.B. produced zero results.  

G.B. LEIE_Redacted

One possible explanation for why G.B. fails to show up on the LEIE could be the administrative process of OIG actually reviewing the reason for the termination and then formally excluding G.B. Nevertheless, a provider who only screens the LEIE and employs or is considering employing G.B. would miss this exclusion.  

OIG Just Misses Some Cases

K.B., a Registered Nurse (RN) with multistate licensure privileges, was placed on probation for substance abuse in February 2005. After testing positive for morphine, Iowa revoked her license and several other states revoked her multistate privileges. While the revocations were reported, the licensure revocation only resulted in K.B.’s exclusion from participation by California and the GSA-SAM in 2010. K.B. is not listed on the LEIE. This means that K.B. is unable to participate in any other state Medicaid program because under the ACA 6501, if you are terminated for cause from participation in one state, then you are terminated in all states, and K.B. is barred from contracting with the federal government. However, if a provider only screened the LEIE he would be completely unaware and could potentially face very hefty fines.

What This Means

Clearly some information is getting lost or mixed up in the reporting pipeline between state Medicaid offices, MFCUs, and the OIG, and the lesson for providers is that merely screening the LEIE is not enough. The examples above demonstrate that human error, narrow search functions, and simply missed information all play a role in the gaps that exist between publication on state exclusion lists and the LEIE.

State Medicaid offices are responsible for compiling and reporting information about excluded providers. However, as demonstrated by the “J.A.” case, the probable human error of transposing names combined with the LEIE’s limited search capabilities could result in a provider employing an excluded person, even though he was properly screened against the LEIE. To avoid this, providers should screen against the LEIE, the GSA-SAM, and all available state lists monthly. Practices should also ensure they use wide search parameters (alternate spellings, full names, maiden names, etc.) when conducting searches or they should select a vendor, like Exclusion Screening, LLC, with a system designed to anticipate these issues.

Notwithstanding name discrepancies, some information just does not make it to the LEIE. As the “G.B.” example reveals, a practice may face considerable monetary fines because it failed to screen the Florida exclusion list and relied solely on the LEIE for exclusion information, and the OIG failed to add G.B.’s name to the LEIE. Similarly, a provider who considered employing “K.B.” would be totally unaware that she was excluded from participation unless the provider screened the GSA-SAM and/or the California exclusion list. Remember that ACA section 6501 states that when an individual or contractor is excluded in one state, he or she is excluded in all states. When a provider misses such state exclusion information, he or she could be liable for CMPs of $10,000 for each claim provided directly or indirectly by the excluded individual, an assessment of up to three times the total amount paid by the government, and potential false claims liability.  Relying on the LEIE’s exclusion information without checking all other available state exclusion lists is a substantial monetary risk for a practice to take. If screening and verifying 40 state and federal exclusion lists each month is overly burdensome for your practice, contact Exclusion Screening, LLC today for a free assessment: 1 (800) 294-0952.

[1] MFCUs are supposed to send a referral letter to the OIG within 30 days of sentencing for the purpose of alerting the OIG about providers excluded from state programs, but the OIG found that in some cases this exclusion information was not referred to the OIG for over 100 days.

[2] We have even found that hyphenated names frustrate LEIE searches even where the actual names are used!

[3] Full names have been redacted for privacy.

Pennsylvania Judge Holds that CIA violations May Result in FCA Liability

OIG

 

In late July, a federal district court in Pennsylvania joined in the flurry of False Claims Act (FCA) decisions. These decisions further interpreted the ACA’s amendments to the law. The court in United States ex rel. Boise v. Cephalon, Inc. considered two important issues. The issues regarded when a party has an obligation to pay the government, and when a failure to do so could result in reverse false claims liability. Providers should be on high alert and ensure that they are in compliance with all requirements. This includes the requirement to screen employees monthly in order to avoid being OIG’s next false claims target.

Background

The defendant in Cephalon failed to comply with its Corporate Integrity Agreement (CIA) and OIG sought repayment. OIG alleged that they failed to comply with the CIA, which caused reverse false claims and produced FCA liability.

Cephalon, a drug manufacturer, argued that it could have only had an obligation to pay penalties under the CIA if HHS-OIG actually demanded payment. The relator argued that Cephalon’s obligation to pay actually arose when it breached the CIA’s reporting requirements. The court disagreed with Cephalon and instead held for the relator. The court found that a CIA imposes contractual obligations through reporting requirements. Furthermore, a breach of these contractual obligations could cause a company to be liable for reverse false claims even if OIG had not yet demanded payment. Finally, the court elaborated that “specific contract remedies” like specific penalties create a “less contingent obligation to pay.”

Takeaways

The federal government is taking advantage of the new false claims recoupment tools made available to it through the ACA. If you are not screening your employees and contractors against state and federal exclusion lists, then now is the time to ensure your practice is complying with the law. Call Exclusion Screening, LLC for a free assessment of your needs and costs at 1-800- 294-0952.

Ashley Hudson

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

Southern District of New York Provides Clarity on “Identifying” Overpayments

false claims act

In early August of 2015, the Southern District of New York (SDNY) provided insight as to when the 60-day clock for returning an overpayment begins to run under the Patient Protection and Affordable Care Act of 2010 (ACA). This decision is particularly relevant to screening for exclusions because the government has started to penalize providers who submit claims for services provided directly or indirectly by an excluded individual or entity for the greater penalty of submitting a false claim. Simply stated, the government now views claims as legally false if an excluded person provided any part of that claim. This makes providers possibly liable pursuant to the false claims act.

The court’s additional clarity on when the 60-day clock begins to run for false claims act liability may be the OIG’s next tool in retrieving Federal dollars from those providers who fail to screen their employees or contractors monthly. Therefore, those providers could be in receipt of overpayments for monies received from services provided by excluded persons or entities.

I. Background – False Claims Act

The Fraud Enforcement and Recovery Act (FERA), enacted in 2009, amended the False Claims Act and added a “reverse false claims” provision. This reverse false claims provision imposes liability of $5,500 to $11,000 per false claim[1] on persons who “knowingly and improperly avoid[] or decrease[] an obligation to pay or transmit money or property to the Government.”[2] The term “knowingly” includes persons who have “actual knowledge of the information,” as well as those who “act in deliberate ignorance” or in “reckless disregard of the truth or falsity of the information.” The term “require[s] no proof of specific intent to defraud.”[3] In addition, FERA further clarified that an “obligation means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.”[4]

The ACA added additional clarification to the overpayment retention provision. Specifically, it required that a person who has received an overpayment must  “report[] and return[]” the overpayment “by the later of (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.” An overpayment is defined as any monies “received or retained” under Medicare or Medicaid to which a person is not entitled.[5] Failure to repay an overpayment by the 60-day deadline constitutes a reverse false claim under the False Claims Act. However, Congress failed to define “identified” in the statute, which caused ambiguity about when the 60-day clock begins to run.

II. United States ex rel. Kane v. Healthfirst, Inc., et al.

The United States ex rel. Kane v. Healthfirst, Inc., et al., case arose after relator Robert Kane, a former Continuum employee, conducted an internal investigation of the company. The investigation revealed that 900 specific claims amounting to over $1 million may have been wrongly submitted and paid by Medicaid as a secondary payor.[6]

According to the Complaint, Continuum was questioned about a “small number of claims” that the Comptroller’s office concluded were improperly submitted for Medicaid reimbursement.[7] After several conversations, the parties discovered that the problem was related to a software glitch that caused certain claims to contain a code which automatically referred the claim for additional payment for covered services. Continuum was sent a corrective software patch by the software vendor that would ensure that Continuum would not improperly bill any other secondary payors.[8]

Once the software problem was identified in December 2010, Continuum asked Kane to determine which claims were improperly submitted due to the software malfunction.[9] After reviewing the claims, Kane sent an email containing a spreadsheet identifying over 900 claims dating back to May 2009 and totaling more than $1 million. All of these claims contained the problematic code that caused the billing error to Continuum’s Vice President for Patient Financial Services, Continuum’s Assistant Vice President for Revenue Cycle Operations- Systems, and other Continuum management. Kane’s email stated that further scrutiny was necessary to confirm his findings, but the Defendants alleged that he had identified a large portion of the claims that were incorrectly billed. Kane was fired four days after sending this email. According to the Complaint, Continuum did nothing with the alleged overpayments Kane identified except for reimbursing five of the 900 erroneously submitted claims.[10]

The Comptroller, however, continued to review Continuum’s billing and found more claims which it promptly brought to Continuum’s attention from March 2011 through February 2012.[11] Continuum reimbursed the claims identified by the Comptroller beginning in April 2013 until March 2013. Continuum never brought Kane’s research to the Comptroller’s attention and only repaid around 300 claims after the Government issued a Civil Investigative Demand in June 2012. Due to its “intentional and reckless”[12] delay in repaying the alleged overpayment more than 60 days after they were identified, the Government, through Relator Kane, alleged that Continuum is liable for reverse false claims. Therefore, Continuum was allegedly liable for treble damages plus an $11,000 penalty for each overpayment illegally retained more than 60 days after identification.[13]

III. SDNY Court Defines “Identifying” Overpayments

Continuum responded to these allegations by filing a Motion to Dismiss arguing that Kane’s email merely “provided notice of potential overpayments and did not identify actual overpayments so as to trigger the ACA’s sixty-day report and return clock.”[14] The term “identified” was left undefined by Congress in the text of the ACA, which gave rise to Continuum’s motion.

In its motion, Continuum contended that the court should adopt a definition of “identified” as “classified with certainty.” The Government responded that instead “an entity ‘has identified an overpayment’ when it ‘has determined, or should have determined through the exercise of reasonable diligence, that [it] has received an overpayment.’” The Government’s definition would essentially define “identified” as when “a person is put on notice that a certain claim may have been overpaid.”[15]

In an effort to ascertain the plain meaning of “identify,” the court consulted dictionary definitions, but it found that the wide range of definitions alone were not particularly helpful. Next, the court utilized canons of construction, reviewed the ACA’s legislative history, and considered the legislative purpose behind including a mandate to return overpayments within the ACA. The court found the legislative history particularly revealing and noted that Congress chose to adopt the Senate’s version of the bill which contained “identified” instead of the House Bill which employed the term “known.” After a thorough evaluation, the court concluded that “identified” should be defined as the moment “when a provider is put on notice of a potential overpayment, rather than when an overpayment is conclusively ascertained, [which] is compatible with the legislative history of the False Claims Act and FERA.”[16]

The court tempered its decision in stating that “the mere existence of an ‘obligation’ does not establish a violation of the False Claims Act.” Instead, the court held that a reverse false claim is only triggered when “an obligation is knowingly concealed or knowingly and improperly avoided or decreased.” Therefore, the court advised that prosecutorial discretion be employed to avoid filing enforcement actions against “well-intentioned providers working with reasonable haste to address overpayments” because this would be “inconsistent with the spirit of the law.”

IV. Takeaways

This decision is significant because it is the first opinion interpreting the term “identify” as it is used in relation to the ACA’s 60-day overpayment reporting requirement. While it is only binding in the Southern District of New York, it will likely guide other court opinions as they arise.

Providers should be aware that they could be liable for overpayments 60 days after they are “put on notice of a potential overpayment.” Therefore, providers should act with “reasonable haste” in reviewing potential overpayments to demonstrate good faith compliance.

Finally, providers must continue to screen their employees and contractors against the Federal and state exclusion lists monthly. The Government has only recently begun to pursue excluded individuals for False Claims Act violations. The new interpretation of “identify” as being “on notice” could provide the Government with a brand new tactic to retrieve federal monies. One of the reasons we strongly advocate that providers check all federal and state exclusion lists monthly is to find potential exclusions and demonstrate maximum compliance before an exclusion problem arises.

V. Conclusion

Failing to screen thoroughly and verify potential matches each month is not a way to avoid liability. It is unlikely that OIG would excuse overpayment liability if a provider claimed he was not “on notice” about an employee’s excluded status if that provider failed to properly screen and verify employees. Further, if a provider has identified a potential match, then he must work diligently to verify this match and return any monies received for services provided by this employee if he is excluded because the initial identification date could potentially start the 60-day clock for false claims act liability. [17]

Ashley Hudson

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article. Feel free to contact us at 1-800-294-0952 or online for a free consultation.


[1] Opinion and Order at 9 n.12, United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y Aug. 3, 2015).

[2] 31 U.S.C. § 3729(a)(1)(G) (2011).

[3] Id. § 3729(b)(1).

[4] Id. § 3729(b)(3) (emphasis added).

[5] 42 U.S.C. § 1320a-7k(d)(4)(B) (2010).

[6] Complaint-in-Intervention of the United States of America at 11, United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y. June 27, 2014).

[7] Id. at 10.

[8] Id.

[9] Id.at 11.

[10] Id.

[11] Id.

[12] Opinion and Order at 11, United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y Aug. 3, 2015).

[13] Id. at 8.

[14] Id. at 17.

[15] Id.  (emphasis added).

[16] Id. at 23.

[17] Exclusion Screening, LLC is not a law firm and does not provide legal advice. As such, this is not intended, and should not be taken, as legal advice. We strongly recommend that you seek the advice of counsel whenever decisions that may have legal consequences are made.

Medicaid Providers That Are Excluded or Terminated for Cause Often Continue to Participate in Other States According to a New OIG Audit

 

medicaid providersOIG Audit Findings

In a recently released audit, the OIG found that despite the ACA requirement that states terminate Medicaid providers already terminated in another state, 12% of providers already terminated for cause in 2011 in one state (295 out of a sample of 2,539) were still participating in other state Medicaid programs as of January of 2014! There is a lack of state to state coordination identified in both this audit and one issued last March, and a lack of state to Federal coordination identified in separate OIG audit reports. This strongly reinforces our suggestion that providers screen their employees, vendors and contractors on all available State Exclusion Registries in addition to the LEIE and the SAM!

Exclusion, Termination and the ACA

In practical terms, to implement section 6501 of the ACA, states must first find the providers who are terminated from federal healthcare programs. Then, states must identify whether any terminated providers are participating in their Medicaid program. Finally, they must take action to terminate the provider from its own Medicaid program.

According to the report, this is defeated by a general lack of coordination caused in large part by a lack of uniformity of terminology among not only the states, but in existing Federal and state databases. For instance, exclusion and termination are synonymous in many states, but they have distinctly different meanings for CMS. This is also true with such terms as suspension, disbarment, revocation and sanction. Furthermore, what constitutes “cause” in one state may not in another state. The audit also notes that some states have a basic misunderstanding about the relationship between licensure and exclusion or termination. Those states often conclude that if Medicaid providers have an active license from the relevant state board, the state Medicaid agency should defer to the judgment of that board and not terminate the providers for cause.

Principle OIG Recommendations

The OIG reiterated its recommendation from March 2014 that CMS require state Medicaid agencies to report all terminations for cause. The OIG found that a lack of a comprehensive data source of providers terminated for cause creates a challenge for state Medicaid agencies. It also recommended that CMS work with states to develop a uniform terminology, that CMS furnish guidance to state agencies that termination is not contingent on the provider’s active licensure status, and that it require states to enroll providers who participate in their managed care programs.

The Message to Medicaid Providers

This audit report stresses, once again, the importance of screening all state Exclusion databases as well as the LEIE and the SAM. This message reinforces two important ideas: 1) States do not reliably share their information either with other states or with the Feds; and 2) a significant percentage of excluded or terminated physicians, nurses and other employees will take advantage of this lack of coordination to their advantage and your disadvantage!

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.

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