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

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

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

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

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



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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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