Understanding Obligations, Risks, and Best Practices

Contractor & Vendor Screening

An issue that arises when healthcare providers have a large pool of contractors, vendors, or agents that they work with from time to time is whether a particular contractor or vendor performs services or provides supplies that are paid “in whole or in part” with funds that are derived from Federal health care benefit program revenues.

Is it Necessary for Providers to Screen Vendors and Contractors?

The screening of contractors, vendors and agents is one of the most confusing tasks faced by health care providers and suppliers when conducting exclusion and sanction screening activities. A wide number of questions may arise when attempting to meet their screening obligations.

In May 2013,[i] the Department of Health and Human Services, Office of Inspector General (OIG) issued guidance discussing the screening obligations of participating providers and suppliers. The OIG interprets §1001.1901(b) to requires providers to screen vendors/contactors and authorizes the imposition of civil money penalties and overpayment exposure “if an excluded person participates in any way in the furnishing of items or services payable by a Federal health care program.”

[i] UPDATED – Special Advisory Bulleting on the Effect of Exclusion from Participation in Federal Health Care Programs.”  Department of Health and Human Services, Office of Inspector General (May 8, 2013).

updated report

As a rule, health care providers and employers may not bill Federal or State Health Care Programs for services ordered or furnished, directly or indirectly, if it is payable in whole or in part, by a Federal Health Care Program.  For example:

  1. Excluded individuals and entities are prohibited from furnishing any executive, leadership, administrative or management services regardless of whether they are separately billable or not;
  2. Excluded individuals cannot perform IT services, strategic planning, billing, and accounting, or human resources unless the services are wholly unrelated to Federal health care programs.
  3. Excluded individuals may not input prescription information or be involved in any way in filling prescriptions.
  4. If an individual is excluded, he or she cannot work for a participating provider or supplier even if the excluded individual agrees to work as a non-paid “volunteer.” Even an excluded volunteer will taint a claim if the excluded individual’s activities contribute to the bundle of services being provided to a Federal program beneficiary.

What Determines Whether a Contractor or Vendor Must be Screened?

Many healthcare providers and suppliers have a large pool of contractors, vendors and agents that they work with from time to time.  One issue that arises is whether a particular contractor or vendor performs services or provides supplies that are paid “in whole or in part” with funds that are derived from Federal health care benefit program revenues.  A second issue to be considered is whether the services or supplies are integral to the overall basket of services provided to Federal health care program beneficiaries.  For example:

  • Incidental Services Where NO Screening is Required. Some services, such as outside garbage pickup, FedEx delivery services and telephone carriers, would not need to be screened.  The services they are providing are not related, directly or indirectly to the patient services provided.     
  • Contractors and Vendors Closely Associated with Patient Care. Contractors and vendors providing services and supplies that directly associated with patient care and / or claims submission and reimbursement would likely require screening.
  • Examples of Contractor / Vendors Where Screening is Likely Required. Prime examples of contractors and vendors where screening is needed include:
    • DME Companies.
    • Billers and Third-Party Billing Companies.
    • Transportation Companies.
    • Pharmacies and Pharmacists.
    • Therapists (PT, OT, ST, etc.).
    • Management Companies and Consultants.
    • Medical Professionals (Doctors, Nurses, ) Who are Now Vendors of a Medical Service or Medical Supplies

Related FAQs.

Answers to common questions related to contractor and vendor screening.

Great question. A common question we receive is whether a provider is required to screen the employees of a contractor or vendor.  The answer is isn’t as clear as we would like.  For instance, if your organization is utilizing nurses provided by a staffing agency, the OIG recommends that you screen the nurses assigned to your organization.  We also recommend that the employing staffing agency is also screened.  To the extent that the staffing agency contends that it conducts its own screening activities, the OIG recommends that the provider “validate” that the contractor or vendor is, in fact, conducting these screening activities. As the OIG points out in its May 2013 Guidance,

“Regardless of whether and by whom screening is performed and the status of the person (e.g. employee, subcontractor, employee of contractor, or volunteer), the provider is subject to overpayment liability for any items and services furnished by any excluded person for which the provider received  Federal health care program reimbursement and may be subject to CMP liability if the provider does not ensure that an appropriate exclusion screening was performed.”

Simply put, YES. The overarching purpose of the exclusion program is to protect Federal health care beneficiaries from the actions of excluded individuals and entities.  As the OIG’s May 2013 Guidance states:
“An excluded person may not provide services that are payable by Federal health care programs, regardless of whether the person is an employee, a contractor, or a volunteer or has any other relationship with the provider.” [i] (Emphasis added). 

As with your employees, you should be screening your contractors, vendors, etc., monthly in order to minimize both Civil Money Penalty (CMP) exposure and to keep any overpayments at a minimum

[i] OIG May 2013 Guidance, Pages 11-12.

Protect yourself and your practice.  Contact us for a free quote and to sign you up for our screening services.  We feel confident that you will be satisfied with Exclusion Screening’s services and that you will stay with us as a client. Alternatively, you can e-mail us to schedule a telephone conference, or simply give us a call at 1 (800) 294-0952.

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Are you unsure your screening requirements depending on your business and location?  Our FREE Consultation has you covered. It includes: An overview of exclusions in addition to an overview of your exclusion requirements, and a demonstration of our product and service (SAFER) will be performed prior to a presentation of your personalized solutions. This consultation for your benefit only!