The Office of Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) recently issued an Updated Special Advisory Opinion to help healthcare providers protect against the risk of employing or contracting with excluded individuals and entities. Exclusion—often referred to as the “death penalty” in the healthcare industry—is a remedial punishment that prohibits an individual or entity from being reimbursed by or participating with federal healthcare programs. OIG has sole authority when deciding to exclude individuals or entities, and can do so under a number of mandatory and discretionary circumstances.
The Special Bulletin updates the original September 1999 Bulletin released by OIG addressing the effect of exclusion and answers questions frequently posed to OIG over the last decade relating to the scope of exclusion. The update also addresses the limitations on contracting with or employing an excluded person and incorporates OIG’s expanded exclusion authorities as provided for in the Patient Protection and Affordable Care Act of 2010 (ACA), as amended by the Health Care Education Reconciliation Act of 2010.
In developing the Updated Bulletin, OIG considered, among other things, the public comments received in response to a solicitation notice published in the Federal Register in November 2012, as well as OIG’s experience resolving numerous self-disclosure cases, and questions received.
Several articles from American Health Lawyers Association (AHLA) examined the recent update. The authors include lawyers Sheila Sawyer; Jennifer Weaver; Richard Westling; Kristi Kung; and Amy Fehn.
“The effect of an OIG exclusion is that no federal healthcare program payment may be made for any items or services furnished: (1) by an excluded person; or (2) at the medical direction or on the prescription of an excluded person. This payment prohibition applies to all methods of federal healthcare 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.”
More than 51,000 individuals and nearly 3,000 entities were excluded from participation in federal healthcare programs since April 2013, and healthcare providers that employ or contract with excluded individuals or entities are subject to significant civil monetary penalties (CMPs). Further, the payment prohibition extends beyond patient care and covers nurses, pharmacists, pharmacy staff, ambulance drivers, and anyone who provides “administrative and management services that are payable by Federal health care programs.” This latter category includes anyone who serves in an “executive or leadership role,” as well as anyone involved in “health information technology services and support, strategic planning, billing and accounting, staff training, and human resources.”
The prohibition against employing or contracting with an excluded individual or entity is extremely broad, and covers anyone who is involved, either directly or indirectly, with the provision of healthcare items or services. “It is irrelevant whether the provider has a direct relationship with the excluded individual or not.”
For instance, if a hospital contracts with a staffing agency for temporary or per diem nurses, “the hospital will be subject to overpayment liability and may be subject to CMP liability if an excluded nurse from that staffing agency furnishes items or services to Federal health care program beneficiaries.”
In light of the foregoing, OIG recommends that providers review every job category or contractual relationship to determine whether the items or services being provided are directly or indirectly, in whole or in part, payable by a federal healthcare program. If they are, OIG advises that “the best mechanism for limiting CMP liability is to screen all persons that perform under that contract or that are in that job category.”
Accordingly, OIG expects providers to screen all covered employees and contractors at least monthly using OIG’s List of Excluded Individuals/Entities database on its website, which is updated every month to best minimize potential overpayment and CMP liability. OIG further suggests that providers maintain documentation of all name searches performed and additional searches conducted. OIG reaffirmed that the LEIE is the primary database that should be used for the purposes of exclusion screening (as opposed to the National Practitioner Data Bank or the General Services Administration’s System for Award Management).
OIG recognizes that contractor and subcontractor employee screening is often delegated contractually to the vendor by providers; however, the provider retains potential liability for CMPs. Thus, OIG strongly encourages providers to request and maintain documentary evidence of such screening in its own files.
Where healthcare workers are contracted through another entity, such as a staffing agency, OIG states that a provider may reduce or eliminate CMP liability if it can demonstrate that it reasonably relied upon the staffing agency’s agreement by contract to perform LEIE screening. OIG further cautions that any such delegation should be documented in the agreement between the parties and the provider should exercise due diligence in ensuring that the agency is meeting the contractual obligation.
OIG has established a voluntary Self-Disclosure Protocol (SDP) for providers that have determined that they have employed or contracted with an excluded individual or entity. By using the SDP, providers may be able to obtain a more favorable resolution with the government than they would if the exclusion were uncovered by government investigators. We previously wrote about OIG’s updated SDP, which includes specific new details and requirements regarding the self-disclosure of employing or contracting with an excluded entity or individual.
OIG also notes that submission of a prohibited claim will be considered an overpayment and could be a false claim where the claim is knowingly submitted by an excluded provider. The Updated Bulletin also clarifies the effect of exclusion in the following scenarios:
- Exclusions and payment prohibitions continue to apply to an excluded person even if he or she switches professions during the exclusion period;
- An excluded provider may refer a patient to a non-excluded provider if the excluded provider does not furnish, order, or prescribe any services for the referred patient, and the non-excluded provider provides all treatment and submits all bills to the federal healthcare programs;
- Exclusions and payment prohibitions extend beyond direct patient care;
- Excluded providers are prohibited from providing administrative or management services that are payable by a federal healthcare program, even if the services are not separately billable;
- The payment prohibition extends to volunteer positions; and
- A provider may employ or contract with excluded providers for items or services that are solely furnished to non-federal healthcare program beneficiaries.
With regard to an excluded provider’s ability to have an ownership interest in a healthcare entity, OIG notes that exclusion does not directly prohibit an excluded person from owning a provider that participates in federal healthcare programs. However, OIG cautions that the provider entity would be subject to permissive exclusion and the excluded provider would be subject to civil monetary penalties (CMPs) if the excluded individual retained greater than 5% control of the entity. The excluded individual could also face CMP liability for holding an administrative or management position with the entity and the entity could not bill for any services where the excluded individual held such a position.
HHS to Consolidate Two Databanks
In somewhat related news, HHS’ Health Resources and Services Administration (HRSA) released a final rule on consolidating two databanks that track questionable physician practices. Data from the Healthcare Integrity and Protection Data Bank (HIPDB) will be transferred to the National Practitioner Data Bank (NPDB), at which point the former will be shut down.
HIPDB aims to help hospitals and other organizations hire health care providers who are in good legal standing with health care regulations, as well as Medicare and Medicaid program requirements. It includes information on:
- Civil monetary penalties levied against health care providers and other entities;
- Terminations of participation in Medicare; and
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Revocations and suspensions of laboratory certifications
“The two databanks essentially served the same purpose: tracking licensure and certification actions taken against practitioners by state licensure or certification agency, reports Bloomberg BNA. Insurers, professional societies and other groups also report to NPDB.”
The consolidated data repository is to be expanded with new requirements that each state establish a system for reporting licensure and certification actions taken against providers.
NPDB is accessible to law enforcement officials and other entities. Its website allows practitioners to query themselves. Meanwhile, hospitals and healthcare organizations have used HIPDB to hire healthcare providers who are in good legal standing with healthcare regulations and Medicare and Medicaid program requirements, according to iHealthBeat.
A Public Citizen study of data from the NPDB from 1990 to 2009 criticized state medical boards for failing to discipline 55 percent of the nation’s doctors who had their clinical privileges revoked or restricted by their hospitals.
“Either state medical boards are receiving this disturbing information from hospitals but not acting upon it, or much less likely, they are not receiving the information at all,” Sidney Wolfe, director of Public Citizen’s Health Research Group and overseer of the study, said. “Something is broken and needs to be fixed.”
Wisconsin, Minnesota, South Carolina, Massachusetts and Connecticut have the lowest rates of physician discipline by state medical boards, according to Public Citizen’s research.