By: William J. McDonald, Esq.

Medical practices must remain vigilant in their compliance efforts to root out and avoid excluded providers.  The Office of the Inspector General for Health and Human Services ("OIG") remains aggressive in its enforcement efforts, and providers who present claims for payment to Federal health care programs for services provided by excluded providers face liability under the Civil Monetary Penalties Law, codified at 42 U.S.C. ยง1320(a)-7(a).  Civil Monetary Penalties ("CMPs") include a $10,000 fine for each individual violation, plus potential liability for three times the amount of reimbursement claimed or paid by a Federal health care program. 

On May 8, 2013, nearly fourteen years after its premier published advisory, the September 1999 Special Advisory Bulletin (the "1999 Bulletin") on the effect of exclusion from participation in Federal health care programs, the OIG published an Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (the "Updated Bulletin").  The Updated Bulletin is available at www.oig.hhs.gov/exclusions/files/sab-05092013.pdf.  

The 1999 Bulletin explained that under an exclusion from Federal health care programs, no Federal health care program payment may be made for any items or services: 1) furnished by an excluded individual or entity, or 2) directed or prescribed by an excluded physician (42 C.F.R. 1001.1901).  The ban covers all methods of Federal health care program reimbursement, whether from itemized claims, cost reports, fee schedules, through a prospective payment system ("PPS"), and it includes any items or services furnished at the medical direction or prescription of an excluded physician.  If Federal health program payments are made to another, non-excluded provider, for services provided by an excluded provider, then those payments are also prohibited.  The prohibition even extends to claims resulting from an excluded provider's administrative and management services not directly related to patient care, if those services are a necessary component of providing items and services to Federal program beneficiaries.  Thus, an excluded physician could not serve as a medical director or office manager if the patients receiving treatment are Federal health care program beneficiaries. 

OIG's 1999 Bulletin listed the following examples of items or services that could subject employers or contractors to CMP liability if performed by excluded providers:
Services performed by excluded nurses, technicians, or other excluded individuals who work for a hospital, nursing home, home health agency, or physician practice, where such services are related to administrative duties , preparation of surgical trays, or review of treatment plans if such services are reimbursed directly or indirectly (such as through a PPS or a bundled payment) by a Federal health care program;

The 1999 Bulletin concludes by advising health care providers and entities to check the status of their current employees on the OIG's List of Excluded Individuals/Entities ("LEIE") on the OIG's website, and to "periodically" check the OIG website for the status of current employees and contractors. 

The Updated Bulletin
The Updated Bulletin provides needed clarification to providers and entities as to what constitutes acceptable "periodic" checks of the LEIE, and it attempts to answer questions it has received from providers since 1999, including:

The Updated Bulletin answers the first question above by delineating specific circumstances under which an excluded person may be employed by, or contract with, a provider that receives payments from Federal health care programs.  First, Federal health care programs must not pay, directly or indirectly, for the items or services provided by the excluded individual.  Second, the arrangement is permissible if the excluded person is furnishing items or services solely to non-Federal health care program beneficiaries.  Third, a provider need not maintain a separate account from which to pay the excluded person, as long as no claims are submitted to, nor is payment received from, Federal health care programs for items or services that the excluded person provides.

Although not required by any statute or regulation, OIG recommends that providers check the LEIE monthly.  A 2011 CMS final rule already requires States to screen enrolled providers monthly.  OIG also believes the LEIE, which is updated monthly, is better than the SAM or the NPDB because it displays: (1) the name of the excluded person at the time of the exclusion, (2) the person's provider type, (3) the authority for the exclusion, (4) the State where the individual resided at the time of the exclusion, and (5) a mechanism to verify search results via Social Security Number or Employer Identification Number.  OIG plans to add NPI to the LEIE, and it wants to include information regarding waivers of exclusion granted by OIG.  Presently, waivers of exclusion granted by OIG are found at www.oig.hhs.gov/exclusions/waivers.asp.   

To determine which providers to screen, the OIG recommends that providers 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 health care program.  If the answer is yes, then the best practice is to screen all persons that perform under that contract or that are in that job category.  Providers should screen contractors with the same scrutiny that they screen their own employees.  Specifically, OIG recommends screening nurses provided by staffing agencies, physician groups that contract with hospitals to provide emergency room coverage, and billing or coding contractors.  The provider may rely upon the contractor to perform screening, but the provider should demand documentation to ensure that the contractor is in fact screening on behalf of the provider.  The OIG notes that pharmacies commonly rely upon Medicare Part D plans or State agencies to ensure that prescribers are not excluded through computer system edits.  However, pharmacies and laboratories that rely upon third parties to screen prescribers remain responsible for overpayment liability and CMPs if items or services are prescribed by excluded providers.

For providers who find that they have received payment for items or services provided by an excluded person, the OIG recommends that providers use OIG's Provider Self Disclosure Protocol to disclose and resolve the potential CMP liability.  The protocol is found at www.oig.hhs.gov/compliance/self-disclosure-info/index.asp.  

CMP sanctions can devastate a medical practice, so providers should follow OIG's new guidance scrupulously to avoid, or at the very least mitigate, exposure.  Providers with questions about compliance or self-disclosure should follow up with health care counsel in order to minimize further risk and liability. 

William J. McDonald practices law at The Law Offices of William J. McDonald, P.C., headquartered in Garden City, New York.  He began his 16 year legal career as an Assistant District Attorney, and was later appointed as a Special Assistant United States Attorney in the EDNY.  During those years he tried felony cases ranging from violent crimes to complex insurance fraud schemes, and he practiced health care law at one of Long Island's premier health care law firms before starting his own practice.  Mr. McDonald's healthcare practice includes compliance advice, OMIG and Medicare RAC audit defense, OIG exclusion defense, fraud and abuse analysis and litigation, reimbursement issues, OPMC and OPD defense for physicians and other licensed healthcare providers, False Claims Act and Civil RICO defense, and criminal defense of all federal and New York State Health Care Fraud offenses.  Mr. McDonald may be reached at wmcdonald@wmcdonaldlaw.com or (516) 630-4501.