Staying informed: how to avoid liability for exclusionary violations

January 2014
BY Mary M. Bearden and Allison Shelton, Brown & Fortunato, P.C.

On May 8, 2013, the Office of Inspector General (OIG) issued a Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (Updated Bulletin) as an update to the previously issued 1999 Bulletin. The Updated Bulletin provides guidance for the health care industry on the scope and implications of exclusions.

The U.S. Department of Health and Human Services established the OIG to identify and correct problems and to ensure efficiency within the Department’s programs. In accordance with these goals, the OIG may exclude individuals or entities who have committed program-related fraud or abuse from federal health care programs. For example, if a health care provider bills Medicare for substandard or unnecessary services, then the OIG has the discretion to exclude the provider. In some situations (e.g., patient abuse or conviction of Medicaid fraud), the OIG must exclude the health care provider.

Exclusion is often seen as the death knell for providers because they can neither directly provide nor indirectly participate in services billed to a federal health care program. Ironically, the OIG does not expressly prohibit excluded persons from owning a health care provider. Such ownership has certain risks, however. When an excluded person owns five percent or more of an entity, the OIG may exclude the entity from federal health care programs.

Exclusions have implications for not only the excluded person but also the health care industry as a whole because other providers must take precautions not to employ or contract with an excluded person. According to the Updated Bulletin, “no Federal health care 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.” Violators, whether excluded or not, may be subject to assessments, exclusion, and civil monetary penalties (CMPs).

Providers that contract with or employ excluded persons may incur CMPs up to $10,000 for each service from which payment is sought, can be subject to an assessment of three times the amount claimed, and may be excluded. According to the Updated Bulletin, provider liability arises when “an excluded person participates in any way in the furnishing of items or services that are payable by a Federal health care program.” Even if the excluded person did not receive compensation or worked temporarily with the provider through a staffing agency, the provider is still liable.

Under the Updated Bulletin, the term, “Federal health care program,” encompasses any federally funded program, such as Medicare Parts A through D, Medicaid and other state programs, Medicare Advantage, TRICARE, etc. When a person is excluded, the person cannot directly or indirectly furnish services or items payable under such programs, regardless of the form of payment. Payments from federal health care programs may include “itemized claims, cost reports, fee schedules, capitated payments, a prospective payment system or other bundled payment.” Accordingly, excluded persons may not render a service even remotely related to patient care. In fact, excluded persons cannot perform administrative or managerial services for a provider that participates in a federal health care program. Even filling a prescription written by an excluded person is a violation.

The OIG maintains a List of Excluded Individuals and Entities (LEIE). The LEIE provides details on the person or entity excluded and allows the search to be verified through the use of a social security number or employer identification number. In the future, the LEIE may be searched by the person’s/entity’s National Provider Identifier.

The Updated Bulletin focuses on the proper screening steps that providers should take in order to avoid liability. The OIG recommends that providers regularly search the LEIE and document the name searches they conduct in order to verify the results of potential matches. The OIG recommends screening new employees and periodically screening current employees. Providers can decide how frequently to conduct screening, but since the OIG updates the LEIE monthly, the OIG advises providers to screen monthly to minimize potential liability. A contractor may conduct screening for the provider, but the provider should monitor the contractor to ensure that the contractor performs the checks properly. Even if a contractor performs the screening, the provider remains liable.

To determine which employees and contractors to screen, the provider should assess each job title and contract and verify what items and services are payable by a federal health care program either directly or indirectly. Anyone providing such an item or service should be screened. The greatest risk of liability occurs “for those persons that provide items or services integral to the provision of patient care because it is much more likely that such items or services are payable by the Federal health care programs.” Thus, providers should screen nurses from staffing agencies, physician groups that cover emergency rooms, and billing or coding contractors.

Since the 1999 Bulletin, the OIG had received questions about the difference between the General Services Administration’s System for Award Management (SAM) and the OIG’s LEIE. SAM includes both LEIE and debarment actions by other federal agencies. Accordingly, providers should use LEIE since it provides greater detail about the excluded persons. The Updated Bulletin also addresses questions regarding the proper use of sanction databases, such as the National Practitioner Data Bank (NPDB) and the Health Care Integrity and Protection Databank (HIPDB). On April 5, 2013, NPDB and HIPDB combined into one database that reports malpractice and similar adverse findings and actions. While providers can refer to NPDB, the OIG advises using LEIE to conduct exclusion screening.

With respect to unanswered concerns providers may have relating to potential liability, they may use the OIG’s Provider Self-Disclosure Protocol to disclose concerns and find a solution. Also, when an excluded person or a provider is unsure whether an arrangement violates the law, they may submit a request for a binding OIG Advisory Opinion, which will inform them if the arrangement does in fact violate the law.

In light of the OIG’s updates, health care providers now have additional guidance to ensure compliance with exclusionary rules. The Updated Bulletin not only replaces and supersedes the 1999 Bulletin, but it also advises providers regarding the most effective screening methods and ways to avoid liability. Finally, the Updated Bulletin provides resources for self-disclosure and encourages providers to submit exclusionary inquiries.