Gaps in Provider Safeguards Result in Employment of Excluded Individuals

Despite CMS’ efforts to strengthen the integrity of the Medicaid program, the Office of Inspector General’s (OIG‘s) List of Excluded Individuals/Entities (LEIE), which is publicly available on the OIG website and is updated monthly, and with many states maintaining their own database of providers they have sanctioned, excluded individuals continue to find employment by service providers in Medicaid managed care networks. What safeguards are required by CMS, what data does OIG and state Medicaid agencies make available to providers, and what conditions contribute to the employment of excluded individuals?

The rule regarding payment when services are rendered by an excluded individual.  Medicaid payments can not be made for any items or services directed or prescribed by excluded physicians or other authorized person when the individual or entity furnishing services either knew or should have known of the exclusion. This prohibition applies even when the Medicaid payment is made to another provider, practitioner or supplier that is not excluded (42 C.F.R. 1001.1901(b)).

OIG’s findings on excluded individuals. In a September 27, 2012, report, OIG found 16 excluded individuals out of approximately 249,00 individuals employed by 500 sampled service providers participating in 12 Medicaid managed care entities (MCEs). In a February 2012 report of its 2011 evaluation of 12 managed care entities in 10 states, OIG found that 4 of the MCEs had 11 excluded providers enrolled in their provider networks in 2009. (OEI-07-09-00632 and OEI-07-09-00630, respectively).

Providers reported that they used a variety of safeguards to ensure that they do not employ excluded individuals, including requiring prospective employees to sign an affidavit or attestation regarding their exclusion status. however, gaps in provider credentialing process and LEIE information contributed to the enrollment of excluded providers. In addition, providers identified costs and resource burdens as challenges in executing safeguards. The safeguards used include checking the OIG’s LEIE to identify excluded providers at least at initial enrollment and at varying frequencies from one month to every three years. Providers specifically identified the following reasons why despite safeguards excluded individuals were employed:

  • The names excluded individuals gave on their employment applications were different than names listed on the on the LEIE. OIG was able to identify these individuals by searching the LEIE for their Social Security Numbers and then looked for similar names.
  • Contracted companies either did not check their employees exclusion status as required or did not inform the provider of the employee’s exclusion status.
  • Contracted background check vendors failed to identify the exclusion status of excluded individuals.
  • Although the name of the excluded individual was on the LEIE the birth date was different so the provider concluded the match was a false positive.
  • An excluded individual was hired prior to her exclusion date.
  • A human resources employee did not follow company policy on conducting exclusion status screenings.

OIG recommended CMS to reinforce its guidance to MCEs on their obligation to check the LEIE and require their network providers to check the LEIE on a monthly basis to identify exclusions and reinstatements. In addition, CMS may wish to reiterate that providers are obligated to prevent use of federal funds for payments to excluded persons and entities.

The LEIE. OIG updates the LEIE monthly to add new exclusions and reinstatements. Monthly updates of exclusions information is sent to CMS, which CMS uses to populate the Medicare Exclusion Database, which is available to state Medicaid agencies and others. OIG also sends monthly updates of the LEIE to the General Services Administration, which maintains the Excluded Parties List System, which includes information regarding parties debarred, suspended, proposed for debarment, excluded, or disqualified from receiving federal funds. OIG recommends that providers rely primarily on the LEIE for the most accurate and timely information on federal exclusions.

CMS’ directives to states. In a June 12, 2008, letter to State Medicaid Directors (SMDL *08-003), CMS notified states of their obligation to determine whether an excluded individual has an ownership interest or control interest in an entity that is a Medicaid provider and report  information regarding such excluded individuals to OIG. OIG has the authority to exclude persons based on actions taken by state Medicaid agencies. States also must notify OIG of any action taken by a state to limit the ability of an individual or entity to participate in its program.

In a January 16, 2009, letter to State Medicaid Directors (SMDL#09-001), CMS clarified its policy requiring states to advise current providers and providers applying to participate in the Medicaid program to screen their employees and contractors for excluded persons to prevent Medicaid payments for items or services furnished or ordered by excluded individuals or entities. CMS expects states to require providers to comply with this obligation as a condition of the providers enrollment. In addition, CMS has advised states to require providers to search the OIG LEIE database monthly to capture new exclusions or reinstatements that have occurred since the last search. and immediately report to the state any exclusion information they discover.

States initiatives. In addition to OIG’s LEIE, and CMS guidance, some states also provide information about exclusion in databases maintained by the state that includes state sanctions and lists providers that they have excluded and in some cases, OIG-excluded providers. In addition, states maintain databases of licenses they issue if a provider loses his or her license, the licensure database reflects the status. States that provide excluded provider lists include Kentucky, Mississippi, New York, Florida.

In addition to the excluded individual list, the New York Office Medicaid Inspector General (OMIG) provides a list of 49 questions and answers addressing excluded persons in Medicaid Employment and Contracting. Questions include whether there is a website to check if a person is excluded from several states, how often the state exclusion list is updated, why providers appear on the OMIG list but not on the LEIE, which employees or contracted employees should be checked, and whether the issue of checking excluded individual lists is based on federal law or regulations.