Contributor’s Corner: A Look At the OIG Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs

On May 8, 2013, a Special Advisory Bulletin (the “2013 Bulletin”) was issued by the Office of the Inspector general of Health and Human Services to provide guidance to the health care industry on the scope and frequency of screening employees and contractors to determine whether they are excluded persons. (Editor’s Note: We’ve reported on the Special Advisory by another contributor here).

The 2013 Bulletin answers many questions which were left unclear from the Special Advisory Bulletin issued by the OIG in September 1999 (the “1999 Bulletin”) which first described the effect of exclusion from participation in Federal health care programs and provided guidance to excluded persons as to the scope and effect of their exclusions and the activities that might result in a violation of their exclusions.

The 2013 Bulletin provides several clarifications based on questions that arose from the 1999 Bulletin. First, the 2013 Bulletin makes it clear that the prohibition on payment for items or services furnished by an excluded individual also includes items and services beyond direct patient care, including work with a hospital, nursing home, home health agency, or managed care entity. The prohibition would extend to such non-patient care activities as preparation of surgical trays or review of treatment plans, regardless of whether such services are separately billable or are included in a bundled payment.

According to the 2013 Bulletin, excluded persons are also prohibited from furnishing administrative and management services that are payable by the Federal health care programs even if the administrative and management services are not separately billable. Examples provided in the 2013 Bulletin include leadership roles such as chief executive officer, chief financial officer, general counsel, director of health information management, director of human resources, physician practice office manager, if the services are rendered at a provider that furnishes items or services payable by Federal health care programs. Additionally, other administrative and management services, such as health information technology services and support, strategic planning, billing and accounting, unless wholly unrelated to Federal health care programs, would also fall under this prohibition.

The OIG goes even further in the 2013 Bulletin by clarifying that items and services furnished at the medical direction, or on the prescription of, an excluded person are also not payable when the person furnishing the items or services either knows or should know of the exclusion. This will particularly impact providers that furnish items and services on the basis of orders or prescriptions, such as laboratories, imaging centers, durable medical equipment suppliers, and pharmacies since. To avoid liability, providers are required to ensure, at the point of service, that the ordering or prescribing physician is not excluded.

The 2013 bulletin also serves as a reminder of the harsh repercussions for violation of the exclusion by an excluded person, including civil monetary penalties (“CMPs”) of $10,000 for each claimed item or service furnished during the period that the person was excluded, as well as an assessment of up to three times the amount claimed for each item or service. In addition, violation of any exclusion is grounds for OIG to deny reinstatement to Federal health care programs and can lead to criminal prosecutions or civil actions depending on the circumstances.

Providers that employ or enter into contracts with excluded persons to provide items or services payable by Federal health care programs can also be subject to CMPs of up to $10,000 for each item or service furnished by the excluded person for which Federal program payment is sought, as well as an assessment of up to three times the amount claimed, and program exclusion.

In order to assure that a provider is not hiring an excluded person, the OIG recommends that providers use the OIG-maintained List of Excluded Individuals/Entities database (“LEIE”), which is available on OIG’s web site here.  A provider may be able to reduce or eliminate its CMP liability if able to demonstrate that it reasonably relied on a check of the LEIE. Although there is no specific time frame required, the OIG recommends monthly checks of LEIE. As to which employees or contractors must be reviewed through the LEIE system, the OIG makes it clear that the risk of potential CMP liability is greatest for those persons that provide items or services integral to the provision of patient care because it is more likely that such items or services are payable by the Federal health care programs. For example, OIG recommends that providers screen nurses provided by staffing agencies, physician groups that contract with hospitals to provide emergency room coverage, and billing or coding contractors. Regardless of whether and by whom screening is performed, the provider is subject to overpayment liability for any items or 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.

Finally, the OIG’s 2013 Bulletin makes it clear that if no Federal health care programs pay, directly or indirectly, for the items or services being provided by an excluded individual, then a provider that participates in Federal health care programs can employ or contract with excluded individuals to provide such items or services. Additionally, a provider that employs or contracts with an excluded person to furnish items or services solely to non-Federal health care program beneficiaries would not be subject to CMP liability, as long as: (a) no claims are submitted to or payment is received from Federal health care programs for items or services that the excluded person provides; and (b) all such items or services relate solely to non-Federal health care program patients.

If providers do identify potential CMP liability on the basis of the employment of, contracting with, or arranging with an excluded person, the OIG’s Provider Self-Disclosure Protocol (SDP) is available to disclose and resolve the potential CMP liability.

Ericka L. Adler is a partner at the firm of Kamensky Rubinstein Hochman & Delott, LLP. Her primary practice focus is in the areas of regulatory and transactional health care law and she has substantial experience structuring sophisticated health care ventures and advising clients regarding compliance with federal and state health care laws and regulations. Ms. Adler lectures to and advises physicians, providers and other health care specialists nationally regarding regulatory health care issues, day to day practice management, physician contract matters and other business issues that impact healthcare. Ms. Adler has a J.D. and an LL.M in health care law from the Health Law Institute at the DePaul University College of Law. You can reach her at and can follow her on Twitter at @krhdhealthlaw.