Kusserow’s Corner: OIG Proposes Amendments to Exclusion Regulations

The HHS Office of Inspector General (OIG) has a wide variety of authorities to implement sanctions and exclusions against health care providers. The OIG also maintains its List of Excluded Individuals and Entities (LEIE), against which providers are expected to screen employees, health care professionals, vendors, contractors, and others with whom they do business. Submitting claims that include sanctioned individuals may be viewed as false and fraudulent. As such, screening for sanctioned individuals is considered a critical part of any compliance program. This is an area that warrants continued attention. On May 9, the OIG moved to modify its sanction authorities and issued a proposed rule that would: create early reinstatement procedures; clarify existing regulatory provisions; expand the “pay first claim rule” to Medicare Part C and D; and update regulations to codify changes pursuant to the Medicare Modernization Act and the Patient Protection and Affordable Care Act. The OIG is trying to ease the exclusion process to take into account extenuating circumstances that are not available now. It is accepting comments on this proposed rule change until July 8, 2014.

By way of background, the OIG currently, under section 1128 (b)(4) of the Social Security Act, has discretionary authority to exclude individuals from participating in federal health care programs, due to the loss of their health care license for reasons relating to their professional competence, performance, or financial integrity. The OIG notes that permissive exclusions often result in permanent exclusions, although the individuals may not have been charged with or convicted of criminal offenses. Consequently, excluded individuals may never become eligible for reinstatement, even when another state or another licensing board grants the excluded individual a license. The OIG has proposed to amend the regulations to allow early reinstatement, and to incorporate a list of factors that the OIG will consider when deciding whether reinstatement is appropriate. For example, the OIG will determine whether the individual has fully and accurately disclosed their actions to a licensing authority, obtained a health care license, permitted to retain a health care license in another state, or retained a difference health care license in the same state. For individuals who did not have a valid health care license, the OIG will assess whether the individual would no longer pose a threat to federal health care programs and their beneficiaries. Additionally, the OIG is consider applying a three-year benchmark to individuals excluded, where the individual could apply for reinstatement after three years, or when the individual regains his/her license, whichever comes first.

The OIG also proposed to expand the “pay first claim rule.” Currently, CMS makes payments for claims submitted by a Medicare enrollee when items or services are delivered by an excluded individual and the enrollee is unaware of the exclusion. Medicare must notify the enrollee and not pay claims after a reasonable time. Currently, the Code of Federal Regulations (CFR) limits this requirement to Medicare Part B. The proposed rule would modify the CFR to expand this to provision to Medicare Parts C and D. The proposed rule further adds information, which specifies that there is no time limitation to exclusions imposed under section 1128 of the Act. The OIG notes that exclusions under 1128 (b)(7) of the Act are often related to civil False Claims Act cases which are resolved through settlement or litigation much later than 6 years after the underlying conduct.

For information purposes, it is worth recalling that almost exactly a year ago OIG issued the Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs. It may be worth reviewing in light of these new proposed rule changes. At that time, the OIG addressed the scope and frequency of screening employees and contractors against the LEIE to determine if they are excluded from participation in federal health care programs. This update was also in an effort to make the entire process more user-friendly.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.