Kusserow on Compliance: New program exclusion guidance issued by the OIG

On April 18, 2016, the HHS Office of Inspector General (OIG) announced at the Health Care Compliance Association (HCCA) conference in Las Vegas that it has issued new guidance, superseding that issued in 1997, regarding the process followed in determining whether a health care entity or practitioner should be excluded from participation in federal health care programs. The OIG advises that it evaluates health care fraud cases “on a continuum . . . of future risk to the federal health care programs.” Cases demonstrating high risk will result in program exclusion and cases with low future risk may result in a decision not to exclude. The OIG stated that “in the absence of egregious conduct such as patient harm or intentional fraud, relatively low financial harm weighs in favor of not requiring integrity obligations” through a Corporate Integrity Agreement (CIA) or a program exclusion. The OIG has provided advice on the steps that can be taken to mitigate enforcement action through program exclusion. It also “flags” the critical factors the OIG will use in assessing a provider’s or practitioner’s future risk to federal health care programs, as well as whether program exclusion to address high risk is necessary.

Tom Herrmann, JD, who served over 20 years in the Office of Counsel to the Inspector General, explained that “The authorities referred to in this guidance is grounded in law and regulations that were delegated to the OIG to exclude entities and individuals from participation in Medicare, Medicaid, and other federal health care programs. To fully appreciate the significance of this guidance, it should be read in conjunction with another OIG Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs, issued in 2013.”

Exclusions are of two types, “mandatory” and “permissive or discretionary.” It is mandatory under the law, if there is a conviction for a program-related crime or patient abuse/neglect. In the new transmittal, the OIG focused on permissive exclusions for conduct that is determined to constitute fraud, kickbacks, or another prohibited activity and sets forth the “non-binding criteria the OIG intends to use in evaluating exclusion. The OIG explains in the transmittal how a decision will be made on the appropriateness of program exclusion when there is a finding of liability or where the Department of Justice settles a case brought under the False Claims Act (FCA). In such a case, the OIG will presume that some period of exclusion should be imposed against such a party. It also notes, “this presumption in favor of exclusion is rebuttable in certain situations” and in the new guidance “sets forth circumstances in which the presumption may be rebutted and the non-binding factors that OIG will use to make such a determination.”

Often, upon resolution of a FCA case, the OIG and the defendant enter a CIA, where an entity or individual agrees to assume certain “integrity obligations in exchange for a release of OIG’s . . . exclusion authority.” Herrmann notes, “It is the OIG view that a CIA enhances their oversight and promotes the entity’s compliance program through integrity obligations that mitigate future risks. Entities who fail to enter into a CIA represent a continuing risk that necessitates their using other tools to mitigate compliance risks.”

The OIG will decide whether or not to impose program exclusion, based on its evaluation of the following factors:

  • nature and circumstances of the conduct at issue, including adverse impact on individuals and financial loss;
  • leadership role;
  • history of prior fraudulent conduct;
  • conduct during the investigation;
  • significant ameliorative efforts; and
  • history of compliance.

Herrmann finds it noteworthy that the OIG will usually give a release a person from exclusion without requiring a CIA when the person self-discloses the fraudulent conduct to the agency, and agrees to “robust integrity obligations” that the OIG determines sufficient to protect the federal health care programs. The new guidance should help those facing potential legal exposure under the FCA to decide on appropriateness of self-disclosing improper conduct involving federal health care programs. The OIG has provided transparency concerning their exclusion decision-making process. It also sends a message that encourages voluntary compliance efforts and the adoption of remedial measures in cases where there is legal exposure.

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 © 2016 Strategic Management Services, LLC. Published with permission.