Kusserow on Compliance: OIG cases involving sanctioned parties and tips to avoid violations

Compliance Officers must screen employees against the List of Excluded Individuals and Entities (LEIE). This is stressed in all of the OIG’s compliance guidance documents. CMS makes it a condition of participation and enrollment. The LEIE continues to change and grow with more than 3,000 exclusions added annually. Failure to screen employees, medical staff, contractors, and vendors results in a great risk. The OIG may consider claims that include work or products from a sanctioned party to be false and fraudulent. Violations can result in monetary penalties. Most cases that deal with this issue are brought to the OIG’s attention through the “Self-Disclosure Protocol.”  In all the recent cases posted, the OIG imposed penalties, but the penalties were mitigated by the fact the matters were self-disclosed—as a result, none of these cases resulted in a Corporate Integrity Agreement (CIA). The OIG posts a number of these cases on its website. The following are examples of recent actions against organizations that engaged individuals they knew or should have known were excluded from participation in the federal health care programs:

  • Southwest Trinity Management, LLC (STM), in Oklahoma paid $141,986.36 in settlement for employing an excluded licensed practical nurse that provided items or services that were billed to Federal health care programs.
  • Diamonds & Pearls Health Services, LLC (DPHS), Cleveland, Ohio paid $75,471.92 for employing an excluded individual who was a scheduling/staffing coordinator, provided items or services to DPHS patients that were billed to Federal health care programs.
  • Center for Ear, Nose Throat & Allergy, P.C. (CENTA) in Indiana, paid $51,564.14 for employing an excluded medical records file clerk, provided items or services to CENTA’s patients that were billed to Federal health care programs.
  • MHMR, Fort Worth, Texas, paid $97,869.78 for employing a program director who had been excluded to provide items or services to clients who were receiving services funded by a Medicaid waiver program.
  • Shawnee Health Services (Shawnee), Carterville, Illinois, paid $107,761.08 as result of employing an excluded individual as a case manager, provided items or services to clients that were receiving services under a Medicaid waiver program.
  • Arkansas Department of Health (ADH) paid $39,343.61 as result of employing an excluded hospice social worker that provided items or services to patients of a community based hospice operated by ADH.
  • Century Pharmacy (Century), Brooklyn, New York, paid $10,000 for an employed excluded individual, who assisted in filling prescriptions in addition to performing other clerical tasks, provided items or services to Century patients that were billed to Federal health care programs.
  • Sundance Behavioral Healthcare System (Sundance), Texas, paid $49,183.48 for an employed sanctioned licensed vocational nurse that provided items or services to patients that were billed to Federal health care programs.
  • ASAP Professional Home Health (ASAP), Houston, Texas, paid $21,797.76 for an employed excluded attendant, provided items or services to ASAP patients that were billed to Federal health care programs.

Practical Screening Tips

  1. Ensure periodic sanction screening of employees, medical staff, contractors, and vendors against the LEIE—best practice is monthly screening.
  2. Inasmuch as most states have developed their own exclusion database, with many states mandating monthly screenings, care should be taken to understand and meet state screening requirements.
  3. Inasmuch as most LEIE exclusions arise from another underlying court, state agency, or licensure board action, it is advisable to also conduct background checks and seek written assurances in applications that prospective employees, contractors, and vendors have not been subject to any prior court or licensure board actions.
  4. It is common for individuals that may be the subject of an investigation, but not yet sanctioned with final actions, to be under investigation for considerable time, therefore it is a best practice to require as a condition of employment, gaining staff privileges, or engagement for the applicant to attest that they have not been, nor are they now, the subject of an investigation by any duly authorized regulatory or enforcement agency. It is also advisable to add a condition that they must promptly report any notice of investigation that involves them.
  5. Educate and inform management and employees on their obligation to promptly report any notification of an adverse action by any duly authorized regulatory or enforcement agency.

Daniel Peake of the Compliance Resource Center (CRC) works with many organizations in ensuring proper sanction screening and from that experience offers a number of practical tips to avoid creating an actionable violation.  He can be reached at dpeake@strategicm.com or (703) 236-9850.

 

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2017 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Appealing exclusions–practical advice

Attorneys and consultants frequently have sanctioned clients desperately wanting to appeal and overturn the HHS Office of Inspector General (OIG) decision on exclusion, adding them to the List of Excluded Individuals and Entities (LEIE). The desperation is driven by the fact that exclusion is tantamount to putting them out of business. Few health care providers of services and products can function without access to federal health care programs and trying to continue servicing in that area after exclusion represents further violation of law with increased penalties.

Tom Herrmann, J.D., served over 20 years in the Office of Counsel to the Inspector General and as Appellate Judge for the Medicare Appeals Counsel and is frequently engaged to assist in Medicare appeals. He explained that there is, indeed, a process for appeal on exclusion to an HHS Administrative Law Judge (“ALJ”), the HHS Departmental Appeals Board (“DAB”), and ultimately the federal courts.  However, he warns that trying to appeal exclusions imposed by the OIG is not generally advisable, in that they are rarely overturned.  This is because most exclusion actions, both mandatory and discretionary, are derivative of a prior official action, whether it is court conviction or licensure board revocation.  Upon appeal, the underlying predicate action for exclusion may not be challenged through the established administrative and judicial review process.  The governing regulations provide further that an ALJ may not “review the exercise of discretion by the OIG to exclude an individual or entity under section 1128(b) of the Act, or determine the scope or effect of the exclusion.”   Moreover, the ALJ is prohibited from setting “a period of exclusion at zero, or reduce[ing] a period of exclusion to zero, in any case where the ALJ finds that an individual or entity committed an act described in section 1128(b) of the Act.”

Furthermore, an excluded party can affect entities with who affiliated. Should a provider permit an excluded party to be involved in services, it will create a liability to that organization.  As a condition of participation in Medicare/Medicaid, it is the affirmative duty and responsibility of the organization to ensure that any provider of services or products that is included in claims submitted for payment to those programs are licensed, qualified and NOT excluded.  To engage excluded parties places in jeopardy the entity’s status as a provider.  Furthermore, it is the OIG’s position that all claims submitted that include anything from a sanctioned provided may be considered false and potentially fraudulent.  Providers should take steps to avoid being poisoned by excluded parties.  Sanction screening can be a challenge because of multiple exclusion databases and variations of names and data.

Practical tips

Organizations should consider the following:

  • The fact that most exclusions arise from court or licensing agency actions underscores the importance of sanction screening and conducting background investigations prior to engaging employees, contractors, and vendors, to ensure they have not been subject to adverse actions by these authorities.
  • Screen parties before engaging them and thereafter periodically (e.g. monthly) against the LEIE or relevant State sanction lists.
  • Ensure data used in screening is accurate and up to date. Frequently, sanctioned parties disguise their exclusion with a name change (e.g. spouse surname), variations on name (particularly significant in the case of names that are transliterated).
  • Include on any application for employment or for medical privilege a statement that they are not under investigation and have not been subject of adverse action by any duly authorized enforcement agency.
  • Check the enrollment and exclusion status of physicians and other non-physician practitioners that routinely order or prescribe, as any services ordered or prescribed by an excluded health care practitioner will not be eligible for program payments.
  • If a party is verified to be on an exclusion list, take immediate action to terminate the party; determine the monetary exposure of the services involving that party that was billed to Federal health care programs; and disclose the findings to the OIG.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2017 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Factors OIG considers in deciding exclusions

The HHS Office of Inspector General (OIG) has authority exclude any individual or entity engaging in prohibited activities from participation in the federal health care programs, and add him or her to their List of Excluded Individuals and Entities (LEIE). The effect of this is that no payment may be made for any items or services furnished by an excluded individual or entity, or directed or prescribed by an excluded physician. This authority is anchored in legislation going back to 1977; the OIG was delegated authority to impose civil monetary penalties (CMPs), assessments, and program exclusion on health care providers and others determined to have submitted, or caused the submission of, false or fraudulent claims to the Medicare or Medicaid programs. During my 11-year tenure as Inspector General (IG), the administrative remedies were broadened to address additional types of misconduct. This has continued over the years.  Passage of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) amended and expanded the existing authority for the OIG to impose CMPs and exclusions.

 Factors in exclusion decisions

The LEIE database is very large, with 3,000 new exclusions being added annually. About half of the exclusions included in the database are for criminal convictions related to health care programs and for patient abuse or neglect. These are mandatory exclusion.  In addition, the OIG has discretionary authority to exclude for other types of misconduct, such as license revocation or suspension, exclusion or suspension from another federal or state health care program, provision of unnecessary or substandard services, fraud or kickbacks, and default on a health education loan.

Tom Herrmann, J.D. served over 20 years in the Office of Counsel to the Inspector General. He explained that when exercising its discretionary authority to exclude, the OIG takes into consideration a number of factors, including the following:

  • Nature and circumstances of conduct. This includes determining adverse physical, mental, financial, or other impact to program beneficiaries, recipients, or other patients.
  •  Financial loss. Conduct  that (1) was part of a pattern of wrongdoing; (2) occurred over a substantial period of time; (3) was continual or repeated; and (4) continued until or after the person learned of the Government’s investigation indicates higher risk.
  • Leadership role. If the individual organized, led, or planned the unlawful conduct.
  • History of prior fraudulent conduct. History of judgments, convictions, decisions, or settlements in prior enforcement actions, as well as (1) refusal to have entered into a corporate integrity agreement (CIA), (2) breach of a prior CIA, or (3) lies or failure to cooperate with the OIG while under a CIA.
  • Conduct during investigation. Any (1) obstruction in the investigation or audit; (2) taking any steps to conceal the conduct from the government; or (3) failure to comply with a subpoena.
  • Resolution. The inability to pay an appropriate monetary amount (including damages, assessments, and penalties) to resolve a fraud case.
  • Absence of compliance program. Absence of a compliance program that incorporates the seven elements of an effective compliance program.

Avoiding exclusion

There are a number of steps that can be taken to reduce the likelihood of the OIG exercising its discretion to exclude parties and put them on the LEIE. These include being able to evidence:

  1. Initiating internal investigation and sharing results before the government gets involved;
  2. Self-disclosing an internal investigation;
  3. Cooperating with the government, if it initiate an investigation;
  4. Taking appropriate disciplinary action against individuals responsible for bad conduct;
  5. Implementing an effective compliance program, prior to government investigation;
  6. Devoting increased/improved support for the compliance program; and
  7. Having in the past self-disclosed overpayments in good faith to the OIG and CMS.

LEIE sanction screening

Screening individuals and entities prior to engagement and periodically thereafter is not optional–it is a necessity.   The best practice is to screen monthly against the LEIE and any state exclusion database where business is conducted, in that CMS has set this as a standard for Medicaid Directors.   In addition to screening against the LEIE, most states require screening against their database of sanction parties. Often there are delays in resolution of cases, so that a party may not be included in a sanction database at time of engagement, but is added later. Furthermore, inasmuch as most state Medicaid Fraud Control Units report their criminal actions to the OIG, that in turn includes them in the LEIE, resulting in frequent cases of multiple hits for the same underlying action. This is further complicated by the fact that there are delays when actions by state agencies are reported to the OIG for their determination to add them to the LEIE.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2017 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: OIG expanded exclusion authorities go into effect

On February 13, 2017, the HHS Office of Inspector General (OIG) Final rule amending the regulations related to its exclusion authority goes into effect. It incorporates recent statutory changes, early reinstatement provisions, and recent policy changes, and clarifies existing regulatory provisions. It is the most substantial revision to the exclusion regulations in many years and reflects changes made by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) in 2010 and the Medicare Modernization Act (MMA) in 2003, as well as informal practices that the OIG has now codified in regulations. Most of the changes in the final rule are largely technical in nature; however they significantly expand and solidify the OIG’s authority to exclude providers.

The scope of OIG oversight now will move beyond claims submission based on the ACA’s permissive exclusion authority over an individual or entity that knowingly makes or causes to be made any false statement, omission, or misrepresentation of material fact in any application, agreement, bid, or contract to participate or enroll as a provider of services or supplier under a federal health care program. Under the new rules, the OIG’s authority has been extended to exclude based on the following:

  • conviction relating to obstruction of an investigation or audit;
  • failure to provide payment information by individuals who “order, refer for furnishing, or certify the need for” items or services paid for by Medicare or state health care programs;
  • those who refer patients or certify the need for items or services, even if they do not provide the items or services; and
  • making false statements or misrepresenting material facts in applications to participate as a provider or supplier under a federal health care program.

The OIG also will now consider materials obtained from various entities, including CMS, state Medicaid agencies, fiscal agents or contractors, private insurance companies, state or local licensing or certification authorities, and law enforcement. This information may be considered in determining the length of exclusion.  Also, a number of technical changes were made regarding key terms, such as replacing the language “who submit claims to” with “who request or receive payment from” in the definitions of “directly” and “indirectly,” thereby clarifying the scope of individuals and entities subject to oversight by the OIG.

The OIG may impose exclusion up to a 10-year period from the time the conduct occurred. It may consider a request for a waiver from a federal health care program administrator, as opposed to only waivers submitted by state health care program administrators. It also makes several changes to the aggravating and mitigating factors that the agency considers in determining whether to increase the length of exclusion above the minimum required. Mitigating factors are only considered if OIG has established one or more aggravating factors. Other changes include:

  • updating the dollar amounts for aggravating and mitigating factors that consider the financial loss to federal health care programs as a result of the misconduct from $15,000 to $50,000;
  • reworking the existing aggravating factors regarding other offenses to include considering adverse actions based on offenses separate from those forming the basis of the exclusion and adverse actions based on the same offenses; and
  • removing the mitigating factor related to availability of alternative sources of the type of health care items or services furnished by the person.