The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) issued an updated “Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs ” (Updated Bulletin) on May 8, 2013, answering certain questions the OIG has received from providers and suppliers regarding exclusions and addressing other issues related to exclusions. The Updated Bulletin follows on a Special Advisory Bulletin regarding the same topic published by the OIG in September 1999. Since the OIG issued the 1999 Special Advisory Bulletin, Congress has enacted various statutory provisions that have strengthened the OIG’s authority to exclude individuals from federal health care programs and impose civil monetary penalties (CMPs) related to exclusion. The OIG states that in the development of the Updated Bulletin, it also relied on comments it received in response to a 2010 solicitation of comments on this topic.

The Updated Bulletin reflects a continuation of the OIG’s expansive view of the scope of the federal exclusion authorities, particularly relating to the prohibition against employing or contracting with excluded individuals and entities. The bulletin explains the statutory background of the exclusion and CMP authorities; describes the effect of exclusion; emphasizes the implications of violations of exclusion by an excluded individual and the implications for violating the prohibition against employment or contracting with an excluded individual for the furnishing of items or services paid for by a federal health care program; explains the scope of what conduct involving excluded individuals may lead to overpayment liability and CMPs; and provides guidance to providers and suppliers regarding how to screen for excluded individuals.

In the Updated Bulletin, the OIG clearly explains its broad interpretation of the prohibition on federal health care program payment for any items or services furnished by an excluded person or at the medical direction or on the prescription of an excluded person. The OIG points out that this prohibition applies to all methods of federal health care program payment. For example, as the OIG states in the Updated Bulletin, the prohibition would apply to an excluded nurse furnishing services to federal health care program beneficiaries in a hospital, even if the nurse’s services are not separately billed to a federal health care program. Further, the OIG makes clear that this prohibition would also apply to an individual who switches professions within the health care industry (e.g., if the OIG excluded an individual as a pharmacist, and that individual then trained to become a nurse, payment for any items or services furnished by the individual while performing the duties of a nurse would be prohibited). The OIG also explains that the prohibition would include items and services beyond direct patient care, such as the preparation of surgical trays, the review of treatment plans, and the order entry of prescriptions for pharmacy billing purposes. In addition, the Updated Bulletin explains that excluded persons may not furnish administrative or management services that are payable by federal health care programs. Moreover, an excluded individual serving in a leadership role, providing health information technology support, or facilitating human resources would violate the prohibition on payment.

In response to a question, the OIG’s Updated Bulletin addresses whether providers such as laboratories, pharmacies, and imaging centers are subject to liability if they furnish an item or service ordered by or prescribed by an excluded individual. The OIG asserts that such providers could be subject to liability and instructs that in order to avoid liability, such providers “should ensure, at the point of service, that the ordering or prescribing physician is not excluded.”

The OIG also explains that if an excluded individual owns more than a five percent ownership interest in a provider, that provider is potentially subject to permissive exclusion.

In a view that seems to exceed the scope of the applicable regulations, the Updated Bulletin explains that potential CMP liability for contracting with or employing an excluded individual could result even if the provider does not pay the excluded individual for his or her services. For example, the bulletin states that CMP liability could be triggered if a provider’s claim to a federal health care program includes any items or services furnished by an excluded health care professional who works at a hospital or nursing home as a volunteer. (Notably, the OIG broadly interpreted the prohibition for contracting with or employing an excluded individual in the 1999 Bulletin, but has not subjected its previous or current interpretation to notice and comment rulemaking.)

In a footnote, the OIG remarks that a hospital may reduce or eliminate its CMP liability if it can demonstrate that it reasonably relied on a staffing agency to conduct screenings of excluded individuals, and gives the example that such reliance may be demonstrated by contractual language showing that the staffing agency agreed to screen individuals and the hospital exercised due diligence to ensure the staffing agency met this obligation. The OIG later recommends that any provider that relies on contractors to perform exclusion screenings, such as a staffing agency, physician group, or third-party billing or coding company, validate that such contractor performs exclusion screenings by, for example, requesting and maintaining screening documentation from the contractor. Finally, the OIG emphasizes that regardless of whether a screening is performed, who performs a screening, and the relationship between the provider and the excluded individual (e.g., contractor, volunteer, employee), the provider would be liable for overpayments related to an excluded individual and may be subject to CMP liability.

Finally, the OIG provides guidance regarding screening individuals to determine whether a person is excluded from participation in the federal health care programs. In sum, the OIG recommends that providers check the List of Excluded Individuals and Entities (“LEIE”) prior to employing or contracting with persons and then “periodically” during the course of employment or a contract. While the OIG points out that there is no statutory or regulatory requirement to check the LEIE, it states that “screening employees and contractors each month best minimizes potential overpayment and CMP liability.” The Updated Bulletin also notes that CMS issued a State Medicaid Director Letter in 2009 that suggested states require providers to screen all employees and contractors monthly. The OIG also notes that it has received questions regarding whether the U.S. General Services Administration’s System for Award Management database or other sanctions databases should be used in addition to or instead of the LEIE to determine whether a provider has any sanctions against him or her. The OIG recommends that providers rely on the LEIE as the primary database for the purposes of exclusion screening.