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Proposed Rule Seeks the Expansion of OIG’s Exclusion Authority

The expansion of OIG's exclusionary authority is significant.

(July 15, 2014): On May 9, 2014, the Department of Health and Human Services, Office of Inspector General (OIG) published a Proposed Rule in the Federal Register (79 Fed. Reg. 26810) that seeks the expansion of OIG’s exclusionary authority. The new rule is consistent with previous statutory changes passed as part of the Affordable Care Act (ACA).  The expansion of OIG’s exclusionary authority is significant.  Providers and suppliers participating in Medicare, Medicaid and other federal / state health benefits programs need to fully understand the new reasons that may be relied upon by OIG when excluding an individual or entity.  Additionally, providers, suppliers and their affiliated contractors must know how to conduct a thorough screening to ensure that they are not employing an excluded party.  An overview of the primary purpose of the expansion of OIG’s exclusionary authority is discussed below.

I. Primary Purpose of this Proposed Expansion of OIG’s Exclusionary Authority:

Passage of the ACA has resulted in the expansion of OIG’s exclusionary authority.  Simply put, OIG’s authority to exclude individuals and entities involved in misconduct from federal health care programs has signficantly broadened.  The purpose behind exclusion is to protect beneficiaries from untrustworthy health care providers suspected or implicated in Medicare fraud.

OIG has authority to impose mandatory and permissive exclusion. Mandatory exclusions are for a period of at least 5 years. The OIG is required to exclude those who commit more serious or repeated offenses. Permissive exclusions apply to specified categories of misconduct, and can have minimum benchmarks and timelines, depending on the basis for exclusion. OIG generally has discretion to determine whether to impose an exclusion and what the appropriate duration of an exclusion should be.

To decide how long a proposed exclusion period will last, HHS-OIG will use a set of factors. The same factors will also be used to determine recommended penalties and assessments, which generally accompany exclusion.

II.  Codifying ACA Provisions Pertaining to Exclusion:

The Proposed Rule implements several provisions of the ACA that authorize OIG to exercise permissive exclusionary authority over individuals and organizations that obstruct audits, fail to supply payment information, or make false statements.

  • Obstruct Audits.  The ACA extended the OIG’s existing discretion to exclude an individual or entity who was convicted of an offense in connection with obstruction or interference with an audit. A conviction regarding an audit obstruction is usually part of a plea bargains or settlement concerning a Federal health care investigation, such as direct or indirect misuse of funds.

  • False Statements.  The OIG has proposed a provision incorporating the ACA’s grant of authority to exclude any individual or entity that makes false statements, omissions, or misrepresentations of material facts in applications to participate as a provider or supplier under a Federal health care program.

  • Failure to Supply Payment Information.  The OIG proposes to impose exclusions for failure to supply payment information for items or services for which payment may be made under Medicare or any State health care program. Originally this provision applied to those individuals who furnish items or services for payment. The ACA expanded it to also apply to individuals who “order, refer for furnishing, or certify the need for,” items or services for payment.

  • Issuance of Testimonial Subpoenas. Another proposed change would allow OIG to issue testimonial subpoenas in investigations for exclusions, which the OIG already had the right to do under its Civil Monetary Penalty (CMP) authority.

III.  Other Propositions to Consider:

In addition to the changes under the ACA, OIG proposed a modification to the waiver authority and reinstatement rules for individuals excluded as a result of losing their licenses. This is to allow them to rejoin Federal healthcare programs earlier, when appropriate.  The OIG has also recommended removing the statute of limitations on exclusion actions based on the false or improper claims provision of the Social Security Act. Finally, the OIG’s proposes modified procedures for exclusionary proceedings, including updates and clarifications to certain aggravating and mitigating factors.

IV.  A Simple Solution to Protect Your Healthcare Organization:

Even though most of the Proposed Rule simply codifies changes from the ACA, the new regulation will still expand OIG’s ability to effectively utilize its exclusion authority to combat alleged healthcare fraud and abuse.  How can you best avoid potential penalties for the wrongful employment or engagement of an excluded individual of entity?  If you participate in Medicare, Medicaid or other federal / state health benefits programs, you need conduct regular, periodic screening of all available exclusion databases.  At last count, there are 40 different federal and state databases that list individuals and entities that have been excluded from Medicare, excluded from Medicaid or debarred from doing business with the government.  An excellent low-cost option to perform these OIG screening / exclusion screening functions is Exclusion Screening.  Their website is located at: www.exclusionscreening.com

Robert W. Liles

Robert W. Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Liles Parker attorneys represent health care providers around the country in connection with both regulatory and transactional legal projects. For a free consultation, call Robert at: 1 (800) 475-1906.

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