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Employing Excluded Individuals Can Cost You!

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Employing Excluded Individuals(August 27, 2012):  As you may know, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) has the statutory authority to exclude providers from participation in federal health care programs. An exclusion is arguably the most serious penalty OIG can levy (we’ve previously called it the “nuclear bomb” of health care enforcement) and in essence prohibits an individual from working in the health care industry at all.  There are two types of exclusions: mandatory and permissive. Under its mandatory exclusion authority, OIG must exclude an individual, and they have no discretion to reduce or withhold the punishment. Mandatory exclusions generally last for 5 years. Permissive exclusions, on the other hand, are at the discretion of OIG, taking into account the egregiousness of the conduct, the danger to the Medicare Trust Fund or patients, and the provider’s prior history. Many permissive exclusions are for 3 years, but OIG can shorten or lengthen this time period based on mitigating or aggravating factors.

II.  Employing Excluded Individuals:

But what if it’s not you that is excluded, but instead an employee you hire? Are you on the hook for employing this excluded person? The short answer is yes. Under the civil monetary penalties (CMP) laws, OIG has the authority to assess substantial fines and penalties for several violations, including employing excluded individuals when the employer “knows or should know” that the person was excluded. In most instances, the government takes the position that the employer should have known about an employee’s exclusion based on the provider’s affirmative obligation to check the OIG and GSA databases, and the relative ease with which these databases may be accessed and searched. The knowledge requirement for employing excluded individuals essentially aligns with those of the False Claims Act (FCA): actual knowledge, reckless disregard, or deliberate ignorance.

II. Penalties for Employing Excluded Individuals:

The range of penalties OIG might assess for employing excluded individuals range far and wide. In the end, it really depends on whether the excluded individual is providing reimbursable health services that can be tied to a specific claim. If a doctor who is excluded, for instance, submits claims, the CMP laws call for a $10,000 penalty plus three times the amount claimed (not the amount the government actual pays). If, instead, a biller is excluded and works for a company, OIG usually assesses the company the value of the employee’s salary, sometimes multiplied. So if an excluded biller was paid $40,000 over the course of his or her exclusion, the company could be subject to penalties of $40,000 – $80,000, depending on the culpability of the company.

III.  Important Compliance Steps:

To prevent your company from employing excluded individuals, you should take two steps. First, you need to ensure that your Compliance Plan is effective, up-to-date, and followed by your employees. Establishing and enforcing an effective Compliance Plan is currently the most important step a health care provide can take to reduce the penalties incurred from the government, and reduce the risk of penalties altogether. We’ve discussed Compliance Plan implementation at length, but it bears repeating: get your Compliance Plan today, before you get a knock on the door from government investigators or contractors.

The other important step relates specifically to screening excluded individuals. You should check your current employees on a regular basis. We recommend every six months for smaller providers and once a month for larger providers (usually those with their own dedicated Compliance Officer). A new employee should be screened before they are officially hired, and you should ask on your employment applications if an applicant has ever been excluded from Medicare/Medicaid. In addition, and we can’t stress this enough, get an applicant’s social security number. Names change; numbers don’t. In our experience, the most common reason an employer hires an excluded individual is because they didn’t check all the possible names the individual might have. Many folks use their maiden name or some other alias, or the person checking simply hasn’t spelled the name correctly! As a result, it is best practice to also take down the applicant’s social security number and ask about other names used, so that all of these possibilities can be searched in the databases. At the end of the day, the most concrete way to establish if someone is or is not excluded is through their social security number.

Healthcare LawyerRobert Liles, in our Washington, D.C. office, advises clients on healthcare fraud and abuse matters, including exclusions and CMPs. In addition, he assists providers in implementing effective Compliance Plans and represents clients in Medicare overpayment appeals. For more information or a free 30 minute consultation, call Robert today at: 1 (800) 475-1906.

2011 The Year of Compliance. Avoiding ZPIC Audits and ZPIC Suspension Actions

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ZPIC Audits and ZPIC Suspension Actions(January 11, 2011):  ZPIC audits and ZPIC suspension actions are a serious risk facing non-hospital providers today.  As you recall at the end of 2010 we identified the “Top Ten Health Care Compliance Risks for 2011.”  The purpose of this article is to analyze two of those risks; Zone Program Integrity Contractor (ZPIC) audits and ZPIC Suspension Actions. Over the next few days we will be discussing these two risk areas in-depth.



I. ZPIC Audit and ZPIC Suspension Actions are Here:

As discussed in our “Top Ten” article, we anticipate that ZPIC audit and ZPIC suspension actions will ratchet up in 2011.  At the close of 2010, there already appeared to be an increase in the use of suspension actions by ZPICs in South Texas and in other areas of the country.  In many instances, these actions were the result of sophisticated data mining techniques by ZPICs.  While cases are initiated in a variety of ways (including, but not limited to whistleblower complaints, anonymous reports to the government’s fraud hotline, etc.), data mining is a key tool relied on by ZPICs and government agencies for targeting purposes.

After analyzing the data, ZPICs often send out requests for information or conduct site visits of health care provider facilities.  These requests and / or site visits can result in medical reviews, demands for alleged overpayments, or lead to referrals to one or more government investigative agencies (such as the Department of Health and Human Services’ Office of Inspector General (OIG), the State Medicaid Fraud Control Unit (MFCU) and / or the Federal Bureau of Investigation (FBI)). Since established, ZPICs have clearly met their goal of developing “innovative data analysis methodologies for detecting and preventing Medicare fraud and abuse.”  Rather than pursuing merely administrative overpayment cases, over the last six months, we have noted an increase in the number of cases referred to law enforcement for fraud investigation.

II. ZPIC Zones in the United States:

While seven ZPIC zones have been identified, only three companies have been awarded ZPIC contracts at this time.  Where ZPIC contracts remain pending, Program SafeGuard Contractors (PSC) are typically still operating and are conducting essentially the same duties as their ZPIC counterparts.  The seven ZPIC zones include:

  • Zone 1- CA, NV, American Samoa, Guam, HI and the Mariana Islands.

  • Zone 2- includes; AK, WA, OR, MT, ID, WY, UT, AZ, ND, SD, NE, KS, IA, MO.

  • Zone 3-MN, WI, IL, IN, MI, OH and KY.

  • Zone 4-CO, NM, OK, TX.

  • Zone 5- AL, AR, GA, LA, MS, NC, SC, TN, VA and WV

  • Zone 6- PA, NY, MD, DC, DE and ME, MA, NJ, CT, RI, NH and VT.

  • Zone 7- FL, PR and VI

The following map reflects zones where the ZPIC contractor is currently operating.  Each of the ZPICs listed below are actively sending out requests for information and / or conducting site visits.  In a number of instances, the ZPICs have been noted to be suspending providers from the Medicare program based on variety of alleged statutory and / regulatory violations.ZPIC Audits and ZPIC Suspension Actions

ZPICs have been very active in their site visits which have brought about Medicare suspension actions. In some cases, these site visits have resulted in allegations of “fraud or willful misrepresentation” with ZPIC’s contacting of CMS for approval to place the provider on payment suspension.  In our next article, we will be examining the primary reasons cited by CMS when placing a provider on payment suspension status.

For a detailed discussion of the ZPIC audit process, please see:  ZPICs.

Liles Parker attorneys have extensive experience representing health care providers in ZPIC initiated actions.  Should your Physician Practice, Home Health Agency, Hospice Company, PT, OT or ST Clinic, Ambulance Company, Pain Clinic or Addiction Medicine provider may be audited by a ZPIC, give us a call for a free consultation.  We can be reached at: 1 (800) 475-1906.

Provider Exclusion Screening / OIG Screening Practices are a Significant Risk

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Provider Exclusion Screening(December 11, 2010):  Has your practice conducted exclusion screening / OIG screening on all of you employees?Earlier this week, HHS-OIG announced that it had assessed significant civil monetary penalties against a health care provider that employed seven individuals who the provider “knew or should have known” had been excluded from participation in Federal health care programs. These individuals were alleged to have furnished items and services for which the provider was paid by Federal health care programs.  The provider paid $376,432 to resolve these allegations. As Lewis Morris, Chief Counsel to the Office of Inspector General stated:

“Providers self-disclosing such violations will ultimately pay lower settlement amounts. . . But in cases initiated by the government — such as this one — providers will, as a matter of course, be required to pay more to resolve the matter.”

As Mr. Morris further noted:

“This case illustrates yet again that OIG will pursue CMPs when providers have employed an excluded person for the furnishing of items or services paid for by Federal health care programs,”

Notably, this matter was referred to HHS-OIG for investigation by the State Medicaid Fraud Control Unit (MFCU).

I.  Lessons to be Learned When Performing Exclusion Screening / OIG Screening:

This case illustrates a number of important lessons for all health care providers who participate in Federal Health Benefits Program, regardless of size. These lessons include:

OIG Screening employees is easy and quick: It takes very little effort for a provider to screen current and prospective employees against HHS-OIG list of excluded parties and GSA’ s list of parties who have been debarred from participation in Federal contracts. Notably, the failure to screen employees can be quite costly.

No mention of actual fraud or overpayment was mentioned in this case — Nevertheless, the employment of excluded individuals was found to be quite serious by HHS-OIG:   HHS-OIG won’t hesitate to pursue civil monetary penalties against a provider who employs excluded individuals, despite the fact that no mention is made of any wrongful billings. Regular screenings of your employees should be made to ensure that none of your employees have been excluded from participation.

The government is serious about self-disclosing problems: HHS-OIG’s Chief Counsel went out of his way to point out that provider’s who self-disclose will ultimately pay a lower amount of damages to the government. While we recognize the government’s preference in this regard, should you identify a problem, you should contact legal counsel before making a self-disclosure. HHS-OIG’s voluntary disclosure protocol has a number of requirements that should be fully assessed prior to deciding to make a disclosure under the program. To be clear, if you owe money to the government, you must pay it back. The issue to be resolved is how to go about returning any monies to which you are not entitled. Depending on the circumstances, a provider may be better off working with their Medicare Administrative Contractor to resolve a problem. In other cases, HHS-OIG’s protocol may be the best option. Every situation is different and should be carefully assessed before action is taken.

Federal and State law enforcement teams are coordinating their actions and findings: Notably, these violations were first identified by a State MFCU who then contacted HHS-OIG. Similarly, we are seeing State Medical Boards advising ZPICs of actions they are taking against licensed health care providers. In several cases, the State Medical Board found that the provider was either not providing adequate supervision over subordinate Nurse Practitioners and Physician Assistants. The ZPIC has then used this as a basis to argue that the claims did not qualify for Medicare coverage.

In summary, health care providers should continually be reviewing their compliance efforts to ensure that basic mistakes such as the ones in this case (failure to properly screen employees) do not occur.

Our attorneys represent health care providers around the country in connection with compliance issues.   Please feel free to contact us for a complimentary consultation.  We can be reached at: 1 (800) 475-1906.