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HHS-OIG Issues New Guidance on the Effects of Exclusion from Participation in Federal Health Benefits Programs

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federal health care (May 21, 2013) On May 8, 2013, the Office of Inspector General of HHS (OIG) issued a Special Advisory Bulletin on the effects of exclusion from participation in Federal health care programs.  As background, among other things, the statute prohibits payment for services under a Federal health care program that are provided by excluded individuals.  Additionally, the statute also provides for the imposition of CMPs against providers that employ or enter into contracts with excluded persons to provide items or services payable by Federal health care programs.

The statute has been interpreted broadly to cover direct and indirect payments.  Thus, it has been considered a violation of the prohibition for an excluded person to deliver services even where the payment is not made directly for the payment for the services that the excluded person provides, e.g. where a hospital employs an excluded nurse to provide inpatient hospital services that are reimbursed under Medicare inpatient PPS.  For this, and many other, reasons knowledgeable attorneys have advised clients to check whether their employees and contractors are listed as excluded on the OIG’s List of Excluded Individuals and Entities (LEIE) at, both at time of employment or contracting, and also periodically.  This would include, for example, checking employees who service a facility on a temporary basis.  Knowledgeable counsel have also recommended including a requirement in its  contract with an entity with which a provider contracts that the contractor performs the screening of its employees periodically, and the provider should periodically monitor the performance of this function by that entity.  Finally, knowledgeable counsel have included a review of a target’s compliance with this requirement as part of its due diligence in an acquisition.[1]

The Special Advisory Bulletin answers a number of questions in greater specificity than previously.  For example, many providers questioned how frequently they must screen their employees and contractors after hiring or retention.  Although the Bulletin states that there is no frequency required by statute or regulation, it indicates that the LEIE is now updated monthly.  The OIG thus recommends that providers screen their employees and contractors against the LEIE at hiring or contracting (or at time of use in the case of workers retained through a temporary agency), and on a monthly basis.

The Bulletin also suggests that the LEIE be the primary source of information about HHS-OIG exclusions because, although the GSA’s SAM list lists HHS-OIG exclusions as well as debarment actions taken by other agencies, it does not contain the same level of detail as the LEIE.  Additionally, the Bulletin recommends that where a provider relies on a contractor to screen its employees and includes a provision to this effect in the contract, that it validate that the contractor is conducting screening by such mechanisms as requesting and maintaining screening documentation by the contractor.  Moreover, the Bulletin makes clear that the prohibition covers services performed by volunteers.

Liles Parker attorneys are experienced in issues such as the prohibition on billing Federal health programs for services provided by excluded individuals, protecting providers from violating that provision as part of their compliance programs and in due diligence in acquisitions, and in addressing violations that they discover.  Any person having questions in the area should contact Michael Cook for a free consultation at (202) 298-8750


[1] Often this has also included checking a target’s compliance with screening of employees and contractors not only on the LEIE, but also on the GSA’s excluded person’s list (GSA EPLS which was recently merged into another list referred to as the SAM,

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.