On April 18, 2016, the Health and Human Services Office of Inspector General (OIG) released updated guidance related to the criteria it may use for evaluating its permissive exclusion authority under Section 1128(b)(7) of the Social Security Act. This guidance replaces guidance previously released by the OIG in 1997. All of the OIG’s special advisory bulletins and guidance documents related to its exclusion authority can be found here.

The OIG stated that in determining where a person or entity falls on the “compliance risk spectrum”, thereby determining whether exclusion should be pursued, the OIG will consider the following four risk areas:

  1. Nature and circumstances of the conduct. Adverse impact on individuals; actual or intended financial loss to federal health care programs; conduct that demonstrates a pattern of wrongdoing, occurrence over a substantial period of time, or continual or repeated conduct, or ongoing conduct; whether management was involved in the conduct; and history of prior fraudulent conduct, including a prior corporate integrity agreement (CIA), indicate a higher risk on the compliance risk spectrum.
  2. Conduct during the Government’s investigation. Obstructing or impeding, or attempting to obstruct or impede, an investigation, taking steps to conceal conduct, and failing to comply with a subpoena in a reasonable time period indicate a higher risk on the compliance risk spectrum. Additionally, an adverse licensure action, criminal resolution, and inability to pay monetary sanctions to resolve a fraud case indicate a higher risk on the compliance risk spectrum. Self-disclosing problematic conduct, conducting an internal investigation and sharing the results with the government, and cooperation with the government demonstrate a lower risk on the compliance risk spectrum.
  3. Significant ameliorative efforts. Disciplinary action, devoting significantly more resources to the compliance function and similar activities indicate a lower risk on the compliance risk spectrum.
  4. History of compliance. The absence of a compliance program that incorporates the U.S. Sentencing Commission Guidelines Manual’s seven elements of an effective compliance program indicates a higher risk on the compliance risk spectrum. A prior history of significant self-disclosures made appropriately and in good faith to OIG, the Centers for Medicare & Medicaid Services (CMS) or CMS contractors indicates a lower risk on the compliance risk spectrum.

Exclusion is undeniably one of the most severe sanctions that can be imposed on an individual or entity participating in the federal health care programs. This guidance, coupled with the OIG’s announcement in July 2015 establishing a special litigation team devoted solely to civil monetary penalty (CMP) and exclusion cases, makes it clear that OIG intends to use its exclusion authority to exclude high risk individuals and entities from participation in federal health care programs.