The Office of Inspector General (OIG) of the Department of Health and Human Services has issued new, non-binding “Criteria for Implementing Section 1128(b)(7) Exclusion Authority” updating the factors OIG will consider in deciding whether to exclude persons “whose continued participation in the [federal health care programs] constitutes a risk to the programs and their beneficiaries.” These are generally persons who have defrauded Medicare or another health care program in some way, such as being held liable under the False Claims Act. OIG imposes a rebuttable presumption in favor of exclusion against persons who have committed health care fraud. The new criteria, issued on April 18, 2016, describe the factors OIG will weigh in determining whether such a person falls on the high end of the compliance risk spectrum, thereby posing a continued risk to the federal health care programs and favoring exclusion, or on the low end of the spectrum, thereby making an alternative sanction more appropriate.

OIG has a range of administrative options it may exercise when settling a civil or administrative health care fraud case. Depending on the facts and circumstances presented, OIG may decide to exclude the person, implement heightened scrutiny, impose integrity obligations, take no further action, or, in the case of a good faith and cooperative self-disclosure, decline to exclude or impose integrity obligations. The updated factors OIG will consider in determining which of these options to pursue are categorized into four broad categories in the new guidance: nature and circumstances of conduct, conduct during the Government’s investigation, significant ameliorative efforts, and history of compliance. In considering the nature and circumstances of the conduct, the new guidance notably states that neither a lack of patient harm nor the absence of criminal sanctions will affect the risk assessment. The updated criteria also strongly emphasize the person’s level of cooperation and honesty during the conduct of the investigation, and the person’s prior history of compliance or similar behavior. For example, a person’s history of judgments, convictions, decisions or settlements in prior enforcement actions; prior refusal to enter into an integrity agreement; and current or prior conduct under a corporate integrity agreement are all considered indications of higher risk on noncompliance. Moreover, attempts to conceal conduct or obstruct or impede an investigation, or failure to comply with a subpoena in a reasonable amount of time are additional indicators of higher risk. The new criteria also specifically set forth that the existence of a compliance program that incorporates the United States Sentencing Commission Guidelines Manual’s seven elements of an effective compliance program “does not affect the risk assessment,” but that the absence of such a program “indicates higher risk.”

Finally, the new criteria place less of an emphasis on the ability of the person to practically or financially continue program participation than does the 1997 guidance, although the new guidance does mention in a footnote that whether a person is “a sole source of essential specialized items or services in a community or provides items or services for which there are no alternative or comparable services” will impact the risk and exclusion analysis. Additionally, the arm’s-length sale of a noncompliant entity to an independent third party with a history of compliance will indicate a lower risk profile. In sum, the updated criteria are forward-looking, in that they emphasize factors that indicate whether a person or entity is likely to pose a future threat to the federal health care programs in deciding on imposing exclusion or another remedy.