On May 8, 2013 the U.S. Department of Health and Human Services Office of the Inspector General (OIG) updated its Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (Bulletin). The original Bulletin was issued in 1999 to provide guidance to excluded persons and providers that might contract with or employ them. The original Bulletin addressed 1) the scope of the prohibition on an excluded person furnishing federal covered services, 2) when the provider might be subject to civil monetary penalties (CMP) for violating the prohibition, and 3) how to determine whether a potential employee or contractor was excluded.

While updated the Bulletin largely reaffirms the OIG’s earlier Bulletin on the effects of exclusion, it reflects the post-1999 statutory amendments that broaden the OIG’s authority to exclude, and it addresses many questions that have arisen after more than a decade of experience. The newly-issued Bulletin supersedes the 1999 version and provides several notable clarifications:

  • The Bulletin reaffirms that no Federal health care program payment may be made for any items or services furnished (1) by an excluded person or (2) at the medical direction of an excluded person. This payment prohibition applies to all forms of Federal health care program payment.

  • The Bulletin gives new examples of prohibited payments, focusing especially on (1) items and services beyond direct patient care and (2) administrative and management services. An excluded individual may only provide services that are “wholly unrelated to Federal health care programs.”

  • Services are not payable if furnished at the medical direction of, or on the prescription of, an excluded person if the provider furnishing the items or services “knows or should know of the exclusion.” The burden is on the provider to ensure that an ordering or prescribing physician is not excluded. If the provider is relying on a third party to screen for exclusion, it should validate that the screening is being conducted. The OIG notes that the provider retains the CMP liability if it employs or contracts with an excluded person.

  • The Bulletin addresses the risks associated with an excluded person maintaining an ownership interest in any provider. Any provider owned in part (5% or more) by an excluded person is potentially subject to exclusion.

  • The Bulletin reaffirms the CMP ($10,000 for each claimed item or service, plus an assessment of up to three times the amount claimed) and the risk of exclusion that a provider faces if it employs or contracts with an excluded person. It also notes that such exclusion violations may lead to criminal prosecutions or other civil actions in addition to CMP (such as under the False Claims Act). Such liability exists even if the excluded person volunteers his or her services to the provider.

  • The Bulletin offers guidance on how and when to use government tools to identify excluded persons, including other specific government exclusion and debarment lists, and recommends that providers use the OIG’s List of Excluded Individuals and Entities (LEIE) database as the primary source, noting that it is updated monthly.

  • Providers that identify potential CMP liability on the basis of employing, contracting, or arranging with an excluded person may use the OIG’s Self Disclosure Protocol (SDP) to disclose and resolve the potential CMP liability. The April 2013 revision of the SDP includes specific information for conduct involving excluded persons.