Providers and manufacturers have worked diligently to comply with the OIG’s guidance on employing or engaging individuals who have been excluded from participation in Federal health care programs for well over a decade. And for the first time since 1999, the OIG has updated its Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (the SAB) in an effort to both clarify and expand the agency’s existing directives. Accordingly, companies that provide items or services for which payment may be made under Federal health care programs will be better situated to evaluate their existing screening protocols for excluded individuals to mitigate the risks of civil monetary penalties (CMPs) or payment denials.

By now, the directive that no Federal health care program payment may be made for items or services furnished by an excluded person, or at the medical direction or on the prescription of an excluded person, has become firmly engrained across the industry. Regardless, ensuring compliance with this seemingly straightforward prohibition has generated numerous practical questions to the OIG. For example:

  • May an excluded person provide an item or service that a health care provider needs but that is not for direct patient care or billing? Is a provider that employs or contracts with an excluded person to provide such item or service subject to CMP liability?
  •  What is the scope of the obligation to screen current and potential employees and contractors against OIG’s List of Excluded Individuals and Entities (LEIE) to determine whether they are excluded? How frequently should providers and manufacturers screen against the LEIE? How far downstream do they need to screen? In other words, is there an obligation to screen the employees of contractors and subcontractors in addition to screening contractors?
  • How should a provider or manufacturer disclose to the OIG that it has employed or contracted with an excluded person?

The ramifications of reaching the wrong answer to these questions can be significant, as providers and manufacturers that arrange or contract with a person that the organization knows or should know is excluded by OIG may be subject to CMPs, an assessment of up to three times any amounts claimed for payment from a Federal health care program, in addition to program exclusion.

Although the updated SAB provides some welcome clarification, the OIG’s responses also force providers and manufacturers to reconsider the scope of their existing screening programs. Most notably, the SAB underlines the fact that the OIG’s payment prohibition extends to all items or services paid for by a Federal health care program (and not just to payments for direct patient care services). The agency also notes specifically that its payment prohibition is applicable to management or administrative services that may not be directly reimbursable, such as “health information technology services and support, strategic planning, billing and accounting, staff training, and human resources . . .” As a practical matter, this means that “an excluded individual may not serve in an executive or leadership role (e.g., [CEO, CFO,] general counsel, director of health information management, director of human resources, physician practice office manager, etc.)” at a provider or manufacturer that furnishes items or services payable by Federal health care programs. The OIG’s other examples of non-patient care services to which its payment prohibition will apply highlight additional operational challenges for the following:

  • Excluded individuals who prepare surgical trays or review treatment plans for hospitals, nursing homes, home health agencies, or managed care entities;
  • Excluded pharmacists or other excluded individuals who input prescription information for pharmacy billing;
  • Members of a hospital’s medical staff, even if they do not receive any compensation from the hospital for services, if they participate in any way in the furnishing of covered services; and
  • Excluded health care professionals who volunteer at hospitals or nursing homes.

Accordingly, the updated SAB appears to expand the universe of employees and other individuals that providers and manufacturers need to screen against the LEIE for risk management purposes. For example, the OIG recommends that providers and other entities that furnish items or services on the basis of physician orders or prescriptions (such as pharmacies, laboratories, and durable medical equipment suppliers) take steps to ensure that the ordering or prescribing physician is not excluded from participation. The OIG also notes that providers and manufacturers should apply the same analysis that would be used for their own employees when determining whether to screen contractors, sub-contractors, and employees of such downstream companies. This means that providers and manufacturers should “review each job category or contractual relationship to determine whether the item or service being provided is directly or indirectly, in whole or in part, payable by a Federal health care program” and screen all persons that fall into that job category (which may include individuals who are two or three contracts removed). Since the provider or manufacturer will ultimately remain subject to any financial liability for items or services furnished by an excluded person, the risk management benefits of the OIG’s proposed screening model may ultimately justify any increased costs or administrative burdens.

The updated SAB also provides welcome clarification on several other technical points, such as which federal databases should be used for screening purposes and whether providers and manufacturers should use the OIG’s newly updated self-disclosure protocol to report non-compliance. As such, entities in the health care space will, at the very least, need to assess their current screening procedures for compliance with the OIG’s revised directives. Providers and manufacturers should recognize that the updated SAB highlights the OIG’s willingness to sanction entities that cannot or will not comply with its program exclusion policies. Going forward, the industry will also be on notice that implementing a robust screening strategy, as proposed by the OIG, is likely to be a costly and burdensome process, especially for those entities that depend on referrals from other health care providers.