On January 8, 2014, the Office of Inspector General (“OIG”) updated the List of Excluded Individuals and Entities (“LEIE”). According to the LEIE, over 66,000 health care providers are currently excluded from all Federal health care plans. Health care providers receiving funding from Federal health care programs must determine if potential and current employees are excluded. Searching the OIG’s LEIE is a simple but necessary task.1

What does “exclusion” mean?

Section 1128B(f) of the Social Security Act (“SSA”) defines a “Federal health care program” as “any plan or program that provides health benefits, whether directly, through insurance, or otherwise, and that is funded directly, in whole or in part, by the U.S. Government or a state health care program.” The OIG has the authority to exclude individuals and entities from Federally funded health care programs pursuant to Sections 1128 and 1156 of the SSA. There are two types of exclusions: permissive and mandatory.

Permissive exclusions:  the OIG has discretionary authority to exclude individuals and entities from participation in all Federal health care programs for a number of reasons, including but not limited to misdemeanor convictions relating to the unlawful manufacture, distribution, prescription, or dispensing of controlled substances; suspension, revocation, or surrender of a license to provide health care for reasons bearing on professional competence or financial integrity; submission of false or fraudulent claims to a Federal health care program; defaulting on health education loan or scholarship obligations; and controlling a sanctioned entity as an manager, officer, or owner. 

Mandatory exclusions:  the OIG is required by law to exclude from participation in all Federal health care programs individuals and entities on a number of grounds, including but not limited to conviction of Medicare or Medicaid fraud; patient abuse or neglect; felony convictions for other health care-related fraud, theft, or other financial misconduct; and felony convictions relating to unlawful manufacture, distribution, prescription, or dispensing of controlled substances. 

Permissive and mandatory exclusion results in exclusion from all Federal health care plans.2 These programs include Medicare, Medicaid, and all other programs funded directly or indirectly by the U.S. Government that provide health benefits, with the exception of the Federal Employees Health Benefits Plan.

What is the LEIE and why is searching the LEIE important? The LEIE is a list of all individuals and entities currently excluded by the OIG. The LEIE is available to the public and can be easily searched using the name of employees or entities.3 Once individuals or entities are reinstated, they are immediately removed from the LEIE. LEIE searches can be performed using the OIG’s Online Searchable Database or by downloading the LEIE Downloadable Database.4

Searching the LEIE is important because health care providers who hire an individual on the LEIE may be subject to civil monetary penalties (“CMP”). Section 1128A(a)(6) of the SSA states that CMPs may be imposed against health care providers and entities that employ or enter into contracts with excluded individuals or entities. Under the CMP authority, providers may face CMP exposure, as discussed more fully below, if they submit claims to a Federal health care program for items or services provided, directly or indirectly, by excluded individuals. CMP liability applies to all of the following: direct patient care, indirect patient care, administrative and management services, and items or services furnished at the medical direction or on the prescription of an excluded person when the person furnishing the services either knows or should know of the exclusion.

In order to avoid CMP liability, health care entities must routinely check the LEIE to ensure that potential and current employees are not excluded.

What are the effects of exclusion?

The principal effect of exclusion is that payment is prohibited for anything that an excluded individual furnishes, orders, or prescribes, and any administrative and management services furnished by the excluded individual. This prohibition extends to anyone who employs or contracts with the excluded individual.

The OIG provides an in-depth review of the effects of exclusion in its Updated Special Advisory Bulletin on the Effect of Exclusions From Participation in Federal Health Programs.5 The Bulletin sets forth the following specific instances where payment of items and services are prohibited with Federal health care program funds:

  • In general, payment of any items and services furnished by an excluded individual or entity are not reimbursable under Federal health care programs;
  • Payment of any items and services furnished at the medical direction or prescription of an excluded physician are not reimbursable when the individual or entity furnishing the services either knows or should know of the exclusion;
  • Payment for administrative and management services provided by an excluded individual that are not directly related to patient care, but that are a necessary component of providing items and services to Federal program beneficiaries;
      • Payment for administrative services, including the processing of claims for payment, performed for a Medicare intermediary or carrier, or a Medicaid fiscal agent, by an excluded individual;
      • Other types of administrative and management services, such as health information technology services and support, strategic planning, billing and accounting, staff training, and human resources, unless wholly unrelated to Federal health care programs.
  • Payment of an excluded individual's salary, expenses or fringe benefits, regardless of whether the individual provides direct patient care;
  • Payment for services performed by excluded nurses, technicians or other excluded individuals who work for a hospital, nursing home, home health agency or physician practice, where such services are related to administrative duties, preparation of surgical trays or review of treatment plans, even if the individuals do not furnish direct care to Federal program beneficiaries;
  • Payment for services performed by excluded ambulance drivers, dispatchers and other employees involved in providing transportation reimbursed by a Federal health care program, to hospital patients or nursing home residents;
  • Payment for services performed for program beneficiaries by excluded individuals who sell, deliver or refill orders for medical devices or equipment being reimbursed by a Federal health care program.

In addition to the scenarios listed above, the Bulletin provides additional clarification on the effect of an OIG exclusion. The Bulletin states that the payment prohibition applies to all methods of Federal health care program payment, whether from itemized claims, cost reports, fee schedules, a prospective payment system or bundled payment, or other payment system and applies even if the payment is made to a State agency or a person that is not excluded. The Bulletin provides the following helpful example of prohibited payment with Federal health care program funds:

     No payment may be made to an [entity] for the items or services furnished by an excluded nurse to Federal health care program beneficiaries, even if the nurse’s services are not separately billed and are paid for as part of a Medicare diagnosis-related group payment received by the [entity]. Also, the excluded nurse would be in violation of her exclusion for causing a claim to be submitted by the [entity] for items or services the nurse furnished while excluded. Are there exceptions?

There are limited exceptions.6 The OIG has issued Special Advisory Bulletins to explain and clarify the situations where a health care provider who receives funds from a Federal health care program may employ an excluded individual. In short, an entity that receives Federal health care funding may employ an excluded individual where the provider is both able to pay the individual exclusively with private funds or from other non-Federal funding sources and where the services furnished by the excluded individual relate solely to non-Federal program patients.

Most recently, the Bulletin7 provided the following guidance regarding the circumstances under which an excluded person may be employed by, or contract with, a provider that receives payments from Federal health care programs:

  • Federal health care programs do not pay, directly or indirectly, for the items or services being provided by the excluded individual;
  • A provider need not maintain a separate account from which to pay the excluded person, as long as no claims are submitted to or payment is received from Federal health care programs for items or services that the excluded person provides and such items or services relate solely to non-Federal health care program patients;
  • The health care provider may reduce or eliminate its CMP liability if it is able to demonstrate that it reasonably relied on the staffing agency to perform a check of the LEIE for the nurses furnished by the staffing agency (e.g., the staffing agency agreed by contract to perform the screening of the LEIE and the provider exercised due diligence in ensuring that the staffing agency was meeting its contractual obligation).

The Bulletins require that the excluded individual and Federal funds never overlap. In an effort to keep health care providers from CMP liability, the Bulletins set forth a number of situations where employment of an excluded individual could lead to CMP liability.

What are the consequences for employment of an excluded individual?

A provider who employs an excluded individual to provide items or services that are reimbursed by Federal health care program funds will be required to pay back 100 percent of the funds improperly received and may be subject to liability under the Civil Monetary Penalties Law.

The Bulletins and relevant sections of the SSA should be reviewed by all health care providers who receive funds from Federal health care programs to ensure liability is avoided.