A proposed rule published in the Federal Register on May 9, 2014 would amend the authority of the Department of Health and Human Services Office of Inspector General (“OIG”) to exclude health care providers and suppliers from participation in Federal health care programs. The proposed revisions to the OIG’s regulations on exclusion would codify changes made by the Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (“ACA”), which expanded the OIG’s authority to protect Federal health care programs from abuse. The proposed revisions would also implement updates pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) and other statutory authorities, and would make technical changes to clarify and update the regulations.

Under current regulations, the OIG has both mandatory exclusion authorities and permissive exclusion authorities. The mandatory exclusion authorities require the OIG to exclude from participation in any Federal health care program a person convicted of: (i) a “program-related” crime, (ii) a crime related to patient abuse or neglect, or (iii) certain felonies related to health care delivery, governmental health care programs, or controlled substances. Mandatory exclusions are for a set period of time, ranging from a minimum of five years to permanent exclusion for persons convicted of a certain number and type of repeat offenses. Under its permissive exclusion authorities, the OIG has the discretion to impose “derivative” exclusions based on actions taken by a court or agency as well as “affirmative” exclusions based on OIG-initiated determinations of misconduct, such as kickbacks or submission of false claims. There are varying minimums and benchmarks for some permissive exclusions, but permissive exclusions do not automatically carry a five-year minimum as mandatory exclusions do. The effect of an OIG exclusion is 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 or on the prescription of an excluded person.

Some of the more significant changes to the OIG’s exclusion authorities under the proposed rule include:

  • Expansion of the permissive authority to allow exclusion for obstruction of an audit. The OIG currently has the authority to exclude an individual or entity that has been convicted of an offense in connection with the obstruction of an investigation into any criminal offense related to health care fraud or fraud in a government program. However, the current regulations do not allow the OIG to exclude a person for obstructing an audit rather than investigation. The proposed rule would add this authority.
  • Expansion of the permissive authority to allow exclusion of a person who orders, refers for furnishing, or certifies the need for items or services. The OIG currently has the authority to exclude an individual or entity who “furnishes” items or services for which payment may be made under Medicare or a state health care program. The proposed rule would expand the OIG’s authority to exclude persons “ordering, referring for furnishing, or certifying the need for” such items or services.
  • Establishment of a new permissive authority to allow exclusion of persons who knowingly make false statements. The ACA granted the OIG a new permissive authority to exclude any individual or entity that knowingly makes or causes to be made any false statement, omission, or misrepresentation of a material fact in any application, agreement, bid, or contract to participate or enroll as a provider of services or supplier under a Federal health care program. The proposed rule would codify this change.
  • Expansion of Centers for Medicare and Medicaid Services (CMS) Authority to Pay Claims for Items or Services Furnished by an Excluded Individual. The current regulations authorize CMS to pay claims submitted by a Medicare enrollee for items or services furnished by an excluded individual if the enrollee did not know or have reason to know that the provider or supplier was excluded from Medicare participation. While Medicare must notify enrollees of exclusions and cease paying the applicable claims within a reasonable time after notification, CMS’ authority to pay such claims is intended to protect Medicare enrollees who unwittingly receive items or services from an excluded party. The current regulation, enacted prior to the implementation of Medicare Parts C and D, applies only to claims submitted by enrollees in Medicare Part B. The proposed rule would expand CMS’ authority to allow it to pay for claims submitted by enrollees in Parts C and D as well. (Enrollees do not submit claims under Medicare Part A.)
  • Addition of Testimonial Subpoena Authority. Prior to enactment of the ACA, the OIG could issue testimonial subpoenas only in cases in which it was pursuing civil monetary penalties (“CMP”) under section 1128A of the Act. The proposed rule would expand the OIG’s authority so that it may issue testimonial subpoenas when pursuing potential exclusions that do not necessary carry a CMP.