May 2007 Newsletter
Exclusion, Exception, Ejection:
Does Your Compliance Plan Address Sanctioned Individuals and Entities?
By:
Corporate Compliance Officer
 The model compliance program issued by the Office of Inspector General (OIG) has identified that employment of sanctioned individuals is a risk area that all healthcare providers and entities must address. The OIG has authority to exclude from participation in Medicare, Medicaid, and other federal healthcare programs individuals and entities that have engaged in fraud or abuse and to impose civil monetary penalties (CMP) for certain misconduct related to federal healthcare programs. The General Services Administration (GSA) also maintains a list of parties “debarred, suspended, proposed for debarment, or declared ineligible by agencies or by the General Accounting Office.”
Exclusion from federal healthcare programs, as well as employing an excluded individual or contracting with an excluded individual or entity, may have very serious consequences for healthcare entities. Items or services provided by excluded individuals or entities are not covered by the federal healthcare programs and payments made for such items and services are generally considered to be overpayments. In addition, no payment will be made for any items or services furnished at the direction of an excluded individual. The payment ban also extends to administrative and management services not directly related to patient care, but that are necessary for providing items and services to federal program beneficiaries.
Excluded healthcare providers that submit, or cause to be submitted, claims to federal healthcare programs for reimbursement may be subject to civil monetary penalties of $10,000 per item or service and may be subject to treble damages. The entity could also face additional penalties for filing false claims. A violation of the False Claims Act can result in penalties of up to $11,000 per claim, plus three times the amount of the damages that the government sustains.
Healthcare entities must establish mechanisms and procedures for regularly monitoring the lists of excluded entities and individuals. Excluded and debarred individuals and entities can be identified by referencing the OIG’s List of Excluded Individuals/Entities at http://exclusions.oig.hhs.gov/ and the U.S. General Services Administration’s Excluded Parties List System at http://www.epls.gov/.
Exclusion Timeline
Section 1128 of the Social Security Act (“the Act”) (42 U.S.C. § 1320a-7) contains the exclusion authority for the Medicare and Medicaid programs. As initially written, section 1128(a) required the OIG to exclude from the programs any individual or entities convicted of a program related crime or of patient abuse or neglect.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-91, amended the exclusion provisions of the Act to strengthen the OIG’s sanction authority. The mandatory exclusion provisions were expanded to include any felony conviction under federal, state, or local law relating to healthcare fraud, regardless of whether government programs were involved.
The Act was amended further by the 1997 Balanced Budget Act which allowed the OIG to impose new civil monetary penalties on individuals or entities that arrange or contract with an individual or entity that is excluded from participation in a federal healthcare program.
In 1998 the OIG issued a significant final rule expanding the scope of its administrative sanction powers by broadening its authority to extend to indirect providers and suppliers of items reimbursed by federal healthcare programs. Until that time the OIG had not applied its exclusion authority to “indirect” providers that did not also directly participate in federal government healthcare programs. The OIG defines "indirect” providers as those individuals or entities who provide items and services to healthcare providers, practitioners or suppliers without billing the federal programs. |
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