Practical Tips for Providers Managing Risks Related to Excluded Parties and the Implications of the OIG's Recent Special Advisory Bulletin

    23 May 2013

    On Wednesday, May 8, 2013, the Health and Human Services Office of Inspector General (OIG) released a Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (FHCPs). This Bulletin discusses providers’ responsibilities for screening for excluded individuals and for remedying situations when a provider learns that health care services were furnished by or at the direction of an excluded person. The new Bulletin updates the OIG’s Special Advisory Bulletin issued in1999 on the effect of exclusion.

    An individual can be excluded from participation in FHCPs, such as Medicare and Medicaid, for a variety of reasons, such as a conviction related to patient abuse or health care fraud. Once an individual is excluded, FHCPs cannot pay for any item or service furnished by or at the medical direction or prescription of that person. If a provider does submit claims for such items and services, it is responsible for repaying the impacted claims. OIG can also pursue Civil Monetary Penalties (CMPs) against the provider under 42 C.F.R. Part 1003 regardless of whether the provider knew it was submitting claims associated with an excluded party.

    To limit these risks, health care providers must take steps to ensure that they do not employ or contract with an excluded individual who provides direct patient care or who provides certain indirect, administrative, or management services that are paid for, directly or indirectly, with FHCP funds. In addition to their obligations in screening their own personnel, providers need to have some level of screening mechanism for referral sources as well (if they provide services to the referred patient), as they must also ensure that they are not furnishing items or services to FHCP beneficiaries at the medical direction or prescription of an excluded person.

    But how often must providers do this screening?  What types of screening tools do they need to have in place?  And what should they do if they find out they accidentally have employed an excluded person? For providers with hundreds or thousands of employees and contractors, and vast networks of referral sources, these questions can present significant operational puzzles. And for smaller providers with limited resources for screening, these obligations can seem downright daunting. This Alert provides practical tips for providers seeking to understand their obligations and limit their risks relating to excluded individuals.

    Ten Tips for Managing Your Obligations and Limiting Your Risks under the OIG’s New Bulletin Regarding Excluded Parties

    The Prohibition on Excluded Parties Applies Regardless of Your Payment Structure

    In the Bulletin, OIG states that the payment prohibition applies regardless of the method of FHCP payment. FHCPs will not pay for items and services provided or prescribed by excluded individuals regardless of whether or not the items and services are billed through itemized claims, cost reports, fee schedules, capitated payments, prospective payment systems, bundled payment systems, or other payment mechanisms. Regardless of the reimbursement system, any provider who does FHCP business needs to be aware of their obligations and take steps to limit their risks.

    Choose Your Exclusion Screening Contractors Carefully and Include a Strong Indemnification Clause in Your Contract

    OIG specifically notes that while providers may contract with entities to perform their exclusion screenings, the provider is still ultimately the responsible party. Even if it is a contractor error that allows an excluded party to avoid detection, the provider could face CMPs and repayment obligations. Providers should be sure they are partnering with reputable and diligent screening contractors, and should include strong indemnification clauses in their contracts to address situations in which liability does arise through no fault of the provider.

    Have a Plan for Making Sure Employees and Contractors are Screened

    CMP fines and repayment obligations can be triggered by both employing and contracting with an excluded party. Providers should develop a detailed plan for screening their employees and contractors before and after hire, or ensure that contractors have an effective screening mechanism in place. Screening plans should address when individuals will be screened initially, how often they will be re-screened, how that screening will be conducted, and the steps to take if a screening indicates an individual may be excluded.

    Also Have a Plan for Screening Referral Sources

    As discussed above, providers may not submit claims for items and services furnished at the direction or under the prescription of an excluded party. OIG states that to avoid liability, “providers should ensure, at the point of service, that the ordering or prescribing physician is not excluded.” To limit exposure, providers should develop and implement a plan to screen practitioners who refer FHCP patients and provide services to those patients.

    Do Not Limit Screening to Individuals Engaged in Direct Patient Care

    OIG specifically states that the payment prohibition is not limited to excluded individuals who provide direct patient care and applies regardless of whether the tasks performed by the excluded party are separately billable. Excluded parties cannot provide administrative and management services. While OIG does not provide a comprehensive list of what services excluded parties can and cannot provide beyond direct patient care, it does state that excluded individuals may not fill the following roles: executive or leadership roles, health information technology services and support, strategic planning, billing and accounting, staff training, and human resources.

    Use the LEIE Database for all Screening

    In conducting exclusion screenings, providers should use the List of Excluded Individuals and Entities (LEIE).

    Consider Re-Screening as Frequently as Every Month

    In the updated Bulletin, OIG advises providers to conduct screening before employing or contracting with an individual, and to periodically re-screen for exclusion status. While OIG acknowledges that there is no statutory or regulatory requirement to screen at a given frequency, it does note that it updates the LEIE database every month so monthly screening “best minimizes potential overpayment and CMP liability.”

    Check Both Current and Former Names When Conducting Screenings

    Individuals may have been originally excluded under another name, such as a maiden name or prior spouse’s name, and a search on their current name may not identify the exclusion. Providers should obtain both current and former names from anyone who is included on a screening list, and should require those individuals to notify them of any subsequent name changes.

    Be Aware That You May Have Obligations to Disclose Claims Involving Excluded Parties

    If you identify an individual in your organization or your referral network who is an excluded party, you may have an obligation to disclose to OIG and to repay impacted claims. Under the Affordable Care Act, providers have an obligation to make a repayment within 60 days of “identifying” an overpayment, such as a payment made in connection with an excluded party. OIG directs providers to utilize its Self-Disclosure Protocol (SDP) for such disclosures. For more on the SDP, see Patton Boggs’ Client Alert on the OIG’s newly revised SDP.

    Talk to Counsel

    Situations involving excluded parties can create substantial liability for providers. If you have questions regarding screening best practices or if you have identified an individual in your organization or your referral network who is an excluded party, seek advice from counsel early on in the process.