Far Reaching Impact of Medicare Exclusion

In our prior articles, we looked at the basis for Medicare exclusion and how the Office of the Inspector General’s (OIG) powers to exclude providers has been recently enhanced by the passage of the Affordable Care Act.  In this article we focus on the sweeping impact that exclusion has on providers and suppliers.

When the OIG determines to exclude a provider or a supplier from participating in the Medicare program, the exclusion extends to all Federal healthcare programs. It is well known that an OIG exclusion means that no Federal healthcare program payment may be made for any items or services: (1) furnished by an excluded individual or entity, or (2) directed or prescribed by an excluded physician.

Even 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. Providers should be aware that this prohibition applies even when the Federal payment itself is made to another provider, practitioner or supplier that is not excluded.

The prohibition extends to payments that are made for items or services that include administrative and management services not directly related to patient care, but that are a necessary component of providing items and services to program beneficiaries. Moreover, the prohibition on payment continues to apply to an individual even if he or she changes from one health care profession to another while excluded. In addition, no Federal program payment may be made to cover an excluded individual’s salary, expenses or fringe benefits, regardless of whether they provide direct patient care.

The OIG provides examples of the types of services that ordinarily are reimbursable by Federal healthcare programs, but, when provided by an excluded provider, violate an OIG exclusion. Some of those include:

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 if such services are reimbursed directly or indirectly (such as through a PPS or a bundled payment) by a Federal health care program, even if the individuals do not furnish direct care to Federal program beneficiaries;

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;

Items or services provided to a program beneficiary by an excluded individual who works for an entity that has a contractual agreement with, and is paid by, a Federal health care program.

Not only is there a prohibition on payment for services or supplies provided by an excluded individual or entity, but the OIG also has the authority to impose a civil monetary penalty where an excluded individual or entity submits a claim for reimbursement to a Federal health care program. The penalties imposed could amount to $10,000 for each item or service furnished during the period that the person or entity was excluded. Additionally, the individual or entity may also be subject to a penalty of three times the amount claimed for each item or service.

Once excluded, providers remain excluded until either the OIG withdraws its decision to exclude, or, until providers apply for a reinstatement.

If you have any questions about Medicare participation, exclusion, OIG or require other legal assistance, please contact us.