Impact of Provider Exclusion from Medicare on Employers

In our prior articles, we discussed the far reaching impact of an Office of Inspector General (OIG) exclusion from the Medicare Program on providers and suppliers. Exclusion from the Medicare Program also impacts employers and we address some of those ramifications below.

Hospitals, nursing homes, physician practices or home health agencies, for example, could be penalized by the OIG if they submit claims to a federal healthcare program for items or services provided directly or indirectly, by excluded employees or contractors. The OIG’s authority to pursue civil money penalties stems from a 1997 Balanced Budget Act (BBA). Such penalties include up to $10,000 for each item or service furnished by the excluded individual or entity. It also includes a possible assessment of up to three times the amount claimed for each item or service. The OIG always retains the right, in extreme cases, to exclude employers from participation in federal healthcare programs.

According to the OIG, employers have an affirmative duty to check the exclusion status before contracting or employing an individual or an entity. Likewise, employers are charged with knowing the exclusion status of employees or contractors who continue to work for the employer. As we discussed in our prior article, employers are prohibited from allowing an excluded individual to direct the ordering or delivery of services or supplies, or to undertake certain administrative duties, irrespective of whether direct patient care is involved.

The OIG recommends that employers check the OIG and state exclusion databases on a regular basis for excluded providers. The OIG also advises that employers screen all new hires and contractors. In one advisory bulletin, the agency notes that:

a provider or entity that receives Federal health care funding may only employ an excluded individual in limited situations. Those situations would include instances 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.

If an employer discovers that its employee or a contractor is on the excluded list, the employer may be required to self-disclose to the OIG. Prior to taking any action, however, it is important to consult with an attorney regarding the specific facts of the employment situation to determine the appropriate course of action.

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