Devastating Impact of Provider Exclusion – Special Bulletin

The government’s authority to exclude practitioners from participation in Federal health care programs has expanded dramatically since program exclusions upon conviction first began back in 1977.  In an attempt to address  industry questions about the scope of exclusion in today’s regulatory climate, the Office of the Inspector General (OIG) issued an updated Special Advisory bulletin this past May.

The Department of Health & Human Services first began excluding providers in 1977 after the passage of the Medicare-Medicaid Anti-Fraud and Abuse Amendments. Since 1981, when the OIG began implementing exclusions, it’s authority to exclude has continued to expand.  The OIG updated the Special Advisory Bulletin this May for the first time in fourteen years to clarify rules on program exclusion.

The upshot of the agency’s guidance? It is a stark reminder to providers that a program exclusion has a devastating impact on an individual’s career and finances.  Not only does an exclusion limit employment opportunities but excluded providers may also be subject to civil penalties and assessments if the provider submits or causes to be submitted a claim for payment. Criminal statutes may also be imposed on providers who knowingly violate the OIG exclusion.

Additionally, not only the excluded individuals, but also their employers and downstream providers may be impacted by exclusions. Employers that hire or contract with excluded providers or providers performing services ordered by excluded individuals which are payable directly or indirectly by Federal healthcare dollars may be exposing themselves to liability, assessment, non-payment and other sanctions available to the agency.

Impact of Exclusions on Providers and Their Employers

An OIG exclusion means that no Federal health care program payment may be made for any items or services furnished either by an excluded person or at the medical direction or on the prescription of an excluded person. The impact of an exclusion, however, is far reaching and the payment prohibition continues to apply to individuals even if they change from one healthcare profession to another while excluded. “The prohibition against Federal health care program payment for items and services would continue to apply to a person who was excluded while a pharmacist even after the person earns his or her medical degree and becomes a licensed physician,” explains the agency by way of an example.

Furthermore, explained the OIG, the “payment prohibition applies to all methods of Federal health care program payment, whether from itemized claims, cost reports, fee schedules, capitated payments, a prospective payment system or other bundled payment, or other payment system and applies even if the payment is made to a State agency or a person that is not excluded.”

The following examples were also provided by the OIG regarding the scope of payment prohibition:

  • payments made to hospitals for items or services furnished by an excluded nurse to federal heathcare program beneficiary, even if the services are not separately billed and are paid for as part of a Medicare diagnosis-related group payment;
  • services performed by excluded individuals who work for or under an arrangement with a hospital, nursing home, home health agency, or managed care entity when such services are related to, for example, preparation of surgical trays or review of treatment plans, regardless of whether such services are separately billable or are included in a bundled payment;
  • services performed by excluded pharmacists or other excluded individuals who input prescription information for pharmacy billing or who are involved in any way in filling prescriptions for drugs that are billed to a Federal health care program;
  • transportation services performed by excluded providers that are paid for by a Federal health care program, such as those provided by ambulance drivers or ambulance company dispatchers.

Excluded persons are also prohibited from furnishing administrative and management services that are payable by the Federal health care programs. This prohibition applies even if the administrative and management services are not separately billable. The OIG explains that:

  • an excluded individual may not serve in an executive or leadership role (e.g., CEO, CFO, general counsel, director of health information management, director of human resources, physician practice office manager, etc.) at a provider that furnishes items or services payable by Federal health care programs;
  • an excluded individual may not provide health information technology services and support, strategic planning, billing and accounting, staff training, and human resources, unless entirely unrelated to Federal health care programs.

Impact of Exclusions for Downstream Providers

Significant for downstream providers, such as labs, imaging centers, DMEs and pharmacies, is the prohibition on payment for items and services furnished at the medical direction or on the prescription of an excluded person. The OIG also suggested these downstream providers may be exposed to civil monetary penalties, which, the agency advises, can be avoided if providers “ensure, at the point of service, that the ordering or prescribing physician is not excluded.”

Impact on Healthcare Entities Owned by Excluded Providers

The OIG also attempted to clarify certain questions concerning ownership of healthcare entities by excluded individuals. While an excluded individual is not entirely prohibited from owning an entity that participates in Federal healthcare programs, the OIG may still exclude a provider if certain circumstances regarding the ownership are present.

“As a practical matter, this means that an excluded person may own a provider, but may not provide any items or services, including administrative and management services, that are payable by Federal health care programs. If an excluded owner does, for example, participate in billing activities or management of the business, both the owner and the provider will risk CMPL liability,” explained the OIG.

Checking Individual and Entity Exclusion Status

The updated bulletin again stressed the importance for employers to check the List of Excluded Individuals and Entities (LEIE) on the OIG website to determine whether an employee or a contracted provider has been excluded.

While there is no statutory or regulatory requirement establishing the frequency of such checks, the agency advises that employers consult the list before employing or contracting and continue to “periodically” check the database to ensure that employees or contractors are not excluded.

If you have questions about provider Medicare & Medicaid enrollment and participation or OIG exclusion, or have other legal or compliance questions, please contact our office.