Health Law Alert: Participants in Medicare Part C and Part D May Now Be Considered Federal Contractors and Subcontractors

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Recently, health care providers have been targeted by the Office of Federal Contract Compliance Programs (OFCCP), which has taken the position that participants in Medicare Part C and D are now federal contractors and may be federal subcontractors, subject to equal opportunity and affirmative action requirements.

In 2009 and 2010, the OFCCP decided two administrative cases that address when a participating TRICARE health care provider is a federal contractor or subcontractor. In the first case, an administrative judge held that a Florida hospital was a federal subcontractor because it contracted with Humana Military Healthcare Services to service TRICARE members as part of a provider network. The judge expressly rejected the hospital’s assertion that TRICARE payments should be treated like Medicare payments for purposes of determining whether they constituted payments under a federal contract, holding that participation in TRICARE was a contract to provide services, unlike Medicare, which is considered a contract to pay for services. Similarly, another administrative judge held that Pittsburgh hospitals, which had contracted with an HMO to provide medical services to current and retired federal employees as part of a provider network, are federal subcontractors because the HMO had a contract with the Office of Personnel Management to provide those services to federal employees. In a third contrasting case, decided in 2003, an administrative judge held that a hospital was not a federal subcontractor when it received only reimbursement for services performed pursuant to a federal contract to provide insurance reimbursement for the Office of Personnel Management policyholders.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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