On April 18, 2016, the Office of Inspector General of the United States Department of Health and Human Services (“OIG”) issued a revised policy statement containing the new criteria that OIG intends to use in implementing its permissive exclusion authority under 42 U.S.C.A. § 1320a-7(b)(7).  The revised policy statement supersedes and replaces a policy statement that OIG published in December 1997 concerning the manner in which OIG exercises its permissive exclusion authority.

Significantly, while continuing to acknowledge that “OIG presumes that some period of exclusion should be imposed against a person who has defrauded Medicare or any other Federal health care program,” the revised policy statement also recognizes that the “presumption in favor of exclusion is rebuttable in certain situations.”  According to OIG, the revised policy statement “sets forth circumstances in which the presumption may be rebutted and the non-binding factors that OIG will use to make such a determination.”  Additionally, OIG explains in the revised policy statement that it “evaluates health care fraud cases on a continuum” and that “resolution of OIG’s exclusion authorities is based on OIG’s assessment of future risk to the Federal health care programs.” 

Background

Federal law permits OIG to exclude “[a]ny individual or entity that the Secretary determines has committed an act  which is described in section 1320a-7a [Civil Monetary Penalties for improperly filed claims or payments], 1320a-7b [Criminal Monetary Penalties for false statements and illegal remuneration], or 1320a-8 [Civil Monetary Penalties for false statements or  representation of material facts regarding the right to receive or continue to receive certain Social Security benefit payments].”  42 U.S.C.A. § 1320a-7(b)(7).  Conduct that subjects a person to liability under the False Claims Act, 31 U.S.C. §§ 3729–3733, will generally also subject that person to liability under section 1128(b)(7).

In December 1997, OIG issued non-binding guidelines that it used to assess whether to impose permissive exclusion in accordance with 42 U.S.C. 1320a-7(b)(7).  See Criteria for Implementing Permissive Exclusion Authority Under Section 1128(b)(7) of the Social Security Act, 62 Fed. Reg. 67392 (December 24, 1997).  Under those guidelines, “[t]here is a presumption that some period of exclusion should be imposed against an individual or entity that has defrauded Medicare or other Federal and State health care programs”  Id. at 67393.  The guidelines list four general criteria that OIG will consider.  Several specific factors are included within each criterion.  The criteria are:

1. The Circumstances of the Misconduct and Seriousness of the Offense.  Considerations relevant to this criterion include whether a criminal sanction was imposed, whether there was physical or mental harm to patients, whether health care programs incurred financial losses, and whether the misconduct was part of a pattern.  Id. at 67,393.
2. Defendant’s Response to Allegations/Determination of Unlawful Conduct.  This criterion includes the entity’s acknowledgement of the misconduct, willingness to cooperate, payment of restitution and penalties, and the adoption of remedial measures and a general change in behavior.  Id.
3. Likelihood that Offense or Some Similar Abuse Will Occur Again.  Considerations include whether the conduct was the result of unique circumstances that are not likely to recur, the robustness of the company’s compliance program, whether there was any voluntary disclosure regarding the alleged wrongdoing, and whether the company has agreed to implement adequate compliance measures, including institution of a corporate integrity plan.   Id. at 67,393-94.
4. Financial Responsibility.  OIG will also consider whether an entity could continue to “operate without a real threat of bankruptcy and without a real threat to its ability to provide quality health care items or services” if “permitted to continue program participation.”  Id. at 67, 394.

Revised Policy Statement

OIG has several administrative options, and it uses a risk spectrum to determine which options, including exclusion, are appropriate.

OIG’s revised policy statement emphasizes that, in addition to permissive exclusion authority, OIG “has a range of administrative options it can exercise.”  Indeed, OIG outlines that “depending on the facts and circumstances presented,” OIG will usually pursue one of the following approaches with respect to a person when settling a civil or administrative health care fraud case:

1. exclusion;
2. heightened scrutiny (e.g., implement unilateral monitoring);
3. integrity obligations;
4. take no further action; or
5. in the case of a good faith and cooperative self-disclosure, release 1128(b)(7) exclusion with no integrity obligations.

OIG goes out of its way in the revised policy statement to explain the circumstances in which permissive exclusion is not necessary.  For example, OIG stated that it “often concludes that exclusion is not necessary to protect Federal health care programs if the person agrees to appropriate integrity obligations,” and OIG will provide an exclusion release in exchange for integrity obligations.   Additionally, the revised policy statement explains that OIG will often choose not to exercise its permissive exclusion authority or demand integrity obligations when, absent a showing of patient harm, the financial harm to Federal health care programs is relatively low and the provider is a successor owner.  Moreover, OIG emphasized that it will affirmatively release a provider from potential exclusion liability and refrain from demanding integrity obligations in two circumstances: (1) when the person self-discloses the fraudulent conduct, cooperatively and in good faith, to OIG; or (2) when the person agrees to robust integrity obligations with a State or the Department of Justice and OIG determines these obligations are sufficient to protect the Federal health care programs.

OIG will consider numerous factors in determining where a provider falls on the risk spectrum.

The revised policy statement includes a list of the factors that OIG will consider and the questions that it will ask to determine where a provider falls on the risk spectrum.  This analysis is significant given that “[a]t the Highest Risk end of the spectrum, OIG will pursue exclusion,” while “[a]t the Lower Risk end of the spectrum (cooperative and good faith self-disclosures), OIG will provide an exclusion release without integrity obligations.”  The factors for consideration are grouped into four broad categories:

1. Nature and circumstances of conduct;
2. Conduct during the Government’s investigation;
3. Significant ameliorative efforts; and
4. History of compliance.

The detailed list of factors that OIG will consider in determining where a provider falls on the risk spectrum and whether exercising OIG’s permissive exclusion authority under 42 U.S.C. § 1320a-7(b)(7) is appropriate can be found in the revised policy statement. 

Reporter, Ramsey Prather, Atlanta, + 1 404 572 4624, rprather@kslaw.com.