OIG Updates Special Advisory Bulletin on the Effect of Exclusion from Participating in Federal Health Care Programs


On May 8, 2013, the Office of Inspector General of the Department of Health and Human Services (“OIG”) released an Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs. The Updated Bulletin is the OIG’s first published guidance on exclusions since 1999, providing answers to many questions about exclusions.  

The effect of an OIG exclusion is that no Federal health care program may pay for items or services (1) furnished by an excluded person or (2) directed or prescribed by an excluded person. The bulletin underscores the fact that 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. Under Federal Civil Monetary Penalty (“CMP”) rules, a provider may be liable for up to $10,000 for each item or service furnished, directly or indirectly, by an excluded person, and up to three times the total amount claimed for such items or services. 

The updated bulletin casts the exclusion net very wide, offering examples of a number of excluded individuals with indirect relationships to providers to which the prohibition applies, including:

  • Excluded individuals who prepare surgical trays or review treatment plans for hospitals, nursing homes, home health agencies, or managed care entities;
  • Excluded pharmacists or other excluded individuals who input prescription information for pharmacy billing or who fill prescriptions for drugs that are billed to Federal health programs;
  • Excluded ambulance drivers or dispatchers who work for companies that provide  transportation services paid for by Federal health programs;
  • Excluded executives and other senior management of providers, including individuals who provide administrative and management services such as physician office management, health information technology services and support, strategic planning, billing and accounting, staff training and human resources;
  • Members of a hospital’s medical staff, even if they do not receive any compensation from the hospital for services, if they participate in any way in the furnishing of covered services; and
  • Excluded health care professionals who volunteer at hospitals or nursing homes.

The updated bulletin clarifies that a provider may employ or contract with an excluded individual without CMP liability only if no Federal health care program pays, directly or indirectly, for the items or services being provided by the excluded individual, or if the excluded individual furnishes items or services solely to non-Federal health care program beneficiaries. The provider must also ensure that no claims are submitted to, and no payment is received from, Federal health care programs for items or services that the excluded individual provides and that such items or services relate solely to non-Federal health care program beneficiaries.

In light of the breadth of relationships that fall within the exclusion sanction, it is important that providers maintain robust screening processes. The OIG provides guidance regarding best practices for screening current and potential employees and contractors for excluded status. OIG recommends searching the OIG-administered List of Excluded Individuals and Entities (“LEIE”) prior to hiring or contracting with an individual or company. OIG also suggests that providers review LEIE for current contractors and employees on a monthly basis, for any job category or contractual relationship where the item or service being provided is payable by a Federal health care program. OIG also cautions against relying on other databases, such as the GSA’s System for Award Management (“SAM”) or the National Practitioner Database, as a provider’s primary source for exclusion screening.

OIG also suggests that providers use the recently updated self-disclosure protocol (“SDP”) in the event of the discovery of potential CMP liability. For more information on the updated SDP, please see our April 18, 2013 alert, HHS Office of Inspector General Issues Updated Self-Disclosure Protocol.

We will continue to monitor developments with respect to excluded providers and, more generally, OIG’s practices. If you have any questions or concerns, please contact the Ropes & Gray attorney who normally advises you.

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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