On January 12, 2017, the HHS OIG issued its final rule amending regulations relating to its authority under the Affordable Care Act (ACA) to exclude individuals and entities from participation in federal healthcare programs.

One important aspect of the final rule is that the OIG declined to finalize a proposed rule that had no time limitation on the OIG’s ability to initiate an exclusion action under section 1128(b)(7) of the ACA.  Instead, in the final rule, the OIG codified a limitations period.  OIG states that the 10-year limitations period is based on section 1128’s interaction with the False Claims Act (FCA), which allows complaints to be filled up to ten years after the conduct (i.e., the FCA statute of repose).

In addition, the final rule implements proposed definitions of several key terms relating to the concept of “furnishing” goods “directly” or “indirectly.”   According to the OIG, the language in the final rule aligns with the FCA’s definition of what it means to submit a “claim” for payment.  “Because the underlying conduct triggering an exclusion action is comparable to that pursued under the FCA, it would be incongruous to limit the exclusion statute’s reach to outdated payment methodologies and not extend it to newer fraud schemes.”

The final rule also increases the amount of the government’s financial loss to $50,000 in order to be an aggravating factor that would trigger an increase in the period of the exclusion.  “In the current health care fraud environment, the $5,000 and $1,500 financial aggravating factor thresholds do not reflect unusual or relatively high losses.  In order to best reflect the current trends in health care fraud cases, we believe that an increase in amount is appropriate.”

Additionally, the OIG expanded application of its exclusion authority to include obstruction of audits, noting that the expansion of authority is statutory and therefore required.  In addition, the OIG declined to define “audit” in the regulations and stated it would apply the “general, commonsense” meaning of the word “audit” for purposes of the exclusion rule.

The final rule also created an early reinstatement process for providers who have been excluded and are seeking reinstatement.  The OIG states that a three-year presumption against reinstatement is generally sufficient.  However, the OIG will look at the facts and circumstances individually to determine whether reinstatement is appropriate.

The final rule is available here.  It takes effect on February 13, 2017.