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August 19, 2013

The OIG's Updated Special Advisory Bulletin On The Effect Of Exclusion

The Office of Inspector General of the U.S. Department of Health & Human Services ("OIG") recently issued its updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs ("Special Advisory Bulletin"), which describes the scope and effect of the legal prohibition on payments by federal health care programs for services and items furnished by or at the direction of an excluded individual.1 The Special Advisory Bulletin also provides guidance on the scope and frequency of screening for exclusions and the sanctions for violations.

The OIG is empowered to impose civil money penalties against health care providers who employ or contract with an excluded person to provide items and services for which payments may be made under a federal health care program. Additionally, the OIG is further authorized to impose liability on an excluded person if the person orders or prescribes an item or a service while excluded and knows or should know that a claim for the item or service may be made to a federal health care program. For health care providers enrolled in Medicare and Medicaid, ensuring regulatory compliance remains crucial and screening for excluded persons is a key element in compliance.

Exclusion From Federal Health Care Programs

The effect of an OIG exclusion is broad"”no payment may be made by a federal health care program for any items or services furnished (1) by an excluded person or (2) at the medical direction or on the prescription of an excluded person. This broad prohibition also extends beyond direct patient care. For example, the following instances of indirect services are prohibited:

  • Services performed by excluded individuals who work for or with a hospital, nursing home, home health agency, or managed care entity when such services are related to, for instance, preparation of surgical trays or review of treatment plans, regardless of whether such services are separately billable or are part of 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; and
  • Transportation services that are paid for by a federal health care program, such as those provided by excluded ambulance drivers or ambulance company dispatchers.

Excluded persons are also prohibited from furnishing administrative and management services that are payable by federal health care programs, even where the administrative and management services are not separately billable. For example, the following would be prohibited:

  • An excluded individual serving in an executive or leadership role at a provider that furnishes items or services payable by federal health care programs; and
  • An excluded individual providing other types of administrative and management services, such as health information technology services and support, strategic planning, billing, accounting, staff training and human resources, unless wholly unrelated to federal health care programs.

Additionally, items or services furnished at the medical direction of or on the prescription of an excluded person are not payable when the person furnishing the item or services knows or should know of the exclusion. This prohibition applies even where the federal payment itself is made to a state agency or provider that is not excluded.

CMP Liability

An excluded person violates the exclusion if the person furnishes to federal health care program beneficiaries items or services to be paid by federal health care programs. An excluded person that submits such a claim or causes such a claim to be submitted may be subject to a civil money penalty of $10,000 for each claimed item or service furnished during the period of exclusion. The individual may also be further subjected to an assessment of up to three times the amount claimed as well as subsequent denial of reinstatement into the program. Similarly, such conduct may also lead to criminal prosecutions or civil actions. For example, knowingly presenting or causing to be presented a false or fraudulent claim may subject the individual to criminal liability for fraud as well as civil money penalties.

CMP Liability For Employing Or Contracting With An Excluded Person

A provider may be subject to liability if an excluded person participates in any way in the furnishing of items or services (including providing direct or indirect patient care, administrative and management services, and items or services furnished at the medical direction of or on the prescription of an excluded person) when the provider knows or should know of the exclusion. Liability may result even if the excluded person does not receive payments from the provider for his or her services. Similarly, an excluded person may not provide services payable by federal health care programs, regardless of whether the person is an employee, a contractor, or a volunteer or has any other relationship with the provider.

Under certain and limited conditions, an excluded person may be employed by or contract with a provider that receives payments from federal health programs:

  • Where the federal health care program does not pay, directly or indirectly, for the items or services furnished by the excluded person;
  • Where a provider employs or contracts with an excluded person to furnish items or services solely to a non-federal health care program beneficiary.

Providers that identify potential liability on the basis of the employment of, contracting with, or arranging for services with an excluded person may be required to use the OIG's Provider Self-Disclosure Protocol ("SDP") to disclose and resolve the potential liability.

How To Determine Whether A Person Is Excluded

To aid providers, the OIG maintains a List of Excluded Individuals and Entities (the "LEIE") on its website. The New York State Office of the Medicaid Inspector General maintains its own list as well.

When verifying individuals and entities using the LEIE, the Special Advisory Bulletin recommends that providers maintain documentation of the initial name search performed, such as a screen-shot and any additional searches. Because the LEIE contains information available at the time of the exclusion, providers should also verify by searching for other names (e.g. maiden name) as well. Additionally, although a provider may contract with another entity to screen a person or entity against the LEIE, a provider is nonetheless charged with the responsibility of determining and knowing whether an individual or entity has been excluded.2

Although using the LEIE is not required by law, to help ensure compliance and avoid liability, providers are encouraged to consult the LEIE regularly to determine the exclusion status of current employees and contractors, as well as potential employees and contractors.3 Since the OIG updates the LEIE on a monthly basis, it is recommended that providers likewise check the LEIE monthly to minimize the risks of potential overpayments and liability. New York recommends a similar monthly checking.

The OIG recommends that to determine which persons should be screened against the LEIE, the provider should review each job category or contractual relationship to determine whether the item or service being provided is directly or indirectly or in whole or in part, payable by a federal health care program. If so, then the best mechanism for limiting liability is to screen all persons that perform under that contract or that are in that job category. Providers should employ a similar methodology to determine when to screen contractors, subcontractors and the employees of contractors. The risk of potential liability is greater for those items and services that are integral to patient care because such items and services are typically payable by a federal health care program.


For health care providers enrolled in Medicare and Medicaid, due diligence and monitoring of employees and contractors, as well as potential employees and contractors, is imperative. The failure to do so may result in liability such as exclusions and civil monetary penalties. Moreover, in light of the Federal and State governments ongoing and increased efforts to protect against fraud and abuse, effective regulatory compliance efforts remain crucial.

Hiscock & Barclay has extensive experience in the areas of Medicare and Medicaid regulatory compliance, self-disclosures, audits, investigations, fraud detection and prevention, preparing and implementing compliance plans and programs, and conducting internal audits. Should you have any questions regarding the issues raised in this Legal Alert, please contact Melissa M. Zambri, Chair of the firm's Health Care & Human Services Practice Area at (518) 429-4229 or, Margaret Surowka Rossi at (518) 429-4295 or, Bella Satra at (518) 429-4299 or or any member of our firm's Health Care & Human Services Practice Area.

1 The OIG originally published a Special Advisory Bulletin in September 1999 on the effects of exclusion from participation in federal health care programs which also provided guidance regarding contracting with and employing excluded persons ("1999 Bulletin"). The Special Advisory Bulletin replaces and supersedes the 1999 Bulletin.
2 Although a provider may use a contractor to screen persons or entities, a provider should request and maintain documentation from the contractor. A provider maintains responsibility for ensuring that a proper screening was performed.
3 In 2011, the Centers for Medicare and Medicaid Services issued regulations requiring the States to screen all enrolled providers monthly.

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