On January 11, 2017, the U.S. Department of Health and Human Services Office of Inspector General (OIG) published its Final Rule (the “Final Rule”) establishing new standards for excluding individuals and entities from participation in federal health care programs. The issuance of the Final Rule reflects changes to the OIG’s exclusion authorities made by the Medicare Modernization Act in 2003, and the Affordable Care Act in 2010 as well as the OIG’s past practices and potentially expands its authority to exclude providers from federal health care programs under the exclusion statute (Section 1128 of the Social Security Act).
Notable elements of the Final Rule, effective as of February 13, 2017, include:
- Imposition of 10 Year Limitation on Exclusion Actions. In accordance with the Final Rule, exclusions will only apply to misconduct from the past ten (10) years. The OIG had, in its proposed rule, suggested that its authority to exclude under the exclusion statute did not require a limitations period, but, with the Final Rule, the OIG may only take action to revoke billing privileges up to ten years from the date of the actual violation. Interestingly, the 10-year period matches the False Claims Act (FCA) limitations period, providing a point of finality for providers facing alleged FCA violations.
- Changes to Certain Definitions. The Final Rule revises certain definitions to account for new payment methodologies, allowing that a provider has “furnished” an item or service not only when the individual or entity “submits a claim” to a federal health care program but also when they “request of receive payment” by other means. This, therefore, allows providers to request or receive payments in ways other than traditional fee-for-service claims, such as, for example, shared savings payments and performance-based payments.
- Expansion of Permissive Exclusion Authority. The OIG expands its authority to exclude individuals or entities from participating in federal health care programs based on: (i) convictions related to obstruction of an investigation or audit, (ii) failure to provide payment information, and/or (iii) making false statements or misrepresenting material facts in provider/supplier applications. The OIG maintains that compliance with audit processes is “integral to fraud prevention and detection.”
- Exclusion of Individuals with Ownership Interests in Excluded Entities. The OIG will also be permitted to exclude individuals who maintain a direct or indirect ownership or control interest in excluded entities for the same time period as that of the sanctioned entity.
- Establishment of an Early Reinstatement Process. The Final Rule establishes procedures for an early reinstatement process for providers that were excluded due to a loss of their healthcare license for reasons related to professional competence, professional performance, or financial integrity. Individuals may apply for early reinstatement if they obtain, or are permitted to retain, a healthcare license in another state, or retain a different healthcare license in the same state, or if they can otherwise demonstrate that they would no longer pose a threat to Federal healthcare programs and beneficiaries of such programs. Early reinstatement is not available to individuals who lost their health care licenses related to patient abuse and neglect until the lost license is restored in the state in which it was lost.
- Changes to Aggravating and Mitigating Factors. When determining whether to increase the length of exclusion above the minimum required, the OIG generally considers certain aggravating and mitigating factors. The Final Rule increases the amount of financial loss necessary to trigger an aggravating factor that can increase the length of exclusion to $15,000 for excessive claims or furnishing of unnecessary or substandard items or services and $50,000 for mandatory exclusion and permissive exclusion involving health care fraud and obstruction. Additionally, the Final Rule has added two new aggravating factors that focus on adverse actions based on offenses separate from those forming the basis of the exclusion as well as adverse actions based on the same offenses. Finally, the Final Rule removes the mitigating factor related to availability of alternative sources of the type of healthcare items or services furnished by the person (except that the OIG will still consider this factor in determining whether a permissive exclusion should be imposed at all).
While the Final Rule does limit the statute of limitations on exclusion actions to ten years, thereby limiting its reach back in time, it appears that many of the changes tend to expand the exclusion authority of the OIG by establishing new policies for excluding individuals and entities from participation in federal health care programs.
Providers that participate in federal health care programs must assess the implications of the Final Rule to their particular practice and make the appropriate changes to their policies and procedures in order to protect themselves from the likelihood of scrutiny under the broadened exclusion authority of the OIG. If you have questions about the implications of the Final Rule to you or your practice, please contact Frier Levitt today.
