November 30, 2021

Volume XI, Number 334


November 29, 2021

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Hiring or Contracting with Excluded Individuals or Entities

Checking the OIG’s Exclusion List Can Avoid Harsh Sanctions

Over the years, we have written in Shorts about the importance of checking the Office of Inspector General’s “List of Excluded Individuals and Entities” before hiring an employee (or rehiring a former employee) or contracting with any sort of vendor or supplier (services or goods) before you hire or contract with them.  When the OIG excludes an individual or entity from federal health care programs, that individual is essentially banned from working for any health care provider who receives federal health care program funds (Medicaid, Medicare, TriStar or any other type of federal health care program) in any role related to program beneficiaries or program goods or services.

The OIG’s ban is broad.  No payment may be made for any item or service provided by, ordered by, subscribed by, or arranged by an individual excluded from federal health care programs, either directly or indirectly.  A provider that employs or contracts with an excluded individual or entity may itself face civil money penalties of up to $10,000 for each item or service claimed (for reimbursement) and three times the amount claimed as reimbursement plus, in some cases, exclusion from federal health care programs.  These sanctions can be imposed against any provider that hires or contracts with an excluded individual or entity and the standard that applies is the provider “knew or should have known” of the exclusion.  With the OIG’s easily accessible Exclusion Database, which lists all excluded individuals and entities and costs nothing to check, the “knew or should have known” standard will catch all providers except in very rare instances.

An excluded individual does not have to be performing direct patient care or services. For example, a health care provider can incur CMPs and/or program exclusion for hiring an excluded nurse or other individual to work in a hospital, SNF or other health care facility to perform exclusively nonclinical, administrative duties, such as review of treatment plans, if such services are reimbursed directly or indirectly (such as through a prospective payment system or a bundled rate) to the employing or contracting provider.  As a practical matter, the only time you can hire or contract with an excluded individual or entity is when you can totally segregate that person’s payment from federal health care reimbursement, paying the person solely from private funds, AND their role involves any service or item provided directly or indirectly to federal program beneficiaries.  That is a very tough standard. 

The OIG’s website contains tons of information about these rules and prohibitions, how to check the Exclusion List, a set of frequently asked questions, and an easy link to the Exclusion Database itself.  You can also just Google “OIG Exclusion” and get there easily.

In our practice, we still encounter SNFs that do not routinely check the OIG Exclusion List.  This is a very reckless practice.  Excluded individuals are not always folks you have heard about in some high-profile fraud case.  They may simply be professionals who have lost their licenses temporarily, thus automatically referred by the licensing board (Board of Nursing, Board of Nursing Home Examiners, etc.) to the OIG and excluded.  Also, reinstatement is not automatic and an excluded individual or entity must reapply to be reinstated for federal health care program participation.  Until they have reapplied, and are formally readmitted, all these prohibitions remain in place and you may not hire or contract with them until they are formally readmitted.  This is true even if the underlying offense, such as loss of professional license, has been corrected. 

In other cases, well-meaning and diligent SNFs check the OIG Exclusion List but make mistakes, such as entering the wrong name, an incomplete name, or a nickname and missing a positive “hit” on the Exclusion List.  While a provider’s efforts to check the list that is marred by such a mistake will often be considered by the OIG in considering sanctions against that provider, you can’t count on that, and the OIG retains almost total discretion in determining whether to impose sanctions on the employer in such cases.

Here are a couple of tips to easily avoid these huge risks.

  • Always, always, always check the OIG’s Exclusion List before hiring or contracting with anyone for any job in or for your facility or your related company (i.e., where you have your own pharmacy or DME company).

  • Always check before you rehire or enter a new contract with former employees or contractors.  Their program participation status may have changed since you last knew or worked with them.

  • Always ensure you have the full and complete name, taken from an official government identification document such as a driver’s license, passport, or other reliable document.

  • Always ask if that person or entity has ever gone by any other name—an alias or maiden name—and check all those names.

  • Your employment application should ask “Have you ever been excluded from participation in any state or federal health care program?” If the answer is yes, ask for details (date, time, facts involved, and current status).  Then ask for documentation to confirm what you’ve been told.

  • If you get a “hit” on the Exclusion List, DO NOT hire or contract with that individual or entity for any purpose, even one you may think is totally unrelated to patient care or to any federal or state health care program payments, until you get some professional advice about whether that role can legally be offered to the excluded person or company.

  • Print documentation from the OIG’s Exclusion List showing that you checked the database, the name or names entered, the date of the inquiry, and the results.

This is one of those situations where you would rather be safe than sorry.  Checking the OIG’s Exclusion List should be a routine and constant part of any pre-employment screening process, just like conducting criminal background checks or checking an applicant’s prior employment history.  The same goes before entering into any contracts with suppliers or vendors.  The OIG site contains other tips on checking names on the Exclusion List.  It’s a good idea to have one person in your organization responsible for reviewing and keeping up to date with the OIG’s website on program exclusions. 

© 2021 Poyner Spruill LLP. All rights reserved.National Law Review, Volume I, Number 357

About this Author

Kenneth L. Burgess, Health Care Litigation Attorney, Poyner Spruill Law firm

Ken is a health care attorney with more than 28 years of experience advising clients on a wide range of regulatory, reimbursement, litigation, compliance and operations issues.  His practice has focused heavily, but not exclusively, on issues affecting long term care providers.  He has advised them on a wide variety of legal planning issues arising in the skilled nursing facility setting, assisted living setting, hospice, home health and other spheres of long term care. He also frequently represents ancillary service providers (pharmacy, DME, therapy and similar...