The Final Rule related to the Health and Human Services Office of Inspector General’s (OIG) exclusion authority pursuant to the Social Security Act (the Act), as amended by the Affordable Care Act (ACA) and the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), was released last week. The Proposed Rule was issued previously by the OIG in May 2014. The effective date of the Final Rule is February 13, 2017.

Noteworthy changes made by the Final Rule include the following key items:

  • Implementation of a 10-year statute of limitations period. According to the OIG, this statute of limitations of period is grounded in the False Claims Act, and provides a balance between the need of defendants to have certainty and the need of the OIG to adequately evaluate exclusion in light of fraudulent conduct. The OIG further stated in the preamble to the Final Rule that it would pursue tolling agreement in certain, limited matters when appropriate to do so to protect Federal health care programs.
  • Change from “submit claims to” to “request or receive payment from.” The OIG recognized a need to update the regulations to account for new payment methodologies involving Federal health care programs since the regulations were last amended. Specifically, the OIG stated in the premable to the Final Rule that individuals and entities request or receive payments, directly or indirectly, from Federal health care programs in many different ways other than traditional fee-for-service claims, including, by way of example, shared savings payments, performance-based payments, and capitated payments.
  • Ability to increase length of exclusion for certain financial losses. The OIG increased 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.
  • Expansion of exclusion regulations to cover obstruction of an “audit.” The OIG stated that this authority expansion is statutory and must be included. Additionally, compliance with audit processes and requests is “integral to fraud prevention and detection” in the same manner as investigations and, therefore, appropriate to include in the OIG’s exclusion authority.
  • Change the presumption against reinstatement to 3 years for individuals, except in certain circumstances. The OIG stated in the preamble to the Final Rule that the reinstatement period should be changed to 3 years for individuals without any health care licenses seeking reinstatement. This exception does not apply to health care professionals or other licensed individuals, in which the licensing board took the action leading to exclusion and assigned a license revocation or suspension that is longer than 3 years. Additionally, early reinstatement is not available to individuals who lost their health care licenses related to patient abuse and neglect until such individuals obtain the license lost from the state in which it was lost.
  • Confirming that exclusion period for certain individuals should be the same as the excluded entity. The OIG stated in the preamble to the Final Rule that certain individuals with ownership or control of an excluded entity, or who were officers or managing employees of such excluded entity, and who are determined to be untrustworthy based on the conduct of the entity should be excluded for the same period of time as the excluded entity. The OIG further confirmed that it is not required to demonstrate knowledge of wrongdoing for officers and managing employees in order to exclude these individuals.
  • Exclusion of individuals and entities that make false statements or misrepresent material facts. The OIG has new permissive exclusion authority to exclude individuals or entities that “knowingly made or caused to be made any false statement, omission, or misrepresentation of a material fact in any application, agreement, bid, or contract to participate or enroll as a provider of services or supplier under a Federal health care program . . .”

All individuals and entities that conduct business with Federal health care programs must assess this Final Rule carefully and make appropriate changes to policies, procedures and processes.

Posted by Sarah K. diFrancesca