Office of Inspector General’s Sanctions And Exclusions of Healthcare Parties

Richard P. Kusserow | October 2013

During my term as Inspector General at the Department of Health and Human Services (HHS), I instituted what is now the List of Excluded Individuals and Entities (LEIE).  The OIG calls for screening the LEIE at time of hire and routinely thereafter, which is noted in its numerous compliance program guidance documents. In addition, the Centers for Medicare & Medicaid Services include sanction screening a condition of participation and enrollment in the federal health care programs. While compliance officers are aware of these requirements, few fully understand how these sanctions and exclusions come about and the type of administrative sanction authorities and actions referred in the LEIE.

In 1977, Congress first mandated the exclusion from program participation of a physician or other practitioner who had been convicted of a criminal offense related to participation in either Medicare or Medicaid. The stated purpose was to protect Federal health care programs and beneficiaries from providers, suppliers and others who engaged in specified misconduct. The enforcement authorities were delegated to the OIG to impose Civil Monetary Penalties (CMP), assessments, and program exclusion on health care providers and others determined to have engaged in defined wrongdoing. The effect of an OIG exclusion is that no payment may be made for any items or services furnished by an excluded individual or entity, or directed or prescribed by an excluded physician.

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During my eleven years tenure as IG the administrative remedies were broadened to address additional types of misconduct. Today there are many types of improper activities that can serve as the basis for either a “mandatory” or “discretionary” exclusion from participation in Federal health care programs. Mandatory exclusion is required where an entity or individual is convicted of a criminal offense related to Medicare or a State health care program or related to neglect or abuse of patients. Discretionary exclusions are for other types of misconduct, such as license revocation or suspension, exclusion or suspension from another Federal or State health care program, provision of unnecessary or substandard services, fraud or kickbacks, and default on a health education loan.

Passage of the Affordable Care Act included a number of new provisions addressing program integrity in the Medicare and Medicaid Programs. It also amended and expanded the existing authority for the OIG to impose CMPs and exclusions.

In light of the fact that most OIG program exclusions, whether mandatory or discretionary, are derivative of a prior official action, whether it be court conviction or licensure board revocation, it is likely that exclusion will be upheld on review. In almost all instances where the OIG’s imposition of program exclusion or CMPs is appealed, it is upheld by a HHS Administrative Law Judge (ALJ), the HHS Departmental Appeals Board (“DAB”), and Federal Courts.

Practical Tips for Compliance Officers

  • Ensure periodic sanction screening of employees, medical staff, contractors, and vendors against the LEIE.
  • At CMS urging nearly half the states have developed their own exclusion database and many mandate monthly screenings, therefore care should be taken to meet state screening requirements in addition to checking the LEIE.
  •  Inasmuch as most exclusion in the LEIE arise from another underlying court, state agency, or licensure board action; it is advisable to conduct background checks and seek assurances that prospective employees, contractors, and vendors have not been subject to any prior court or licensure board actions.
  • It is not uncommon for individuals that may be the subject of an investigation, but not yet sanctioned. Final actions may take considerable time. As such, it is a best practice to require as a condition of employment, gaining staff privileges, or engagement for the applicant to attest that they have not been, nor are they now, the subject of an investigation by any duly authorized regulatory or enforcement agency. It is also advisable to add a condition that they must promptly report any notice of investigation that involves them.
  • Educate and inform management and employees on their obligation to promptly report any notification of an adverse action by any duly authorized regulatory or enforcement agency.

About the Author

Richard P. Kusserow established Strategic Management Services, LLC, after retiring from being the DHHS Inspector General, and has assisted over 3,000 health care organizations and entities in developing, implementing and assessing compliance programs.