By Paul Weidenfeld

January 23, 2017

On January 12, 2017, the Office of Inspector General published a final rule finalizing revisions to its exclusion authorities. The final rule makes changes to key definitions that could have a significant impact on providers by broadening the scope of their exclusion screening obligation and enhancing exclusion enforcement by the agency. Effective February 10th, the final rule also authorizes new basis’ for permissive exclusions, makes the acquisition of information during investigations easier, creates a process for early reinstatement, and caps the Statute of Limitations at 10 years.

OIG Expands its Exclusion Authority Through Definitional Changes

Federal and State health care programs are prohibited from paying for items or services furnished, either directly or indirectly, by an excluded person or entity. The payment prohibition, as originally written, was limited to claims that were “submitted” and to the persons or entities that made the “submissions;” a limitation that did not account for the growing number of non-traditional reimbursement mechanisms (such as shared savings or performance-based payments).

The final rule proposes to amend the definitions of “directly,” “indirectly” and “furnished” to “incorporate [these] newer payment methodologies” simply by eliminating the “submission requirement.” It redefines “direct claims” to include “the provision of an items or services for which one “request(s) or receive(s) payment from … Federal health care programs;” and “indirect claims” to include items and services “that do not directly request or receive payment from Medicare, Medicaid, or other Federal health care programs, but that provide items and services to providers, practitioners, or suppliers who request or receive payment from these programs for such items or services” (such as the provision of a knee replacement that is paid for by the hospital and is part of the reimbursement to a hospital as part of the DRG).

The OIG refers to the changes in these definitions as mere “technical definitional change,” but that vastly understates their significance. After all, the changes (which intentionally track the inclusive language of the Federal False Claims Act) are intended to give the broadest possible meaning to what constitutes a claim, and the OIG’s exclusion authorities (whether in terms of the payment prohibition or civil money penalties) are primarily defined in terms of the number and value of “claims.” Exactly how this will “play out” over time is unknown, but the changes are certain to impact exclusion enforcement in the coming months and years!

Linkage of Federal and State Health Care Programs

The original draft of the final rule, issued in May, 2014, included State Health Care Programs and Medicaid in the definition of Federal Health Care Programs, and it specifically extended the payment prohibition of a federally imposed exclusion to Medicaid and other State Health Care Programs. Thus, whether or not a State has followed the OIG’s lead and excluded a person from its own exclusion list, the final rule makes clear that it must honor the payment prohibition of an existing OIG Exclusion.

This requirement was strengthened and emphasized by an amendment to section § 1002.6 by the final rule which makes States responsible for repayment of any Federal Financial Participation (FFP) payments they received for items or services that were provided by an excluded person. Thus by extending the exclusion payment prohibition beyond providers to the States, and by requiring the potential repayment of improperly received FFP, the OIG has clearly put additional teeth in exclusion screening requirements to both providers and to the States that oversee them in their Medicaid Programs.

 

New Exclusion Authorities

The ACA and MMA expanded the OIG’s permissive exclusion authorities, and the final rule implements these authorities. Among these, are the creation of a permissive exclusion authority for individuals and entities convicted of obstructing health care investigations and/or audits; for the improper certification for the need for items or services; and for the making or causing to be made false statements or for the misrepresentation of material facts in participate and enrollment requests.

OIG Gains Additional Access to Documents in Exclusion Hearings 

The OIG has proposed in the final rule to revise the language related to its right to immediate access to information and clarifications to its access to electronically stored documents under the Inspector General Reform Act of 2008. The proposed rule also provides for the ability of OIG to subpoena and require testimonial evidence in connection with a permissive exclusion hearing.

Excluded Persons Gain Procedure Rights; May Seek Early Reinstatement

The final rule creates the possibility of early reinstatement and waivers in the exclusion process. In particular, it gives the OIG the authority to grant waivers of certain exclusions, it proposes to add a process for early reinstatement where a health care license has been lost and has not been reinstated under certain circumstances, and it proposes to give individuals and entities the right to an oral argument in front of an OIG official prior to exclusion under certain circumstances.

10 Year Statute of limitations

Finally, the OIG has changed from its initial position that there should be no limitation on exclusion actions noting that as conduct becomes older it becomes less relevant to current trustworthiness. After further observing that the litigation of False Claims Act cases and exclusion actions are often on parallel tracks, and that such cases often take many years to litigate – the OIG states that it has sought to achieve a balance and that it and has chosen to adopt a 10-year limitations period for exclusions. This, it believes, is a period that is consistent with the application of the remedies utilized in exclusion investigations and the False Claims Act in many circumstances.

Conclusion

The OIG’s rule finalizes revisions to its exclusion authorities and increases its permissive exclusion authority while augmenting its already impressive enforcement toolkit. The rule also provides for early reinstatement under certain circumstances, it grants persons subject to permissive exclusions the right to orally argue their positions, and the proposed unlimited statute of limitations has been reduced to 10 years.

• Paul Weidenfeld, is a nationally recognized expert in health care fraud litigation and the federal False claims Act. A former Department of Justice National Health Care Fraud Coordinator, he is currently in private representing health care providers and individuals, and a co-founder of Exclusion Screening, LLC.