Exclusion Archives - Compliance Hotline

Home Health Final Rule Extends Exclusion Screening Obligation: Failure to Screen Could Result in Termination from Medicare

By Paul Weidenfeld and Catalina Jandorf

The new Final Rule issued by CMS revising the conditions of participation for home health agencies (HHAs) requires that providers “must ensure” that agencies providing services under arrangement have not been excluded from Medicare, Medicaid or any other federal health care program. Effective July 17, 2017, the rule also states that providers must ensure that such agencies have not had their billing privileges revoked, and that they have not been terminated or been debarred from participating in any government program. In making these requirements a condition of participation, CMS has created an affirmative screening obligation under which they have enforcement authority.

Compliance as a Condition of Participation

By making compliance with exclusion regulations a condition of participation, CMS has raised the stakes for failing to properly screen the exclusion status of vendors or contractors for HHAs while reaffirming the agency’s longstanding concerns about the participation of excluded persons in the Medicare Program. Specifically, CMS has a wide assortment of administrative remedies that can be imposed for failing to meet conditions of participation – including even the ability to terminate a provider from participation in the program itself – all of which are independent from the OIG’s enforcement authorities for exclusion violations.

Guidance that Doesn’t Guide

Under the Final Rule, CMS may now hold an HHA liable for a State Exclusion in addition to a Federal Exclusion, by including Medicaid exclusion screening as a condition of participation. However, as there is no universal list of all Medicaid excluded entities and individuals and the newly published final rule provides no guidance on how this requirement can be met, CMS has created an affirmative obligation without any guidance on how to fulfill it.

In the response to a commenter’s concerns about the difficulties involved in meeting these requirements CMS stated that it “appreciates the opportunity to clarify [the] requirement” but it did not actually speak to the State issue. The agency discussed the Federal exclusion lists but failed to address how an HHA could screen for a Medicaid exclusion. It provided that self-certification is an appropriate mechanism in identifying denial of Medicare or Medicaid enrollment or in verifying debarment from government programs, but maintained that an HHA will still be held responsible for failing to properly screen a contracted entity that is providing “services under arrangement”. This lack of guidance in screening requirements could be potentially problematic for a home health agency that relies solely on self-certification or just screening the Federal exclusion lists to weed out excluded entities.

Conclusion

We think it is clear at this point that the mandated screening requirements consist of checking the List of Excluded Individuals and Entities (LEIE) and the System for Award Management (SAM) for a Medicare exclusion upon hire and every 30 days thereafter. However, since the final rule does not clearly articulate what agencies must do to meet these requirements – particularly insofar as they involve Exclusions imposed by State and their Medicaid Fraud Control Units – home health agencies are left without clear guidance as to how to meet this requirement and are well advised to employ a broad exclusion screening protocol.

The best way to remain in compliance and avoid a Medicare or Medicaid Exclusion is to screen all employees, contractors, and vendors every month against all 38 state lists in addition to the LEIE and SAM. To eliminate the risk of being barred from participation in the Federal health care programs, contact the Exclusion Experts at 1-800-294-0952 or online for a free consultation.

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.

Catalina Jandorf is a 3L at American University Washington College of Law. She has experience working in health care as a law clerk at the Department of Health and Human Services Office of Counsel to the Inspector General and Inova Health System Office of the General Counsel.

What Medical Practices Need to Know About an OIG Exclusion

By Paul Weidenfeld [1] The Office of Inspector General (OIG) has steadily increased its enforcement of OIG Exclusion violations since the issuance of its Special Advisory stressing the effect of an OIG Exclusion in May, 2013. Among other things, they have created a special unit to focus specifically on Civil Money Penalties (CMPs) (its favored enforcement tool), supported numerous prosecutions by both its Office of Audit and its Office of Evaluations and Inspections, and sought greater regulatory authority from Congress. This article was originally directed (and is still intended) to give a basic tutorial on what an exclusion is, how it effects them, and what they can do to protect themselves.

I. What is an OIG Exclusion?

The Department of Health and Human Services (HHS) is responsible for administering the Medicare and Medicaid Programs and it decides who may receive benefits under these programs as well as who will be allowed to provide them. When it is determined that a person or entity will not be permitted to provide services to the program, that person or entity is said to be “excluded.” The authority to exclude individuals and entities from Federal health care programs has been delegated by the Secretary of HHS to the OIG.[2]

There are two types of OIG exclusions, mandatory and permissive, and both have the effect of barring an individual or entity from participating in all Federal health care programs until such time, if ever, that their privilege has been reinstated.[3] Mandatory exclusions last a minimum of 5 years and must be imposed if a person or entity is convicted of certain criminal offenses. These include, among others, offenses related to defrauding Federal or State health care programs, felony convictions for other health care related offenses, most drug related felony convictions, and patient abuse or neglect.

Permissive exclusion authority implicates a much wider range of conduct. The type of conduct for which permissive exclusions may be imposed include misdemeanor convictions related to defrauding health care fraud programs; drug related misdemeanors; suspension, revocation or surrender of a health care license based on competence, performance, or financial integrity; providing unnecessary or substandard services; submitting false claims; defaulting on health education loans or student loans, and so on.

II. What is the Impact of an OIG Exclusion?

The impact of an OIG exclusion extends to any provider who employs or contracts with the excluded person or entity. The regulation that grants OIG the exclusion authority states that payments cannot be made for items or services furnished “by an excluded individual or entity, or at the medical direction or on the prescription of a physician or other authorized individual who is excluded when the person furnishing such item or service knew or had reason to know of the exclusion.” 42 CFR § 1001.1901(b).

Though the language of the regulation appears to be directed at excluded persons who provide direct, billable services, the OIG broadly interprets the regulation to create a “payment prohibition” that includes virtually any item or service performed by an excluded person that contributes to any claim for reimbursement from any Federal or State Health Care Program.[4] For example, the OIG considers the preparation of a surgical tray or the inputting of information into a computer by an excluded person in violation of the prohibition. Similarly, administrative and management services, IT support, and even strategic planning would also be problematic. Even an excluded volunteer’s assistance might trigger the prohibition unless his activities were “wholly unrelated to Federal health care programs.”[5]

As indicated earlier, the favored enforcement tool is the imposition of civil penalties pursuant to 42 CFR §1003.102(a)(2). Though this regulation also appears to be restrictive in nature,[6] the OIG interprets it to authorize CMPs for the failure of providers to screen their employees, vendors and contractors for exclusions. In its view, any time an “excluded person participates in any way in the furnishing of items or services that are payable by a Federal health care program,” [7] a employer/provider that fails to screen will be held to have “known” — or “should have known” — of the exclusion.[8]

III. OIG Exclusion Screening Requirements

Federal screening requirements are contained in the May, 2013 Special Advisory Bulletin.[9] The Advisory Bulletin states that in order for a provider to “avoid potential CMP liability,” they must check the List of Excluded Individuals and Entities (LEIE) to “determine the exclusion status” of their current employees, vendors and contractors. This can be done, according to the Bulletin’s guidance, by reviewing “each job category or contractual relationship to determine whether the item or service being provided is directly or indirectly, in whole or in part, payable by a Federal health care program,” and then “screen everyone that perform[s] under that contract or in that job category.[10]

While the OIG concedes that it does not have the authority to require that screening be performed every 30 days, it makes it clear that providers who fail to screen their employees, contractors, or vendors monthly risk the imposition of CMPs and overpayment liability. In addition, the OIG observes that the LEIE is updated on a monthly basis, that CMS mandated monthly screening for all State Medicaid Units in 2009 and 2011, and it requires monthly screening in all of its corporate integrity agreements.

IV. Are the OIG Exclusion Requirements Difficult to Meet?

The logistics of the screening process are extremely challenging for most providers despite the fact that the LEIE is a “searchable and downloadable database that can assist in identifying excluded employees.”[11] Providers can elect to use the “search function” of the LEIE, but can only screen five employees at a time and each name must be entered manually. In addition, potential matches can only be verified individually by entering the social security number. This may work well if a provider only has to screen a handful of employees or contractors, but how would this work out if a provider has 200, 2,000, or even 20,000 employees?

The alternative, downloading the LEIE database and comparing the employee list to it, is equally problematic. Most providers simply do not have the capability to download the LEIE (which contains almost 60,000 names) and compare it with their own employee database in any reliable, or economically viable way. Another issue is the requirement that providers apply the same standard to contractors and sub-contractors as to their own employees. Contractors are unlikely to want to share their employee lists, and a provider would not want to screen the employee list of a large contractor. While the OIG does seem to recognize the issue by suggesting that providers can “choose to rely [on] screening conducted by the contractor,” it immediately follows the suggestion by reminding providers that they remain responsible for both overpayment liability and CMPs if they fail to ensure that “appropriate exclusion screening” has been conducted.[12]

V. State Exclusion Requirements

It is important to remember that the OIG’s guidance addresses only federal concerns. While the OIG may be satisfied with just screening the LEIE on a “regular” basis, there are only a handful of State Medicaid Programs that would find that this satisfied their requirements. Indeed, most States require, at a minimum, that providers screen their State Exclusion List (37 States have them) in addition to the LEIE, and many also require screening of the GSA/SAM[13] and/or other State specific exclusions lists (such as sex offender lists, elder abuse lists, etc.).

States also commonly include additional screening requirements through their provider agreements — some of which can be quite onerous. For example, in some States, applicants are required to certify that no employees or contractors are “suspended, or excluded from Medicare, Medicaid or other Health Care Program in any state”.[14] Additionally, State exclusion lists have a wide range of formats that vary from excel spreadsheets to unsearchable PDF documents further adding to the problems with screening.

VI. Outsourcing of Exclusion Screening is a Simple, and Affordable Solution

Exclusion Screening, LLC was created because we recognized the difficulties providers faced when seeking to comply with their exclusion screening obligations. We were determined to provide a simple, cost effective solution to the problem and we feel strongly that we accomplished our goal.

Exclusion Screening is simple (we do all the work), cost effective (likely to cost less than the monthly cost of the water delivered to your office), and best of all, it is a complete solution to your screening needs. Call or email me if you have any questions at: pweidenfeld@www.exclusionscreening.com or 1-800-294-0952.

[1] This is an update of an article that was first published in by the National Alliance of Medical Auditing Specialists (NAMAS) and posted on this website in November, 2014. It was done with the assistance of Jonathan Culpepper.

[2] Sections 1128 and 1156 of the Social Security Act. Though loosely defined to include any program that provides any health benefits, the most significant of these programs are Medicare and TRICARE. Medicaid exclusions are left to the State Fraud Control Units.

[3] Mandatory exclusions are found at 42 USC § 1320a-7; permissive exclusions at 42 USC § 1320a-7(b).

[4] The Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs issued May, 8, 2013 replaced and superseded the 1999 Bulletin and states: “This payment prohibition applies to all methods of Federal health care program payment, whether from itemized claims, cost reports, fee schedules, capitated payments, a prospective payment system or other bundled payment, or other payment system and applies even if the payment is made to a State agency or a person that is not excluded (at page 6 of the Bulletin).

[5] These are examples taken from the Special Advisory Bulletin, id.

[6] The regulation seems to be explaining the circumstances under which CMPs are available, not extending them stating that they may be assessed where a person making a claim stating: “knew, or should have known, that the claim was false or fraudulent, including a claim for any item or service furnished by an excluded individual employed by or otherwise under contract with that person.”

[7] Id. at 11.

[8] This is the language that appears in the OIG press releases announcing settlements of exclusion violations.

[9] Special Advisory Bulletin, at 13-18.

[10] Id. at 15-16.

[11] Id. at 14.

[12] Id. at 16.

[13] The System for Award Management (SAM) is the Official U.S. Government system that consolidated the capabilities of the CCR/FedReg, ORCA, and EPLS which were pre-existing debarment databases.

[14] See, for example, Rule § 352.5 of the Texas Administrative Code which specifically requires such a certification and the Louisiana Medicaid Provider Agreement.

Who Is to Blame for Gaps in OIG and State Exclusion Lists? What Is the Impact on Providers?

The failure to report excludable offenses by state Medicaid offices and licensing boards is a longstanding issue for the OIG. Recent OIG audits and reports have confirmed these state failures to report. For example, an OIG study released in August found that over 12% of terminated providers were able to continue participating in other state Medicaid programs because states were not sharing terminated provider information. In addition, two recent Medicaid Fraud Control Unit (MFCU) audits discovered that they routinely failed to timely report conviction information to the OIG and sometimes did not report them at all.[1] Reporting failures lead to gaps in the OIG Exclusion List (LEIE) because the OIG cannot exclude an individual if the OIG is never informed of the state’s conviction, termination, or suspension of providers. Such failures to report are important because the information that would have been reported can lead to exclusion violations, which are listed on the LEIE. But, state compliance failures are not the only cause of gaps in OIG and State exclusion lists – as we discuss, no matter who is at fault, the provider may pay for anyone’s mistake.

The OIG Exclusion List Has Limited Search Capabilities

One important reason providers should not rely on screening only the LEIE is that its search function is extremely narrow. If an excluded individual uses a different name, such as a middle or maiden name, an LEIE search using the person’s first and last names my not produce any results.[2] For example, J. A.[3] was excluded from participation on Georgia’s state exclusion list in August 2015. However, a search for “J.A.” on the LEIE currently produces zero results.

Conversely, when we searched J.A. on SAFER^TM, our proprietary exclusion database, we not only found a match on the Georgia list (“J.A.”), but we also found a match on the LEIE and SAM databases for “R.J.A.”. Interestingly, “J.A.” has the same middle and last name as “R.J.A.,” they are both Georgia residents, and they were both excluded from participation in April 2015. Like many states, the identifying information on Georgia’s list is sparse. Nevertheless, it is extremely likely that R.J.A. and J.A. are the same person, which a provider would have missed if he only searched the LEIE for J.A.

Reported Cases May Not Be Picked Up by OIG

Florida’s Agency for Health Care Administration publishes monthly press releases which identify persons terminated from participation in Florida Medicaid. It expressly states that the exclusion information was “reported to the federal government for placement on the federal exclusion list,” and named providers appear on Florida’s Excluded Provider List. When we conducted a SAFER^TM search for G.B., who was listed on the April 2015 memo as “terminated from participation,” the only two “hits” were from Florida’s state exclusion list.

However, an LEIE search for G.B. produced zero results.

One possible explanation for why G.B. fails to show up on the LEIE could be the administrative process of OIG actually reviewing the reason for the termination and then formally excluding G.B. Nevertheless, a provider who only screens the LEIE and employs or is considering employing G.B. would miss this exclusion.

OIG Just Misses Some Cases

K.B., a Registered Nurse (RN) with multistate licensure privileges, was placed on probation for substance abuse in February 2005. After testing positive for morphine, Iowa revoked her license and several other states revoked her multistate privileges. While the revocations were reported, the licensure revocation only resulted in K.B.’s exclusion from participation by California and the GSA-SAM in 2010. K.B. is not listed on the LEIE. This means that K.B. is unable to participate in any other state Medicaid program because under the ACA 6501, if you are terminated for cause from participation in one state, then you are terminated in all states, and K.B. is barred from contracting with the federal government. However, if a provider only screened the LEIE he would be completely unaware and could potentially face very hefty fines.

What This Means

Clearly some information is getting lost or mixed up in the reporting pipeline between state Medicaid offices, MFCUs, and the OIG, and the lesson for providers is that merely screening the LEIE is not enough. The examples above demonstrate that human error, narrow search functions, and simply missed information all play a role in the gaps that exist between publication on state exclusion lists and the LEIE.

State Medicaid offices are responsible for compiling and reporting information about excluded providers. However, as demonstrated by the “J.A.” case, the probable human error of transposing names combined with the LEIE’s limited search capabilities could result in a provider employing an excluded person, even though he was properly screened against the LEIE. To avoid this, providers should screen against the LEIE, the GSA-SAM, and all available state lists monthly. Practices should also ensure they use wide search parameters (alternate spellings, full names, maiden names, etc.) when conducting searches or they should select a vendor, like Exclusion Screening, LLC, with a system designed to anticipate these issues.

Notwithstanding name discrepancies, some information just does not make it to the LEIE. As the “G.B.” example reveals, a practice may face considerable monetary fines because it failed to screen the Florida exclusion list and relied solely on the LEIE for exclusion information, and the OIG failed to add G.B.’s name to the LEIE. Similarly, a provider who considered employing “K.B.” would be totally unaware that she was excluded from participation unless the provider screened the GSA-SAM and/or the California exclusion list. Remember that ACA section 6501 states that when an individual or contractor is excluded in one state, he or she is excluded in all states. When a provider misses such state exclusion information, he or she could be liable for CMPs of $10,000 for each claim provided directly or indirectly by the excluded individual, an assessment of up to three times the total amount paid by the government, and potential false claims liability. Relying on the LEIE’s exclusion information without checking all other available state exclusion lists is a substantial monetary risk for a practice to take. If screening and verifying 40 state and federal exclusion lists each month is overly burdensome for your practice, contact Exclusion Screening, LLC today for a free assessment: 1 (800) 294-0952.

[1] MFCUs are supposed to send a referral letter to the OIG within 30 days of sentencing for the purpose of alerting the OIG about providers excluded from state programs, but the OIG found that in some cases this exclusion information was not referred to the OIG for over 100 days.

[2] We have even found that hyphenated names frustrate LEIE searches even where the actual names are used!

[3] Full names have been redacted for privacy.

Health Care Fraud: Second Conviction Secured in Michigan Excluded Provider Scheme

In February, we reported that the Michigan Attorney General secured a racketeering and health care fraud conviction against an excluded Michigan podiatrist. The podiatrist participated in an elaborate health care fraud scheme with another Michigan provider. In early July, the Michigan Attorney General successfully convicted the doctor who knew or should have known that the podiatrist was excluded.

Health Care Fraud Conviction Details

The Attorney General’s investigators determined that the provider hired a former podiatrist who was convicted of health care fraud in 2003. The podiatrist was subsequently excluded from participation in the federal health care programs for a period of 25 years. The provider billed private insurance and the government for the excluded podiatrist’s medical services as if he performed them. Trial testimony indicated that the provider made payments to the excluded podiatrist from the same account where health care program payments were deposited.

For entering into this scheme, the provider was convicted of racketeering (20-year felony), thirteen counts of health care fraud (4-year felony), and five counts of Medicaid fraud (4-year felony). Up to $200,000 in fines accompanied the convictions.

Takeaway

The Michigan provider was held liable because he “knew or should have known” that the podiatrist he contracted with was excluded from participation in the federal health care programs. The OIG and state Attorney Generals are working to end health care fraud by seeking out providers who employ or contract with excluded persons or entities. The best way to protect yourself from liability is to screen all employees and contractors against all federal and state exclusion lists monthly. Call Exclusion Screening, LLC today for a free assessment of your needs and costs at 1(800) 294-0952.

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article.

Pennsylvania Judge Holds that CIA violations May Result in FCA Liability

In late July, a federal district court in Pennsylvania joined in the flurry of False Claims Act (FCA) decisions. These decisions further interpreted the ACA’s amendments to the law. The court in United States ex rel. Boise v. Cephalon, Inc. considered two important issues. The issues regarded when a party has an obligation to pay the government, and when a failure to do so could result in reverse false claims liability. Providers should be on high alert and ensure that they are in compliance with all requirements. This includes the requirement to screen employees monthly in order to avoid being OIG’s next false claims target.

Background

The defendant in Cephalon failed to comply with its Corporate Integrity Agreement (CIA) and OIG sought repayment. OIG alleged that they failed to comply with the CIA, which caused reverse false claims and produced FCA liability.

Cephalon, a drug manufacturer, argued that it could have only had an obligation to pay penalties under the CIA if HHS-OIG actually demanded payment. The relator argued that Cephalon’s obligation to pay actually arose when it breached the CIA’s reporting requirements. The court disagreed with Cephalon and instead held for the relator. The court found that a CIA imposes contractual obligations through reporting requirements. Furthermore, a breach of these contractual obligations could cause a company to be liable for reverse false claims even if OIG had not yet demanded payment. Finally, the court elaborated that “specific contract remedies” like specific penalties create a “less contingent obligation to pay.”

Takeaways

The federal government is taking advantage of the new false claims recoupment tools made available to it through the ACA. If you are not screening your employees and contractors against state and federal exclusion lists, then now is the time to ensure your practice is complying with the law. Call Exclusion Screening, LLC for a free assessment of your needs and costs at 1-800- 294-0952.

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article.

Excluded Individual Conducts Elaborate Health Care Fraud Scheme

The owner of a New Jersey ambulance company was indicted for health care fraud in mid-August of 2015. The owner was excluded from participation in the federal health care programs after being convicted of defrauding New Jersey health care programs in 2003. This is just the latest in a steady stream of health care related enforcement actions by state attorney generals.

Background

New Jersey prosecutors allege that the provider has been the owner and operator of a New Jersey ambulance company to which Medicare and Medicaid have paid out a combined $7.5 million since 2010. The provider allegedly hid his involvement in the company by paying employees in cash. The defendant has owned and operated the ambulance company since 2005, which is only two years after he was excluded from participation in the federal health care programs for a period of 11 years. The provider now faces a 17-count federal indictment with a possible sentence of 30 years in prison for conducting the health care fraud scheme.

Takeaways

It may be difficult to protect yourself from individuals like this New Jersey provider who explicitly sought to defraud the federal health care programs. Providers should, however, try to protect themselves by conducting monthly exclusion screening searches of their employees and contractors. Providers should also maintain proper records of these searches. States, like the federal government, are actively pursuing those who are in violation of federal health care regulations. Remember, compliance is always the best policy!

Ashley Hudson, Associate Attorney at Liles Parker, LLP and former Chief Operating Officer for Exclusion Screening, LLC, is the author of this article. Feel free to contact us at 1-800-294-0952 or online for a free consultation.

Exclusion Screening Required in United States Territories

Our experts at Exclusion Screening, LLC maintain fact sheets that contain the screening requirements for providers in every state, including those states that do not currently maintain a separate excluded or terminated provider list. However, Medicaid participation and adherence to exclusion screening requirements does not stop with the fifty states. United States territories like Puerto Rico and the U.S. Virgin Islands also participate in Medicaid, and therefore, providers must comply with the same screening requirements as United States Medicaid providers.

A Closer Look

Through our research, we analyzed and compiled the exclusion screening requirements in Puerto Rico, the U.S. Virgin Islands, the Northern Mariana Islands, and Guam. A summary for each territory follows.

Puerto Rico

Puerto Rico’s Medicaid program does not maintain a separate excluded provider list and does not demand that providers conduct independent exclusion screening. Instead, private companies, like Molina Healthcare, which contracts with Puerto Rico Medicaid, conduct exclusion screening searches before accepting a provider’s Medicaid enrollment application. The contracted healthcare company continually reviews review the exclusion lists monthly thereafter.

U.S. Virgin Islands

The U.S. Virgin Islands, on the other hand, require providers to disclose quite a bit of information pertaining to exclusions. When a provider enrolls in the Virgin Islands’ Medicaid program, he must disclose whether: the provider; any person or entity that has a direct or indirect ownership interest of 5% or more of the provider; any person or entity with an interest in any subcontractor that the provider has an ownership interest of 5% or more; any agent, officer, director, or managing employee has ever been excluded from participation in any program under Medicare, Medicaid, or Title XXI services since the inception of the program.

In addition, the provider must certify that the enrolling provider, its owners, managers, employees, and contractors are not excluded from participation in the federal health care programs by checking the LEIE at the time of enrollment, before hiring or contracting, and monthly thereafter. The provider must also agree to immediately report any exclusion information discovered to the Department of Human Services.

Northern Mariana Islands

The Northern Mariana Islands, like the U.S. Virgin Islands, address exclusions within the Medicaid Provider Enrollment application. Specifically, the provider must disclose whether he or she has ever been denied, terminated, or suspended by Medicare or any Medicaid program. In addition, the provider must disclose whether any person with an ownership or control interest or any agents or managing employees have ever been convicted of a criminal offense related to his or her involvement in the federal health care programs, the commission of which would likely result in exclusion from participation in the programs.

Guam

Guam’s State Medicaid Plan, effective January 1, 2012, requires that the Medicaid agency performs exclusion screening checks on all providers, any person with an ownership or control interest in the provider, or any of the provider’s agents or managing employees.

Takeaway

The U.S. Territories, much like the fifty states, have varied exclusion screening requirements. We believe all providers must be aware of the specific requirements imposed by their state Medicaid office, but also believe that providers should not stop at their state’s baseline minimum for exclusion screening. Compliance is always the best policy and screening all available state lists is an excellent way to ensure that your practice is abiding by any requirements imposed by Medicare, Medicaid, or private insurance companies. In addition, when it comes time to enroll or re-enroll (and upcoming deadline for many) in your state Medicaid program, you can certify with confidence that no employee, contractor, or vendor has ever been excluded from participation in any state. Call Exclusion Screening, LLC today at 1(800) 294-0952 to discuss your specific state’s screening requirements or for a free consultation regarding your practice’s exclusion screening program!

Southern District of New York Provides Clarity on “Identifying” Overpayments

In early August of 2015, the Southern District of New York (SDNY) provided insight as to when the 60-day clock for returning an overpayment begins to run under the Patient Protection and Affordable Care Act of 2010 (ACA). This decision is particularly relevant to screening for exclusions because the government has started to penalize providers who submit claims for services provided directly or indirectly by an excluded individual or entity for the greater penalty of submitting a false claim. Simply stated, the government now views claims as legally false if an excluded person provided any part of that claim. This makes providers possibly liable pursuant to the false claims act.

The court’s additional clarity on when the 60-day clock begins to run for false claims act liability may be the OIG’s next tool in retrieving Federal dollars from those providers who fail to screen their employees or contractors monthly. Therefore, those providers could be in receipt of overpayments for monies received from services provided by excluded persons or entities.

I. Background – False Claims Act

The Fraud Enforcement and Recovery Act (FERA), enacted in 2009, amended the False Claims Act and added a “reverse false claims” provision. This reverse false claims provision imposes liability of $5,500 to $11,000 per false claim[1] on persons who “knowingly and improperly avoid[] or decrease[] an obligation to pay or transmit money or property to the Government.”[2] The term “knowingly” includes persons who have “actual knowledge of the information,” as well as those who “act in deliberate ignorance” or in “reckless disregard of the truth or falsity of the information.” The term “require[s] no proof of specific intent to defraud.”[3] In addition, FERA further clarified that an “obligation means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.”[4]

The ACA added additional clarification to the overpayment retention provision. Specifically, it required that a person who has received an overpayment must “report[] and return[]” the overpayment “by the later of (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.” An overpayment is defined as any monies “received or retained” under Medicare or Medicaid to which a person is not entitled.[5] Failure to repay an overpayment by the 60-day deadline constitutes a reverse false claim under the False Claims Act. However, Congress failed to define “identified” in the statute, which caused ambiguity about when the 60-day clock begins to run.

II. United States ex rel. Kane v. Healthfirst, Inc., et al.

The United States ex rel. Kane v. Healthfirst, Inc., et al., case arose after relator Robert Kane, a former Continuum employee, conducted an internal investigation of the company. The investigation revealed that 900 specific claims amounting to over $1 million may have been wrongly submitted and paid by Medicaid as a secondary payor.[6]

According to the Complaint, Continuum was questioned about a “small number of claims” that the Comptroller’s office concluded were improperly submitted for Medicaid reimbursement.[7] After several conversations, the parties discovered that the problem was related to a software glitch that caused certain claims to contain a code which automatically referred the claim for additional payment for covered services. Continuum was sent a corrective software patch by the software vendor that would ensure that Continuum would not improperly bill any other secondary payors.[8]

Once the software problem was identified in December 2010, Continuum asked Kane to determine which claims were improperly submitted due to the software malfunction.[9] After reviewing the claims, Kane sent an email containing a spreadsheet identifying over 900 claims dating back to May 2009 and totaling more than $1 million. All of these claims contained the problematic code that caused the billing error to Continuum’s Vice President for Patient Financial Services, Continuum’s Assistant Vice President for Revenue Cycle Operations- Systems, and other Continuum management. Kane’s email stated that further scrutiny was necessary to confirm his findings, but the Defendants alleged that he had identified a large portion of the claims that were incorrectly billed. Kane was fired four days after sending this email. According to the Complaint, Continuum did nothing with the alleged overpayments Kane identified except for reimbursing five of the 900 erroneously submitted claims.[10]

The Comptroller, however, continued to review Continuum’s billing and found more claims which it promptly brought to Continuum’s attention from March 2011 through February 2012.[11] Continuum reimbursed the claims identified by the Comptroller beginning in April 2013 until March 2013. Continuum never brought Kane’s research to the Comptroller’s attention and only repaid around 300 claims after the Government issued a Civil Investigative Demand in June 2012. Due to its “intentional and reckless”[12] delay in repaying the alleged overpayment more than 60 days after they were identified, the Government, through Relator Kane, alleged that Continuum is liable for reverse false claims. Therefore, Continuum was allegedly liable for treble damages plus an $11,000 penalty for each overpayment illegally retained more than 60 days after identification.[13]

III. SDNY Court Defines “Identifying” Overpayments

Continuum responded to these allegations by filing a Motion to Dismiss arguing that Kane’s email merely “provided notice of potential overpayments and did not identify actual overpayments so as to trigger the ACA’s sixty-day report and return clock.”[14] The term “identified” was left undefined by Congress in the text of the ACA, which gave rise to Continuum’s motion.

In its motion, Continuum contended that the court should adopt a definition of “identified” as “classified with certainty.” The Government responded that instead “an entity ‘has identified an overpayment’ when it ‘has determined, or should have determined through the exercise of reasonable diligence, that [it] has received an overpayment.’” The Government’s definition would essentially define “identified” as when “a person is put on notice that a certain claim may have been overpaid.”[15]

In an effort to ascertain the plain meaning of “identify,” the court consulted dictionary definitions, but it found that the wide range of definitions alone were not particularly helpful. Next, the court utilized canons of construction, reviewed the ACA’s legislative history, and considered the legislative purpose behind including a mandate to return overpayments within the ACA. The court found the legislative history particularly revealing and noted that Congress chose to adopt the Senate’s version of the bill which contained “identified” instead of the House Bill which employed the term “known.” After a thorough evaluation, the court concluded that “identified” should be defined as the moment “when a provider is put on notice of a potential overpayment, rather than when an overpayment is conclusively ascertained, [which] is compatible with the legislative history of the False Claims Act and FERA.”[16]

The court tempered its decision in stating that “the mere existence of an ‘obligation’ does not establish a violation of the False Claims Act.” Instead, the court held that a reverse false claim is only triggered when “an obligation is knowingly concealed or knowingly and improperly avoided or decreased.” Therefore, the court advised that prosecutorial discretion be employed to avoid filing enforcement actions against “well-intentioned providers working with reasonable haste to address overpayments” because this would be “inconsistent with the spirit of the law.”

IV. Takeaways

This decision is significant because it is the first opinion interpreting the term “identify” as it is used in relation to the ACA’s 60-day overpayment reporting requirement. While it is only binding in the Southern District of New York, it will likely guide other court opinions as they arise.

Providers should be aware that they could be liable for overpayments 60 days after they are “put on notice of a potential overpayment.” Therefore, providers should act with “reasonable haste” in reviewing potential overpayments to demonstrate good faith compliance.

Finally, providers must continue to screen their employees and contractors against the Federal and state exclusion lists monthly. The Government has only recently begun to pursue excluded individuals for False Claims Act violations. The new interpretation of “identify” as being “on notice” could provide the Government with a brand new tactic to retrieve federal monies. One of the reasons we strongly advocate that providers check all federal and state exclusion lists monthly is to find potential exclusions and demonstrate maximum compliance before an exclusion problem arises.

V. Conclusion

Failing to screen thoroughly and verify potential matches each month is not a way to avoid liability. It is unlikely that OIG would excuse overpayment liability if a provider claimed he was not “on notice” about an employee’s excluded status if that provider failed to properly screen and verify employees. Further, if a provider has identified a potential match, then he must work diligently to verify this match and return any monies received for services provided by this employee if he is excluded because the initial identification date could potentially start the 60-day clock for false claims act liability. [17]

[1] Opinion and Order at 9 n.12, United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y Aug. 3, 2015).

[2] 31 U.S.C. § 3729(a)(1)(G) (2011).

[3] Id. § 3729(b)(1).

[4] Id. § 3729(b)(3) (emphasis added).

[5] 42 U.S.C. § 1320a-7k(d)(4)(B) (2010).

[6] Complaint-in-Intervention of the United States of America at 11, United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y. June 27, 2014).

[7] Id. at 10.

[8] Id.

[9] Id.at 11.

[10] Id.

[11] Id.

[12] Opinion and Order at 11, United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y Aug. 3, 2015).

[13] Id. at 8.

[14] Id. at 17.

[15] Id. (emphasis added).

[16] Id. at 23.

[17] Exclusion Screening, LLC is not a law firm and does not provide legal advice. As such, this is not intended, and should not be taken, as legal advice. We strongly recommend that you seek the advice of counsel whenever decisions that may have legal consequences are made.

Medicaid Providers That Are Excluded or Terminated for Cause Often Continue to Participate in Other States According to a New OIG Audit

OIG Audit Findings

In a recently released audit, the OIG found that despite the ACA requirement that states terminate Medicaid providers already terminated in another state, 12% of providers already terminated for cause in 2011 in one state (295 out of a sample of 2,539) were still participating in other state Medicaid programs as of January of 2014! There is a lack of state to state coordination identified in both this audit and one issued last March, and a lack of state to Federal coordination identified in separate OIG audit reports. This strongly reinforces our suggestion that providers screen their employees, vendors and contractors on all available State Exclusion Registries in addition to the LEIE and the SAM!

Exclusion, Termination and the ACA

In practical terms, to implement section 6501 of the ACA, states must first find the providers who are terminated from federal healthcare programs. Then, states must identify whether any terminated providers are participating in their Medicaid program. Finally, they must take action to terminate the provider from its own Medicaid program.

According to the report, this is defeated by a general lack of coordination caused in large part by a lack of uniformity of terminology among not only the states, but in existing Federal and state databases. For instance, exclusion and termination are synonymous in many states, but they have distinctly different meanings for CMS. This is also true with such terms as suspension, disbarment, revocation and sanction. Furthermore, what constitutes “cause” in one state may not in another state. The audit also notes that some states have a basic misunderstanding about the relationship between licensure and exclusion or termination. Those states often conclude that if Medicaid providers have an active license from the relevant state board, the state Medicaid agency should defer to the judgment of that board and not terminate the providers for cause.

Principle OIG Recommendations

The OIG reiterated its recommendation from March 2014 that CMS require state Medicaid agencies to report all terminations for cause. The OIG found that a lack of a comprehensive data source of providers terminated for cause creates a challenge for state Medicaid agencies. It also recommended that CMS work with states to develop a uniform terminology, that CMS furnish guidance to state agencies that termination is not contingent on the provider’s active licensure status, and that it require states to enroll providers who participate in their managed care programs.

The Message to Medicaid Providers

This audit report stresses, once again, the importance of screening all state Exclusion databases as well as the LEIE and the SAM. This message reinforces two important ideas: 1) States do not reliably share their information either with other states or with the Feds; and 2) a significant percentage of excluded or terminated physicians, nurses and other employees will take advantage of this lack of coordination to their advantage and your disadvantage!

Paul Weidenfeld, Co-Founder and CEO of Exclusion Screening, LLC, is the author of this article. He is a longtime health care lawyer whose practice has focused on False Claims Act cases and health care fraud matters generally. Contact Paul should you have any questions at: pweidenfeld@www.exclusionscreening.com or 1-800-294-0952.

HHS/OIG Excludes Illinois Home Health Agency for Exclusion Violation!

Home Health Agency Excluded for Employing Excluded Nurse

HHS/OIG recently issued a press release announcing that it had excluded an Illinois home health agency participation in all Federal health programs as a result of its employment of an excluded nurse. OIG’s investigation revealed that the home care service had billed the Federal health care programs for services provided by the excluded nurse to both Medicare and Medicaid beneficiaries.

An Unprecedented Move by HHS/OIG

As far as we can tell, this is the first time that this has been the basis of an exclusion, and it further evidences the ongoing enforcement interest that the OIG has in exclusion violations. The exclusion became effective March 19, 2015, and participation in Federal health care programs for a period of three years. It is also worthy of note that the OIG staffed the case with two Senior Counsels and a Paralegal Specialist, Eula Taylor.

If your practice doesn’t screen for exclusions, give the experts at Exclusion Screening, LLC^SM a call at 1-800-294-0952 or fill out our assessment of needs and costs.