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Medicare/Medicaid Program March 25-27, 2009 Baltimore, Maryland Materials prepared by: Cindy Wisner Exclusions: Why Imposed? Screenings and Employer Liability

I.

Fiscal year FY2008 statistics A. (October 2007-September 2008) a. Exclusion of 3,129 individuals and entities from participating in Medicare, Medicaid and other federally sponsored health care programs b. 775 criminal and 342 civil actions c. $2.43 billion in audit receivables, and B. Recovery of $3.45 billion in HHS investigative receivables (civil and administrative settlements and civil judgments) Mandatory Exclusions a. The scope of exclusions imposed by the OIG was expanded from Medicare and State health care programs to all Federal health care programs, as defined in section 1128B(f)(1). 42 USC § 1320a-7 Balanced Budget Act (BBA); Public Law 105-33: Enacted August 5, 1997 b. 42 USC § 1320a-7(b)

II.

Social Security Act 42 USC § 1128(a)(1) 1320a-7(a)(1) 1128(a)(2) 1128(a)(3)

Amendment Conviction of program-related crimes. Minimum Period: 5 years Conviction relating to patient abuse or neglect. Minimum Period: 5 years Felony conviction relating to health care fraud. Minimum Period: 5 years Felony conviction relating to controlled substance. Minimum Period: 5 years Conviction of two mandatory exclusion offenses. Minimum Period: 10 years Conviction on 3 or more occasions of mandatory exclusion offenses. Permanent Exclusion

1320a-7(a)(2) 1320a-7(a)(3)

1128(a)(4)

1320a-7(a)(4)

1128(c)(3) (G)(i)

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1320a-7(c)(3)(G)(i)

1128(c)(3) (G)(ii)

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1320a-7(c)(3)(G)(ii)

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1892

1395ccc

Failure to enter an agreement to repay Health Education Assistance Loans (HEAL). Minimum Period: Until entire past due obligation is repaid.

III.

Permissive Exclusions a. 42 USC § 1320a-7(b)

Social Security Act 1. 1128(b)(1)(A) 2. 1128(b)(1)(B) 3. 1128(b)(2) 4. 1128(b)(3) 5. 1128(b)(4)

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42 USC § 1320a-7(b)(1)(A) 1320a-7(b)(1)(B) 1320a-7(b)(2) 1320a-7(b)(3) 1320a-7(b)(4)

Amendment Misdemeanor conviction relating to health care fraud. Minimum Period: 3 years Conviction relating to fraud in non- health care programs. Minimum Period: 3 Conviction relating to obstruction of an investigation. Minimum Period: 3 years Misdemeanor conviction relating to controlled substance. Minimum Period: 3 years License revocation or suspension. Minimum Period: No less than the period imposed by the state licensing authority. Exclusion or suspension under federal or state health care program. Minimum Period: No less than the period imposed by federal or state health care program. Claims for. excessive charges, unnecessary services or services which fail to meet professionally recognized standards of health care, or failure of an HMO to furnish medically necessary services. Minimum Period: 1 year

6. 1128(b)(5)

1320a-7(b)(5)

7. 1128(b)(6)

1320a-7(b)(6)

8. 1128(b)(7) 9. 1128(b)(8) 10. 1128(b)(8)(A)#

1320a-7(b)(7) 1320a-7(b)(8) 1320a-7(b)(8)(A)

11. 1128(b)(9), (10), 1320a-7(b)(9), and (11) (10), and (11)

Fraud, kickbacks, and other prohibited activities. Minimum Period: None Entities controlled by a sanctioned individual. Minimum Period: Same as length of individual's exclusion. Entities controlled by a family or household member of an excluded individual and where there has been a transfer of ownership/ control. Minimum Period: Same as length of individual's exclusion. Failure to disclose required information, supply requested information on subcontractors and suppliers; or supply payment information. Minimum Period: None

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12. 1128(b)(12) 13. 1128(b)(13) 14. 1128(b)(14)

1320a-7(b)(12) 1320a-7(b)(13) 1320a-7(b)(14)

Failure to grant immediate access. Minimum Period: None Failure to take corrective action. Minimum Period: None Default on health education loan or scholarship obligations. Minimum Period: Until default has been cured or obligations have been resolved to Public Health Service's (PHS) satisfaction. Individuals controlling a sanctioned entity. Minimum Period: Same period as entity. Failure to meet statutory obligations of practitioners and providers to provide' medically necessary services meeting professionally recognized standards of health care (Peer Review Organization (PRO) findings). Minimum Period: 1 year

15. 1128(b)(15) 16. 1156

1320a-7(b)(15) 1320c-5

c.

Permissive Exclusion for Excessive Charges NPRM Withdrawn in 2007 1. Proposed rule (NPRM) September 15, 2003 attempted to define excessive charges as greater than 120% of discounted charges to other payers 68 Fed Reg 53,939 2. Authority to exclude remains in Social Security Act to use its permissive-exclusion authority against individuals and entities that bill Medicare substantially in excess of what the usual charges are for other payers. (6) Claims for excessive charges or unnecessary services and failure of certain organizations to furnish medically necessary services.--Any individual or entity that the Secretary determines-- (A) has submitted or caused to be submitted bills or requests for payment (where such bills or requests are based on charges or cost) under title XVIII or a State health care program containing charges (or, in applicable cases, requests for payment of costs) for items or services furnished substantially in excess of such individual's or entity's usual charges (or, in applicable cases, substantially in excess of such individual's or entity's costs) for such items or services, unless the Secretary finds there is good cause for such bills or requests containing such charges or costs; 3. WITHDRAWN June 2007: 33430 Federal Register / Vol. 72, No. 116 / Monday, June 18, 2007 / Proposed Rules 4. Reason: OIG concluded there's not enough data to set a uniform fixed benchmark that could be applied equitably across the industry.(OIG reviewed 323 comments) OIG will enforce law on a case-by-case basis "OIG will continue to evaluate billing patterns for individuals and entities on a case-bycase basis and will use all tools available to address instances where Medicare or Medicaid are charged substantially more than others without good cause," OIG spokesman Don White to Report on Medicare Compliance in June 2007. He noted, "this is the situation as it has been for a long time. We tried with [the proposed rule] to clarify it." 3

IV.

Who is EXCLUDED? a. Criteria for evaluating permissive exclusion i. The Circumstances of the Misconduct and Seriousness of the Offense ii. Defendant's Response to Allegations/ Determination of Unlawful Conduct iii. Likelihood that Offense or Some Similar Abuse Will Occur Again iv. Financial Responsibility b. Exclusions are tracked by classification c. Examples: NURSING FIRM 1104 NURSING PROFESSION OSTEOPATHIC PRAC PHARMACY PHYSICAL THERAPIST PHYSICIAN ASSISTANT PODIATRY PRACTICE PRINTING FIRM PRIVATE CIT/ENTITY PSYCHOLOGIC PRACTICE 11426 422 2327 130 206 510 3 1462 565

d. Exclusions are tracked by state at http://exclusions.oig.hhs.gov/StateCounts.aspx e. Examples: Alabama Alaska Arizona Arkansas California Colorado Connecticut 950 84 1553 636 5583 1014 493

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Delaware

87

District of Columbia

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Florida 4384 · · f. Impact of Exclusion: Excluded Persons 1. Can't be employed by a M/M provider 2. Can't provide services to a M/M provider 3. Can't order services for a M/M beneficiary 4. There is a limited exception to exclusions for the provision of certain emergency items or services not provided in a hospital emergency room. See regulations at 42 CFR 1001.1901(c) 5. Additional information is available in the Special Advisory Bulletin on the Effect of an Exclusion. http://oig.hhs.gov/fraud/alerts/effect_of_exclusion.asp 6. Information about Exclusions: http://oig.hhs.fraud/exclusions.asp V. OIG 2009 Workplan: Exclusions From Program Participation A. OIG has authority to exclude individuals and entities from participation in Medicare, Medicaid, and all other Federal health care programs to protect the programs and beneficiaries from providers that pose a risk. B. Providers are excluded for reasons that include program-related convictions, patient abuse or neglect convictions, and licensing board disciplinary actions. We impose exclusions based on referrals from various Federal and State agencies. We will continue to work with these agencies to ensure the timely referral of convictions and licensing board and administrative actions. C. In FY 2007, we excluded 3,308 individuals and entities from Federal health care programs and anticipate reviewing and implementing the exclusion of additional providers in FY 2009. As appropriate, the Office of Investigations and OCIG expect to initiate program exclusions against individuals and entities that submitted false or fraudulent claims, failed to provide services that met professionally recognized standards of care, or otherwise engaged in conduct actionable under the Social Security Act, § 1128, or other statutes authorizing exclusions by OIG.

Recent Exclusion Litigation A. ALJ affirms 15-year exclusions of three corporate officers who failed to prevent misbranding and fraudulent distribution of Oxycontin. B. Responsible Corporate Officer plead guilty to one misdemeanor count of misbranding and corporation plead guilty to felony misbranding.ALJ upheld exclusions to protect integrity of federal health care programs and noted astronomical costs to programs of the officers' actions/failure to act. C. Allison Engine Case: "cause to be presented" June 9, 2008: Allison Engine Co. v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008). a. In the Allison Engine case the district court dismissed the case on the basis that no evidence was submitted that any false claims were "presented" to the Federal government for payment. United States ex rel. Sanders v.Allison Engine Co., No. 1-95-CV-970, 2005 U.S. Dist. LEXIS 5612 (S.D. Ohio Mar. 11, 2005).

VI.

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b. The district court found that no evidence was admitted to show presentment by the prime contractors to the government, only evidence that subcontractors submitted false clams to the prime contractor. c. The Sixth Circuit held that "presentment" was not required for violations of subsections (a) (2) and (a)(3) of the False Claims Act and reversed. United States ex rel. Sanders v. Allison Engine Co., Inc., 471 F.3d 610 (6th Cir. 2006). d. The Supreme Court struck down the FCA claim against the subcontractors, holding that a demonstration that a false claim was paid for with government funds, without more, does not establish liability under 31 U.S.C. §§ 3729(a)(2) and (a)(3). e. The Court found that a plaintiff must prove that the defendant intended to defraud the government (and not just a recipient of government funds) when it submitted or agreed to make use of false claim. VII. Why are They Excluded ? a. Exclusion applies to both direct and indirect providers b. "direct providers" ­ individuals and health care entities that bill Medicare directly for the services they provide to Medicare beneficiaries c. "indirect providers" ­ individuals, health care entities and companies that do not submit bills to the Medicare program, but that sell products to physicians, hospitals and others that submit bills to Medicare d. Top reasons for exclusions: license revocation/suspension/surrender, program-related convictions, patient abuse/neglect convictions http://exclusions.oig.hhs.gov/ExclusionTypeCounts.aspx a. The owner and operator of HME Solutions Inc., dba Lifecare Medical (Lifecare Medical), a licensed pharmaceutical wholesale company in Miami, pleaded guilty today to defrauding the Medicare program in connection with a $5.3 million HIV-infusion fraud scheme, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced. Harold Sio, 33, pleaded guilty to conspiracy to commit healthcare fraud and conspiracy to commit money laundering. In pleading guilty, Marrero and Pascual both admitted that they falsely billed Medicare more than $5.3 million for unnecessary infusion treatments. Both Marrero and Pascual acknowledged that all the patients who received injections or infusions at Medcore were paid cash kickbacks to induce them to visit to the clinic.

VIII.

Who soon will be EXCLUDED? A. January 28, 2009, Department of Justice Owner of Pharmaceutical Wholesale Company Pleads Guilty to Medicare Fraud B. January 26, 2009, U.S. Attorney, District of Connecticut New Haven Medical Clinic Pays $284,398 to Settle Allegations Under The False Claims Act

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C. D. E. F.

G. H.

January 15, 2009, Department of Justice Eli Lilly and Company Agrees to Pay $1.415 Billion to Resolve Allegations of Off-Label Promotion of Zyprexa January 15, 2009, U.S. Attorney, District of Minnesota Former State Employee Pleads Guilty to Health Care Fraud January 13, 2009, U.S. Attorney, Southern District of Florida Organizer Receives 10 Year Sentence in Medicare Fraud and Money Laundering Scheme January 9, 2009, U.S. Attorney, District of Maryland Internet Pharmacy Owners Sentenced to Five Years in Prison and Ordered to Pay Over $11 Million For Illegal Internet Sales of 10 Million Hydrocodone Pills January 8, 2009, U.S. Attorney, Southern District of Florida Medical Clinic Owner Pleads Guilty to Role in $5.3 million Medicare Fraud Scheme January 5, 2009, U.S. Attorney, Southern District of Indiana Anderson Man Charged with Defrauding the Indiana Medicaid Program of over $900,000.

IX. A.

B. C. D.

E.

Actions Not to take While Excluded After it self-disclosed conduct to the OIG, Courtyard Manor of Farmington Hills (Courtyard Manor), Michigan, agreed to pay $1.7 million for allegedly violating the Civil Monetary Penalties Law. The OIG alleged that Courtyard Manor received federal health care program funds while the entity was excluded. Courtyard Manor also agreed to be excluded from Medicare, Medicaid, and all other Federal health care programs for two years in addition to its original 10-year period of exclusion. OIG 2009 Workplan Office of Counsel to the Inspector General a. In addition to providing day-to-day internal legal advice and representation to OIG, the Office of Counsel to the Inspector General (OCIG) coordinates our role in the resolution of civil and administrative health care fraud cases, including the litigation of program exclusions and CMPs and assessments. OCIG also negotiates and monitors CIAs. b. OCIG issues special fraud alerts, special advisory bulletins, and advisory opinions regarding the application of our sanction authorities and is responsible for developing OIG regulations, including new safe harbor regulations under the anti-kickback statute, and compliance program guidance. OIG 2009 Workplan Providers' Compliance With Corporate Integrity Agreements a. We will continue to assess the compliance of providers with the terms of CIAs (and settlements with integrity provisions) into which they entered as part of the settlement of fraud and abuse allegations. b. We will conduct site visits to entities that are subject to the integrity agreements to verify compliance efforts, to confirm information submitted by the entities to OIG and to assist with compliance generally. Included in this monitoring process will be systems reviews to determine whether a provider's compliance mechanisms are appropriate and to identify any problem areas and establish a basis for corrective action. When warranted, we will continue to impose sanctions, in the form of stipulated penalties or exclusions, against providers that breach their integrity agreement obligations. 7

X.

Exclusion for Not Complying with Corporate Integrity Agreement A. Based on South Beach's failure to cure the breach, the OIG is exercising its contractual right to exclude South Beach from participation in all Federal health care programs for a period of five years. i. The hospital has the right to request a hearing before an HHS Administrative Law Judge, with a right to further appeal to the HHS Departmental Appeals Board. B. In December 2005, South Beach represented to the OIG that it would cure the material breach of the CIA by February 28, 2006. a. The OIG reviewed written submissions and performed a site visit at the facility to evaluate the extent to which South Beach may have cured the material breach. b. Based on this review, the OIG determined that the hospital had failed to take timely corrective actions necessary to cure the breach, and, in fact had failed to meet its own timetable to take such actions. C. "South Beach has committed repeated and flagrant violations of its obligations under the CIA," said Inspector General Levinson. a. On December 2, 2005, the OIG notified the hospital that the OIG intended to exclude South Beach based on the hospital's material breach of its obligations under the CIA. b. South Beach had 30 days to demonstrate that it was in compliance with the obligations of the agreement, that it had cured the breach. D. "This exclusion sends a clear message to the provider community that the OIG will not hesitate to pursue an action against those providers that fail to abide by their integrity agreement obligations."

XI.

2008 & 2009 Employer Voluntary Disclosures & Penalties

A. An employer that discovers that it has employed an excluded individual is required to voluntarily disclose the violation under the voluntary disclosure protocol. April 15, 2008 OIG Open Letter to Providers http://www.oig.hhs.gov/fraud/docs/openletters/OpenLetter4-15-08.pdf

OIG Self-Disclosure Protocol, 63 Fed. Reg. 58399 (Oct. 30, 1998)

B. 01-06-09 Methodist Health Care-Memphis Hospitals (Methodist), Tennessee, agreed to pay $136,627 for allegedly violating the Civil Monetary Penalties Law. The OIG alleged that Methodist employed an individual that Methodist knew or should have known was excluded from participation in Federal health care programs. C. 12-29-08 Haven Nursing Home, Inc. (Haven), Maryland, agreed to pay $90,921.06 for allegedly violating the Civil Monetary Penalties Law. The OIG alleged that Haven employed an individual that Haven knew or should have known was excluded from participation in Federal health care programs. D. 12-12-08 After it self-disclosed conduct to the OIG, Ellsworth Municipal Hospital (Ellsworth), Iowa, agreed to pay $46,165.50 for allegedly violating the Civil Monetary Penalties

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Law. The OIG alleged that Ellsworth employed an individual that Ellsworth knew or should have known was excluded from participation in Federal health care programs. E. Management Company employees: · 09-30-2008 After it self-disclosed conduct to the OIG, Briarcliff Nursing and Rehabilitation Center LP (Briarcliff), Texas, agreed to pay $1,833 for allegedly violating the Civil Monetary Penalties Law. The OIG alleged that Briarcliff and its management company, Skilled Healthcare LLC, employed an individual that Briarcliff knew or should have known was excluded from participation in Federal health care programs. · 09-30-2008 After it self-disclosed conduct to the OIG, Pacific Healthcare and Rehabilitation Center, LLC (Pacific), California, agreed to pay $4,657.50 for allegedly violating the Civil Monetary Penalties Law. The OIG alleged that Pacific and its management company, Skilled Healthcare LLC, employed an individual that Pacific knew or should have known was excluded from participation in Federal health care programs. · 09-30-2008 After it self-disclosed conduct to the OIG, Rossville Healthcare and Rehabilitation Center, LLC (Rossville), Kansas, agreed to pay $46,216.50 for allegedly violating the Civil Monetary Penalties Law. The OIG alleged that Rossville and its management company, Skilled Healthcare LLC, employed an individual that Rossville knew or should have known was excluded from participation in Federal health care programs.

XII.

Screening A. Prior to Hiring and annually (at a minimum) an Employer should check a number of databases 1. List of Excluded Individuals/Entities (LEIE) 2. National Practitioner Data Bank 3. Healthcare Integrity and Protection Data Bank (queries are limited to specific inquirers and uses) 4. Specially Designated Nationals and Blocked Persons list (SDN List Last Updated February 28 , 2009) 5. Office of Federal Contract Compliance Programs (OFCCP) 6. Department of Homeland Security E-Verify system (contractors and subcontractors subject to the Federal Acquisition Regulation (FAR) -- effective February 20, 2009 delayed from January 15, 2009) B. Another Database: OFAC list/Suspected terrorism list 1. Can't pay or provide benefits to a person listed on the OFAC list Specially Designated Nationals and Blocked Persons list (SDN List Last Updated - February 28 , 2009) 2. The Office of Foreign Assets Control ("OFAC") of the US Department of the Treasury administers and enforces economic and trade sanctions Database and prohibitions were added to carry out the purposes of Executive Order 13224 of September 23, 2001 "Blocking Property and Prohibiting Transactions wiith Persons Who Commit, Threaten to Commit, or Support Terrorism" 9

C. OIG Workplan 2009 Reporting Adverse Actions to the Healthcare Integrity and Protection Data Bank 1. We will review the extent to which HHS agencies have reported adverse actions to the Healthcare Integrity and Protection Data Bank (HIPDB). The Health Insurance Portability and Accountability Act of 1996 directed the Secretary, acting through OIG and the Attorney General, to create HIPDB to help combat fraud and abuse in health care delivery. The HIPDB, operated by HRSA under a memorandum of agreement with OIG, is a national data bank containing "adverse actions" taken against health care practitioners and suppliers, including OIG exclusions, criminal convictions, and civil judgments related to health care. As such, adverse actions taken by the Centers for Medicare & Medicaid Services (CMS), FDA, IHS, HRSA, NIH, and OIG are required to be reported to the HIPDB. We will determine whether the HIPDB contains all HHS-imposed actions and whether there are any impediments to reporting such actions. (OEI; 00-00-00000; expected issue date: FY 2009; new start) D. Corrections: LEIE publishes corrections monthly http://oig.hhs.gov/fraud/exclusions/files/leie_updated_information.pdf E. Each database has its own procedures for error reporting and correction F. To Obtain Documentation on Excluded Individuals or Entities 1. If you have verified the identity of an excluded party and are seeking documentation of this action, you may submit a written request to the address listed above. Your request should include a copy of the LEIE page identifying the individual or entity. Requests without this information from the LEIE will be returned. 2. In most instances, the only documentation available will be the exclusion notice, which notifies the party of the exclusion, its effect and information concerning appeal rights. It does not contain specific details regarding the basis for the exclusion. If the excluded party has been reinstated, that notice may also be available. We recommend contacting an excluded individual or entity for additional information concerning any of these actions. G. Frequently Asked Questions (FAQs) provide answers to a variety of questions typically asked regarding the OIG Exclusion program. Please review the FAQs before contacting the OIG. If you do not find an answer to your question regarding content and information contained in the LEIE, contact the Exclusions Staff at: E-mail Address: [email protected] Telephone: (410) 281-3060 Fax: (410) 265-6780 Mailing Address: HHS, OIG, OI Exclusions Staff 7175 Security Boulevard, Suite 210 Baltimore, MD 21244 For members of the media or general public, contact the HHS, OIG External Affairs Office. XIII. Applying for Reinstatement A. Regulations are at 42 CFR 1001.3001-3005 B. Reinstatement of excluded entities and individuals is not automatic: 10

1. Must apply for reinstatement and receive authorized notice from the OIG that reinstatement has been granted 2. Obtaining a provider number from a Medicare contractor, a State agency or a Federal health care program does not reinstate eligibility to participate 3. There are no provisions for early or retroactive reinstatement C. Process generally requires up to 120 days to complete, but can take longer if circumstances warrant D. Excluded parties may write to the OIG within 120 days of the expiration of the minimum period of exclusion to request reinstatement. E. Premature requests will not be considered. F. If reinstatement is denied, the excluded party is eligible to reapply after one year. G. To apply for reinstatement, mail your request to: HHS, OIG, OI Exclusions Staff 7175 Security Boulevard, Suite 210 Baltimore, MD 21244 XIII. XIV. Updates to LEIE OIG is only Responsible Agency A. Only the OIG is responsible for determining whether the individual or company should be excluded from the federal programs B. In the past DOJ and OIG have agreed not to impose a permissive exclusion in exchange for the organization's commitment to institute a comprehensive corporate compliance program Avoiding Exclusion: Self-Disclosure A. Some cases settled by the OIG result from self-disclosures to the OIG. B. When a health care provider appropriately self-discloses potentially fraudulent conduct, the OIG takes the self-disclosure and the provider's level of cooperation into account when determining the appropriate settlement terms. Specifically, the OIG will require less money to be paid in settlement for conduct that has been self-disclosed. Furthermore, in self disclosure cases the OIG is more likely to settle without requiring integrity provisions or to require more limited integrity provisions. (see the Inspector General's November 20, 2001, Open Letter and the OIG's assessment of CIA modifications for self-disclosures) a. Corporate Integrity Agreements: The Office of Inspector General (OIG) often negotiates compliance obligations with health care providers and other entities as part of the settlement of Federal health care program investigations arising under a variety of civil false claims statutes. A provider or entity consents to these obligations as part of the civil settlement and in exchange for the OIG's agreement not to seek an exclusion of that health care provider or entity from participation in Medicare, Medicaid and other Federal health care programs. False claims submitted in violation of the False Claims Act or Civil Monetary Penalties Law give rise to the OIG's permissive exclusion authority under 42 U.S.C.1320a-7(b)(7). Providers who settle these cases often deny that they were liable or that they committed the alleged conduct.

XV.

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C. OIG 2009 Workplan Resolution of False Claims Act Cases and Negotiation of Corporate Integrity Agreements OIG staff will continue to work closely with prosecutors from DOJ to develop and pursue Federal false claims cases against individuals and entities that defraud the Government, when adequate evidence of violations exists. Authorities relevant to this work come from the False Claims Amendments Act of 1986. We will provide further assistance to DOJ prosecutors in litigation and in settlement negotiations arising from these cases. We also will continue to consider whether to invoke our exclusion authority based on these defendants' conduct. When appropriate and necessary, we will require these defendants to implement compliance measures, in the form of integrity agreements, aimed at ensuring future compliance with Federal health care program requirements.

Sample Contract Language A. Exclusion from Governmental Programs. Seller represents that, as of the Effective Date, it has not (i) been heretofore excluded, debarred, suspended or been otherwise determined to be, or identified as, ineligible to participate in any governmental program (collectively, the "Governmental Programs") or is about to be excluded, debarred, suspended or otherwise determined to be, or identified as, ineligible to participate in any Governmental Program, (ii) received any information or notice, or become aware, by any means or methods, that it is the subject of any investigation or review regarding its participation in any Government Programs, and (iii) been convicted of any crime relating to any Governmental Program. Seller agrees to notify Trinity Health, within one (1) business day of Seller's becoming aware of any of the foregoing information, notice, actions or events during the term of this Agreement. The listing of Seller or any Seller-owned subsidiary on the Office of Inspector General's ("OIG") exclusion list or OIG's website for excluded individuals/entities shall constitute a breach of this Section 9.3, and requires immediate written notice to Trinity Health. In the event that Seller is excluded from any Governmental Program, this Agreement shall, at the sole option of Trinity Health, immediately terminate. B. Exclusion from Governmental Programs. Supplier warrants that Supplier, including its employees, agents and subcontractors, is not excluded from participating in the Medicare or Medicaid program and is not ineligible to participate in any governmental program. Supplier shall immediately notify Buyer in the event Supplier becomes debarred or suspended from any governmental program during the term of the agreement. XVII. Sample Policy

XVI.

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XVIII.

Recent CMS Guidance

DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services 7500 Security Boulevard, Mail Stop S2-26-12 Baltimore, Maryland 21244-1850

Center for Medicaid and State Operations SMDL #08-003 June 12, 2008 Dear State Medicaid Director: The Centers for Medicare & Medicaid Services (CMS) is issuing this State Medicaid Director Letter to strengthen the integrity of the Medicaid program and help States reduce improper payments to providers. This letter specifically: (1) Clarifies CMS policy with respect to States' obligations to screen for excluded individuals and entities prior to and during provider enrollment; (2) Reminds States of the obligation to report to the Health and Human Service Office of Inspector General (OIG) both convictions related to the Medicaid program and sanctions imposed by the State Medicaid Agency on Medicaid providers; and (3) Reminds States of the consequences set forth in Federal laws and regulations for failure to prevent Medicaid participation by excluded individuals and entities. Background The OIG excludes individuals and entities from participation in Medicare, Medicaid, the State Children's Health Insurance Program (SCHIP), and all Federal health care programs (as defined in section 1128B(f) of the Social Security Act (the Act)) based on the authority contained in various sections of the Act, including sections 1128, 1128A, 1156, and 1892. When the OIG has excluded a provider, Federal health care programs (including Medicaid and SCHIP programs) are prohibited from paying for any items or services furnished, ordered, or prescribed by excluded individuals or entities until the provider has been reinstated by the OIG (42 CFR section 1001.1901). The only exception is when the OIG has waived the exclusion of an individual or entity. See sections 1128(c)(3)(B) and 1128(d)(3)(B) of the Act; and 42 CFR section 1001.1801. No State may waive such an exclusion, in whole or in part. Only the OIG has the authority to waive an exclusion that it has imposed. If a State believes that waiver of an exclusion is appropriate, it may submit a written request for such a waiver to the OIG (42 CFR section 1001.1801). Additionally, section 1932(d)(1) of the Act prohibits managed care organizations (MCOs) and primary care case managers (PCCMs) from knowingly having a director, officer, partner, or person with a beneficial ownership of more than 5 percent of the entity's equity who is debarred, suspended, or excluded, or from having an employment, consulting, or other agreement with an

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Page 2 ­ State Medicaid Director individual or entity for the provision of items and services that are significant and material to the entity's obligations under its contract with the State where the individual or entity is debarred, suspended, or excluded. Section 438.610 of the Federal managed care regulations extends the prohibition to prepaid inpatient health plans (PIHPs) and prepaid ambulatory health plans (PAHPs) (42 CFR section 438.610.) If a State finds that an MCO, PCCM, PIHP, or PAHP has a noncompliant relationship, the State must notify the Secretary of the noncompliance. The State may not renew or extend its agreement with the noncompliant entity unless the Secretary provides to the State and to Congress a written statement describing compelling reasons to renew or extend the agreement. Additional administrative sanctions applicable to MCEs are set forth in 42 CFR section 438.700 et seq. Policy Clarification States must determine whether current providers, managed care entities (MCEs) (i.e., MCOs, PCCMs, PIHPs, and PAHPs),* providers applying to participate in the Medicaid program, and individuals with an ownership or control interest in the provider entity or MCE are excluded individuals or entities. Since Federal regulations prohibit payment for items or services furnished by excluded individuals and entities, it is imperative that this first line of defense in combating fraud and abuse be conducted accurately, thoroughly, and routinely. Previous Guidance In a State Medicaid Director Letter issued on March 17, 1999, and in a follow-up State Medicaid Director Letter issued on May 16, 2000, CMS described the OIG's authority to exclude persons based on actions taken by State Medicaid Agencies. In the State Medicaid Director Letter dated May 16, 2000, CMS reminded States that the Medicare/Medicaid Sanction-Reinstatement Report, formerly known as HCFA Publication 69 and now replaced by the Medicare Exclusion Database, discussed below, is a vital resource for ascertaining and verifying whether a provider is excluded and should not be receiving payments. The guidance also stated that the payment prohibition applies to any MCO contracting with an excluded party. State Obligations Concerning Excluded Individuals and Entities Federal statutes and regulations clearly prohibit States from paying for items or services furnished, ordered or prescribed by excluded persons. States typically do screen for excluded providers prior to and after enrollment. However, not all States attempt to determine whether an excluded individual has an ownership or control interest, as defined below, in an entity that is a Medicaid provider. Federal regulations at 42 CFR section 1002.3 require States to report to OIG information regarding individuals that have ownership or control interests in provider entities and who have been convicted of a criminal offense as described in sections 1128(a) and 1128(b)(1), (2), or (3) of the Act, that have had civil monetary penalties imposed under section 1128A of the Act, or that have been excluded from participation in Medicare or any of the State

*

While this State Medicaid Director Letter uses the term "managed care entity" to refer briefly to MCOs, PIHPs, PAHPs, and PCCMs, States should not confuse this abbreviation with the statutory definition of managed care entity which only refers to MCOs and PCCMs. See section 1932(a)(1)(B) of the Act.

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Page 3 ­ State Medicaid Director health care programs, within 20 business days after the date the agency receives the information. If appropriate, OIG may permissively exclude the provider under section 1128(b)(8) of the Act and under 42 CFR section 1001.1001. General Rules · States should solicit information from providers about individuals with ownership or control interests in the provider entity. · In accordance with the rules set forth in this letter, States should search the Medicare Exclusion Database (MED) or the OIG List of Excluded Individuals/Entities (LEIE) database by the names of any individual, entity, or individual with ownership or control interest in any provider entity providing services for which payment is made under the Medicaid program or seeking to participate in the Medicaid program, including through a fee-for-service delivery system or through the State's managed care program or other waiver program. · States should review provider enrollment eligibility upon enrollment or reenrollment. · States should search the MED or the OIG Web site monthly to capture exclusions and reinstatements that have occurred since the last search. · States should search the exclusions database for both in-State providers and out-of-State providers seeking to participate in the program. · States should not process a provider's disclosure information that does not appear complete or does not include information on individuals with ownership or control interests in the provider entity, including managing employees, until the State verifies the accuracy and completeness of the information. · States should report to OIG any exclusion information that is disclosed to them by a provider about an individual who has or had an ownership or control interest in a provider entity or who is a managing employee of a provider entity within 20 business days after receipt of such information. · States must notify the OIG promptly if the State Medicaid Agency has taken any action on the provider's application for participation in the Medicaid program. · States should notify the OIG promptly of any administrative action the State takes to limit a provider's participation in the Medicaid program that might lead to an exclusion. Ownership and Control Interests An individual is considered to have an ownership or control interest in a provider entity if it has direct or indirect ownership of 5 percent or more, or is a managing employee (e.g., a general manager, business manager, administrator, or director) who exercises operational or managerial control over the entity, or who directly or indirectly conducts the day-to-day operations of the entity as defined in section 1126(b) of the Act and under 42 CFR section 1001.1001(a)(1). States must actively solicit information regarding individuals with ownership or control interests in provider entities from providers because providers may not independently disclose the identity of owners or managing employees on the disclosure document. State data files should capture these important data elements so that an automated comparison of exclusions against a provider file that includes the names of individuals with ownership or control interests in provider entities

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Page 4 ­ State Medicaid Director can be accomplished easily during regular monthly searches and at any time providers submit new disclosure information to the State. While States may delegate many provider enrollment or credentialing functions to MCEs for the managed care program and to the States' contractors for Home and Community-Based Services (HCBS) and other waiver programs, the State remains responsible for ensuring that it does not pay an excluded provider for Medicaid health care items or services. States that delegate managed care and waiver program provider enrollment and credentialing to their MCEs and HCBS waiver contractors must mandate that the MCEs and HCBS waiver contractors search the exclusions database with the same frequency as the State for fee-forservice providers. MCEs and HCBS waiver contractors should search for providers, provider entities, and individuals with ownership or control interests in the provider entities. Under Federal regulations at 42 CFR section 1002.3(a), providers entering into or renewing a provider agreement must disclose to the State Medicaid Agency the identity of any excluded individual with an ownership or control interest in the provider entity. The State Medicaid Agency then must notify the OIG of this information within 20 business days after the date the agency receives the information and must notify the OIG promptly if the State Medicaid Agency has taken any action on the provider's application for participation in the Medicaid program. 42 CFR section 1002.3 (b)(2). The OIG, in its discretion and under statutory and regulatory authority, may exclude that entity. Convictions and Administrative Sanctions Under 42 CFR section 1002.230, each State, either through its State Medicaid Agency or its Medicaid Fraud Control Unit (MFCU), must notify the OIG of convictions related to the delivery of items or services under the Medicaid program within 15 days after the conviction if the State agency was involved in the investigation or prosecution of the case, or within 15 days after the State agency learns of the conviction if the agency was not involved in the investigation or prosecution of the case. Such a report should include all the necessary documentation to support an exclusion action by the OIG. Additionally, under 42 CFR section 1002.3, the State agency must notify the OIG of any disclosures made by providers with regard to the ownership or control by a person that has been convicted of a criminal offense described under sections 1128(a) and 1128(b)(1), (2), or (3) of the Act, or that has had civil money penalties or assessments imposed under section 1128A of the Act. See 42 CFR section 1001.1001(a)(1). The State Medicaid Agency must notify the OIG of this information within 20 business days after the date it receives the information. 42 CFR sections 455.106(b)(1) and 1002.3. States are required under 42 CFR sections 455.106(b)(2) and 1002.3(b)(3) to notify the OIG promptly of any administrative action it takes to limit participation of a provider in the Medicaid program. Reporting these criminal and administrative actions is critical to timely implementation of exclusions of persons who have defrauded health care programs or harmed patients. Currently in some States there are significant delays in reporting of such actions. Such

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Page 5 ­ State Medicaid Director delays jeopardize the government's ability to protect the Federal health care programs and their beneficiaries from untrustworthy persons. Where to Look for Excluded Parties Medicare Exclusion Database In 2002, HCFA Publication 69 was replaced by a new system of record called the Medicare Exclusion Database (MED). The MED was developed to collect and retrieve information that aided in ensuring that no payments are made to excluded individuals and entities for services furnished during the exclusion period. Two of the information sources used in populating the MED are the OIG Exclusion file and the Social Security Administration. MED files contain a variety of identifiable and general information including name, Social Security Number (SSN), employer identification number, Uniform Provider Identification Number, National Provider Identifier, address, exclusion type, and reinstatement date, if applicable. The five MED files are e-mailed to States every month. These files contain the month's new exclusions, new reinstatements, cumulative exclusions, cumulative reinstatements and non-MED data. MED files are also available through CMS' Application Portal. List of Excluded Individuals/Entities The OIG maintains the LEIE, a database that provides information about parties excluded from participation in Medicare, Medicaid, and all other Federal health care programs. The LEIE Web site is located at http://oig.hhs.gov/fraud/exclusions/listofexcluded.html and is available in two formats. The on-line search engine identifies currently excluded individuals or entities. When a match is identified, it is possible for the searcher to verify the accuracy of the match using a SSN or Employer Identification Number (EIN). The downloadable version of the database may be compared against State enrollment files. However, unlike the on-line format, the downloadable database does not contain SSNs or EINs. When to Look for Excluded Parties States should review provider enrollment eligibility whenever an individual or entity submits an application for enrollment or reenrollment in the program. Additionally, States should conduct searches on both in-State providers and out-of-State providers about which the State Medicaid Agency would not have received notice of exclusion. States should conduct the searches monthly via the MED or the OIG Web site to capture exclusions and reinstatements that have occurred since the last search. Reminder of Consequences of Paying Excluded Providers The CMS informed States in the State Medicaid Director Letter dated May 16, 2000, that under section 1903(i)(2) of the Act CMS shall make no payments to States for any amount expended for items or services (other than an emergency item or service not provided in a hospital emergency room) furnished under the plan by an individual or entity while being excluded from participation. This includes Medicare, Medicaid, SCHIP, and all Federal health care programs (as defined in section 1128B(f) of the Act) based on the authority contained in various sections of the Act, including sections 1128, 1128A, 1156, and 1892. Any such payments actually

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Page 6 ­ State Medicaid Director claimed for Federal financial participation (FFP) constitute an overpayment under section 1903(d)(2)(A) of the Act and are unallowable for FFP. Further, States may not seek Federal reimbursement for payments to providers that have not provided required ownership and control disclosures, or other disclosures regarding business transactions, under 42 CFR sections 455.104 and 455.105. States may deny enrollment to a provider whose owner, agent, or managing employee has been convicted of a criminal offense relating to Medicare, Medicaid, or title XX programs. Moreover, States may deny enrollment or terminate a provider's enrollment if the State determines the provider did not fully disclose required criminal conviction information, under 42 CFR section 455.106(c). Conclusion We know you share our commitment to combating fraud and abuse and understand that provider enrollment is the first line of defense in this endeavor. If we strengthen our efforts to identify excluded parties, the integrity and quality of the Medicaid program will be improved, benefiting Medicaid beneficiaries and taxpayers across the country. If you have any questions or would like any additional information on this guidance, please direct your inquiries to Ms. Claudia Simonson, Centers for Medicare & Medicaid Services, Center for Medicaid and State Operations, Medicaid Integrity Group, Division of Field Operations, 233 North Michigan Avenue, Suite 600, Chicago, IL 60601 or [email protected] Thank you for your assistance in this important endeavor. Sincerely, /s/ Herb B. Kuhn Deputy Administrator Acting Director, Center for Medicaid and State Operations cc: CMS Regional Administrators CMS Associate Regional Administrators Division of Medicaid and Children's Health Barbara Edwards NASMD Interim Director American Public Human Services Association Joy Wilson Director, Health Committee National Conference of State Legislatures Page 7 ­ State Medicaid Director Matt Salo Director of Health Legislation National Governors Association Debra Miller Director for Health Policy Council of State Governments Christie Raniszewski Herrera Director, Health and Human Services Task Force American Legislative Exchange Council Barbara Levine Director of Policy and Programs Association of State and Territorial Health Officials

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Special Advisory Bulletin | September 1999

The Effect of Exclusion From Participation in Federal Health Care Programs

Introduction

The Office of Inspector General (OIG) was established in the U.S. Department of Health and Human Services to identify and eliminate fraud, waste, and abuse in the Department's programs and to promote efficiency and economy in Departmental operations. The OIG carries out this mission through a nationwide program of audits, inspections, and investigations. In addition, the OIG has been given the authority to exclude from participation in 1 Medicare, Medicaid and other Federal health care programs individuals and entities who have engaged in fraud or abuse, and to impose civil money penalties (CMPs) for certain misconduct related to Federal health care programs (sections 1128 and 1156 of the Social Security Act , (the Act)). Recent statutory enactments have strengthened and expanded the OIG's authority to exclude individuals and entities from the Federal health care programs. These laws also expanded the OIG's authority to assess CMPs against individuals and entities that violate the law. With this expanded authority, the OIG believes that it is important to explain the effect of program exclusions under the current statutory and regulatory provisions. The Health Insurance Portability and Accountability Act (HIPAA) of 1996, Public Law 104-191, authorized the OIG to provide guidance to the health care industry to prevent fraud and abuse, and to promote high levels of ethical and lawful conduct. To further these goals, the OIG issues Special Advisory Bulletins about industry practices or arrangements that potentially implicate the fraud and abuse authorities subject to enforcement by the OIG. In order to assist all affected parties in understanding the breadth of the payment prohibitions that apply to items 2 and services provided to Federal program beneficiaries, this Special Advisory Bulletin provides guidance to individuals and entities that have been excluded from Federal health care programs, as well as to those who might employ or contract with an excluded individual or entity to provide items or services reimbursed by a Federal health care program.

Statutory Background

In 1977, in the Medicare-Medicaid Anti-Fraud and Abuse Amendments, Public Law 95-142, Congress first mandated the exclusion of physicians and other practitioners convicted of program-related crimes from participation in Medicare and Medicaid (now codified at section 1128 of the Act). This was followed in 1981 with Congressional enactment of the Civil Monetary Penalties Law (CMPL), Public Law 97-35, to further address health care fraud and abuse (section 1128A of the Act). The CMPL authorizes the Department and the OIG to impose CMPs, assessments and program exclusions against individuals and entities who submit false or fraudulent, or otherwise improper claims for Medicare or Medicaid payment. "Improper claims" include claims submitted by an excluded individual or entity for items or services furnished during a period of program exclusion. To enhance the OIG's ability to protect the Medicare and Medicaid programs and beneficiaries, the Medicare and Medicaid Patient and Program Protection Act of 1987, Public Law 100-93, expanded and revised the OIG's administrative sanction authorities by, among other things, establishing certain mandatory and discretionary exclusions for various types of misconduct. The enactment of HIPAA in 1996 and the Balanced Budget Act (BBA) of 1997, Public Law 105-33, further expanded the OIG's sanction authorities. These statutes extended the application and scope of the current CMP and exclusion authorities beyond programs funded by the Department to all "Federal health care programs." BBA also authorized a new CMP authority to be imposed against health care providers or entities that employ or enter into contracts with excluded individuals for the provision of services or items to Federal program beneficiaries. In the discussion that follows, it should be understood that the prohibitions being described apply to items and services provided, directly or indirectly, to Federal program beneficiaries. The ability of an excluded individual or entity to render items and services to others is not affected by an OIG exclusion.

Exclusion from Federal Health Care Programs

The effect of an OIG exclusion from Federal health care programs is that no Federal health care program payment may be made for any items or services (1) furnished by an excluded individual or entity, or (2) directed or prescribed by an excluded physician (42 CFR 1001.1901). This payment ban applies to all methods of Federal

19

program reimbursement, whether payment results from itemized claims, cost reports, fee schedules or a prospective payment system (PPS). Any items and services furnished by an excluded individual or entity are not reimbursable under Federal health care programs. In addition, any items and services furnished at the medical direction or prescription of an excluded physician are not reimbursable when the individual or entity furnishing the services either knows or should know of the exclusion. This prohibition applies even when the Federal payment itself is made to another provider, practitioner or supplier that is not excluded. The prohibition against Federal program payment for items or services furnished by excluded individuals or entities also extends to payment for administrative and management services not directly related to patient care, but that are a necessary component of providing items and services to Federal program beneficiaries. This prohibition continues to apply to an individual even if he or she changes from one health care profession to another while 3 excluded. In addition, no Federal program payment may be made to cover an excluded individual's salary, expenses or fringe benefits, regardless of whether they provide direct patient care. Set forth below is a listing of some of the types of items or services that are reimbursed by Federal health care programs which, when provided by excluded parties, violate an OIG exclusion. These examples also demonstrate the kinds of items and services that excluded parties may be furnishing which will subject their employer or contractor to possible CMP liability.

·

Services performed by excluded nurses, technicians or other excluded individuals who work for a hospital, nursing home, home health agency or physician practice, where such services are related to administrative duties, preparation of surgical trays or review of treatment plans if such services are reimbursed directly or indirectly (such as through a PPS or a bundled payment) by a Federal health care program, even if the individuals do not furnish direct care to Federal program beneficiaries; Services performed by excluded pharmacists or other excluded individuals who input prescription information for pharmacy billing or who are involved in any way in filling prescriptions for drugs reimbursed, directly or indirectly, by any Federal health care program; Services performed by excluded ambulance drivers, dispatchers and other employees involved in providing transportation reimbursed by a Federal health care program, to hospital patients or nursing home residents; Services performed for program beneficiaries by excluded individuals who sell, deliver or refill orders for medical devices or equipment being reimbursed by a Federal health care program; Services performed by excluded social workers who are employed by health care entities to provide services to Federal program beneficiaries, and whose services are reimbursed, directly or indirectly, by a Federal health care program; Administrative services, including the processing of claims for payment, performed for a Medicare intermediary or carrier, or a Medicaid fiscal agent, by an excluded individual; Services performed by an excluded administrator, billing agent, accountant, claims processor or utilization reviewer that are related to and reimbursed, directly or indirectly, by a Federal health care program; Items or services provided to a program beneficiary by an excluded individual who works for an entity that has a contractual agreement with, and is paid by, a Federal health care program; and Items or equipment sold by an excluded manufacturer or supplier, used in the care or treatment of beneficiaries and reimbursed, directly or indirectly, by a Federal health care program.

·

· · ·

· · · ·

Violation of an OIG Exclusion By an Excluded Individual or Entity

An excluded party is in violation of its exclusion if it furnishes to Federal program beneficiaries items or services for which Federal health care program payment is sought. An excluded individual or entity that submits a claim for reimbursement to a Federal health care program, or causes such a claim to be submitted, may be subject to a CMP of $10,000 for each item or service furnished during the period that the person or entity was excluded (section 1128A(a)(1)(D) of the Act). The individual or entity may also be subject to treble damages for the amount claimed for each item or service. In addition, since reinstatement into the programs is not automatic, the excluded individual may jeopardize future reinstatement into Federal health care programs (42 CFR 1001.3002).

Employing an Excluded Individual or Entity

As indicated above, BBA authorizes the imposition of CMPs against health care providers and entities that employ or enter into contracts with excluded individuals or entities to provide items or services to Federal program beneficiaries (section 1128A(a)(6) of the Act; 42 CFR 1003.102(a)(2)). This authority parallels the CMP for health

20

maintenance organizations that employ or contract with excluded individuals (section 1857(g)(1)(G) of the Act). Under the CMP authority, providers such as hospitals, nursing homes, hospices and group medical practices may face CMP exposure if they submit claims to a Federal health care program for health care items or services provided, directly or indirectly, by excluded individuals or entities. Thus, a provider or entity that receives Federal health care funding may only employ an excluded individual in limited situations. Those situations would include instances where the provider is both able to pay the individual exclusively with private funds or from other non-federal funding sources, and where the services furnished by the excluded individual relate solely to non-federal program patients. In many instances, the practical effect of an OIG exclusion is to preclude employment of an excluded individual in any capacity by a health care provider that receives reimbursement, indirectly or directly, from any Federal health care program.

CMP Liability for Employing or Contracting with an Excluded Individual or Entity

If a health care provider arranges or contracts (by employment or otherwise) with an individual or entity who is excluded by the OIG from program participation for the provision of items or services reimbursable under such a Federal program, the provider may be subject to CMP liability if they render services reimbursed, directly or indirectly, by such a program. CMPs of up to $10,000 for each item or service furnished by the excluded individual or entity and listed on a claim submitted for Federal program reimbursement, as well as an assessment of up to three times the amount claimed and program exclusion may be imposed. For liability to be imposed, the statute requires that the provider submitting the claims for health care items or services furnished by an excluded individual or entity "knows or should know" that the person was excluded from participation in the Federal health care programs (section 1128A(a)(6) of the Act; 42 CFR 1003.102(a)(2)). Providers and contracting entities have an affirmative duty to check the program exclusion status of individuals and entities prior to entering into employment or contractual relationships, or run the risk of CMP liability if they fail to do so.

How to Determine If an Individual or Entity is Excluded

In order to avoid potential CMP liability, the OIG urges health care providers and entities to check the OIG List of Excluded Individuals/Entities on the OIG web site (www.hhs.gov/oig) prior to hiring or contracting with individuals or entities. In addition, if they have not already done so, health care providers should periodically check the OIG web site for determining the participation/exclusion status of current employees and contractors. The web site contains OIG program exclusion information and is updated in both on-line searchable and downloadable formats. This information is updated on a regular basis. The OIG web site sorts the exclusion of individuals and entities by: (1) the legal basis for the exclusion, (2) the types of individuals and entities that have been excluded, and (3) the State where the excluded individual resided at the time they were excluded or the State where the entity was doing business. In addition, the entire exclusion file may be downloaded for persons who wish to set up their own database. Monthly updates are posted to the downloadable information on the web site.

Conclusion

In accordance with the expanded sanction authority provided in HIPAA and BBA, and with limited exceptions, an exclusion from Federal health care programs effectively precludes an excluded individual or entity from being employed by, or under contract with, any practitioner, provider or supplier to provide any items and services reimbursed by a Federal health care program. This broad prohibition applies whether the Federal reimbursement is based on itemized claims, cost reports, fee schedules or PPS. Furthermore, it should be recognized that an exclusion remains in effect until the individual or entity has been reinstated to participate in Federal health care programs in accordance with the procedures set forth at 42 CFR 1001.3001 through 1001.3005. Reinstatement does not occur automatically at the end of a term of exclusion, but rather, an excluded party must apply for reinstatement. If you are an excluded individual or entity, or are considering hiring or contracting with an excluded individual or entity, and question whether or not the employment arrangement may violate the law, the OIG Advisory Opinion process is available to offer formal binding guidance on whether an employment or contractual arrangement may be in violation of the OIG's exclusion and CMP authorities. The process and procedure for submitting an advisory opinion request can be found at 42 CFR 1008, or on the OIG web site at www.hhs.gov/oig.

4

Footnotes

1. A Federal health care program is defined as any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government or a

21

State health care program (with the exception of the Federal Employees Health Benefits Program) (section 1128B(f) of the Act). The most significant Federal health care programs are Medicare, Medicaid, Tricare and the Veterans programs. ¶ 2. A Federal program beneficiary is an individual that receives health care benefits that are funded, in whole or in part, by a Federal health care program. ¶ 3. For example, the prohibition against Federal program payment for items and services would continue to apply in the situation where an excluded pharmacist completes his or her medical degree and becomes a licensed physician. ¶ 4. In certain instances, a State health care program may request a waiver of an exclusion if an individual or entity is the sole community physician or the sole source of essential specialized services in a community (42 CFR 1001.1801(b)) ¶.

22

SYSTEM POLICY NUMBER: 8-05

SUBJECT:

Prohibition of Employment of Excluded Individuals and Others Convicted of Health Care Related Criminal Offenses

EFFECTIVE DATE: October 1, 2000 RESPONSIBLE DEPARTMENT: PURPOSE:

CATEGORY: Administrative Policy Organizational Integrity & Audit Services

POLICY:

In keeping with the Mission and Values of Trinity Health, it is critical that Trinity Health hire employees who are trustworthy, law abiding, concerned with upholding the standards of conduct and are appropriately qualified. In addition, federal health care regulations prohibit the submission of claims for services furnished, ordered or prescribed by individuals debarred or otherwise excluded from participation in federal health care program. It is the policy of Trinity Health and its member and service organizations to conduct appropriate pre-employment background checks on all employment applications for job positions within Trinity Health. Furthermore, it is the policy of Trinity Health not to employ individuals who are listed by a Federal agency as debarred, excluded or otherwise ineligible for participation in federally or state funded health care programs.

PROCEDURE:

1. Upon initial employment with any organization owned or operated by Trinity

Health, employees will be required to certify in writing they have not been debarred or excluded from participation in Medicare, Medicaid or any other federally or state funded health care programs and have not been convicted of a health care related criminal offense. Such certification statement will be made a required part of the employment application process within Trinity Health.

2. Before employment, if practical, or within 30 days following the date of initial

employment, each member organization and the Corporate Office will utilize vendor, database services or other means available to verify that applicants or new employees are not currently debarred or excluded from participation in Medicare, Medicaid or any other federally or state funded health care program and have not been convicted of a criminal offense related to health care.

3. If, as a result of the above procedures or through other means, the organization

becomes aware that an applicant or existing employee may be excluded from participation in a federally or state funded health care program or has been convicted in the past of a health care related criminal offense, the organization will take the following steps: a) in the case of applicants, the hiring of the individual will be suspended pending completion of procedures described in #4; 23

b) in the case of an existing employee, the employee will be contacted immediately by local Human Resources personnel who will notify the Local Integrity Officer. The employee shall be removed from direct responsibility for or involvement in any federally or state funded health care program through reassignment or a leave of absence until a final resolution of the status of the issue can be determined.

4. Human Resources will immediately initiate an investigation to confirm whether

the applicant or employee is excluded from participation in a federal or state funded health care program or has been convicted in the past of a health care related criminal offense.

5. If upon completion of the investigation, the applicant or employee is found to be

debarred or excluded from participation in Medicare, Medicaid or any federally funded health care program, Human Resources, in consultation with the Local Integrity Officer, will take appropriate steps to terminate the hiring of the applicant or, for existing employees, the employment of the individual within 60 days. Human Resources, in consultation with the Local Integrity Officer and the hiring department manager, will take appropriate due care prior to hiring any applicants found to have been convicted of a health care criminal offense. In the event an employee is determined to not have been so debarred or excluded, the individual shall be restored as soon as practical to his or her position within the organization.

6. See TH Policy ­ Prohibition of Business Relationships with Excluded Physicians,

outlining requirements for employed physicians to immediately report to the Trinity Health organization any notifications received of exclusion from participation in federally or state funded healthcare programs.

A report of any activities taken in response to this policy is to be included in the quarterly report prepared by the Local Integrity Officer and submitted to the System Integrity Officer. SAMPLE

Assistant Inspector General for Investigative Operations Office of the Inspector General Department of Health and Human Services 24

330 Independence Avenue, SW Cohen Building, Room 5409 Washington, D.C. 20201

Dear Assistant Inspector General:

Pharmacy, Inc., a _________ corporation ("Provider") herein submits a voluntary selfdisclosure pursuant to the Office of Inspector General's ("OIG") Provider Self-Disclosure Protocol. The subject of this voluntary disclosure is Provider's employment of an individual excluded from participation in Federal health care programs. The undersigned is Provider's representative for purposes of this voluntary disclosure.

Disclosing Party

Provider operates retail pharmacies located in ______. Provider's provider identification numbers are listed on Attachment A to this letter, and its tax identification number is 38________. To Provider's knowledge, the subject matter of this voluntary disclosure is not under current inquiry by any Federal government agency or contractor and Provider is not under any other investigation pertaining to a Federal health care program. Provider understands that the excluded individual who is the subject of this voluntary disclosure is separately seeking reinstatement as a provider in good standing in Federal health care programs.

Nature and Extent of Incident at Issue

Discovery of Employee's Excluded Status

In __________ of 200_, during the course of due diligence proceedings for the then-pending transaction between Company A and Provider, ______________, a pharmacist employed by Provider (the "Excluded Employee"), was identified as listed on the OIG's List of Excluded Individuals and Entities ("LEIE"). The Excluded Employee was placed on leave pending further investigation by Provider. Following an internal investigation and confirmation of the exclusion the Excluded Employee's employment with Provider was terminated.

Investigation

Issues Addressed and Information Gathered in the Course of the Investigation

25

Basis for Employee's Exclusion

Effective ______________, 200_, the OIG excluded the Excluded Employee from participation in the Medicare and Medicaid programs, as well as other Federal health care programs. The exclusion resulted from the suspension of Excluded Employee's license to practice pharmacy. The basis for exclusion (exclusion type 1128(b)(4)) was license revocation/suspension due to ___________. The Excluded Employee's license was suspended by the State of ________ on _________, 200_. The suspension was dissolved on __________, 200_, and the Excluded Employee has remained duly licensed since that time. (See Attachment B, which is a copy of the Excluded Employee's licensure status and history from the licensure verification section of the State of _________ website.) The Excluded Employee apparently did not seek reinstatement to remove his/her name from the LEIE. The Excluded Employee became employed by Provider on ____,2000_ and remained employed until __________, 200_. He/She served as a full-time pharmacist at various retail pharmacy locations of Provider. The Excluded Employee's patient care activities included filling and checking prescriptions for patients.

Provider

The investigation of this matter also focused on the reasons why Provider did not discover the Excluded Employee's exclusion until _______ of 2008. Prior to and after _____, 200_, Provider's background check practice included searching the LEIE on an annual basis and periodically thereafter for groups of new hires. Provider inadvertently did not include the Excluded Employee in the annual or group screening. Upon discovery of the excluded status of the Excluded Employee, Provider promptly modified its practice to require conducting searches regarding all new hires at the time of hire and again on _____ 1 of each year. Following the discovery of the Excluded Employee's excluded status, the list of all current employees of Provider was screened against federally maintained databases listing excluded persons and entities.1 This search confirmed that the Excluded Employee was the only employee for whom this screening generated documentation of an adverse action.

Impact of the Excluded Employee's Employment While on the LEIE

Provider's investigation concluded that no safety or quality of health care risks arose as the result of the Excluded Employee's employment at Provider while she was on the OIG's LEIE. Provider has determined that the compensation (salary and benefits) paid to the Excluded Employee was for the period of his/her employment. While the Provider's pharmacies participate in the Medicare program Provider does not file a Medicare cost report. Therefore, the Excluded Employee's compensation was not included on any cost reports. Prescriptions covered by Medicare/Medicaid may have been filled and/or checked by the Excluded Employee.

Response and Preventive Measures

1 The lists checked included lists kept by OIG GSA, and OFAC Specially Designated Nationals.

26

As described above, Provider acted diligently and promptly in responding to the Excluded Employee's excluded status once discovered. His/Her employment was terminated following a brief period of suspension. The Excluded Employee was advised that until he/she became reinstated to participate in Federal health care programs he/she could not work as a Provider employee. Laws Potentially Violated by the Conduct The laws potentially violated by the conduct disclosed in this letter include:

Section 1128A of the Social Security Act 42 U.S.C. 1320a-7a, and 42 U.S.C. 1003.102(a)(2) and (3).

Certification

Provider's certification is attached to this letter prior to the first exhibit.

Summary and Conclusion

In 2008, Provider was alerted to the fact that one of its then-current employees was excluded by the OIG from participation in Medicare, Medicaid and all other Federal health care programs. In response, Provider suspended and then promptly terminated the Excluded Employee's employment. Provider conducted a detailed investigation to confirm the Excluded Employee's exclusion and why Provider did not detect her excluded status. The investigation revealed Provider's comprehensive background check policy was insufficient, particularly with respect to the frequency of necessary background checks. This issue has now been addressed and Provider is confident that a similar screening incident will not occur in the future. In conclusion, Provider has identified the matters that are the subject of this disclosure and brought them to the attention of the government pursuant to the OIG's Protocol. Provider respectfully requests that in considering how to address the matters disclosed in this letter, you consider Provider's actions to promptly bring this matter to your attention and its actions to ensure that such an incident does not occur again. We look forward to working with you toward a successful resolution of this matter. Please do not hesitate to contact us, if we can be of any further assistance at this time.

Sincerely, _____________________________ Attachments cc:

27

CERTIFICATION

I, ___________________________________, state that to the best of my knowledge, this submission contains truthful information and is based on a good faith effort to bring the matter to the government's attention for the purpose of resolving any potential liabilities to the government.

____________________________ Name Title

Attachment A Provider Identification Numbers

Attachment B Licensure Status and History

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