OIG Provides Important Guidance on Expectations Related to Screening for Excluded Individuals

By Amy Fehn

The Social Security Act generally prohibits an entity that treats Medicare or Medicaid beneficiaries from employing or contracting with an individual who has been excluded from participation in federal health care programs (“an excluded individual”). Claims for services directly or indirectly provided by an excluded individual are considered an overpayment, subjecting the entity submitting the claim to civil monetary penalties, and possible criminal penalties.

On May 8, 2013 the Office of Inspector General (“OIG”) for the Department of Health and Human Services issued an Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (“the Updated Bulletin”) to replace and supersede a 1999 bulletin. The purpose of the Updated Bulletin was to clarify various aspects related to the prohibition on contracting with or employing excluded individuals.

Some of the points clarified in the Updated Bulletin include:

• Exclusions and payment prohibitions continue to apply to an excluded person even if he or she switches professions during the exclusion period (e.g., an individual excluded as a pharmacist cannot go on to obtain a medical degree and furnish services to patients covered by federal health care programs).


• Exclusions and payment prohibitions extend beyond direct patient care. For example, an excluded person could not prepare surgical trays, review treatment plans, input prescription information for pharmacy billing or be involved in any way in filling prescriptions for drugs that are billed to a Federal health care program.


• Excluded individuals are prohibited from providing administrative or management services that are payable by a Federal health care program, even if the services are not separately billable. For example, an excluded individual could not act as a chief executive officer, chief financial officer, general counsel, director of health information management, director of human resources or a physician practice office manager. An excluded individual also could not provide health information technology services and support, strategic planning, billing and accounting, staff training or human resources services for an entity that submits claims to a Federal health care program.


• The payment prohibition extends to volunteer positions.


• A provider may employ or contract with excluded individuals for items or services that are solely furnished to non-Federal healthcare program beneficiaries. In such a situation, the excluded individuals do not have to be paid out of a separate account. However, there can be no claim submitted or payment received from a Federal health care program for services or items provided directly or indirectly by the excluded individuals.

In order to avoid submitting a claim that was ordered by or prescribed by an excluded individual, the OIG suggests that providers confirm at the point of service that the ordering or prescribing physician is not excluded. The OIG further cautioned that some excluded individuals may still have a Drug Enforcement Agency (DEA) license. The OIG also warned providers that relying on a third party such as a Medicare Part D plan or a state agency does not relieve the provider of responsibility with regard to any overpayments or civil monetary penalties related to services ordered or prescribed by an excluded provider.

The OIG also cautioned that an excluded individual should not hold greater than a five percent interest in an entity that submits claims to a Federal health care program and should not have any administrative control over such an entity. An excluded individual could face civil monetary penalty liability for holding an administrative or management position with an entity that bills Federal health care programs and any claims submitted by the entity would be considered an overpayment and possibly subject to false claims liability if they were knowing submitted in violation of the statutory prohibition.

In order to avoid inadvertently contracting with or employing an excluded individual, the OIG urged providers to screen potential employees or contractors by using the OIG List of Excluded Individuals/Entities (LEIE). Although there is no statutory or regulatory requirement to check the LEIE at any specific intervals, the list is updated monthly. Therefore, the OIG suggests monthly screening to best minimize potential overpayment and CMP liability. The OIG further suggests that providers maintain documentation of all name searches performed and additional searches conducted.

In determining who to screen, a provider is expected to look at each job category and contractual relationship and determine whether the item or service is payable directly or indirectly, in whole or in part by a Federal health care program. If the answer to this question is yes, then all persons in that job category or with a similar contractual relationship should be screened to best minimize CMP liability.

Although the screening function can be outsourced to contractors, the OIG cautioned that the provider retains potential liability for civil monetary penalties. Where health care workers are contracted through another entity, such as a staffing agency, the OIG stated that a provider may reduce or eliminate CMP liability if it can demonstrate that it reasonably relied upon the staffing agency’s agreement by contract to perform LEIE screening. The OIG further cautioned that any such delegation should be documented in the agreement between the parties and the provider should exercise due diligence in ensuring that the agency is meeting the contractual obligation.

As part of an effective compliance program, health care entities should develop a systematic approach for screening for excluded individuals. Where entities discover that an excluded individual has been part of their workforce through employment, contract or a volunteer position, a return of any overpayments attributable to that individual’s services may be necessary to avoid false claims liability. The OIG noted that providers could use the OIG’s Provider Self-Disclosure Protocol (SDP) to disclose and resolve potential CMP liability related to services provided by an excluded individual.