G: Watch for individuals excluded from Medicare

Everyone knows that the really big penalty for Medicare and Medicaid fraud is the hospital’s exclusion from participation in those and other federal programs, but the government is reminding risk managers that individuals can be excluded also. And if they are, they should not be welcome at your facility, according to a federal advisory.

The U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) recently issued an advisory to health care providers suggesting they should determine whether potential and current employees and contractors have been excluded from participation in federal health care programs, including Medicare and Medicaid.

The advisory explains that an effect of an OIG exclusion from federal health care programs is that no federal health care program payments may be made for any items or services furnished, directly or indirectly, by an excluded individual or entity. Almost 17,000 individuals and entities have been excluded from participating in federal health care programs for misconduct including fraud convictions, patient abuse, and defaulting on health education loans. In fiscal year 1999, the OIG expects to exclude about 3,000 individuals and entities.

"Exclusion is one of the most important tools we have to protect beneficiaries and stem fraud and abuse in federal health care programs," Inspector General June Gibbs Brown said in the advisory. "To ensure that Medicare, Medicaid and other federal health care programs are protected, we need the cooperation of the entire health care community to help make sure excluded individuals are not involved in any way in the care of federal program beneficiaries."

Virtually all federal programs affected

Both the Health Insurance Portability and Accountability Act of 1996 and the Balanced Budget Act of 1997 expanded and strengthened the OIG’s exclusion authorities. One of the most significant changes has been the expansion of the OIG’s exclusion authority beyond HHS programs, such as Medicare and Medicaid, to all federal health care programs, including those administered by the Department of Veterans Affairs and the Department of Defense. The only federal health care program not covered by the OIG’s exclusion authority is the Federal Employees Health Benefits Program.

The OIG also has the authority to impose civil monetary penalties against excluded individuals and entities that seek reimbursement from federal health care programs, as well as health care pro viders that employ or enter into contracts with excluded individuals to provide items or services to federal program beneficiaries. In both cases, civil monetary pen alties of $10,000 for each item or service furnished by the excluded individual may be imposed, and the responsible party may have to pay three times the amount claimed for each item or service.

"The prohibition against federal program payment for items or services furnished by excluded individuals and entities extends to payment for administrative and management services not directly related to patient care," the advisory says. "In short, 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. The payment prohibition applies whether federal payment results from itemized claims, cost reports, fee schedules or a prospective-payment system."

Health care providers that receive federal health care funding may employ an excluded individual only in limited situations where the provider is able to pay the individual exclusively with nonfederal funding and the items and services furnished by the excluded individual relate solely to nonfederal program patients.

Here are some examples in the advisory bulletin of situations that can expose excluded parties and their employers to civil money penalties:

• 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 treatment plan reviews if such services are reimbursed, directly or indirectly, 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 a federal health care program;

• administrative services, including the processing of claims for payment, performed by an excluded individual for a Medicare fiscal intermediary or carrier or a Medicaid fiscal agent;

• services performed for program beneficiaries by excluded individuals who sell, deliver, or refill orders for medical devices or equipment reimbursed, directly or indirectly, by a federal health care program;

• items or equipment sold by an excluded manufacturer or supplier used to care for or treat a federal program beneficiary and reimbursed, directly or indirectly, by a federal health care program.

Check the Web

The OIG maintains a list of excluded individuals and entities accessible on the World Wide Web at www.hhs.gov/oig/cumsan/index.htm and urges health care providers to check the list before hiring or contracting with individuals or entities. Additionally, the OIG recommends that health care providers periodically check the list to determine the exclusion status of current employees and contractors. The OIG also will provide advisory opinions on specific employment or contractual arrangements that may violate the law.