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OIG Issues Updated Special Advisory Opinion Today regarding the Recommended Scope and Frequency of Exclusion Checks

Industries Served
05.08.13

Today the HHS Office of Inspector General (OIG) issued an Updated Special Advisory Opinion addressing the recommended scope and frequency of exclusion checks of employees and contractors. The Advisory Opinion provides important and practical guidance to assist healthcare providers seeking to protect their businesses against the risk of employing or contracting with excluded individuals and entities.

OIG has the authority to exclude individuals and entities from participation in federal healthcare programs. As of April 10, 2013 more than 51,000 individuals and nearly 3,000 entities were excluded from participation, and healthcare providers that employ or contract with excluded individuals or entities are subject to significant civil monetary penalties (CMPs). To manage this risk, providers typically run checks on prospective employees or contractors to determine whether they have been excluded by the OIG before hiring or engaging those individuals or entities. However, pre-employment or pre-contract exclusion checks are insufficient to fully protect a healthcare provider from liability from employing excluded individuals or entities. What remained unclear until the issuance of today’s Advisory Opinion was how often providers should run exclusion checks and which prospective employees and/or vendors should be included in the checks. For instance, can providers employ or contract with an excluded person if that person is not directly involved in patient care or billing? Do providers need to periodically screen current employees and contractors who passed previous exclusion checks at the time of hiring? And if so, how frequently must they conduct those checks? And how far “downstream” do they need to go when conducting such checks? Do providers need to screen employees of contractors and subcontractors, or just the contractors themselves? Today, the OIG’s Advisory Opinion resolved many of these issues. Below are some of the key takeaways from the OIG opinion.

Who Should be Screened?

The prohibition against employing or contracting with an excluded individual or entity is extremely broad, and covers anyone who is involved in any way with the provision of healthcare items or services, either directly or indirectly. For instance, the prohibition covers nurses, pharmacists, pharmacy staff, ambulance drivers, ambulance company dispatchers, as well as anyone who provides “administrative and management services that are payable by Federal health care programs.” This latter category includes anyone who serves in an “executive or leadership role,” as well as anyone involved in “health information technology services and support, strategic planning, billing and accounting, staff training, and human resources.”

Furthermore, as the OIG makes clear, it is irrelevant whether the provider who unwittingly employed or contracted with an excluded person received payment for the item or service. Even volunteers who donate their time at a hospital or nursing home, for example, are covered by the prohibition. Similarly, it is irrelevant whether the provider has a direct relationship with the excluded individual or not. For instance, if a hospital contracts with a staffing agency for temporary or per diem nurses, “the hospital will be subject to overpayment liability and may be subject to CMP liability if an excluded nurse from that staffing agency furnishes items or services to Federal health care program beneficiaries.”

In light of the foregoing, the OIG recommends that providers review every job category or contractual relationship in order to determine whether the items or services being provided are directly or indirectly, in whole or in part, payable by a Federal healthcare program. Assuming the answer to that question is yes, the OIG advises that “the best mechanism for limiting CMP liability is to screen all persons that perform under that contract or that are in that job category.”

The OIG recognizes that the screening employees of contractors and subcontractors is often delegated contractually to the vendor by providers. Given the risk of CMP liability, however, the OIG strongly encourages providers to “validate” that the contractor is conducting such screening on its behalf by requesting and maintaining documentary evidence of such screening in its own files.

How Frequently Should Screenings be Conducted?

The OIG recommends that providers screen all covered employees and contractors at least monthly. The OIG maintains a List of Excluded Individuals and Entities (LEIE) on its website, and updates that database every month. Accordingly, the OIG expects providers to screen monthly to ensure that current employees and contractors have not been added to the LEIE.

What Should Providers Do if They Determine that They Have Employed or Contracted with an Excluded Individual or Entity?

The OIG has established a voluntary Self-Disclosure Protocol (SDP) which enables providers to voluntarily self-disclose the employment of an excluded individual (or the existence of a contract with an excluded individual or entity). By using the SDP, providers may be able to obtain a more favorable resolution with the government than they would if the exclusion were uncovered by government investigators in the first instance. Accordingly, the OIG strongly encourages providers to utilize the SDP if they discover that they have inadvertently hired or contracted with an excluded person or entity.

Providers who unwittingly employ or contract with excluded individuals and entities face potentially significant monetary penalties. Today’s Advisory Opinion from the OIG provides much-needed and long-awaited guidance to help providers mitigate and avoid that liability.

For more additional information, please contact Sheila SawyerJennifer WeaverRichard Westling or any member of the Waller Healthcare Government Investigations team at 800.487.6380.


The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.

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