On May 8, 2013, the US Department of Health and Human Services, Office of Inspector General ("OIG") issued a "Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs" ("2013 Bulletin"). The 2013 Bulletin updates similar OIG guidance issued in a 1999 Special Advisory Bulletin ("1999 Bulletin"). The 2013 Bulletin reflects several expansions of the OIG's exclusion authority since 1999 and answers a number of questions that have arisen in the interim.

Among other things, the 2013 Bulletin reminds hospitals and other providers and suppliers—collectively, "providers"—that (1) no Federal health care program payments can be made for items or services that were furnished by an excluded person or "at the medical direction or on the prescription of an excluded person," and (2) the "items and services" at issue include those "beyond direct patient care," such as administrative, management, information technology, strategic planning, billing, accounting, training and human resources services, unless they are "wholly unrelated to Federal health care programs." Most notable, perhaps, is the OIG's new position on the frequency with which providers should check whether their employees or contractors have been excluded from participating in Federal health care programs.

By way of background, a provider may have to pay a civil monetary penalty ("CMP") if it bills a Federal health care program for services that were furnished by an excluded individual, but only if the provider (1) knew that the individual was excluded or (2) acted in "deliberate ignorance" or “reckless disregard" of this fact. In its 1999 Bulletin, the OIG suggested that providers should check the agency's list of excluded providers before hiring an employee or contractor and "periodically" thereafter. In its 2005 voluntary compliance guidance for hospitals, the OIG moved from periodically to "routinely" (e.g., "at least annually"). Now, in the 2013 Bulletin, the OIG states that because it updates its list of excluded individuals and entities on a monthly basis, "screening employees and contractors each month best minimizes potential overpayment and CMP liability."

Depending on the size of an organization and the number of its employees and contractors, this "best practice" may not, in fact, be practicable. Further, the OIG's suggestion to the contrary notwithstanding, it is not at all clear that a provider can avoid CMP liability only if it confirms—each and every month—that each and every one of its employees and contractors has not been excluded. That being said, the OIG plainly is trying to move the bar with respect to this issue and, as such, all providers are advised to review the 2013 Bulletin carefully and determine whether and the extent to which their compliance programs adequately address the risk areas identified therein.

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