OIG crackdown on excluded physicians, suppliers raises states’ oversight burden
The Department of Health and Human Services’ Office of the Inspector General (OIG) has backed away from excluding providers for not offering Medicare and state health programs the lowest price. However, the OIG intends to clamp down on excluded physicians, manufacturers and distributors, which undoubtedly will add considerably to state program directors’ oversight headaches.
A proposed OIG rule, intended to implement portions of the Health Insurance Portability and Accountability Act (HIPAA) legislation, would have permitted exclusion of providers that charged Medicare/Medicaid "substantially in excess" of what they charged other customers. That provoked an outcry from providers who feared they could be sanctioned for discounted arrangements with HMOs.
"This would have destroyed any chance of offering flexible pricing," explained attorney Bill Sarraille, JD, of law firm Arent Fox in Washington, DC. OIG eliminated the provision from a package of final rules, published in the Sept. 2 Federal Register.
But if OIG has closed one avenue to exclusion, it’s opened another. Now, manufacturers and distributors that don’t file Medicare or Medicaid claims face the ultimate sanction. OIG had previously maintained that while it had the authority to exclude manufacturers and distributors that didn’t submit claims, it wouldn’t do so for logistical reasons. "We have now concluded that such exclusions should be undertaken, when warranted by the conduct of such entities, notwithstanding the administrative burdens," the agency said.
Program managers must check
In addition, because OIG can penalize anyone who deals with an excluded company, program directors and providers will have to check and keep checking who’s on OIG’s excluded list, which is posted monthly on the agency’s site on the World Wide Web (http://www.hhs. gov/progorg/oig/cumsan/cumsanc. html).
"The government is going to take the position that because the lists are public, it’s [the providers’] responsibility to look at them," Sarraille predicted.
However, the federal watchdogs did hedge a little. "We wouldn’t expect that manufacturers would often be convicted and subject to a mandatory exclusion," the agency said. Indeed, OIG spokeswoman Judy Holtz claims the agency has never taken such an action.
Because excluding a manufacturer might hurt customers, OIG says it’s "committed to exercising this sanction authority carefully and prudently, and acting only where the excluded provider’s product can be clearly identified."
Waivers will be given, for example, to a pharmaceutical company that makes a unique drug. Still, anyone who submits claims that involve items made by an excluded indirect provider is subject to a civil monetary penalty. But OIG will only come down on those who "knew or should have known" they were submitting those claims. Plus, providers will be allowed to bill for products for up to 30 days after the effective date of the manufacturer’s exclusion, and up to 60 days until October 1999.
State program directors also should be aware that the new set of rules, which takes effect Oct. 2, also:
• Lengthens exclusions. OIG now will use any adverse actions by any federal, state or local agency or board when deciding the length of exclusions.
• Blocks voluntary withdrawals. Provi ders under investigation by state agencies can’t avoid OIG exclusion by withdrawing from the state program. OIG now requires that if a state agency serves a provider with a written notice of charges or allegations, the agency also must report the action to OIG for an exclusionary review regardless of whether the provider withdraws from the state program.
• Penalizes officers and managing staff. OIG is sticking by its plan to exclude the officers and managing staff of excluded companies, as well as any owners. State programs will have to monitor providers and suppliers to make sure there’s no overlap in ownership by excluded individuals.
Harsh penalties for barred doctors
The federal watchdogs particularly want to crack down on hospitals that hire excluded doctors, according to the proposed rules. "The OIG has been made aware of situations where individuals who have been excluded from Medicare or state health care program participation have been able to obtain (or retain) employment, staff privileges or other affiliation with various health care entities, and to render services that are ultimately paid for by the programs," said OIG.
The agency proposes a civil monetary penalty of up to $10,000 for any provider that bills for the services of excluded employees. The exact fine would depend on whether the billing provider knew or should have known of the exclusion, any potential harm to Medicare/Medicaid or patients, and a history of prior sanctions.
In addition, an excluded person could no longer work for a federal agency that funds a federal health care program. Thus the Defense Department, which funds CHAMPUS, no longer would have any discretion to pay excluded parties for any services, nor may it pay them a salary. "In most instances, the effect of an OIG exclusion will preclude the employment of an excluded individual in any capacity by a federal or state agency," OIG noted. Many private payers also will not deal with anyone excluded by Medicare, added Sarraille.
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