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Protecting a practice from excluded providers

By Beth Anne Jackson, Esq.

With staff time and energy engaged in a race to comply with HIPAA privacy regulations by the deadline, practices may be allowing other important compliance issues to fall temporarily by the wayside. While the Office of Civil Rights may be focused on privacy, the Office of Inspector General (OIG) remains focused on matters under its authority, including program exclusions. In its Fiscal Year 2003 Work Plan, the OIG states that it anticipates an increased number of cases supporting exclusion from Medicare, Medicaid and other federal and state governmental health care programs. Fortunately, there are non-time consuming steps that practices can take to protect themselves from excluded providers.

Excluded providers. Any individual or entity that provides or is involved in the provision of, or billing for, services or items that are reimbursable by federal health care programs may be excluded—physicians, nurses, nurses’ aides, DME companies, physical therapists, billing companies and non-licensed persons involved in some aspect of the health care industry. There are currently 3,728 excluded physicians and 4,394 excluded “private citizens.” Providers may be excluded for a multitude of reasons, the most common of which are license revocation or suspension, program-related convictions, and patient abuse and neglect. However, there are also currently 2,409 persons excluded for default on health education loans. While the OIG has had exclusionary authority for many years, both HIPAA and the Balanced Budget Act of 1997 expanded this authority as well as the OIG’s civil money penalty authority.

Effect of excluded providers. Medical practices are affected by excluded providers in several ways. First, no federal health care program payments may be made for any items or services furnished by an excluded provider. That means that an employer may not bill Medicare or any other federal health care program for services provided by an excluded physician or other licensed individual, “incident to” services performed by an excluded nurse, or for items or services purchased from an excluded vendor (or a vendor owned by an excluded individual). If an employer does bill Medicare for the services of an excluded provider, payment will likely be denied. Further, the prohibition extends to any participation by an excluded individual in either providing care or billing federal health care programs for services. It should be noted that a program exclusion does not expire or end on its own terms; an individual or entity must apply to the OIG for reinstatement.

Second, items or services prescribed by an excluded physician are not reimbursable when the individual or entity furnishing the item or services knew or should have known of the exclusion. These payment prohibitions apply even when the payment itself is made to a non-excluded provider, such as the group practice. For example, if an excluded physician orders a chest x-ray, the entity furnishing the x-ray may not bill a federal health care program for that x-ray if it knew or should have known that the physician was excluded. Providers who file claims for items or services furnished by an individual or entity that the provider knew or should have known was excluded may be required to repay all amounts received from such claims and, potentially, false claims liability.

Third, the OIG has the authority to impose civil money penalties on any provider that contracts with, by employment or otherwise, an individual or entity that the provider knows or should know is excluded from program participation. The OIG has repeatedly stated that this “knowledge” standard imposes an affirmative obligation on providers to check the exclusion status of individuals and entities prior to hiring and/or contracting with them. Therefore, if a practice employs an excluded physician without checking his exclusion status and submits claims for federal health care program reimbursement for services provided by the excluded physician, then the practice could be liable for a civil money penalty of $10,000 for each item or service claimed, as well as an assessment of up to three times the amount claimed. Moreover, the practice itself may be excluded from program participation.

Protective steps. For these reasons, practices need to confirm, prior to employing a physician or other individual or contracting with a provider or vendor and periodically thereafter, that the individual or entity is not excluded from participation in federal health care programs. This may be accomplished by consulting the List of Excluded Individuals and Entities (LEIE), a list of individuals and providers excluded from federal health care programs maintained by the OIG and posted on its website. The OIG website contains an online searchable LEIE database as well as a downloadable LEIE database that is supplemented monthly. For most physician practices, the online searchable LEIE, which allows one to search for up to five names or companies at a time, is the best source. It can be found at: http://exclusions.oig.hhs.gov/search.html.

In order to avoid liability, practices must perform an effective and accurate search on the appropriate persons and entities, document their efforts, and ensure that a policy, procedure or job description specifies who is responsible for performing and documenting these checks so that they are performed consistently. The following tips will help ensure protection from excluded individuals and entities:

Compliance plan/procedure tips.

• Perform searches on all employees, independent contractors and vendors of reimbursable items or supplies with whom you contract.

• Make the search part of your new-hire procedure.

• Implement a procedure for periodic re-checks, such as prior to the employee’s annual evaluation or prior to contract renewal (but not less than every two years).

• If there is any reason to suspect that an individual or entity has been excluded, check their exclusion status immediately and as often as warranted thereafter.

• If you discover that an employee, contractor or vendor is excluded, contact an experienced health care attorney immediately to assess your potential liability for repayment, civil money penalties and/or exclusion. Do not panic—if you have taken and documented reasonable steps to detect and avoid contracting with excluded parties, you may have minimum or no liability.

• Do not assume that individuals or entities are not excluded because they have a valid provider number and Medicare has been paying for claims billed through that number. Excluded providers have in the past been able to obtain new provider numbers due to carrier error or to the inaccurate, out-of-date information supplied to carriers.

Online search tips.

• Do the broadest search possible.

• Do not limit the search to Pennsylvania.

• Do not use middle initials.

• If a person has used another name (such as a maiden name), perform another search using that name.

• If you find an individual or entity that matches your search, but you do not think it is the same person (for example, if the state is listed as Texas), verify the result by clicking on the “verify” link after the name. This will take you to a screen that contains the person’s name and address, category of exclusion and other information. You can then enter the individual’s social security number or the entity’s employer identification number (federal tax ID) and the site will verify whether the SSN or EIN matches.

Documentation tips.

• Print your results. If there is no record of the individual or entity’s exclusion, the results will state: “No records found where (last name like ‘X’ and first name like ‘Y’).” If there is a record of the individual’s or entity’s name, print out that page as well as the SSN/EIN verification results page.

• The results will state when the search was conducted and when the source data was last updated.

• Have the person performing the search initial the page and maintain it in a permanent file.

Practices should also consider requiring in physician employment and other contracts a representation that the individual or entity is not excluded from federal health care programs, as well as a duty to notify the practice should they become excluded. Exclusion should also be listed as a basis for immediate termination of the contract.

In the highly regulated health care field, practices are required to spend an inordinate amount of time on compliance efforts. Protecting your practice from excluded individuals and entities, and the potential civil money penalties and exclusion that can result when a practice employs or contracts with an excluded party, however, can be accomplished in very little time. The key is to have mechanisms in place to ensure that the LEIE is checked initially and periodically thereafter for every existing and future employee, independent contractor and vendor of reimbursable supplies and that the results are documented and maintained.

Beth Anne Jackson, Esq., is a Senior Associate with the law firm of Houston Harbaugh, P.C., Pittsburgh, Pa.

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