On January 12, 2017, the U.S. Department of Health and Human Services’ Office of Inspector General (“OIG”) issued a final rule updating the OIG’s exclusionary authorities. The final rule can be read in its entirety here: https://www.federalregister.gov/documents/2017/01/12/2016-31390/health-care-programs-fraud-and-abuse-revisions-to-the-office-of-inspector-generals-exclusion. The final rule is expected to take effect on March 21, 2017.

The OIG is authorized (and sometimes required) to exclude individuals or entities from participating in federal health programs based on certain conduct. See 42 U.S.C. § 1320a-7; 42 C.F.R. § 1001 et seq. Under the mandatory exclusion rules, individuals and entities must be excluded for: (1) misdemeanor or felony convictions related to the delivery of an item or service under Medicare or a State health care program; (2) misdemeanor or felony convictions related to patient abuse connected to the delivery of care, item, or service; (3) felony convictions related to fraud, theft, embezzlement, or other financial misconduct in connection to health care; and (4) felony convictions related to the unlawful manufacturing, distribution, prescription, or dispensing of a controlled substance. Under the permissive exclusion rules, the OIG is not required, but has the discretion, to initiate an exclusion action against an individual or entity for various conduct, including obstruction of an investigation, license revocation or suspension, excessive claims, furnishing unnecessary or substandard items or services, and submitting false claims.

The new provisions taking effect on March 21, 2017 include:

  • An expansion of the OIG’s permissive authority to exclude a provider who is convicted of obstructing an audit. The guidance accompanying the new rule explains that “audit” is defined broadly to include “inspection,” “verification,” and “examination,” and that because the authority is permissive, the OIG will have discretion over the meaning of “audit” when seeking to exclude a provider under this new authority.
  • An expansion of the OIG’s permissive authority to exclude a provider for making false statement, omissions, or misrepresentations when applying to enroll in a federal health program. Those facing exclusion are currently permitted to present documentary and written argument after receiving notice of any proposed exclusion, but may present oral argument only under certain circumstances. The final rule states that where an individual or entity faces permissive exclusion for making a false statement, omission, or misrepresentation when applying for enrollment, that individual or entity will be permitted to present oral argument before exclusion is imposed.
  • The creation of an early reinstatement process for providers who were excluded for losing their license. Prior to the final rule taking effect, the reinstatement process can only begin after a provider regains full licensure. This practice has unintentionally caused providers who lost their license to have to endure much longer exclusion periods than providers who were excluded due to being convicted of criminal activity. The new rule will permit a provider to start the reinstatement process with OIG before regaining full licensure so long as the loss was not due to patient abuse or neglect.
  • The creation of a 10-year limitations period for exclusion actions. The OIG considered having no limitations period, but ultimately concluded that such an option would be too burdensome because, among other reasons, it would require providers to keep certain records indefinitely. The OIG’s commentary on the new rules explains that a “10-year limitations period is grounded in the [False Claims Act], provides certainty to the industry, and better protects OIG’s ability to protect the programs and individuals.”

The attorneys at Chilivis Grubman represent healthcare providers of all types and sizes in connection with exclusion proceedings, as well as government investigations and audits, and a wide variety of other regulatory and compliance matters. For any questions, or if we can assist you in connection with a healthcare regulatory or compliance issue or audit/investigation, please contact us at (404) 262-6505 or sgrubman@cglawfirm.com.