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From Health Law Daily, May 9, 2014

Codification of OIG’s statutory authority to waive exclusions proposed

By Harold M. Bishop, JD

The regulations relating to the mandatory and permissive exclusion authorities of the HHS Office of Inspector General (OIG) would be amended under a proposed rule issued by the OIG. The proposal would change the regulations governing the integrity of Medicare and State health care programs by codifying provisions of the Medicare Prescription Drug,

Improvement, and Modernization Act of 2003 (MMA) (P.L. 104-191) and the Patient Protection and Affordable Care Act (P. L. 111–148), as amended by the Health Care and Education Reconciliation Act of 2010 (P. L. 111–152) (collectively, the ACA) and make other technical changes to existing regulations (Proposed rule, 79 FR 26809, May 9, 2014).

Exclusion authority background. OIG’s exclusion authorities encompass both mandatory exclusions (Soc. Sec. Act sec. 1128(a)) and permissive exclusions (sec. 1128(b)). Mandatory exclusion requires the OIG to exclude from Federal health care program participation for a period of at least five years any individual or entity convicted of a program-related crime; a crime related to patient abuse or neglect; or certain felonies related to health care delivery, governmental health care programs, or controlled substances. The OIG’s permissive authorities do not require the imposition of an exclusion, and may either be (1) derivative exclusions that are based on actions previously taken by a court or other law enforcement or regulatory agency or (2) affirmative exclusions that are based on OIG-initiated determinations of misconduct, such as poor quality of care, kickbacks, or submission of false claims to a Federal health care program.

MMA changes. Section 949 of MMA amended Soc. Sec. Act section 1128(c)(3)(B) by expanding the waiver provision of the Act to allow waiver requests for individuals excluded under either of the two mandatory exclusion authorities that were added by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (P.L. 104-191) to sections 1128(a)(3) (felony conviction related to health care fraud) and (a)(4) (felony conviction relating to a controlled substance) of the Soc. Sec. Act.

Section 949 also expanded the mandatory exclusion waiver provision to permit the administrator of any Federal health care program to request a waiver. Prior to MMA, a waiver request could be made only by the administrator of a State agency for a waiver of the State health care program.

Finally, the MMA added a provision requiring the requesting Federal health care program administrator to determine whether the exclusion would impose a hardship on Medicare beneficiaries, in addition to the existing requirement that the requesting administrator determine whether the individual or entity for whom the waiver was requested be the sole community physician or sole source of essential specialized services in a community.

ACA changes. Section 6402(k) of ACA also amended the Social Security Act’s waiver provisions to permit the administrator of a Federal health care program to request a waiver if the administrator determines that exclusion would impose a hardship on any beneficiary or beneficiaries eligible to receive items or services under a Federal health care program, which broadened the waiver request beyond only Medicare beneficiaries.

In addition, section 6408(c) of ACA amended section 1128(b)(2) of the Soc. Sec. Act by expanding the application of the permissive exclusion authority to include individuals convicted of an offense in connection with the obstruction of an audit. ACA section 6406(c) also broadened the scope of the permissive exclusion authority found in section 1128(b)(11) of the Soc. Sec. Act to apply to individuals who not only furnish but also “order, refer for furnishing, or certify the need for” items or services for which payment may be made under Medicare or any State health care program and fail to provide payment information.

Section 6402(d) of ACA established a new permissive exclusion authority under section 1128(b)(16) of the Soc. Sec. Act applicable to any individual or entity that knowingly makes, or causes to be made, any false statement, omission, or misrepresentation of a material fact in any application, agreement, bid, or contract to participate or enroll as a provider of services or supplier under a Federal health care program. Finally, section 6402(e) established a new authority at section 1128(f)(4) of the Soc. Sec. Act for OIG to issue testimonial subpoenas in investigations of exclusion cases.

Policy changes. The OIG proposal would make several policy changes, including: (1) creating early reinstatement procedures for exclusions pursuant to the loss of a health care license; (2) expanding the “pay the first claim rule” in 42 CFR Sec. 1001.1901(c) so that it would apply to Medicare Parts C and D; and (3) clarifying that no statute of limitations period applies to exclusions imposed under section 1128(b)(7) (permissive exclusion for fraud, kickbacks or other prohibited activities) of the Soc. Sec. Act.

Clarifying changes. The OIG proposal would make a number of changes to the regulations to correct omissions from previous regulatory issuances, to update certain dollar figures related to aggravating factors, and to clarify existing regulatory provisions.

In addition, the proposed rule would make changes to 42 CFR part 1002. Part 1002 provide direction to State Medicaid agencies when they independently initiate exclusion actions. These requirements are substantially consistent with OIG procedures and are designed to ensure adequate due process. The proposed changes to part 1002 would consist of minimal reorganization, several new headings to clarify the applicability of certain provisions, language to clarify existing Federal requirements, and a listing of the statutory underpinnings of the provisions.

MainStory: TopStory ProposedRules ProgramIntegrityNews CMSNews AntikickbackNews EnforcementNews FraudNews HealthReformNews HIPAANews MedicaidPaymentNews PaymentNews PartCNews PartDNews

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