HHS LogoOffice of Inspector General
Office of Public Affairs
330 Independence Ave., SW
Room 5541, Cohen Bldg.
Washington, DC 20201
(202) 619-1343


Contact: Alwyn Cassil (202) 205-0333

Tuesday, Sept. 28, 1999

Special Advisory Bulletin Outlines Effects of Exclusion from Federal Health Care Programs

Health care providers should determine whether potential and current employees and contractors have been excluded from participation in federal health care programs, including Medicare and Medicaid, according to a special advisory bulletin issued today by the Department of Health and Human Services' Office of Inspector General.

The effect of an Office of Inspector General exclusion from federal health care programs is that no federal health care program payments may be made for any items or services furnished, directly or indirectly, by an excluded individual or entity. Almost 17,000 individuals and entities have been excluded from participating in federal health care programs for misconduct ranging from fraud convictions to patient abuse to defaulting on health education loans. In fiscal year 1999, the Office of Inspector General expects to exclude about 3,000 individuals and entities.

"Exclusion is one of the most important tools we have to protect beneficiaries and stem fraud and abuse in federal health care programs," Inspector General June Gibbs Brown said. "To ensure that Medicare, Medicaid and other federal health care programs are protected, we need the cooperation of the entire health care community to help make sure excluded individuals are not involved in any way in the care of federal program beneficiaries."

The Office of Inspector General periodically issues special advisory bulletins to provide guidance to the health care industry to prevent fraud and abuse and promote high standards of ethical and lawful conduct. The new special advisory bulletin -- The Effect of Exclusion From Participation in Federal Health Care Programs -- also will be published soon as a Federal Register notice.

Both the Health Insurance Portability and Accountability Act of 1996 and the Balanced Budget Act of 1997 expanded and strengthened the Office of Inspector General's exclusion authorities.

One of the most significant changes has been the expansion of the Office of Inspector General's exclusion authority beyond Department of Health and Human Services' programs, such as Medicare and Medicaid, to all federal health care programs, including those administered by the Department of Veterans Affairs and the Department of Defense. The only federal health care program not covered by the Office of Inspector General's exclusion authority is the Federal Employees Health Benefits Program.

The Office of Inspector General also has the authority to impose civil money penalties against excluded individuals and entities that seek reimbursement from federal health care programs and health care providers that employ or enter into contracts with excluded individuals to provide items or services to federal program beneficiaries. In both cases, civil money penalties of $10,000 for each item or service furnished by the excluded individual may be imposed, and the responsible party may have to pay three times the amount claimed for each item or service.

The prohibition against federal program payment for items or services furnished by excluded individuals and entities extends to payment for administrative and management services not directly related to patient care. In short, no federal program payment may be made to cover an excluded individual's salary, expenses or fringe benefits, regardless of whether they provide direct patient care. The payment prohibition applies whether federal payment results from itemized claims, cost reports, fee schedules or a prospective-payment system.

Health care providers that receive federal health care funding may only employ an excluded individual in limited situations where the provider is able to pay the individual exclusively with non-federal funding and the items and services furnished by the excluded individual relate solely to non-federal program patients.

The following examples contained in the advisory bulletin illustrate situations that can expose excluded parties and their employers to civil money penalties:

The Office of Inspector General maintains a list of excluded individuals/entities accessible on the World Wide Web at www.hhs.gov/oig/cumsan/index.htm and urges health care providers to check the list before hiring or contracting with individuals or entities. Additionally, the Office of Inspector General recommends that health care providers periodically check the list to determine the exclusion status of current employees and contractors. The Office of Inspector General also will provide advisory opinions on specific employment or contractual arrangements that may violate the law.


Note: The special advisory bulletin is available on the Office of Inspector General's Web site at https://www.hhs.gov/oig. Click on "What's New" to access the bulletin.