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OIG Permits Excluded Individual an Indirect Role in Furnishing Items

The OIG recently issued an advisory opinion permitting an excluded individual to be employed to market medications to pharmacies that participate in Medicare and Medicaid. Advisory opinions are limited to the specific individuals and facts addressed, so the decision cannot be read as general policy. It does, however, mark a noteworthy departure from the OIG's typical position that excluded individuals may not affect Federal health care costs even indirectly.

The individual requesting OIG Advisory Opinion No. 18-01, posted February 27, 2018, acknowledged a previous criminal conviction for health care fraud, and an agreement to permanent exclusion from Federal health care programs. Nevertheless, he or she requested permission to act as a marketing agent to promote the sale of medications that will ultimately be billed to Federal health care programs. The excluded individual's expected income will include commissions based on the number of pharmacies that sign contracts with his or her employer.

OIG determined, unsurprisingly, that promoting the sale of items to buyers who participate in Federal health care programs is "indirectly furnishing an item or service for which a claim is submitted." The OIG acknowledged that this "could constitute grounds for the imposition of administrative sanctions." However, because neither the excluded individual nor his or her employer would have "any control over the volume, type or frequency of" purchases, the OIG found "minimal risk" in the arrangement and determined it would not seek sanctions.

The OIG did not explain how it determined that the relationship was sufficiently indirect to pose a minimal risk of future fraud. On first review, the decision seems inconsistent with OIG's general approach to such matters. For example, in a Corporate Integrity Agreement posted on its website, OIG sanctioned a provider for employing an excluded individual as a medical records clerk. That clerk's role had no impact on her employer's decisions to provide or procure health care services, or to bill for those services.

Contrasting that fact pattern with the one set forth in the Advisory Opinion, one could reasonably conclude that the important factor is separation of the corporate entities. That is, perhaps OIG thinks the risk of fraud is mitigated when an excluded individual works for a different entity than the one making the decisions about purchases and claims. The arms-length nature of the relationship between the excluded individual's employer and the pharmacy might also have been relevant to the outcome.

OIG's decision in this instance may serve as encouragement to other entities in a similar position to pursue the possibility of hiring a uniquely qualified, but excluded, individual. There may be grounds for hope of procuring a similar opinion, given a sufficiently indirect link between the excluded person and the billing of claims to Federal health care programs. That said, however, this exception should not be viewed as swallowing the rule. Parties will still be well-advised to maintain vigilance, and perform thorough and frequent checks to ensure their employees are not excluded individuals.

Thomas S. Dean

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