OIG Process for Settlements with Health Care Organizations That Employed or Contracted With Excluded Individuals

The OIG has streamlined its process for entering into resolutions with providers who inadvertently employed or contracted with excluded individuals. The penalties associated with employing or contracting an excluded individual are calculated based on either (i) the value of the billed services (for providers that bill directly) or (ii) the salary and benefit costs for those individuals who do not bill for services (such as nurses).

The OIG applies a multiplier of 1.5 to calculate the penalties associated with employing or contracting with an excluded individual in order to reach a final settlement amount.  This amount can obviously become quite significant depending on how long the excluded individual was providing services within an organization. Because of this, we encourage our clients to ensure they have a good process in place for checking not only the OIG excluded provider database, but also the databases for debarred government providers and state Medicaid program exclusions.

The OIG no longer requires providers to enter into a corporate integrity agreement in order to resolve an excluded provider issue.  However, we encourage organizations to ensure they have an effective compliance program in place, and to conduct a root cause analysis to determine why the existing policies and procedures regarding screening for excluded individuals were not successful in ensuring the organization did not employ or contract with an excluded individual.

Finally, sometimes we are asked how it would become known that an organization employed or contracted with an excluded individual if the organization does not self-disclose it.  When an individual who was excluded because of a permissive exclusion applies to be reinstated and have their exclusion removed, the OIG asks them about where they have worked during their exclusion period. If the OIG identifies that the individual was employed by a health care organization, the OIG will send a letter to the organization requesting the following information: 

• dates of the excluded individual’s employment (date of hire and date of termination or separation) along with the position held by the individual, and a copy of the job description or list of job duties;
• whether the organization submitted claims to or received payments from any Federal health care program for items or services furnished by the excluded individual;
• a copy of the excluded individual’s employment application and salary and benefits information, including all IRS Form W-2s;
• the annual Federal payor mix for the organization for each year of the excluded individual’s employment, including the percentage for each Federal payor (the percentage of Federal health care program payments measured against the gross revenues of the organization; of note, the OIG defines Federal payors to include, but not be limited to, Medicare, Medicaid, and TRICARE); and
• whether the excluded individual provided any items or services while employed by the organization that were paid for, directly or indirectly, by any Federal health care program.

If you determine that you have employed or contracted with an excluded individual and need assistance with a self-disclosure, please contact Kim Lammers at klammers@bairdholm.com.