[Federal Register Volume 62, Number 206 (Friday, October 24, 1997)]
[Notices]
[Pages 55410-55412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28202]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General


Criteria for Implementing Permissive Exclusion Authority Under 
Section 1128(b)(7) of the Social Security Act

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice sets forth a proposed policy statement, in the 
form of non-binding guidelines, to be used by the OIG in assessing 
whether to impose a permissive exclusion in accordance with section 
1128(b)(7) of the Social Security Act. These guidelines identify 
specific factors with regard to whether an individual's or entity's 
continued participation in the Medicare and other Federal and State 
health care programs will pose a risk to the programs or program 
beneficiaries, and explain how these factors would be used by the OIG 
to assess a permissive exclusion decision.

COMMENT PERIOD: Parties interested in commenting on these guidelines 
may submit their written comments to the

[[Page 55411]]

address provided below by no later than 5 p.m. on November 24, 1997. 
Comments will be available for public inspection beginning on [14 days 
after date of publication in the Federal Register] in Room 5518 of the 
Office of Inspector General at 330 Independence Avenue, S.W., 
Washington, D.C., on Monday through Friday of each week from 8:00 a.m. 
to 4:30 p.m., (202) 619-0089.

ADDRESSES: Please mail or deliver any written comments to the following 
address: Office of Inspector General, Department of Health and Human 
Services, Attention: OIG-821-N, Room 5246, Cohen Building 330 
Independence Avenue, S.W., Washington, D.C. 20201.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code OIG-821-N.

FOR FURTHER INFORMATION CONTACT: Joel Schaer, Office of Counsel to the 
Inspector General (202) 619-0089.

SUPPLEMENTARY INFORMATION:

I. Background

Purpose and Rationale

    Internal guidelines have been developed by the OIG to provide 
specific criteria on which it will base its decision as to whether to 
seek the imposition of a permissive exclusion against a health care 
provider in accordance with section 1128(b)(7) of the Social Security 
Act (the Act).
    Section 1128(b)(7) of the Act authorizes the Secretary, and by 
delegation the Inspector General, to exclude a provider from Medicare 
and the other Federal and State health care programs for engaging in 
conduct described in sections 1128A and 1128B of the Act. These 
provisions establish administrative and criminal sanctions, 
respectively, against individuals and entities that (1) submit, or 
cause to be submitted, false or fraudulent claims to Medicare and the 
Federal and State health care programs; or (2) offer, pay, solicit or 
receive remuneration in return for the referral of business reimbursed 
by Medicare or Medicaid, a violation of the Medicare and Medicaid anti-
kickback statute. Exclusions in accordance with section 1128(b)(7) of 
the Act, based on such conduct, are permissive in nature. Respondents 
in these administrative exclusion proceedings have the right to a 
hearing before a Department of Health and Human Services administrative 
law judge prior to the imposition of an exclusion.
    We believe these criteria will serve a number of useful purposes by 
(1) allowing for the more effective development of OIG investigations 
and investigative plans; (2) establishing an objective basis for the 
OIG's permissive exclusion decisions, and evaluating a provider's 
trustworthiness to continue to conduct business with the Medicare and 
other Federal and State health care programs; and (3) positively 
influencing providers' future behavior through the development of 
corporate integrity programs and other conduct contemplated by the 
exclusion criteria.

Structure of Permissive Exclusion Criteria

    The exclusion criteria are organized into four general categories 
of factors bearing on the trustworthiness of a provider that has 
allegedly engaged in health care fraud and abuse--
     The first category addresses the circumstances and 
seriousness of the underlying misconduct. The factors to be considered 
are historical in nature and rely on past misconduct as an indicator of 
the defendant's propensity for future abuse of the programs.
     The second category considers the defendant's response to 
the allegations or determination of wrongdoing. These factors indicate 
whether the defendant is willing to affirmatively modify his or her 
conduct, make injured parties whole, and otherwise acknowledge and 
remedy past wrongdoing.
     The third category identifies various other factors 
relevant to assessing the likelihood of a future violation of the law. 
The implementation of an adequate corporate integrity program is a key 
consideration.
     The fourth category relates to the defendant's financial 
ability to provide quality health care services.
    These exclusion criteria will merely serve as internal agency 
guidelines that may be subject to further modification at any time. 
They are not intended to limit the OIG's discretionary authority to 
exclude individuals or entities that pose a risk to Medicare and other 
Federal and State health care programs or program beneficiaries, nor do 
they create any rights or privileges in favor of any party. Further, 
these criteria do not supplant or modify in any way the OIG 
regulations, codified at 42 CFR part 1001, governing program 
exclusions.
    The factors listed in the guidelines are derived from two principle 
sources--the regulations governing exclusions under sections 1128(b)(7) 
and 1128A of the Act (42 CFR parts 1001 and 1003), and the decisions of 
the Departmental Appeals Board (DAB) in exclusion matters. The factors 
derived from DAB decisions reflect the analysis of the remedial purpose 
of program exclusion.

II. Proposed Criteria To Implement the OIG'S Permissive Exclusion 
Authority Under Section 1128(b)(7)

    The following criteria may be used to determine whether or not it 
is appropriate to impose a permissive exclusion in accordance with 
section 1128(b)(7) of the Act (42 U.S.C. 1320a-7(b)(7)). These criteria 
are informal and non-binding, and may be used as a guide to assist the 
OIG in determining in which cases an exclusion should be imposed. The 
presence or absence of any or all of the factors that appear below does 
not constitute the sole grounds for determining whether exclusion is 
appropriate. There is a favorable presumption that a period of 
exclusion should be imposed against an individual or entity that has 
defrauded Medicare or other Federal and State health care programs.

A. The Circumstances of the Misconduct and Seriousness of the Offense

    1. Was a criminal sanction imposed? The amount of any criminal fine 
or penalty imposed, and the length of any period of incarceration that 
is ordered, is evidence of the seriousness of the statutory misconduct, 
and may have an impact on the exclusion determination.
    2. Was there evidence of (i) physical or mental harm to patients or 
(ii) financial harm to the Medicare or any of the other Federal and 
State health care programs? If financial loss to the programs occurred, 
what was the extent of such loss? Exclusion may be appropriate not only 
in cases where actual harm is present, but potential harm as well.
    3. Is the misconduct an isolated incident or a continuous pattern 
of wrongdoing over a significant period of time? Is there evidence that 
the defendant knew his or her conduct was prohibited? Has the defendant 
had the same or previous problems with the OIG, the Health Care 
Financing Administration (HCFA), the carrier or intermediary, or the 
State? What was the nature of these problems?
    4. Was the defendant's involvement in the misconduct active or 
passive? Was the defendant aware of the misconduct when it was 
occurring? Did the defendant play a role in the misconduct?

B. Defendant's Response to Allegations/Determination of Unlawful 
Conduct

    1. What was the defendant's response to any actual or potential 
legal violations or harm to the programs or

[[Page 55412]]

their beneficiaries? Was the response appropriate and credible?
    2. Did the defendant cooperate with investigators and prosecutors, 
and timely respond to lawful requests for documents and the provision 
of evidence regarding the involvement of other individuals in a 
particular scheme, thereby demonstrating trustworthiness?
    3. Has the defendant made or agreed to make full restitution to the 
Federal and/or state health care programs, thereby demonstrating 
present responsibility and willingness to conform to applicable laws, 
regulations and program requirements?
    4. Has the defendant paid or agreed to pay all criminal, civil, and 
administrative fines, penalties, and assessments resulting from the 
improper activity?
    5. Has the defendant taken steps to undo the questionable conduct 
or mitigate the ill effects of the misconduct, e.g., appropriate 
disciplinary action against the individuals responsible for the 
activity that constitutes cause for exclusion, or other corrective 
action?
    6. Has the defendant acknowledged its wrongdoing and change its 
behavior, thereby demonstrating future trustworthiness?

C. Likelihood that Offense or Some Similar Abuse Will Occur Again

    1. Was the misconduct the result of a unique circumstance not 
likely to recur? Is there minimal risk of repeat conduct?
    2. Have prior and subsequent conduct been exemplary or improper?
    3. What prior measures had been taken to ensure compliance with the 
law? Can the defendant demonstrate that it had an effective compliance 
plan in place when the activities that constitute cause for exclusion 
occurred?
    A. Did the defendant make any efforts to contact the OIG, HCFA, or 
its contractors to determine whether its conduct complied with the law 
and applicable program requirements? Were any contacts documented?
    B. Did the defendant bring the activity in question to the 
attention of the appropriate Government officials prior to any 
Government action, e.g., was there any voluntary disclosure regarding 
the alleged wrongful conduct?
    C. Did the defendant have effective standards of conduct and 
internal control systems in place at the time of the wrongful activity, 
e.g., was there a corporate compliance program in place? If there was 
an existing corporate compliance plan:
    (i) How long had the compliance plan been in effect?
    (ii) What problems had been identified as a result of the 
compliance plan?
    (iii) Were any overpayments or systemic changes made if problems 
were identified?
    (iv) Were appropriate staff sufficiently trained in applicable 
policies and procedures pertaining to Medicare and other Federal and 
State health care programs?
    (v) Was there a corporate compliance officer and an effective 
corporate compliance committee in place (if appropriate to the size of 
the company)?
    (vi) Were regular audits undertaken at the time of the unlawful 
activity?
    4. What measures have been taken, or will be taken, to ensure 
compliance with the law? Has the defendant agreed to implement adequate 
compliance measures, including institution of a corporate integrity 
plan?

D. Financial Responsibility

    If permitted to continue program participation, is the defendant 
able to operate without a real threat of bankruptcy and without a real 
threat to its ability to provide quality health care items or services?

    Dated: October 14, 1997.
June Gibbs Brown,
Inspector General.
[FR Doc. 97-28202 Filed 10-23-97; 8:45 am]
BILLING CODE 4150-04-P