[Federal Register Volume 62, Number 247 (Wednesday, December 24, 1997)]
[Notices]
[Pages 67392-67394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33524]


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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.

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SUMMARY: This notice sets forth the 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, 
Medicaid and other Federal 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.

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

SUPPLEMENTARY INFORMATION: 

I. Background

Purpose and Rationale

    Section 1128(b)(7) of the Social Security Act (the Act) authorizes 
the Secretary, and by delegation the Inspector General, to exclude a 
provider from Medicare, Medicaid and the other Federal health care 
programs for engaging in conduct described in sections 1128A and 1128B 
of the Act. These latter 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, that is, the Secretary has the discretion whether 
to exclude or not to exclude. 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.
    On October 24, 1997, the OIG published a proposed policy statement 
in the Federal Register (62 FR 55410) 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 Act. 
We indicated that these draft criteria were designed to allow for the 
more effective development of OIG investigations and investigative 
plans; establish an objective basis for the OIG's permissive exclusion 
decisions; evaluate a provider's trustworthiness to continue to conduct 
business with the Medicare, Medicaid and other Federal health care 
programs; and positively influence providers' future behavior through 
the development of corporate integrity programs and other conduct 
contemplated by the exclusion criteria.
    The factors listed in these proposed guidelines were derived from 
two principal 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 reflected the analysis 
of the remedial purpose of program exclusion that is, to protect 
Federal health care programs by determining whether the respondent is 
sufficiently trustworthy to participate.

Structure of Permissive Exclusion Criteria

    The proposed exclusion criteria were 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 addressed the circumstances and 
seriousness of the

[[Page 67393]]

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 considered the defendant's response to 
the allegations or determination of wrongdoing. These factors indicate 
whether the defendant is willing to affirmately modify his or her 
conduct, make injured parties whole, and otherwise acknowledge and 
remedy past wrongdoing.
     The third category identified 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 related to the defendant's financial 
ability to provide quality health care services.
    Interested parties were invited to comment on these draft criteria 
and submit their written comments to the OIG for consideration. The OIG 
received two timely-filed public comments in accordance with that 
solicitation request. As a result of those comments, we are making two 
technical revisions to the final guidelines. The first change relates 
to section D and the defendant's financial ability to provide quality 
health care services. We are clarifying this section to indicate its 
application only to entities and not individual practitioners. Second, 
we are revising the language in paragraph 3 of section A to address the 
``knowledge standard.'' Specifically, we are now indicating that a 
criterion would be whether there is evidence that the defendant knew, 
or should have known, that his or her conduct was prohibited.
    We believe that the revised internal guidelines set forth below 
should now establish specific criteria on which the OIG may 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 Act. While these revised exclusion criteria will now serve as 
internal agency guidelines for the OIG, these criteria may be subject 
to further modification at any time. They are not intended to limit or 
bind the OIG's discretionary authority to exclude individuals or 
entities that pose a risk to Medicare, Medicaid and other Federal 
health care programs or program beneficiaries. These criteria do not 
create any rights or privileges in favor of any party. In addition, 
these criteria do not supplant to modify in any way the OIG 
regulations, codified at 42 CFR part 1001, governing program 
exclusions.

II. 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 presumption that some 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, or should have known, that 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 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 changed 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?

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    (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 the defendant is an entity and is permitted to continue program 
participation, is that 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: December 16, 1997.
June Gibbs Brown,
Inspector General.
[FR Doc. 97-33524 Filed 12-23-97; 8:45 am]
BILLING CODE 4150-04-M