[Federal Register Volume 63, Number 170 (Wednesday, September 2, 1998)]
[Rules and Regulations]
[Pages 46676-46692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23462]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
42 CFR Parts 1000, 1001, 1002 and 1005
RIN 0991-AA87
Health Care Programs: Fraud and Abuse; Revised OIG Exclusion
Authorities Resulting From Public Law 104-191
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Final rule.
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SUMMARY: This final rule addresses revisions to the OIG's
administrative sanction authorities to comport with sections 211, 212
and 213 of the Health Insurance Portability and Accountability Act
(HIPAA) of 1996, along with other technical and conforming changes to
the OIG exclusion authorities set forth in 42 CFR parts 1000, 1001,
1002 and 1005. These revisions serve to expand the scope of certain
basic fraud authorities, and revise and strengthen the current legal
authorities pertaining to exclusions from the Medicare, Medicaid and
all other Federal health care programs.
EFFECTIVE DATE: October 2, 1998.
FOR FURTHER INFORMATION CONTACT: Joel Schaer, (202) 619-0089, OIG
Regulations Officer.
SUPPLEMENTARY INFORMATION:
I. Background
The Health Insurance Portability and Accountability Act of 1996
On September 8, 1997, the Office of Inspector General (OIG)
published proposed rulemaking (62 FR 47182) addressing the program
exclusion provisions set forth in the Health Insurance Portability and
Accountability Act (HIPAA) of 1996, Public Law 104-191. Among other
things, the HIPAA provisions revised or expanded the authorities
pertaining to exclusion from Medicare and the State health care
programs. With respect to the OIG's program exclusion authorities, the
HIPAA provisions served to (1) broaden the OIG's mandatory exclusion
authority; (2) establish minimum periods of exclusion for certain
permissive exclusions; and (3) establish a new permissive exclusion
authority applicable to individuals with ownership or control interest
in sanctioned entities.
(The Balanced Budget Act (BBA) of 1997, Public Law 105-33, also
enacted new or expanded exclusion and civil money penalty authorities.
Among the provisions in the BBA, section 4331(c) amended sections
1128(a) and (b) of the Act to (1) provide that the scope of an OIG
exclusion extends beyond Medicare and the State health care programs to
all Federal health care programs (as defined in section 1128B(f) of the
Act) 1, and (2) enable the OIG to directly impose exclusions
from all Federal health care programs. While regulations implementing
the BBA exclusion provisions are being developed under separate
rulemaking by the Department, for purposes of clarity, we are
conforming language in this final rule to be consistent with the
statute and the expanded scope of an OIG exclusion that encompasses all
Federal health care programs. As a result, in all references in this
preamble and in the regulations, as amended, we are substituting the
phrase ``Medicare and the State health care programs'' with the phrase
``Medicare, Medicaid and all other Federal health care programs.''
Additional regulatory changes in 42 CFR part 1001 with regard to this
expanded scope of an OIG exclusion will be specifically addressed in
the BBA-implementing regulations referenced above.)
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\1\ In accordance with section 1128B(f) of the Act, the term
``Federal health care program'' means (1) any plan or program that
provides health benefits, whether directly, through insurance, or
otherwise, which is funded directly, in whole or in part, by the
United States Government (other than the health insurance program
under 5 U.S.C. 89; or (2) and State health care program, as defined
in section 1128(h) of the Act.
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Because the new HIPAA statutory provisions afford the Department
some policy discretion in their implementation, the OIG developed
proposed rulemaking to address both the new statutory provisions of
HIPAA and other technical revisions to the OIG's exclusion authorities,
that were previously codified in 42 CFR parts 1000, 1001, 1002 and
1005. The proposed rule established a 60-day public comment period
during which interested parties were invited to submit written comments
to the OIG on these proposed changes.
II. Summary of the Proposed Rule
1. The HIPAA Exclusion Provisions
The proposed rule set forth the Department's three new exclusion
authorities to be codified in 42 CFR part 1001 as follows:
Mandatory OIG exclusion from Medicare and State health
care program participation. Section 211 of HIPAA expanded the OIG's
minimum 5-year mandatory program exclusion authority to cover any
felony conviction under Federal, State or local law relating to health
care fraud, even if governmental programs are not involved. Felony
convictions relating to controlled substances were also made a basis
for a mandatory exclusion. Accordingly, we proposed to revise
Sec. 1001.101 to address the mandatory provisions set forth in new
sections 1128(a)(3) and (4) of the Act. To appropriately restrict the
imposition of mandatory program exclusions to only those individuals
and entities who might reasonably be expected to have future contact
with Medicare, Medicaid and all other Federal health care programs, we
proposed to limit applicability of this provision only to those
individuals or entities that (1) are or have been health care
practitioners, providers or suppliers; (2) hold or have held a direct
or indirect ownership or control interest in a health care entity; or
(3) are or have been officers, directors, agents or managing employees
of such an entity, or are or have ever been employed in any capacity in
the direct or indirect provision of health care items or services.
Establishment of minimum periods of exclusion for certain
permissive exclusions. The proposed rule addressed the establishment of
minimum periods of exclusion in 42 CFR part 1001 ranging from 1 to 3
years for permissive exclusions from the Medicare , Medicaid and all
other Federal programs. In accordance with section 212 of HIPAA--
(1) A standard period of exclusion of 3 years would be established
for convictions of misdemeanor criminal health care fraud offenses;
criminal offenses relating to fraud in non-health Federal or State
programs; convictions relating to obstruction of an investigation of
health care fraud; and
[[Page 46677]]
convictions of misdemeanor offenses relating to controlled substances.
Aggravating and mitigating circumstances may be taken into account to
lengthen or shorten this period, as appropriate.
(2) For permissive exclusions from Medicare, Medicaid and all other
Federal programs resulting from the revocation, surrender or suspension
of an individual's or entity's health care license relating to
professional competence, professional performance or financial
integrity, an exclusion would be imposed for a period not less than the
period during which the individual's or entity's license was revoked or
suspended.
(3) For permissive exclusions derived from the suspension or
exclusion from other Federal health care programs, such as CHAMPUS,
Veterans and other State health care programs, relating to an
individual's or entity's professional competence, professional
performance or financial integrity, an exclusion would be imposed for a
period not less than the period the individual or entity is excluded or
suspended from that Federal or State health care program.
(4) A minimum one-year period of exclusion would be established for
individuals or entities who are found to have submitted claims for
excessive charges or who furnished unnecessary or substandard items or
services; and health maintenance organizations that are found to have
failed to provide medically necessary items and services. (An
inadvertent error was made in the proposed rule in addressing the scope
of the minimum one-year period of exclusion. A technical revision is
set forth in section IV. of this preamble.)
Permissive exclusion of individuals with ownership or
control interest in sanctioned entities. In accordance with section 213
of HIPAA, a new Sec. 1001.1051 was proposed to implement permissive
exclusions applicable to individuals who have a majority ownership
interest in, or have significant control over the operations of, an
entity that has been convicted of an offense or excluded. Under this
section, we proposed that the length of exclusion generally be for the
same period as that of the sanctioned entity with which the individual
had a relationship.
2. Additional Technical and Conforming Changes
In addition to proposing codification in regulations of the HIPAA
exclusion provisions, we also set forth for comment a number of
proposed technical and conforming changes designed to clarify OIG
exclusion authority policy currently codified in 42 CFR parts 1000,
1001, 1002 and 1005. Among the revisions set forth in the proposed
rule--
We proposed revising Sec. 1001.2 to indicate that the term
``incarceration'' would include imprisonment or any type of
confinement, with or without supervised release.
Because the term ``patient'' has been narrowly defined in
some instances to restrict its scope to only an individual in a
traditional medical care setting, we proposed to revise Secs. 1001.2
and 1001.101 to define the term to include any individual receiving
health care services, including any item or service provided to meet
his or her physical, mental or emotional needs, regardless of whether
it is reimbursed under Medicare, Medicaid or any other Federal health
care program and regardless of the location in which it is provided.
In order to distinguish between more and less egregious
cases involving patient abuse or neglect, we proposed adding a new
aggravating factor to Sec. 1001.102(b) to indicate that the OIG would
consider whether the action that resulted in the conviction was
premeditated, part of a continuing pattern of behavior, or consisted of
non-consensual sexual acts.
In allowing greater flexibility to consider an additional
conviction if the individual or entity is convicted of both Medicare
fraud and another offense, such as tax evasion, we proposed to amend
various sections of 42 CFR part 1001 to allow the Department to
consider any other conviction or civil or administrative sanction prior
to, concurrent with or subsequent to the conviction upon which the
exclusion was based.
We proposed to revise Secs. 1001.2002 and 1005.15 to
indicate that the initial notice letter of exclusion to the affected
individual or entity could be amended should any additional information
or wrongdoing occur or come to the attention of the OIG subsequent to
the letter, and that these additional items or information may be
introduced into evidence by either party at the hearing before the
administrative law judge.
To encourage greater cooperation by individuals and
entities, and to afford the OIG greater flexibility in identifying and
addressing issues related to program fraud and abuse, we proposed
adding a new mitigating factor applicable to the authorities in 42 CFR
part 1001 that would take into account whether the cooperation of an
individual or entity resulted in additional cases being investigated or
reports issued by the appropriate law enforcement agency identifying
program vulnerabilities or weaknesses.
In Sec. 1001.701, we proposed to more clearly explain the
imposition of exclusions under section 1128(b)(6) of the Act concerning
excessive charges or costs and to whom an individual's or entity's
excess charges or costs apply.
We proposed to clarify the term ``agent'' in
Sec. 1001.1001 by reiterating existing OIG policy concerning the
legitimacy of transfer of a health care entity from an excluded
individual to a spouse, and the circumstances constituting divestment
of ownership and control of the entity by the excluded individual.
To clarify that the obtaining of a program provider number
or equivalent would not automatically result in an individual's or
entity's reinstatement into the programs, we proposed revising
Secs. 1001.1901, 1001.3001 and 1001.3002 to clarify existing OIG policy
that an excluded individual or entity continues to be excluded until
officially reinstated by the OIG, regardless of whether a provider
number or equivalent is obtained prior to this OIG action. In
Sec. 1001.1901, we also proposed to reiterate current HCFA policy
regarding payment of the first claim of a supplier after notice of a
provider's exclusion, i.e., HCFA will not pay for items and services
furnished by a supplier past the fifth day following the date of the
written notice to the supplier of the provider's program exclusion.
Because the OIG has the obligation to impose an exclusion
on individuals or entities when the statutory requirements of section
1128 of the Act are met, regardless of whether the individual or entity
is paid by the programs directly, or the items or services are
reimbursed by the programs indirectly through claims of a third party
who is a direct provider, we proposed to clarify the definition of
``furnished'' in Sec. 1000.10 to indicate that exclusions would apply
to any individual or entity that provides or supplies items or
services, directly or indirectly. In this section, we proposed to make
clear that no payment would be made to any direct provider for items
and services manufactured, distributed or otherwise provided by an
excluded individual or entity.
With regard to the Medicaid State agency's obligations to
notify the OIG of certain actions, we proposed revising Sec. 1002.3 to
state that the Medicaid agency would be required to promptly notify the
OIG of any and all actions--including suspension actions, settlement
agreements and situations where the individual or entity voluntarily
agrees to withdraw from the
[[Page 46678]]
program to avoid a formal sanction action--that it takes to limit any
individual's or entity's ability to participate in its program.
III. Response to Comments and Summary of Revisions
In response to the notice of proposed rulemaking, the OIG received
a total of 109 timely-filed public comments from various health care
providers and organizations, State and professional medical societies
and associations, and other interested parties. Set forth below is an
abstract of the various comments and recommendations received, our
response to those concerns, and a summary of the specific revisions and
further clarifications being made to the regulations at 42 CFR parts
1000, 1001, 1002 and 1005 as a result of the proposed HIPAA exclusion
rule and these public comments.
Section 1000.10, Definition of the term ``furnished''
Comment: We proposed to clarify the current definition of the term
``furnished'' in Sec. 1000.10 to indicate that exclusions will apply to
any individual or entity that provides or supplies items or services,
directly or indirectly.2 A total of 22 comments responded to
this proposed revision. Citing sections 1128a-7a and 1128(b)(7) of the
Act and the legislative history of the 1987 amendments to the Act, a
number of commenters questioned whether the OIG had the statutory
authority to take remedial action and exclude individuals or entities
from participation in Medicare and Medicaid if such individuals or
entities do not directly ``participate'' in these programs by
submitting claims for reimbursement to them. Commenters further stated
that the expansion of the exclusion authority to indirect providers was
proposed and contemplated in previous OIG rulemakings (55 FR 12205,
April 2, 1990; 57 FR 3298, January 29, 1992)--addressing revisions to
OIG sanction authorities resulting from Public Law 100-93--and that no
new circumstances or substantive reasons exist now that warrant further
consideration of this revision.
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\2\ The term ``indirectly'' means the provision of items and
services manufactured, distributed or otherwise supplied by
individuals or entities who do not directly submit claims to
Medicare, Medicaid or other Federal health care programs, but that
provide items and services to providers, practitioners or suppliers
who submit claims to these programs for such items and services. The
term ``indirectly'' does not include individuals and entities that
submit claims directly to these programs for items and services
ordered or prescribed by another individual or entity.
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Response: As indicated in the preamble to the proposed rule, the
OIG intends to change its position on this issue. In 1992, we elected
to publicly state in the preamble to the final exclusion regulations
implementing the Medicare and Medicaid Patient and Program Protection
Act of 1987 our intention to refrain from exercising our exclusion
authority in the case of manufacturers or distributors that could be
subject to exclusion but do not submit claims to the programs for the
items they supply (57 FR 3298, January 29, 1992). While we were
cognizant at that time of our authority to exclude such indirect
providers, and said so explicitly in the preamble to that final rule,
we were also concerned that it would be difficult to administer
exclusions against entities that are not reimbursed directly by the
Department. We have now concluded that such exclusions should be
undertaken, when warranted by the conduct of such entities,
notwithstanding the administrative burdens.
In our earlier discussion of the effect of an exclusion, we cited
section 1862(e) of the Act, which denies both payment for items and
services provided by an excluded individual or entity and payment for
services furnished at the medical direction or on the prescription of
an excluded physician. This provision reflects the intent of Congress
and the Secretary that the Government not pay--directly or indirectly--
for the services of untrustworthy individuals and entities with whom
the Department has determined it should cease doing business.
Historically, with each set of amendments to the original 1977
exclusion statute (section 1128(a) of the Act) mandating ``suspension''
of ``physicians and other practitioners'' from the programs subsequent
to any conviction for a program-related crime, Congress has expanded
the scope of the exclusion authority to permit, and sometimes to
mandate, exclusion of a wider scope of ``untrustworthy'' individuals
and entities.
For example, in the 1980 amendments to section 1128(a) of the Act,
Congress stated that it was broadening the exclusion authorities to
make such authorities ``apply to other categories of health
professionals, such as administrators of health care institutions'
(House Report 96-1167, p. 5572). The Report by Congress went on to say
that ``[i]n the case of those professionals who do not directly furnish
medical care or services, payment would not be made to the provider for
the cost of any services furnished to or on behalf of the provider by
the convicted professional * * *'' (underlining added). We believe that
the 1980 amendments made it clear that indirect providers that were
convicted were to be excluded, and that the effect of such an exclusion
would be that items and services furnished by these indirect providers
could not be reimbursed. We believe this is consistent with the
Department's interpretation of its current authority to exclude any
individual or entity that violates the prohibitions of section 1128 of
the Act.
Further, in the Balanced Budget Act (BBA) of 1997, Congress again
indicated its continued expectation that indirect providers of items
and services will be excluded from the programs. In the BBA, Congress
enacted a civil money penalty (CMP) to deter providers from doing
business with excluded individuals or entities. The new statutory
authority--section 1128A(a)(6) of the Act--permits the Secretary to
impose a CMP against any person (defined broadly in the statute to
include entities) who ``arranges or contracts (by employment or
otherwise) with an individual or entity that the person knows or should
know is excluded from participation in a federal health care program *
* * for the provision of items or services for which payment may be
made under such a program.'' Implicit in the enactment of this CMP
authority is Congress' expectation that indirect providers who do not
submit claims to the programs are subject to exclusion. Services
furnished by such indirect providers, and items manufactured or
supplied by them, would be unreimbursable due to the excluded status of
the individual or entity. In addition, the direct provider who submits
a request for reimbursement for such items or services is subject to a
CMP. Thus, from 1980 to the present, Congress has consistently and
repeatedly expressed its view that any individual and entity that
furnishes items or services that are reimbursable under the programs is
subject to exclusion from the programs, regardless of whether that
individual or entity directly presents a bill to the program.
Thus, we have concluded that our original regulatory policy, while
perhaps sensible from the standpoint of administrative ease of
enforcement, is not fully consistent with the legislative intent of
section 1128 of the Act. Furthermore, it is not appropriate to continue
to exempt untrustworthy manufacturers and distributors of products from
exclusion, when many other providers are excluded every year due to
similar concerns.
[[Page 46679]]
Comment: Many commenters believed that the proposed rule failed to
provide sufficient information about how an exclusion would be applied
to indirect providers and to which indirect providers it would apply.
Commenters indicated that this definition of ``furnished'' would
neither be fair nor effective since the use of an exclusion against
individuals or entities that do not receive reimbursement from the
Medicare or Medicaid programs will have more of a punitive effect on
innocent third parties than it would on the actual wrongdoer.
Commenters indicated that limiting the number of available or
appropriate sources of equipment or supplies would have anti-
competitive effects and could result in beneficiaries being denied
services or supplies. In addition, the commenters stated that direct
providers may be inappropriately denied reimbursement, unfairly
burdened with monitoring responsibilities, and inappropriately subject
to False Claims Act prosecution. Some commenters believed that since
some equipment manufacturers and suppliers rely heavily on their
ability to sell their products to providers who receive Medicare and
Medicaid program reimbursement, this lack of ability to sell their
products to program providers would effectively force them out of
business.
Response: Since 1980, the Department has been excluding many
``indirect'' providers of items and services that are reimbursed by the
programs. Nurses, home health aides and laboratory technicians, for
example, cannot submit claims yet have often been excluded from the
programs. During their exclusion period, no employer, such as a
hospital or nursing home, may be paid by the programs for any services
furnished by these individuals. Employees of companies who provide
transportation to nursing home residents, accountants who keep the
account books for health care institutions, and an employee of a
Medicare carrier who stole checks that belonged to physicians as
payment for services provided to beneficiaries are all examples of
individuals who have been excluded from the programs. In all cases, the
costs attributable to their services may not be charged on cost reports
or be claimed by an employer in any other way during the period of
their exclusion.
As discussed above, the new CMP authority enacted in BBA is the
most recent indication that Congress has not carved out an exception
for indirect providers simply because they do not participate in the
programs directly through submitting claims and receiving direct
reimbursement. Through the new BBA CMP authority, Congress, in fact,
has provided the OIG with a new tool to enforce exclusions against
indirect providers. By making direct providers liable if they submit
claims for others who are excluded, the direct provider is likely to be
deterred from doing so. Because fewer of these impermissible claims
should be submitted, it should become less common for the programs to
unwittingly pay indirectly for items and services furnished by excluded
parties.
By law, the Department has an ongoing obligation to impose
mandatory exclusions when warranted. Notwithstanding the difficulty in
monitoring and administering exclusions against so-called ``indirect''
providers, we believe that an exception for indirect providers and
suppliers is not appropriate as a matter of policy. Just as nurses,
home health aides, administrators and others who do not bill the
programs directly for their services have been excluded over the years,
we believe that untrustworthy manufacturers and suppliers of drugs,
medical devices and durable medical equipment and other reimbursable
items must be treated in a similar fashion.
In addition to revising the definition for the term ``furnished''
in Sec. 1000.10, we are addressing some concerns raised by adding
definitions to this section for the terms ``directly'' and
``indirectly,'' as used in the definition of ``furnished,'' to
specifically clarify the meaning of these terms.
Comment: Commenters recommended that clearer, more specific
guidance was necessary on how the OIG intended to administer this
authority. Specifically, a number of commenters raised concerns about
the effect that this revision would have on current inventories held by
providers, and the potential confusion that could result when more than
one manufacturer is licensed to manufacture a product, e.g., a
prescription drug. It was indicated by some commenters that determining
the actual manufacturer of certain products could sometimes be
extremely difficult or impossible. Clarification was also requested on
the impact on providers who receive a physician's prescription, for
example, for a specific item or equipment manufactured by an excluded
entity.
Response: In clarifying the definition of the term ``furnished,''
we are indicating that exclusions of indirect providers may be imposed,
when appropriate. We would not expect that manufacturers would often be
convicted and subject to a mandatory exclusion. However, on those
exceptional or infrequent occasions when a manufacturer is convicted,
we cannot justify treating it more favorably than we would treat others
similarly convicted. Moreover, the concern for protecting the programs
from those who are untrustworthy applies to all those convicted of
health care criminal offenses.
We are fully aware that exclusion of a manufacturer or supplier may
have a significant effect on direct providers, practitioners or
suppliers who would be paid by the programs for items or services
manufactured, distributed or otherwise provided by an excluded entity.
We are committed to exercising this sanction authority carefully and
prudently, and acting only where the excluded provider's product can be
clearly identified. We are committed to assisting affected
beneficiaries to avoid hardship as a consequence of any exclusion of a
manufacturer or supplier. Moreover, we are committed to ensuring that
no inappropriate hardships will be imposed on direct providers who
unknowingly bill Federal health care programs for items and services
furnished by an excluded indirect provider. The new civil money penalty
provision authorized by section 4304(a) of BBA against those who
arrange or contract with an excluded individual or entity will only be
used where a direct provider ``knows or should know'' of the exclusion.
While it is impossible to predict every possible scenario and to
provide much specific guidance in this document, there is, however,
some general guidance that we can offer. Under our proposed revisions,
we never intended that items within a direct provider's existing
inventory be affected by the exclusion of a manufacturer. Specifically,
any health care items that a practitioner, provider or supplier has in
inventory from the excluded manufacturer prior to the effective date of
the exclusion of the manufacturer will not be affected by the
exclusion, and claims may be submitted for the furnishing of such items
by the practitioner, provider or supplier. This will include all
supplies and items maintained in inventory by a practitioner, provider
or supplier that are billed to Medicare or other Federal health care
programs through a claims form or on a cost report.
In addition, in an attempt to alleviate some concerns raised by
commenters, we have decided to amend Sec. 1001.1901(c)(3) by adding a
new provision to permit payment for health care items ordered from an
excluded manufacturer prior to the effective date of the exclusion and
delivered up to 30 days after the effective date of such
[[Page 46680]]
exclusion.3 We believe this will further protect
beneficiaries and direct providers from significant financial harm due
to the indirect provider's exclusion.
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\3\ For the first year from the effective date of this provision
only, we are permitting payment for health care items ordered from
an excluded manufacturer prior to the effective date of the
exclusion and delivered up to a 60 day period after the effective
date of the exclusion.
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In those unusual cases where a manufacturer is convicted of health
care-related fraud, the OIG will carefully examine the products or
services being provided or distributed, and on a case-by-case basis
provide the necessary guidance to affected direct providers. Our
interest is in enforcing the exclusion while guaranteeing, with
reasonable assurance, that no substantial harm comes to program
beneficiaries and direct providers. When appropriate and permitted by
law, the OIG will entertain a request for waiver of an exclusion, such
as, for example, if a convicted pharmaceutical company manufactures the
only drug deemed effective to treat a particular disease. If a waiver
is requested by a State agency and the OIG deems that such waiver is
appropriate and should be implemented nationally, we believe that the
OIG has the discretion to extend the waiver to all State Medicaid
programs, as well as to Medicare.
Comment: Several commenters addressed the potential adverse impact
of a manufacturer's exclusion on direct providers and suppliers,
indicating that providers such as hospitals could suffer extreme
administrative and financial costs in complying with this exclusion
authority. Commenters stated that since direct providers or suppliers
would not be paid for a particular item or supply furnished by an
excluded entity, providers or suppliers may have to collect or maintain
additional information to demonstrate to the programs that the item for
which it is seeking payment was not furnished by an excluded entity.
Response: We do not agree that there will be significant new
administrative costs to direct providers, such as hospitals, nursing
homes and physicians, in ensuring that they do not submit claims for
items manufactured or supplied by excluded parties. Exclusions of
manufacturers are rare and usually well-publicized in the press and
other media. Further, the OIG will quickly inform the public of the
exclusion over the internet, as it does with all exclusions. Direct
providers must keep themselves apprised of all exclusions, not only to
ensure that their claims are reimbursable, but also to ensure that they
are not subject to the new CMP for contracting with or employing an
individual or entity that is excluded. We do not believe that the
revision to the definition of ``furnished'' will place significant new
burdens on direct providers above and beyond the responsibility they
already have to refrain from doing business with excluded parties.
Section 1001.2, Definitions
Comment: One commenter believed that amending the term
``exclusion,'' that is, by adding the words ``ordered or prescribed''
to prohibit Medicare payment to providers that furnish services ordered
or prescribed by an excluded provider, confuses the issue of fraud and
the real need for medical care since a provider, such as a physician,
that has been excluded from the Medicare program may still order
services that are medically necessary that need to be furnished by
another entity.
Response: We believe the commenter has misinterpreted the statutory
language. The revised definition of the term ``exclusion'' is being set
forth to conform and be consistent with statutory language in Public
Law 100-93 under which items and services will not be reimbursed under
the programs when furnished, ordered or prescribed by an excluded
individual or entity. Although an excluded individual or entity may
continue to order or prescribe items and services, those items and
services are not reimbursable under the programs.
Comment: We proposed revising the definition of the term
``patient'' to ensure that it includes any individual who is receiving
any health care items or services to meet physical, mental or emotional
needs, whether or not the item or service is reimbursed under Medicare,
Medicaid or any Federal health care program and irrespective of the
location of where the service is provided. While supportive of this
approach, one commenter believed that the statute was not necessarily
intended to extend to patient neglect and abuse related to items and
services ``wholly unconnected'' with Medicare, Medicaid and all other
Federal health care programs, and believed that we should look at other
statutory authorities elsewhere to sanction abuse of such individuals
before expanding the existing definition.
Response: Section 1128(a)(2) of the Act does not directly relate to
Medicare, Medicaid or any other specific Federal health care program.
This statutory provision covers conduct against any patient regardless
of that individual's relationship with these programs. The OIG believes
that the statute is intended to prohibit neglect and abuse of all
individuals receiving health care items and services, regardless of the
care giver or the location within which the items or services are
provided, and is adopting this definition to ensure consistent
interpretation of this provision.
Part 1001, Additional Aggravating Factor in Determining Length of
Exclusion; Conviction of More Than One Offense
Comment: We proposed revising one of the aggravating factors in
Secs. 1001.102 through 1001.951, that would permit consideration of any
adverse actions by other Federal, State or local government agencies or
boards based on the same conduct as a basis for lengthening an
exclusion. The proposed factor was set forth to consider ``whether the
individual or entity was convicted of other offenses besides those
which formed the basis for the exclusion, or has been the subject of
any other adverse action by a Federal, State or local government agency
or board, even if the adverse action is based on the same set of
circumstances that serves as the basis for imposition of the
exclusion'' (underlining added). A number of commenters disagreed that
the OIG should have the discretion to consider other convictions,
whether in the past or contemporaneous, as an aggravating factor.
Commenters argued that in the case of an individual or entity that was
the subject of various ``adverse actions'' by a locality on a matter,
unrelated to a later conviction, such other actions should have no
bearing on the appropriate length of an individual's program exclusion,
and believed that some limits should be placed on the consideration of
adverse actions since different agencies (especially ones with no
health care responsibilities) may reach varying conclusions based on
very different policy considerations. Commenters stated that since
simultaneous convictions may be based on only one course of conduct and
represent a prosecutor's decision to charge essentially the same
conduct under various offenses, we should not be allowed to increase an
exclusion period where an individual is convicted of multiple offenses
at the same time he or she is convicted of the offense that forms the
basis for the exclusion.
Response: While the language set forth in these sections is
permissive, it is specifically designed to address the issue of an
individual's or entity's trustworthiness. Thus, we are revising the
language throughout part 1001 so that the factor will be relevant to
the
[[Page 46681]]
same conduct and circumstances that serves as the basis for the
imposition of the OIG exclusion. We believe that the revised language
is fairer, while allowing the OIG to attain the intended goal of
allowing an increased sanction only if the adverse action was related
in some way to the original basis for the exclusion. The intent of the
revised language is to allow the OIG to increase the length of
exclusion if an individual or entity was convicted of other offenses at
the same time as he or she was convicted of the offense that served as
the basis for the exclusion. Inclusion of this aggravating factor will
permit the OIG to increase a length of exclusion when an individual is
convicted of Medicare fraud and any other offense, such as drug
distribution or income tax evasion. The aggravating factor will take
into consideration separate and different types of convictions that
occurred concurrently; we do not intend to use the basis of the OIG
exclusion more than once as a factor in lengthening an exclusion.
Part 1001, New Mitigating Factor in Determining Length of Exclusion
Comment: A number of commenters supported the proposed new
mitigating factor in Secs. 1001.102(c)(3) , 1001.201(b)(3)(iii),
1001.301(b)(3)(ii), 1001.401((c)(3)(i), 1001.501(b)(3)(i) and
1001.601(b)(3)(ii) that would take into account whether the cooperation
of an individual or entity resulted in additional cases being
investigated, or reports being issued, by the appropriate law
enforcement agency identifying program vulnerabilities or weaknesses.
The commenters believed that this additional factor would positively
impact on individuals' cooperation and encourage offenders to assist
board investigators and other State authorities. One commenter,
however, stated that the value of some information may not be
determined until much later, and recommended that credit should also be
given to individuals and entities that cooperate and provide
information that is not immediately validated by the commencement of a
new case or report issuance since preliminary investigations may
require a significant amount of time before a case is opened or a
report prepared.
Response: While we expect this mitigating factor to be taken into
consideration only in those situations where the law enforcement agency
validated the person's information by opening up a case investigation
or by issuing a report, we nevertheless believe that this additional
factor will afford the OIG greater flexibility in identifying and
addressing issues related to program waste, fraud and abuse.
Section 1001.701, Excessive Claims or Furnishing of Unnecessary or
Substandard Items or Services
Comment: In an effort to more clearly define the scope of an action
under section 1128(b)(6) of the Act, we proposed to revise
Sec. 1001.701(a)(1) to further clarify to whom an individual's or
entity's excess charges or costs apply. Many commenters strongly
objected to what they believed was the OIG's setting of Medicare
payment policy (for bills submitted on the basis of costs or charges)
at the best price charged to any payer. Specifically, the proposed
language addressed possible exclusion of providers that have
``submitted, or caused to be submitted, bills or request for Medicare,
Medicaid and all other Federal health care program payments that
contain charges or costs that are substantially in excess of their
usual charges or costs for items or services furnished to any of their
customers, clients or patients.'' Many of the commenters indicated that
this proposed revision would create excessive administrative and
billing difficulties that would require a comprehensive and consistent
review of charges to all customers. Further commenters stated that this
proposal would have substantive implications for providers who work
with managed care programs, discouraging providers from entering into
these discounted rate arrangements or possibly forcing physicians
participating in these programs to increase their contract rates in an
effort to recover what may constitute a loss on Medicare program
claims. In addition, commenters indicated that the proposed revision
fails to take into account that most physician payments under Medicare
are now determined by a resource-based relative value scale system.
Response: Many commenters misunderstood our proposal. The proposed
rule intended to subject those who submit bills based on costs or
charges to liability for exclusion if they presented bills for amounts
``substantially in excess'' of lowest prices charged any customer.
Nevertheless, persuasive arguments have been raised, and we are
withdrawing our proposed modification to Sec. 1001.701 at this time. We
have become convinced that the prohibitions of section 1128(b)(6)(A) of
the Act have very limited applicability with respect to the current
Medicare reimbursement system. The recently-enacted Balanced Budget Act
of 1997, Public Law 105-33, either directly mandates prospective
payment or provides authority for the Secretary to develop additional
fee schedules to replace almost all existing cost or charged-based
reimbursement methodologies. The purpose of fee schedules is to bring
Medicare reimbursement more in line with market rates. As fee schedules
are implemented, providers may have less incentive and less opportunity
to claim Medicare payment that is substantially in excess of their
usual charges. Therefore, we would expect this statutory authority to
have declining relevance within the Medicare reimbursement system.
Moreover, the statute contains the undefined term ``substantially in
excess,'' which makes enforcement action difficult. As such, we now
believe that modifying the definition of ``usual charges'' will have
very little impact.
Section 1001.801. Minimum Period of Exclusion
Comment: Based on section 212 of HIPAA, we proposed amending
Sec. 1001.801(c) to require a minimum exclusion period of one year for
managed care organizations that are found to have failed to provide
medically necessary items or services. One commenter believed that the
OIG was in error in interpreting section 212 applicability to this
provision. The commenter indicated that section 212 of HIPAA
establishes minimum periods of exclusion for some activities prohibited
under section 1128(b) of the Act, specifically only those activities
described in section 1128(b)(6)(B) of the Act. As a result, the
commenter stated that under the exclusion authority in Sec. 1001.801
for managed care organizations that fail to provide medically necessary
services, there is no legal authority to mandate a one-year minimum
exclusion period. The commenter indicated that under the proposed
language if a single physician acts inappropriately, and the managed
care organization in which he or she is participating finds out about
the issue and acts appropriately and promptly to address the problem,
in this instance the OIG would be inappropriately forced to impose a
one year exclusion.
Response: We believe the commenter is correct in this regard and
that the concerns set forth are valid. As a result, we are amending
paragraph (c)(1) of this section.
Section 1001.1051, Exclusion of Individuals With Ownership or Control
Interest in Sanctioned Entities
Comment: In accordance with a new HIPAA provision, we proposed to
add Sec. 1001.1051 to permit the exclusion of
[[Page 46682]]
individuals (1) who have a ``direct or indirect'' ownership or control
interest in a sanctioned entity if the individual ``knows or should
know'' of the action constituting the basis for the conviction or
exclusion, and (2) who are officers or managing employees of a
sanctioned entity. Commenters indicated that because the exclusion is
potentially applicable in the latter category to persons with no
knowledge of the sanctioned entity's wrongdoing, the OIG should provide
specific criteria on which decisions are based on whether to seek the
imposition of a permissive exclusion against such individuals. Some
commenters recommended that the OIG follow a ``deliberate ignorance''
standard for excluding officers and managing employees of sanctioned
entities. Commenters indicated that in failing to use a standard of
``deliberate ignorance,'' the OIG would be targeting individual
physicians who may have no reason to know whether the entity with which
they are affiliated was convicted or excluded. As a result, these
commenters believed that to exclude an officer or managing employee
without having to show some knowledge of the underlying sanction would
be excessive and inappropriate. In addition, some commenters were
concerned that the proposed rule did not specifically preclude
exclusion of an officer or managing employee who joins a previously
sanctioned entity after commission of the conduct on which the sanction
was based, and when he or she had no relationship with the entity at
the time of the commission of the wrongful actions.
Response: In accordance with the statute, in the case of an officer
or managing employee, the OIG does not have to demonstrate that such
individuals acted in deliberate ignorance of the offense constituting
the sanctionable action. It appears that Congress believed that any
person serving as an officer or managing employee of the entity is
presumed to have specific knowledge of the actions constituting the
basis for the exclusion. Our language in Sec. 1001.1051(a) is
consistent with the statute and does not afford the OIG policy
discretion in this regard when considering the relationship between an
officer or managing employee and a sanctioned entity during the period
the sanctionable actions were committed.
Comment: Several commenters objected to the fact that the period of
exclusion for individuals under Sec. 1001.1051(c)(1) would be the same
as the period of exclusion for the entity, if the entity is excluded.
Commenters stated that an individual's reinstatement request under this
section should be judged on its own merits rather than linked to a
particular entity's status. The commenters believed that arbitrary
application of this provision would impact on individuals, especially
in situations where the entity may in fact no longer exist.
Response: The language in Sec. 1001.1051(c) is being revised to
address these concerns in some respects. While the length of exclusion
for such individuals will be for the same period of time as that of the
sanctioned entity with which he or she has had the prohibited
relationship, any individual excluded under this provision may apply
for reinstatement in accordance with the procedures set forth in
Sec. 1001.3001 of the regulations.
Section 1001.1901, Scope and Effect of Exclusion
Comment: We proposed revising Sec. 1001.1901(b)(3) to indicate that
submitting, or causing to submit, claims for items or services ordered
or prescribed by an excluded individual or entity may be sufficient
grounds to deny reinstatement to the programs. One commenter believed
that this provision would prevent an excluded person not only from
program participation, but also from operating in the health care arena
at all during the period of exclusion, and as such, was unwarranted and
impermissible.
Response: We believe that the revised language is not overly broad,
serves to more clearly define what an excluded individual or entity can
do, and specifically re-enforces existing OIG policy set forth in
exclusion notice letters currently sent to individuals and entities.
Accordingly, we are retaining the language in paragraph (b)(3) of this
section as set forth in the proposed rule.
Section 1001.2001, Elimination of In-Person Hearings Prior to When
Exclusion is Proposed
Comment: We proposed deletion of Sec. 1001.2001(b) which provides
for an in-person hearing when an exclusion is proposed under section
1128(b)(6)(B) and (C) of the Act. Paragraph (b) of Sec. 1001.2001
states that with respect to such exclusions the individual or entity
``may submit, in addition to the information described in paragraph (a)
of this subsection, a written request to present evidence or argument
orally to an OIG official.'' Several commenters opposed the elimination
of an opportunity for oral evidence and argument, and believed it was
essential that providers be given full due process rights before the
effective date of the exclusion and not after the exclusion has gone
into effect. Commenters stated that failure to present information
directly and in person presents a significant due process problem, and
believed that a provider facing exclusion should be permitted the
opportunity to present its case in person rather than just on paper.
For example, one commenter, representing orthotic and prosthetic
interests stated that since most people are not familiar with the
fabrication or use of certain items or devices, a visual demonstration
often easily clears up a misunderstanding that would continue were it
to be based solely upon written information, and would enhance the
possibility of resolving issues at an early stage. In addition, some
commenters stated that although a provider still retains the ability to
challenge the proposed exclusion, an exclusion by the OIG would remain
in effect during the formal appeals process until overturned, thus
potentially resulting in financial harm to that provider. As an
example, one commenter stated that a successful appeal during a formal
appeals process would be meaningless for a managed care organization
that was excluded, had its contract terminated and had its Medicare and
Medicaid members disenrolled or subsequently enrolled into other health
plans.
Response: As we indicated in the preamble discussion of the
proposed rule, the vast majority of cases involving a proposal to
exclude are medical in nature, with the OIG relying on a Medicare
intermediary or carrier, a peer review organization or other medical
reviewer to provide medical review of a case prior to it being referred
by the OIG. In addition to relying on this prior medical review, under
the revised regulation the provider is still afforded an opportunity to
submit any appropriate written material to the OIG for review and
consideration. We believe this revised approach will usually be the
most appropriate, efficient and timely use of resources for protecting
the programs and its beneficiaries. However, we recognize that there
may be situations where the OIG may, at its discretion, wish to hear
oral argument prior to deciding whether to impose an exclusion. As a
result, we will permit individuals and entities to request, in
conjunction with their written submission, an opportunity to present
oral argument to an OIG official. Regardless of whether oral argument
is allowed, individuals and entities will still retain the ability to
challenge in the administrative process any OIG proposed exclusion. The
administrative process includes, among other things,
[[Page 46683]]
the right to call witnesses, the cross-examination of witnesses, and
the presentation of evidence to an Administrative Law Judge, as set
forth in 42 CFR part 1005.
Section 1001.2005, Notice to State Licensing Agencies
Comment: We proposed deleting Sec. 1001.2005(b) and revising this
section to indicate that while the Department will continue to notify
State and local agencies of the circumstances leading to an exclusion,
it would not be tied to a specific notification process. Commenters
believed that whether or not the Department advocates specific State
and local actions may significantly influence the actions generally
taken by these agencies, and recommended that any revision to this
section include guidelines regarding the OIG's intended position on
notification of exclusions to these agencies and the designation of a
general time frame within which the agencies may be notified of the
exclusions.
Response: The statute obligates the Department to notify State and
local agencies of any exclusion action taken by the OIG, but is not
does not require us to delineate the precise methods as to when and how
this notification will occur. We believe it would be an unnecessary
paperwork burden to establish specific notification procedures to be
used, and thus remained opposed to placing such internal procedures in
regulations. We are, however, sensitive to the commenters concerns of
keeping State and local agencies promptly and directly informed of any
exclusion action taken by the OIG. As a result, in an effort to
increase the effectiveness of the process and allow the use of
alternative means of notification, we are reinserting paragraph (b) of
this section, but will continue to reserve the right to alter this
notification process to consider alternative, more efficient methods as
appropriate.
Section 1001.3001, Timing and Method of Request for Reinstatement
Comment: We proposed to revise this section to permit submission of
a request for reinstatement only after the full period of exclusion has
expired. Commenters believed that this provision, as interpreted, would
guarantee that the period of exclusion would exceed the period
originally specified since it would also incorporate the amount of time
taken by the OIG to process a reinstatement request. One commenter
believed that this was especially problematic since the regulation does
not impose constraints on the amount of time the OIG may take in
processing such requests.
Response: We believe that commenters' concerns are valid and are
agreeing to take no action in revising the existing regulatory language
with regard to the time frames for reinstatement. We are also
withdrawing the conforming change proposed in Sec. 1001.3002(a). We
are, however, clarifying in Sec. 1001.3001(a) that obtaining a program
provider number or equivalent, in and of itself, does not reinstate an
individual's or entity's eligibility nor does it connote permission to
bill the programs. Thus, merely obtaining a program provider number or
equivalent from HCFA, a State agency or other Federal health care
agency cannot vitiate an exclusion by the OIG; an exclusion will remain
in effect until such time as the OIG formally reinstates the individual
or entity.
Section 1001.3002, Basis for Reinstatement
Comment: A technical revision was proposed in
Sec. 1001.3002(a)(1)(ii) to delete the ``unwillingness and inability''
factor as a basis for consideration by the OIG in making a
reinstatement determination. One commenter used this opportunity to
take exception to the language in this paragraph that the OIG will make
a determination that the types of actions that formed the basis for the
original exclusion ``will not recur.'' The commenter believed that such
a standard is impossible to prove, and provides too much discretion to
the OIG in determining whether an individual or entity is to be
reinstated in the programs. As a result, the commenter recommended that
the term ``will not recur'' be deleted.
Response: Use and consideration of this term is specifically
required by the statutory language set forth in section 1128(g)(2)(B)
of the Act.
Section 1002.3, Disclosure of Information
Comment: One commenter recommended that we clarify the reporting
requirements imposed on State Medicaid agencies in Sec. 1002.3 with
respect to actions taken to limit an individual's or entity's
participation in a State program. Specifically, the commenter suggested
that guidance be provided as to when a State agency is obligated to
report ``suspension actions, settlement agreements and situations where
an individual or entity voluntarily withdraws from the program in order
to avoid a formal sanction.''
Response: Under section 1128(b)(5) of the Act, the OIG is
authorized to exclude from program participation any individual or
entity ``suspended or excluded from participation, or otherwise
sanctioned * * *'' under a Federal or State health care program ``for
reasons bearing on the individual's or entity's professional
competence, professional performance, or financial integrity'' (42 CFR
1001.601). Since 1992, Sec. 1001.601(a)(2) of our regulations has
defined the phrase ``otherwise sanctioned'' to cover ``all actions that
limit the ability of a person to participate in the program at issue
regardless of what such an action is called * * *,'' including where
there is a voluntary withdrawal from program participation in order to
avoid a formal sanction. 4 With respect to a State agency's
obligation to report sanctions to the OIG, Sec. 1002.3 sets forth and
clarifies the circumstances under which a ``voluntary withdrawal''
should be reported.
---------------------------------------------------------------------------
\4\ Administrative decisions have upheld exclusions under
section 1128(b)(5) of the Act based on a physician withdrawing from
participation in a State Medicaid program in order to avoid a formal
sanction under this language (see Hassan M. Ibrahim, M.D. DAB CR445
(1996)).
---------------------------------------------------------------------------
The OIG is obligated under the statute to review providers who no
longer qualify to participate in a State's Medicaid program, and relies
on State Medicaid agencies to report on a timely and complete basis
those cases where a provider has been sanctioned, including where an
individual or entity voluntarily withdraws from a program to avoid a
formal sanction.
Typically, when a State agency receives a complaint or allegation,
or is made aware of other circumstances, regarding a physician or other
health care provider that causes the State agency to open an
investigation or review, the physician or provider is sent a letter and
given an opportunity to respond. Under this scenario, withdrawal from
the State program after notice and opportunity to respond, and prior to
the completion of a formal proceeding, would subject the physician or
provider to possible exclusion under section 1128(b)(5) of the Act.
Informal contacts with the provider, short of written notice, have
been viewed as not constituting the start of a formal proceeding. If a
provider withdraws from program participation at this early stage of an
investigation or review prior to when formal charges or notification
has been made, and the provider has not been offered an opportunity to
respond, such a withdrawal would not be grounds for an exclusion. Under
this situation, the State Medicaid agency is not required to report the
matter to the OIG.
[[Page 46684]]
We wish to clarify that consistent with the first example, in those
situations where a written notice of charges or allegations has been
given by the State agency to a provider with an opportunity to respond,
and he or she voluntarily withdraws from program participation in order
to avoid formal sanction, the State Medicaid agency is obligated under
Sec. 1002.3(b)(3) to report the matter to the OIG for review and a
determination by the OIG of whether an exclusion under section
1128(b)(5) of the Act is appropriate. We are revising the section
heading to Sec. 1002.3 to more accurately reflect the requirements of
this section.
IV. Technical Revisions
We are including in these final regulations a number of technical
revisions in parts 1001 and 1005.
Section 1001.2, Definitions: We are clarifying the
definition of the term ``patient'' in Sec. 1001.2 to include residents
receiving care in a facility described in 42 CFR part 483.
Section 1001.1007, Excessive claims or furnishing of
unnecessary or substandard items or services: We are making a technical
revision to Sec. 1001.701(d)(1), the regulations implementing section
1128(b)(6) of the Act. We incorrectly stated in the proposed rule that
a minimum one-year period of exclusion would apply to violations of
section 1128(b)(6)(A) of the Act (claims for excessive charges) and
section 1128(b)(2)(B) of the Act (the furnishing of unnecessary or
substandard items or services). However, section 1128(c)(3)(F) of the
Act, enacted by HIPAA, mandated a minimum one-year period of exclusion
only for individuals and entities excluded under section 1128(b)(6)(B)
of the Act. As a result, we are clarifying Sec. 1001.701(d)(1) to
properly reflect the statutory language.
Section 1005.21, Appeals to the DAB: We are revising the
language in Sec. 1005.21(k)(2) and (k)(3) by deleting the current
reference to ``the Associate General Counsel, Inspector General
Division, HHS,'' and by inserting the term ``Chief Counsel to the IG''
in its place. These changes reflect the recent consolidation of the IG
Division of the Office of the General Counsel into the OIG (62 FR
30859, June 6, 1997).
V. Regulatory Impact Statement
Executive Order 12866 and Regulatory Flexibility Act
The Office of Management and Budget (OMB) has reviewed this final
rule in accordance with the provisions of Executive Order 12866 and the
Regulatory Flexibility Act (5 U.S.C. 601-612), and has determined that
it does not meet the criteria for a significant regulatory action.
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, when rulemaking is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health, safety distributive
and equity effects). In addition, under the Regulatory Flexibility Act,
if a rule has a significant economic effect on a substantial number of
small businesses the Secretary must specifically consider the economic
effect of a rule on small business entities and analyze regulatory
options that could lessen the impact of the rule.
The provisions set forth in this final rule, for the most part,
implement statutory requirements, and are designed to broaden the scope
of the OIG's authority to exclude individuals and entities from the
Medicare, Medicaid and all other Federal health care programs. As
indicated above, these provisions implement the new statutory
requirements regarding the period of exclusion for some individuals and
entities by: (1) broadening the minimum 5-year mandatory exclusion
authority to cover felony convictions under Federal, State or local law
relating to health care fraud, and (2) establishing minimum periods of
exclusion for certain permissive exclusions. We believe that the number
of individuals and entities affected these statutory changes will be
minimal in light of the fact that these felony convictions were
previously subject to a permissive program exclusion in accordance with
section 1128(b)(1) of the Act prior to the enactment of the HIPAA
changes.
Further, while the provisions in this rule serve to clarify the
OIG's sanction authorities by (1) establishing a new permissive
exclusion applicable to individuals having major ownership interest in
(or significant control over the operations of) an entity convicted of
a program-related offense; (2) clarifying what would constitute patient
abuse or neglect for purposes of exclusion; and (3) setting forth a
definition for ``furnished'' that would apply to individuals and
entities that provide or supply items or services directly or
indirectly, we also believe the increase in the number of exclusion
cases will be small in light of past experience with respect to
imposing program exclusions under section 1128(b)(8) of the Act.
Specifically, while the statutory requirement to impose exclusions in
cases of certain types of convictions has been broadened in sections
1128 (a)(3) and (a)(4) of the Act, the process for excluding
individuals and entities who are convicted in accordance with the new
requirements remains essentially the same. Cases to be processed under
the new mandatory provisions set forth in sections 1128 (a)(3) and
(a)(4) for the minimum mandatory 5-year exclusion were previously
processed under the permissive authority provisions in sections 1128
(b)(1) and (b)(3) of the Act, with a benchmark of 3 years. As a result,
while there may be minor increases in the number of mandatory
exclusions imposed, we see no significant increase or decrease in the
number of these cases. Similarly, the clarification of what constitutes
patient neglect or abuse should not result in a significant increase in
the number of cases under section 1128(a)(2) of the Act, but merely
support prior findings of abuse and neglect while delivering health
care services.
In addition, we do not anticipate a significant workload resulting
from the implementation of section 1128(b)(15) of the Act (in light of
past experience with respect to section 1128(b)(8) of the Act), and
Sec. 1001.1051 of these regulations, as the requirements for
effectuating this authority are rather stringent at the present time,
and will limit the number of exclusions to be implemented under this
authority.
Since the vast majority of individuals, organizations and entities
addressed by these regulations do not engage in such prohibited
activities and practices, we believe that any aggregate economic effect
of these revised exclusion regulations will be minimal, affecting only
those limited few who engage in prohibited behavior in violation of the
statute. As such, this final rule should have no significant economic
impact. Similarly, while some sanctions may have an impact on small
entities, it is the nature of the violation and not the size of the
entity that will result in an action by the OIG. We believe that the
aggregate economic impact of this rulemaking should be minimal,
affecting only those limited few who have chosen to engage in
prohibited arrangements, schemes or practices in violation of statutory
intent. Therefore, we have concluded that these final regulations
should not have a significant economic impact on a number of small
business entities, and that a regulatory flexibility analysis is not
required for this rulemaking.
[[Page 46685]]
Paperwork Reduction Act
1. Reporting Requirements on State Medicaid Agencies in Accordance With
Sec. 1002.3
A Federal agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a currently valid OMB control number. The valid OMB control number for
the information collection requirements with respect to Sec. 1002.3 of
these regulations is 0990-0218. Public reporting burden for this
collection of information--that is, the burden on the State Medicaid
agencies in preparing and submitting the notification to the OIG in
accordance Sec. 1002.3--is estimated to average of less than one-half
hour per submitted notification, including time for reviewing
instructions, searching existing data sources, gathering and
maintaining the necessary data, and completing and reviewing the
collection of information.
2. Clarifying Definition of the Term ``Furnished''
With respect to the clarifying definition of the term ``furnished''
being set forth in these regulations, we do not believe there will be
any new or significant administrative costs or burden requirements
placed on direct providers, such as hospitals, nursing homes and
physicians, for ensuring that claims are not submitted for items
manufactured or supplied by excluded parties. Specifically, the
mandatory exclusion of indirect providers is rare. On those exceptional
and infrequent occasions that an indirect provider is convicted and
subject to an exclusion, the OIG will quickly make this action known
through posting this information on the OIG web site, as is done in the
case of all OIG exclusions. Since direct providers are already required
to keep themselves apprised of all exclusions (not only to ensure their
claims are reimbursable, but also to ensure they are not subject to a
CMP for contracting with or employing an individual or entity that has
been excluded), we do not believe this clarifying definition places any
significant new burdens on direct providers beyond the responsibility
already existing to refrain from doing business with excluded parties.
Past OIG experience has indicated that the exclusion of indirect
providers, such as in the case of a hospital administrator or a nurse
aide in a nursing home setting, have created no significant
administrative or cost burden problems to a direct provider. In the
cases of a hospital administrator's exclusion or a nurse aide's
exclusion, the hospital or nursing home was able to separate out the
salaries of these individuals on their cost reports without added or
significant burden to them. The vast majority of comments to the
proposed rule did not allude to any additional administrative or cost
burdens that they faced in this regard.
Further, as we have stated above in this preamble, it is our goal
to implement program exclusions in a prudent manner that will minimize
any inconveniences or hardship. As a result, we have indicated that,
with respect to items in a direct provider's existing inventory which
may be affected by the exclusion of a manufacturer, any health care
items that a direct provider has in inventory from the excluded
manufacturer prior to the effective date of the exclusion of the
manufacturer will not be affected by the exclusion, and claims may be
submitted for the furnishing of such items by the practitioner ,
provider or supplier. In addition, as indicated in the regulations, we
are permitting payment for health care items that are ordered from an
excluded manufacturer prior to the effective date of the exclusion and
delivered up to 30 days (or 60 days for the first year from the
effective date of this provision) after the effective date of such
exclusion. We believe this will serve to more effectively protect
direct providers from significant financial harm and lessen the impact
of any administrative burden on direct providers as a result of an
indirect provider's exclusion.
In addition, to provide reasonable assurance that no substantial,
harm is encountered by direct providers, we have reiterated in the
preamble of this final rule that, when appropriate and permitted under
the existing statute, the OIG will entertain requests for waivers of
program exclusion in appropriate cases. As a result, we do not
anticipate any additional information collection and reporting burden
requirements being imposed on direct providers as a result of the
exclusion of an indirect provider.
List of Subjects
42 Part 1001
Administrative practice and procedure, Fraud, Health facilities,
Health professions, Medicaid, Medicare.
42 Part 1002
Fraud, Grant programs--health, Health facilities, Health
professions, Medicaid, Reporting and recordkeeping.
42 Part 1005
Administrative practice and procedure, Fraud, Penalties.
Accordingly, 42 Parts 1000, 1001, 1002 and 1005 are amended as set
forth below:
PART 1000--[AMENDED]
A. Part 1000 is amended as follows:
1. The authority citation for part 1000 continues to read as
follows:
Authority: 42 U.S.C. 1320 and 1395hh.
2. Section 1000.10 is amended by republishing the introductory
paragraph; by revising the definition for the term Furnished; and by
adding, alphabetically, definitions for the terms Directly and
Indirectly to read as follows:
Sec. 1000.10 General definitions.
In this chapter, unless the context indicates otherwise----
* * * * *
Directly, as used in the definition of ``furnished'' in this
section, means the provision of items and services by individuals or
entities (including items and services provided by them, but
manufactured, ordered or prescribed by another individual or entity)
who submit claims to Medicare, Medicaid or other Federal health care
programs.
* * * * *
Furnished refers to items or services provided or supplied,
directly or indirectly, by any individual or entity. This includes
items and services manufactured, distributed or otherwise provided by
individuals or entities that do not directly submit claims to Medicare,
Medicaid or other Federal health care programs, but that supply items
or services to providers, practitioners or suppliers who submit claims
to these programs for such items or services.
* * * * *
Indirectly, as used in the definition of ``furnished'' in this
section, means the provision of items and services manufactured,
distributed or otherwise supplied by individuals or entities who do not
directly submit claims to Medicare, Medicaid or other Federal health
care programs, but that provide items and services to providers,
practitioners or suppliers who submit claims to these programs for such
items and services. This term does not include individuals and entities
that submit claims directly to these programs for items and services
ordered or prescribed by another individual or entity.
* * * * *
PART 1001--[AMENDED]
B. Part 1001 is amended as follows:
1. The authority citation for part 1001 is revised to read as
follows:
[[Page 46686]]
Authority: 42 U.S.C. 1302, 1320a-7, 1320a-7b, 1395u(j),
1395u(k), 1395y(d), 1395y(e), 1395cc(b)(2) (D), (E) and (F), and
1395hh; and sec. 2455, Pub.L. 103-355, 108 Stat. 3327 (31 U.S.C.
6101 note).
2. Section 1001.2 is amended by revising the definitions for the
terms Exclusion, Professionally recognized standards of health care,
and Sole source of essential specialized services in the community; and
by adding definitions for the terms Incarceration and Patient to read
as follows:
Sec. 1001.2 Definitions.
* * * * *
Exclusion means that items and services furnished, ordered or
prescribed by a specified individual or entity will not be reimbursed
under Medicare, Medicaid and all other Federal health care programs
until the individual or entity is reinstated by the OIG.
* * * * *
Incarceration means imprisonment or any type of confinement with or
without supervised release, including, but not limited to, community
confinement, house arrest and home detention.
* * * * *
Patient means any individual who is receiving health care items or
services, including any item or service provided to meet his or her
physical, mental or emotional needs or well-being (including a resident
receiving care in a facility as described in part 483 of this chapter),
whether or not reimbursed under Medicare, Medicaid and any other
Federal health care program and regardless of the location in which
such item or service is provided.
* * * * *
Professionally recognized standards of health care are Statewide or
national standards of care, whether in writing or not, that
professional peers of the individual or entity whose provision of care
is an issue, recognize as applying to those peers practicing or
providing care within a State. When the Department has declared a
treatment modality not to be safe and effective, practitioners who
employ such a treatment modality will be deemed not to meet
professionally recognized standards of health care. This definition
will not be construed to mean that all other treatments meet
professionally recognized standards.
* * * * *
Sole source of essential specialized services in the community
means that an individual or entity--
(1) Is the only practitioner, supplier or provider furnishing
specialized services in an area designated by the Health Resources
Services Administration as a health professional shortage area for that
medical specialty, as listed in 42 part 5, appendices B-F;
(2) Is a sole community hospital, as defined in Sec. 412.92 of this
title; or
(3) Is the only source of specialized services in a reasonably
defined service area where services by a non-specialist could not be
substituted for the source without jeopardizing the health or safety of
beneficiaries.
* * * * *
3. Section 1001.101 is revised to read as follows:
Sec. 1001.101 Basis for liability.
The OIG will exclude any individual or entity that--
(a) Has been convicted of a criminal offense related to the
delivery of an item or service under Medicare or a State health care
program, including the performance of management or administrative
services relating to the delivery of items or services under any such
program;
(b) Has been convicted, under Federal or State law, of a criminal
offense related to the neglect or abuse of a patient, in connection
with the delivery of a health care item or service, including any
offense that the OIG concludes entailed, or resulted in, neglect or
abuse of patients (the delivery of a health care item or service
includes the provision of any item or service to an individual to meet
his or her physical, mental or emotional needs or well-being, whether
or not reimbursed under Medicare, Medicaid or any Federal health care
program);
(c) Has been convicted, under Federal or State law, of a felony
that occurred after August 21, 1996 relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other misconduct--
(1) In connection with the delivery of a health care item or
service, including the performance of management or administrative
services relating to the delivery of such items or services, or
(2) With respect to any act or omission in a health care program
(other than Medicare and a State health care program) operated by, or
financed in whole or in part, by any Federal, State or local government
agency; or
(d) Has been convicted, under Federal or State law, of a felony
that occurred after August 21, 1996 relating to the unlawful
manufacture, distribution, prescription or dispensing of a controlled
substance, as defined under Federal or State law. This applies to any
individual or entity that--
(1) Is, or has ever been, a health care practitioner, provider or
supplier;
(2) Holds, or has held, a direct or indirect ownership or control
interest (as defined in section 1124(a)(3) of the Act) in an entity
that is a health care provider or supplier, or is, or has ever been, an
officer, director, agent or managing employee (as defined in section
1126(b) of the Act) of such an entity; or
(3) Is, or has ever been, employed in any capacity in the health
care industry.
4. Section 1001.102 is amended by revising paragraph (b);
republishing introductory paragraph (c); and revising paragraph (c)(3)
to read as follows:
Sec. 1001.102 Length of exclusion.
* * * * *
(b) Any of the following factors may be considered to be
aggravating and a basis for lengthening the period of exclusion--
(1) The acts resulting in the conviction, or similar acts, resulted
in financial loss to a government program or to one or more entities of
$1,500 or more. (The entire amount of financial loss to such programs
or entities, including any amounts resulting from similar acts not
adjudicated, will be considered regardless of whether full or partial
restitution has been made);
(2) The acts that resulted in the conviction, or similar acts, were
committed over a period of one year or more;
(3) The acts that resulted in the conviction, or similar acts, had
a significant adverse physical, mental or financial impact on one or
more program beneficiaries or other individuals;
(4) In convictions involving patient abuse or neglect, the action
that resulted in the conviction was premeditated, was part of a
continuing pattern or behavior, or consisted of non-consensual sexual
acts;
(5) The sentence imposed by the court included incarceration;
(6) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing;
(7) The individual or entity has at any time been overpaid a total
of $1,500 or more by Medicare, Medicaid and all other Federal health
care programs, or other third-party payers, as a result of improper
billings; or
(8) Whether the individual or entity was convicted of other
offenses besides those which formed the basis for the exclusion, or has
been the subject of any other adverse action by any Federal, State or
local government agency or board, if the adverse action is based on the
same set of circumstances that serves as the basis for imposition of
the exclusion.
[[Page 46687]]
(c) Only if any of the aggravating factors set forth in paragraph
(b) of this section justifies an exclusion longer than 5 years, may
mitigating factors be considered as the basis for reducing the period
of exclusion to no less than 5 years. Only the following factors may be
considered mitigating--
* * * * *
(3) The individual's or entity's cooperation with Federal or State
officials resulted in--
(i) Others being convicted or excluded from Medicare, Medicaid and
all other Federal health care programs,
(ii) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or
(iii) The imposition against anyone of a civil money penalty or
assessment under part 1003 of this chapter.
5. Section 1001.201 is amended by revising the section heading;
revising paragraph (a); republishing introductory paragraph (b)(2),
revising paragraphs (b)(2)(iv) and (v), and adding a new paragraph
(b)(2)(vi); and by republishing introductory paragraph (b)(3) and
revising paragraphs (b)(3)(i) and (b)(3)(iii) to read as follows:
Sec. 1001.201 Conviction relating to fraud.
(a) Circumstance for exclusion. The OIG may exclude an individual
or entity convicted under Federal or State law of--
(1) A misdemeanor relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct--
(i) In connection with the delivery of any health care item or
service, including the performance of management or administrative
services relating to the delivery of such items or services, or
(ii) With respect to any act or omission in a health care program,
other than Medicare and a State health care program, operated by, or
financed in whole or in part by, any Federal, State or local government
agency; or
(2) Fraud, theft, embezzlement, breach of fiduciary responsibility,
or other financial misconduct with respect to any act or omission in a
program, other than a health care program, operated by or financed in
whole or in part by any Federal, State or local government agency.
(b) Length of exclusion. * * *
* * * * *
(2) Any of the following factors may be considered to be
aggravating and a basis for lengthening the period of exclusion--
* * * * *
(iv) The sentence imposed by the court included incarceration;
(v) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
(vi) Whether the individual or entity was convicted of other
offenses besides those which formed the basis for the exclusion, or has
been the subject of any other adverse action by any Federal, State or
local government agency or board, if the adverse action is based on the
same set of circumstances that serves as the basis for the imposition
of the exclusion.
(3) Only the following factors may be considered as mitigating and
a basis for reducing the period of exclusion--
(i) The individual or entity was convicted of 3 or fewer offenses,
and the entire amount of financial loss to a government program or to
other individuals or entities due to the acts that resulted in the
conviction and similar acts is less than $1,500;
* * * * *
(iii) The individual's or entity's cooperation with Federal or
State officials resulted in--
(A) Others being convicted or excluded from Medicare, Medicaid and
all other Federal health care programs,
(B) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or
(C) The imposition of a civil money penalty against others; or
* * * * *
6. Section 1001.301 is amended by republishing introductory
paragraph (b)(2); revising paragraphs (b)(2)(iv) and (v); by adding a
new paragraph (b)(2)(vi); by republishing introductory paragraph
(b)(3); and by revising paragraph (b)(3)(ii) to read as follows:
Sec. 1001.301 Conviction relating to obstruction of an investigation.
* * * * *
(b) Length of exclusion. * * *
* * * * *
(2) Any of the following factors may be considered to be
aggravating and a basis for lengthening the period of exclusion--
* * * * *
(iv) The sentence imposed by the court included incarceration;
(v) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
(vi) Whether the individual or entity was convicted of other
offenses besides those which formed the basis for the exclusion, or has
been the subject of any other adverse action by any Federal, State or
local government agency or board, if the adverse action is based on the
same set of circumstances that serves as the basis for the imposition
of the exclusion.
(3) Only the following factors may be considered as mitigating and
a basis for reducing the period of exclusion--
* * * * *
(ii) The individual's or entity's cooperation with Federal or State
officials resulted in--
(A) Others being convicted or excluded from Medicare, Medicaid and
all other Federal health care programs,
(B) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or
(C) The imposition of a civil money penalty against others; or
* * * * *
7. Section 1001.401 is amended by revising the section heading;
revising paragraph (a); by republishing introductory paragraph (c)(2);
by revising paragraphs (c)(2)(iii) and (iv); by adding a new paragraph
(c)(2)(v); by republishing introductory paragraph (c)(3); and by
revising paragraph (c)(3)(i) to read as follows:
Sec. 1001.401 Misdemeanor conviction relating to controlled
substances.
(a) Circumstance for exclusion. The OIG may exclude an individual
or entity convicted under Federal or State law of a misdemeanor
relating to the unlawful manufacture, distribution, prescription or
dispensing of a controlled substance, as defined under Federal or State
law. This section applies to any individual or entity that--
(1) Is, or has ever been, a health care practitioner, provider or
supplier;
(2) Holds or has held a direct or indirect ownership or control
interest, as defined in section 1124(a)(3) of the Act, in an entity
that is a health care provider or supplier, or is or has been an
officer, director, agent or managing employee, as defined in section
1126(b) of the Act, of such an entity; or
(3) Is, or has ever been, employed in any capacity in the health
care industry.
* * * * *
(c) Length of exclusion. * * *
(2) Any of the following factors may be considered to be
aggravating and a basis for lengthening the period of exclusion--
* * * * *
(iii) The sentence imposed by the court included incarceration;
(iv) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
[[Page 46688]]
(v) Whether the individual or entity was convicted of other
offenses besides those which formed the basis for the exclusion, or has
been the subject of any other adverse action by any other Federal,
State or local government agency or board, if the adverse action is
based on the same set of circumstances that serves as the basis for the
imposition of the exclusion.
(3) Only the following factors may be considered as mitigating and
a basis for shortening the period of exclusion--
(i) The individual's or entity's cooperation with Federal or State
officials resulted in--
(A) Others being convicted or excluded from Medicare, Medicaid and
all other Federal health care programs,
(B) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or
(C) The imposition of a civil money penalty against others; or
* * * * *
8. Section 1001.501 is amended by revising paragraph (b)(1);
republishing introductory paragraph (b)(2), revising paragraphs
(b)(2)(ii) and (iii), and adding a new paragraph (b)(2)(iv); by
republishing introductory paragraph (b)(3) and revising paragraph
(b)(3)(i); and by deleting paragraph (c) to read as follows:
Sec. 1001.501 License revocation or suspension.
* * * * *
(b) Length of exclusion. (1) An exclusion imposed in accordance
with this section will not be for a period of time less than the period
during which an individual's or entity's license is revoked, suspended
or otherwise not in effect as a result of, or in connection with, a
State licensing agency action.
(2) Any of the following factors may be considered aggravating and
a basis for lengthening the period for exclusion--
* * * * *
(ii) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing;
(iii) The acts, or similar acts, had or could have had a
significant adverse impact on the financial integrity of the programs;
or
(iv) The individual or entity has been the subject of any other
adverse action by any other Federal, State or local government agency
or board, if the adverse action is based on the same set of
circumstances that serves as the basis for the imposition of the
exclusion.
(3) Only if any of the aggravating factors listed in paragraph
(b)(2) of this section justifies a longer exclusion may mitigating
factors be considered as a basis for reducing the period of exclusion
to a period not less than that set forth in paragraph (b)(1) of this
section. Only the following factors may be considered mitigating--
(i) The individual's or entity's cooperation with a State licensing
authority resulted in--
(A) The sanctioning of other individuals or entities, or
(B) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses; or
* * * * *
9. Section 1001.601 is amended by revising paragraph (b) to read as
follows:
Sec. 1001.601 Exclusion or suspension under a Federal or State health
care program.
* * * * *
(b) Length of exclusion. (1) An exclusion imposed in accordance
with this section will not be for a period of time less than the period
during which the individual or entity is excluded or suspended from a
Federal or State health care program.
(2) Any of the following factors may be considered aggravating and
a basis for lengthening the period of exclusion--
(i) The acts that resulted in the exclusion, suspension or other
sanction under Medicare, Medicaid and all other Federal health care
programs had, or could have had, a significant adverse impact on
Federal or State health care programs or the beneficiaries of those
programs or other individuals;
(ii) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
(iii) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, if the adverse action is based on the same set of circumstances
that serves as the basis for the imposition of the exclusion.
(3) Only if any of the aggravating factors set forth in paragraph
(b)(2) of this section justifies a longer exclusion may mitigating
factors be considered as a basis for reducing the period of exclusion
to a period not less than that set forth in paragraph (b)(1) of this
section. Only the following factors may be considered mitigating--
(i) The individual's or entity's cooperation with Federal or State
officials resulted in--
(A) The sanctioning of other individuals or entities, or
(B) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses; or
(ii) Alternative sources of the types of health care items or
services furnished by the individual or entity are not available.
(4) If the individual or entity is eligible to apply for
reinstatement in accordance with Sec. 1001.3001 of this part, and the
sole reason for the State denying reinstatement is the existing
Medicare exclusion imposed by the OIG as a result of the original State
action, the OIG will consider a request for reinstatement.
10. Section 1001.701 is amended by revising paragraph (d)(1);
republishing introductory paragraph (d)(2), revising paragraphs
(d)(2)(iii) and (iv), and adding paragraph (d)(2)(v) to read as
follows:
Sec. 1001.701 Excessive claims or furnishing of unnecessary or
substandard items and services.
* * * * *
(d) Length of exclusion. (1) An exclusion imposed in accordance
with this section will be for a period of 3 years, unless aggravating
or mitigating factors set forth in paragraphs (d)(2) and (d)(3) of this
section form a basis for lengthening or shortening the period. In no
case may the period be shorter than 1 year for any exclusion taken in
accordance with paragraph (a)(2) of this section.
(2) Any of the following factors may be considered aggravating and
a basis for lengthening the period of exclusion--
* * * * *
(iii) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing;
(iv) The violation resulted in financial loss to Medicare, Medicaid
and all other Federal health care programs of $1,500 or more; or
(v) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, if the adverse action is based on the same set of circumstances
that serves as the basis for the imposition of the exclusion.
* * * * *
11. Section 1001.801 is amended by revising paragraph (c)(1); and
by republishing introductory paragraph (c)(2), revising paragraphs
(c)(2)(iii) and (iv), and adding a new paragraph (c)(2)(v) to read as
follows:
Sec. 1001.801 Failure of HMOs and CMPs to furnish medically necessary
items and services.
* * * * *
[[Page 46689]]
(c) Length of exclusion. (1) An exclusion imposed in accordance
with this section will be for a period of 3 years, unless aggravating
or mitigating factors set forth in paragraphs (c)(2) and (c)(3) of this
section form a basis for lengthening or shortening the period.
(2) Any of the following factors may be considered aggravating and
a basis for lengthening the period of exclusion--
* * * * *
(iii) The entity's failure to provide a necessary item or service
that had or could have had a serious adverse effect;
(iv) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
(v) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, if the adverse action is based on the same set of circumstances
that serves as the basis for the imposition of the exclusion.
* * * * *
12. Section 1001.901 is amended by republishing introductory
paragraph (b), revising paragraph (b)(3), redesignating existing
paragraph (b)(4) as (b)(5), and adding a new paragraph (b)(4) to read
as follows:
Sec. 1001.901 False or improper claims.
* * * * *
(b) Length of exclusion. In determining the length of exclusion
imposed in accordance with this section, the OIG will consider the
following factors--
* * * * *
(3) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior
record is to be considered neutral);
(4) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, if the adverse action is based on the same set of circumstances
that serves as the basis for the imposition of the exclusion; or
* * * * *
13. Section 1001.951 is amended by republishing introductory
paragraph (b)(1), revising paragraph (b)(1)(iii), redesignating
existing paragraph (b)(1)(iv) as (b)(1)(v), and adding a new paragraph
(b)(1)(iv) to read as follows:
Sec. 1001.951 Fraud and kickbacks and other prohibited activities.
* * * * *
(b) Length of exclusion. (1) The following factors will be
considered in determining the length of exclusion in accordance with
this section--
* * * * *
(iii) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior
record is to be considered neutral);
(iv) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, if the adverse action is based on the same set of circumstances
that serves as the basis for the imposition of the exclusion; or
* * * * *
Sec. 1001.953 [Removed]
14. Section 1001.953 is removed.
15. A new section 1001.1051 is added to read as follows:
Sec. 1001.1051 Exclusion of individuals with ownership or control
interest in sanctioned entities.
(a) Circumstance for exclusion. The OIG may exclude any individual
who--
(1) Has a direct or indirect ownership or control interest in a
sanctioned entity, and who knows or should know (as defined in section
1128A(i)(6) of the Act) of the action constituting the basis for the
conviction or exclusion set forth in paragraph (b) of this section; or
(2) Is an officer or managing employee (as defined in section
1126(b) of the Act) of such an entity.
(b) For purposes of paragraph (a) of this section, the term
``sanctioned entity'' means an entity that--
(1) Has been convicted of any offense described in Secs. 1001.101
through 1001.401 of this part; or
(2) Has been terminated or excluded from participation in Medicare,
Medicaid and all other Federal health care programs.
(c) Length of exclusion. (1) If the entity has been excluded, the
length of the individual's exclusion will be for the same period as
that of the sanctioned entity with which the individual has the
prohibited relationship.
(2) If the entity was not excluded, the length of the individual's
exclusion will be determined by considering the factors that would have
been considered if the entity had been excluded.
(3) An individual excluded under this section may apply for
reinstatement in accordance with the procedures set forth in
Sec. 1001.3001.
16. Section 1001.1101 is amended by republishing the introductory
text of (b) and revising paragraph (b)(3) to read as follows:
Sec. 1001.1101 Failure to disclose certain information.
* * * * *
(b) Length of exclusion. The following factors will be considered
in determining the length of an exclusion under this section--
* * * * *
(3) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior
record is to be considered neutral);
* * * * *
17. Section 1001.1201 is amended by revising paragraph (b)(4) to
read as follows:
Sec. 1001.1201 Failure to provide payment information.
* * * * *
(b) * * *
(4) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior
record is to be considered neutral); and
* * * * *
18. Section 1001.1301 is amended by revising paragraph (b)(2)(iv)
to read as follows:
Sec. 1001.1301 Failure to grant immediate access.
* * * * *
(b) * * *
(2) * * *
(iv) Whether the entity has a documented history of criminal, civil
or administrative wrongdoing (The lack of any prior record is to be
considered neutral).
* * * * *
19. Section 1001.1401 is amended by revising paragraph (b)(5) to
read as follows:
Sec. 1001.1401 Violations of PPS corrective action.
* * * * *
(b) Length of exclusion. * * *
(5) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior
record is to be considered neutral).
20. Section 1001.1601 is amended by revising paragraph (b)(1)(iv)
to read as follows:
Sec. 1001.1601 Violations of the limitations on physician charges.
* * * * *
(b) Length of exclusion. (1) * * *
(iv) Whether the physician has a documented history of criminal,
civil or administrative wrongdoing (The lack of any prior record is to
be considered neutral); and
* * * * *
21. Section 1001.1701 is amended by revising paragraph (c)(1)(v) to
read as follows:
[[Page 46690]]
Sec. 1001.1701 Billing for services of assistant at surgery during
cataract operations.
* * * * *
(c) Length of exclusion. (1) * * *
(v) Whether the physician has a documented history of criminal,
civil or administrative wrongdoing (The lack of any prior record is to
be considered neutral); and
* * * * *
22. Section 1001.1901 is amended by revising paragraphs (b)(1),
(b)(3) and (c)(3); (i) (ii) and (iii) redesignating (c)(4) as (c)(5)
and revising paragraph (c)(5)(ii); and by adding a new paragraph (c)(4)
to read as follows:
Sec. 1001.1901 Scope and effect of exclusion.
* * * * *
(b) Effect of exclusion on excluded individuals and entities. (1)
Unless and until an individual or entity is reinstated into the
Medicare program in accordance with subpart F of this part, no payment
will be made by Medicare, Medicaid and all other Federal health care
programs for any item or service furnished, on or after the effective
date specified in the notice period, by an excluded individual or
entity, or at the medical direction or on the prescription of a
physician or other authorized individual who is excluded when the
individual or entity furnishing such item or service knew, or had
reason to know, of the exclusion. This section applies regardless of
whether an individual or entity has obtained a program provider number
or equivalent, either as an individual or as a member of a group, prior
to being reinstated.
* * * * *
(3) An excluded individual or entity that submits, or causes to be
submitted, claims for items or services furnished during the exclusion
period is subject to civil money penalty liability under section
1128A(a)(1)(D) of the Act, and criminal liability under section
1128B(a)(3) of the Act and other provisions. In addition, submitting
claims, or causing claims to be submitted or payments to be made for
items or services furnished, ordered or prescribed, including
administrative and management services or salary, may serve as the
basis for denying reinstatement to the programs.
(c) Exceptions to paragraph (b)(1) of this section. * * *
(3) * * *
(i) Inpatient institutional services furnished to an individual who
was admitted to an excluded institution before the date of the
exclusion,
(ii) Home health services and hospice care furnished to an
individual under a plan of care established before the effective date
of the exclusion, and
(iii) Any health care items that are ordered by a practitioner,
provider or supplier from an excluded manufacturer before the effective
date of the exclusion and delivered within 30 days of the effective
date of such exclusion. (For the period October 2, 1998 to October 4,
1999) payment may be made under Medicare or a State health care program
for up to 60 days after the effective date of the exclusion for any
health care items that are ordered by a practitioner, provider or
supplier from an excluded manufacturer before the effective date of
such exclusion and delivered within 60 days of the effect of the
exclusion.)
(4) HCFA will not pay any claims submitted by, or for items or
services ordered or prescribed by, an excluded provider for dates of
service 15 days or more after the notice of the provider's exclusion
was mailed to the supplier.
(5) * * *
(ii) Notwithstanding paragraph (c)(5)(i) of this section, no claim
for emergency items or services will be payable if such items or
services were provided by an excluded individual who, through an
employment, contractual or any other arrangement, routinely provides
emergency health care items or services.
23. Section 1001.2001 is revised to read as follows:
Sec. 1001.2001 Notice of intent to exclude.
(a) Except as provided in paragraph (b) of this section, if the OIG
proposes to exclude an individual or entity in accordance with subpart
C of this part, or in accordance with subpart B of this part where the
exclusion is for a period exceeding 5 years, it will send written
notice of its intent, the basis for the proposed exclusion and the
potential effect of an exclusion. Within 30 days of receipt of notice,
which will be deemed to be 5 days after the date on the notice, the
individual or entity may submit documentary evidence and written
argument concerning whether the exclusion is warranted and any related
issues. In conjunction with this submission, an individual or entity
may request an opportunity to present oral argument to an OIG official.
(b) Exception. If the OIG proposes to exclude an individual or
entity under the provisions of Secs. 1001.1301, 1001.1401 or 1001.1501
of this part, paragraph (a) of this section will not apply.
(c) If an entity has a provider agreement under section 1866 of the
Act, and the OIG proposes to terminate that agreement in accordance
with section 1866(b)(2)(C) of the Act, the notice provided for in
paragraph (a) of this section will so state.
24. Section 1001.2002 is amended by adding a new paragraph (e) to
read as follows:
Sec. 1001.2002 Notice of exclusion.
* * * * *
(e) No later than 15 days prior to the final exhibit exchanges
required under Sec. 1005.8 of this chapter, the OIG may amend its
notice letter if information comes to light that justifies the
imposition of a different period of exclusion other than the one
proposed in the original notice letter.
25. Section 1001.2003 is amended by revising introductory paragraph
(a) to read as follows:
Sec. 1001.2003 Notice of proposal to exclude.
(a) Except as provided in paragraph (c) of this section, if the OIG
proposes to exclude an individual or entity in accordance with
Secs. 1001.901, 1001.951, 1001.1601 or 1001.1701, it will send written
notice of this decision to the affected individual or entity. The
written notice will provide the same information set forth in
Sec. 1001.2002(c). If an entity has a provider agreement under section
1866 of the Act, and the OIG also proposes to terminate that agreement
in accordance with section 1866(b)(2)(C) of the Act, the notice will so
indicate. The exclusion will be effective 60 days after the receipt of
the notice (as defined in Sec. 1005.2 of this chapter) unless, within
that period, the individual or entity files a written request for a
hearing in accordance with part 1005 of this chapter. Such request must
set forth--
* * * * *
26. Section 1001.2006 is amended by republishing introductory
paragraph (a); revising paragraphs (a)(1) and (a)(7); redesignating
existing paragraph (a)(8) as (a)(9); and by adding a new paragraph
(a)(8) to read as follows:
Sec. 1001.2006 Notice to others regarding exclusion.
(a) HHS will give notice of the exclusion and the effective date to
the public, to beneficiaries (in accordance with Sec. 1001.1901(c)),
and, as appropriate, to--
(1) Any entity in which the excluded individual is known to be
serving as an employee, administrator, operator, or in which the
individual is serving in any other capacity and is receiving payment
for providing services (The lack of this notice will not affect HCFA's
ability to deny payment for services);
* * * * *
[[Page 46691]]
(7) The State and Area Agencies on Aging established under title
III of the Older Americans Act;
(8) The National Practitioner Data Bank.
* * * * *
27. Section 1001.3001 is amended by revising paragraph (a)(1) to
read as follows:
Sec. 1001.3001 Timing and method of request for reinstatement.
(a)(1) Except as provided in paragraphs (a)(2) and (a)(3) of this
section or in Sec. 1001.501(b)(4) of this part, an excluded individual
or entity (other than those excluded in accordance with Secs. 1001.1001
and 1001.1501) may submit a written request for reinstatement to the
OIG only after the date specified in the notice of exclusion. Obtaining
a program provider number or equivalent does not reinstate eligibility.
* * * * *
28. Section 1001.3002 is amended by revising paragraph (a);
republishing introductory paragraph (b), revising paragraphs (b)(3) and
(4) and deleting paragraph (b)(5); and by revising introductory
paragraph (c) and paragraph (d) to read as follows:
Sec. 1001.3002 Basis for reinstatement.
(a)(1) The OIG will authorize reinstatement if it determines that--
(i) The period of exclusion has expired;
(ii) There are reasonable assurances that the types of actions that
formed the basis for the original exclusion have not recurred and will
not recur; and
(iii) There is no additional basis under sections 1128(a) or (b) or
1128A of the Act for continuation of the exclusion.
(2) Submitting claims or causing claims to be submitted or payments
to be made by the programs for items or services furnished, ordered or
prescribed, including administrative and management services or salary,
may serve as the basis for denying reinstatement. This section applies
regardless of whether an individual or entity has obtained a program
provider number or equivalent, either as an individual or as a member
of a group, prior to being reinstated.
(b) In making the reinstatement determination, the OIG will
consider--
* * * * *
(3) Whether all fines, and all debts due and owing (including
overpayments) to any Federal, State or local government that relate to
Medicare, Medicaid and all other Federal health care programs, have
been paid or satisfactory arrangements have been made to fulfill these
obligations; and
(4) Whether HCFA has determined that the individual or entity
complies with, or has made satisfactory arrangements to fulfill, all of
the applicable conditions of participation or supplier conditions for
coverage under the statutes and regulations.
(c) If the OIG determines that the criteria in paragraphs
(a)(1)(ii) and (iii) of this section have been met, an entity excluded
in accordance with Sec. 1001.1001 will be reinstated upon a
determination by the OIG that the individual whose conviction,
exclusion or civil money penalty was the basis for the entity's
exclusion--
* * * * *
(d) Reinstatement will not be effective until the OIG grants the
request and provides notice under Sec. 1001.3003(a) of this part.
Reinstatement will be effective as provided in the notice.
* * * * *
PART 1002--[AMENDED]
C. Part 1002 is amended as follows:
1. The authority citation for part 1002 continues to read as
follows:
Authority: 42 U.S.C. 1302, 1320a-3, 1320a-5, 1320a-7,
1396(a)(4)(A), 1396(p)(1), 1396a(30), 1396a(39), 1396b(a)(6),
1396b(b)(3), 1396b(i)(2) and 1396b(q).
2. Section 1002.3 is amended by revising the section heading and
paragraph (b)(2), and by adding a new paragraph (b)(3) to read as
follows:
Sec. 1002.3 Disclosure by providers and State Medicaid agencies.
* * * * *
(b) Notification to Inspector General.
* * * * *
(2) The agency must promptly notify the Inspector General of any
action it takes on the provider's application for participation in the
program.
(3) The agency must also promptly notify the Inspector General of
any action it takes to limit the ability of an individual or entity to
participate in its program, regardless of what such an action is
called. This includes, but is not limited to, suspension actions,
settlement agreements and situations where an individual or entity
voluntarily withdraws from the program to avoid a formal sanction.
* * * * *
3. Section 1002.203 is amended by revising paragraph (a) to read as
follows:
Sec. 1002.203 Mandatory exclusion.
(a) The State agency, in order to receive Federal financial
participation (FFP), must provide that it will exclude from
participation any HMO, or entity furnishing services under a waiver
approved under section 1915(b)(1) of the Act, if such organization or
entity--
(1) Could be excluded under Sec. 1001.1001 or Sec. 1001.1051 of
this chapter, or
(2) Has, directly or indirectly, a substantial contractual
relationship with an individual or entity that could be excluded under
Sec. 1001.1001 or Sec. 1001.1051 of this chapter.
* * * * *
4. Section 1002.211 is amended by revising paragraph (a) to read as
follows:
Sec. 1002.211 Effect of exclusion.
(a) Denial of payment. Except as provided for in
Sec. 1001.1901(c)(3), (c)(4) and (c)(5)(i) of this chapter, no payment
may be made by the State agency for any item or service furnished on or
after the effective date specified in the notice by an excluded
individual or entity, or at the medical direction or on the
prescription of a physician who is excluded when a person furnishing
such item or service knew, or had reason to know, of the exclusion.
* * * * *
PART 1005--[AMENDED]
D. Part 1005 is amended as follows:
1. The authority citation for part 1005 continues to read as
follows:
Authority: 42 U.S.C. 405(a), 405(b), 1302, 1320a-7, 1320a-7a and
1320c-5.
2. Section 1005.15 is amended by revising introductory paragraph
(f)(1) to read as follows:
Sec. 1005.15 The hearing and burden of proof.
* * * * *
(f)(1) A hearing under this part is not limited to specific items
and information set forth in the notice letter to the petitioner or
respondent. Subject to the 15-day requirement under Sec. 1005.8,
additional items and information, including aggravating or mitigating
circumstances that arose or became known subsequent to the issuance of
the notice letter, may be introduced by either party during its case-
in-chief unless such information or items are--
* * * * *
3. Section 1005.21 is amended by revising paragraphs (k)(2) and (3)
to read as follows:
Sec. 1005.21, Appeal to DAB.
* * * * *
(k) * * *
(2) In compliance with 28 U.S.C. 2112(a), a copy of any petition
for judicial review filed in any U.S. Court of Appeals challenging a
final action of
[[Page 46692]]
the DAB will be sent by certified mail, return receipt requested, to
the Chief Counsel to the IG. The petition copy will be time-stamped by
the clerk of the court when the original is filed with the court.
(3) If the Chief Counsel to the IG receives two or more petitions
within 10 days after the DAB issues its decision, the Chief Counsel to
the IG will notify the U.S. Judicial Panel on Multidistrict Litigation
of any petitions that were received within the 10-day period.
Dated: March 11, 1998.
June Gibbs Brown,
Inspector General, Department of Health and Human Services.
Approved: April 13, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-23462 Filed 8-28-98; 4:23pm]
BILLING CODE 4150-04-P