On December 2, 2024, the Office of Inspector General (“OIG”) for the U.S. Department of Health and Human Services (“HHS”) issued a proposed rule (“Proposed Rule”) that amended the regulations relating to exclusion authorities under the authority of OIG. The Proposed Rule would codify changes made by the Medicaid Services Investment and Accountability Act of 2019 (“MSIAA”), that added exclusion authorities related to misclassification and false information about outpatient drugs. The Proposed Rule would also update and clarify OIG’s procedures for excluding individuals and entities from participation in the federal health care programs, including the factors that will be considered in determining the length of exclusions, the provisions governing notices of exclusions and certain provisions related to reinstatement into the programs. On average per year, OIG excludes approximately 3,000 individuals and entities, defends 100 appeals of exclusions and hears two reinstatement denial appeals. Historically, one waiver of exclusion has been requested and granted in any given year.
Exclusion Rules and Post-Acute
OIG has the legal authority to exclude individuals and entities from participation in all federal health care programs under section 1128 of the Social Security Act (the “Act”). The exclusion authorities found in section 1128 of the Act are intended to protect the federal health care programs and their beneficiaries from untrustworthy individuals and entities whose behavior has demonstrated that those individuals and entities pose a risk to program beneficiaries or to the integrity of these programs. These authorities encompass both mandatory exclusions (section 1128(a) of the Act) and permissive exclusions (section 1128(b) of the Act). OIG maintains a list of all currently excluded individuals and entities called the List of Excluded Individuals and Entities (“LEIE”). Information about the LEIE may be found on the OIG’s Exclusions page.
OIG Compliance Program Guidance Emphasis on Exclusion Checks and Staff Screening
OIG’s General Compliance Program Guidance issued in November 2023, directs that, to avoid overpayment and Civil Monetary Penalty liability, entities participating in federal health care programs should check the LEIE before employing or contracting with individuals and entities, and periodically check the LEIE to determine the exclusion status of current employees and contractors. The LEIE is a tool that OIG has made available to providers and others to enable them to identify potential and current employees or contractors who are excluded by OIG.
OIG’s new Industry Segment-Specific Compliance Program Guidance For Nursing Facilities (“Nursing Facility ICPG”) for nursing home members of the health care compliance community emphasizes the importance of staff screening and exclusion checks. Under 42 CFR Sec. 483.12, nursing facilities cannot employ or otherwise engage individuals “found guilty of abuse, neglect, exploitation, misappropriation of property, or mistreatment by a court of law,” or individuals with “a finding entered into [a] State nurse aide registry concerning abuse, neglect, mistreatment of residents or misappropriation of their property.” Nursing Facility ICPG calls for nursing facilities to conduct comprehensive background screenings to protect their residents, including checking OIG’s LEIE to confirm the exclusion status of a prospective employee or contractor.
Overview of Key Elements of the Proposed Rule
- Medicaid Services Investment and Accountability Act of 2019
MSIAA expanded OIG’s exclusion authority to protect the federal health care programs from fraud and abuse by allowing OIG to exclude certain individuals and entities that knowingly misclassify a covered outpatient drug, knowingly fail to correct such misclassification or knowingly provide false information related to drug pricing, drug product information or data related to drug pricing or drug product information.
The Proposed Rule calls for changes to the exclusion regulations at 42 CFR parts 1000 and 1001 to address the authority under MSIAA, update processes, and make clarifying and technical changes to existing regulations. Specifically, section 6(d) of MSIAA amended section 1128(b) of the Act to add an exclusion authority for certain conduct related to the misclassification of outpatient drugs, and knowingly providing false information related to drug pricing, drug product information, or data related to drug pricing or drug product.
- Changes to Aggravating and Mitigating Factors
OIG proposes clarifying changes to aggravating and mitigating factors that are used to determine periods of exclusion under section 1128 of the Act. The Proposed Rule would remove the aggravating factors which permit OIG to lengthen periods of exclusion based on the loss of the individual’s or entity’s health care license, and the mitigating factors, which OIG could consider if aggravating factors are applied. Since exclusions under section 1128(b)(4) of the Act are derived from licensing board actions, OIG generally imposes exclusions under this section for the same period of time as that of the licensing board’s action. As a result, an individual is generally eligible for reinstatement once the individual regains the health care license on which the exclusion is based. The proposed removal of these aggravating and mitigating factors would make the regulations consistent with OIG’s general practice of imposing exclusions that are the same length as the licensing board actions.
OIG also proposes to simplify the mitigating factor relating to cooperation and to consolidate certain aggravating factors relating to other criminal, civil and administrative sanctions into a single factor. The Proposed Rule would allow the mitigating factor of cooperation to be demonstrated based on the record in the criminal proceedings or a written statement by a government official that demonstrates that the individual’s or entity’s cooperation resulted in other individuals or entities being excluded, indicted or otherwise charged, convicted or investigated. Under the proposed language, the application of the cooperation mitigating factor would be based on documentation provided by an official involved in the underlying criminal proceedings rather than OIG’s later independent assessment of the criminal proceedings.
The Proposed Rule would also modify the exclusion authority under section 1128(b)(12) of the Act, for failure to grant immediate access, to eliminate a requirement for OIG or a State Medicaid Fraud Control Unit to demonstrate that the requested material is about to be altered or destroyed in order to obtain access to the material at the time the request is made. The Proposed Rule would revise the definition of “failure to grant immediate access” to specify what would constitute “a compelling reason,” namely, that the requested material does not exist or is not at the location where the request is presented.
The Proposed Rule would revise the section governing exclusions under section 1128(b)(14) of the Act based on an individual’s default on a health education loan or scholarship obligation. The section currently requires OIG to take into account access of beneficiaries to physician services for which payment may be made under Medicare, Medicaid or other federal health care programs in determining whether to impose an exclusion. OIG proposes to align the regulation with section 1128(b)(14) of the Act by limiting OIG’s obligations under this section to take into account access of beneficiaries to only Medicare and Medicaid physician services.
- Changes to Reinstatements
In 2017, OIG finalized regulations implementing a process that allows individuals and entities excluded under section 1128(b)(4) of the Act to request reinstatement before regaining the license that was lost and on which the exclusion is based (referred to as “early reinstatement”) under two sets of circumstances. The Proposed Rule would modify the circumstances under which early reinstatement is available for individuals and entities excluded under section 1128(b)(4) of the Act to permit individuals who lost their health care licenses for reasons related to patient abuse and neglect to apply for early reinstatement in limited circumstances. The Proposed Rule would state that rather than applying a presumption against early reinstatement for persons who are excluded for less than three years, OIG will not consider a request for early reinstatement submitted by an individual or entity if such individual or entity has been excluded for less than three years.
The Proposed Rule would also modify the current language to state that when the action underlying the exclusion is for a set period longer than three years, OIG will not consider a request for early reinstatement at any time before the expiration of the period set by the licensing board. In addition, OIG proposes to modify 42 CFR Sec. 1001.501(c)(1)(i) and (ii) so that, in reviewing requests for early reinstatement, OIG will consider the circumstances that formed the basis for the exclusion, including whether such circumstances were related to patient abuse or neglect. The Proposed Rule would also modify this section to require that, in the case of a license revocation or suspension for reasons related to patient abuse or neglect, OIG will not consider a request for early reinstatement until the individual or entity has been excluded for at least five years for parity with those excluded for the statutory minimum period of five years for a conviction related to the neglect or abuse of a patient.
Key Post-Acute Takeaways
- Post-acute compliance teams should review the changes to the Proposed Rule to determine the potential impact on their operations.
- Post-acute compliance teams should also determine whether to submit a comment to support, question, clarify or challenge any of the proposed changes. Comments are due by 5:00 p.m. ET on January 31, 2025.
If you have any questions, would like assistance preparing public comments or would like additional information about this topic, please contact:
- Sean Fahey at (317) 977-1472 or sfahey@hallrender.com;
- Brian Jent at (317) 977-1402 or bjent@hallrender.com;
- Todd Selby at (317) 977-1440 or tselby@hallrender.com; or
- Your regular Hall Render attorney.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
