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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

Criteria for Implementing Permissive Exclusion Authority Under

Section 1128(b)(7) of the Social Security Act

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

ACTION: Notice.

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SUMMARY: This notice sets forth a proposed policy statement, in the

form of non-binding guidelines, to be used by the OIG in assessing

whether to impose a permissive exclusion in accordance with section

1128(b)(7) of the Social Security Act. These guidelines identify

specific factors with regard to whether an individual's or entity's

continued participation in the Medicare and other Federal and State

health care programs will pose a risk to the programs or program

beneficiaries, and explain how these factors would be used by the OIG

to assess a permissive exclusion decision.

COMMENT PERIOD: Parties interested in commenting on these guidelines

may submit their written comments to the

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address provided below by no later than 5 p.m. on November 24, 1997.

Comments will be available for public inspection beginning on [14 days

after date of publication in the Federal Register] in Room 5518 of the

Office of Inspector General at 330 Independence Avenue, S.W.,

Washington, D.C., on Monday through Friday of each week from 8:00 a.m.

to 4:30 p.m., (202) 619-0089.

ADDRESSES: Please mail or deliver any written comments to the following

address: Office of Inspector General, Department of Health and Human

Services, Attention: OIG-821-N, Room 5246, Cohen Building 330

Independence Avenue, S.W., Washington, D.C. 20201.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commenting, please refer

to file code OIG-821-N.

FOR FURTHER INFORMATION CONTACT: Joel Schaer, Office of Counsel to the

Inspector General (202) 619-0089.

SUPPLEMENTARY INFORMATION:

I. Background

Purpose and Rationale

Internal guidelines have been developed by the OIG to provide

specific criteria on which it will base its decision as to whether to

seek the imposition of a permissive exclusion against a health care

provider in accordance with section 1128(b)(7) of the Social Security

Act (the Act).

Section 1128(b)(7) of the Act authorizes the Secretary, and by

delegation the Inspector General, to exclude a provider from Medicare

and the other Federal and State health care programs for engaging in

conduct described in sections 1128A and 1128B of the Act. These

provisions establish administrative and criminal sanctions,

respectively, against individuals and entities that (1) submit, or

cause to be submitted, false or fraudulent claims to Medicare and the

Federal and State health care programs; or (2) offer, pay, solicit or

receive remuneration in return for the referral of business reimbursed

by Medicare or Medicaid, a violation of the Medicare and Medicaid anti-

kickback statute. Exclusions in accordance with section 1128(b)(7) of

the Act, based on such conduct, are permissive in nature. Respondents

in these administrative exclusion proceedings have the right to a

hearing before a Department of Health and Human Services administrative

law judge prior to the imposition of an exclusion.

We believe these criteria will serve a number of useful purposes by

(1) allowing for the more effective development of OIG investigations

and investigative plans; (2) establishing an objective basis for the

OIG's permissive exclusion decisions, and evaluating a provider's

trustworthiness to continue to conduct business with the Medicare and

other Federal and State health care programs; and (3) positively

influencing providers' future behavior through the development of

corporate integrity programs and other conduct contemplated by the

exclusion criteria.

Structure of Permissive Exclusion Criteria

The exclusion criteria are organized into four general categories

of factors bearing on the trustworthiness of a provider that has

allegedly engaged in health care fraud and abuse--

The first category addresses the circumstances and

seriousness of the underlying misconduct. The factors to be considered

are historical in nature and rely on past misconduct as an indicator of

the defendant's propensity for future abuse of the programs.

The second category considers the defendant's response to

the allegations or determination of wrongdoing. These factors indicate

whether the defendant is willing to affirmatively modify his or her

conduct, make injured parties whole, and otherwise acknowledge and

remedy past wrongdoing.

The third category identifies various other factors

relevant to assessing the likelihood of a future violation of the law.

The implementation of an adequate corporate integrity program is a key

consideration.

The fourth category relates to the defendant's financial

ability to provide quality health care services.

These exclusion criteria will merely serve as internal agency

guidelines that may be subject to further modification at any time.

They are not intended to limit the OIG's discretionary authority to

exclude individuals or entities that pose a risk to Medicare and other

Federal and State health care programs or program beneficiaries, nor do

they create any rights or privileges in favor of any party. Further,

these criteria do not supplant or modify in any way the OIG

regulations, codified at 42 CFR part 1001, governing program

exclusions.

The factors listed in the guidelines are derived from two principle

sources--the regulations governing exclusions under sections 1128(b)(7)

and 1128A of the Act (42 CFR parts 1001 and 1003), and the decisions of

the Departmental Appeals Board (DAB) in exclusion matters. The factors

derived from DAB decisions reflect the analysis of the remedial purpose

of program exclusion.

II. Proposed Criteria To Implement the OIG'S Permissive Exclusion

Authority Under Section 1128(b)(7)

The following criteria may be used to determine whether or not it

is appropriate to impose a permissive exclusion in accordance with

section 1128(b)(7) of the Act (42 U.S.C. 1320a-7(b)(7)). These criteria

are informal and non-binding, and may be used as a guide to assist the

OIG in determining in which cases an exclusion should be imposed. The

presence or absence of any or all of the factors that appear below does

not constitute the sole grounds for determining whether exclusion is

appropriate. There is a favorable presumption that a period of

exclusion should be imposed against an individual or entity that has

defrauded Medicare or other Federal and State health care programs.

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

1. Was a criminal sanction imposed? The amount of any criminal fine

or penalty imposed, and the length of any period of incarceration that

is ordered, is evidence of the seriousness of the statutory misconduct,

and may have an impact on the exclusion determination.

2. Was there evidence of (i) physical or mental harm to patients or

(ii) financial harm to the Medicare or any of the other Federal and

State health care programs? If financial loss to the programs occurred,

what was the extent of such loss? Exclusion may be appropriate not only

in cases where actual harm is present, but potential harm as well.

3. Is the misconduct an isolated incident or a continuous pattern

of wrongdoing over a significant period of time? Is there evidence that

the defendant knew his or her conduct was prohibited? Has the defendant

had the same or previous problems with the OIG, the Health Care

Financing Administration (HCFA), the carrier or intermediary, or the

State? What was the nature of these problems?

4. Was the defendant's involvement in the misconduct active or

passive? Was the defendant aware of the misconduct when it was

occurring? Did the defendant play a role in the misconduct?

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

Conduct

1. What was the defendant's response to any actual or potential

legal violations or harm to the programs or

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their beneficiaries? Was the response appropriate and credible?

2. Did the defendant cooperate with investigators and prosecutors,

and timely respond to lawful requests for documents and the provision

of evidence regarding the involvement of other individuals in a

particular scheme, thereby demonstrating trustworthiness?

3. Has the defendant made or agreed to make full restitution to the

Federal and/or state health care programs, thereby demonstrating

present responsibility and willingness to conform to applicable laws,

regulations and program requirements?

4. Has the defendant paid or agreed to pay all criminal, civil, and

administrative fines, penalties, and assessments resulting from the

improper activity?

5. Has the defendant taken steps to undo the questionable conduct

or mitigate the ill effects of the misconduct, e.g., appropriate

disciplinary action against the individuals responsible for the

activity that constitutes cause for exclusion, or other corrective

action?

6. Has the defendant acknowledged its wrongdoing and change its

behavior, thereby demonstrating future trustworthiness?

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

1. Was the misconduct the result of a unique circumstance not

likely to recur? Is there minimal risk of repeat conduct?

2. Have prior and subsequent conduct been exemplary or improper?

3. What prior measures had been taken to ensure compliance with the

law? Can the defendant demonstrate that it had an effective compliance

plan in place when the activities that constitute cause for exclusion

occurred?

A. Did the defendant make any efforts to contact the OIG, HCFA, or

its contractors to determine whether its conduct complied with the law

and applicable program requirements? Were any contacts documented?

B. Did the defendant bring the activity in question to the

attention of the appropriate Government officials prior to any

Government action, e.g., was there any voluntary disclosure regarding

the alleged wrongful conduct?

C. Did the defendant have effective standards of conduct and

internal control systems in place at the time of the wrongful activity,

e.g., was there a corporate compliance program in place? If there was

an existing corporate compliance plan:

(i) How long had the compliance plan been in effect?

(ii) What problems had been identified as a result of the

compliance plan?

(iii) Were any overpayments or systemic changes made if problems

were identified?

(iv) Were appropriate staff sufficiently trained in applicable

policies and procedures pertaining to Medicare and other Federal and

State health care programs?

(v) Was there a corporate compliance officer and an effective

corporate compliance committee in place (if appropriate to the size of

the company)?

(vi) Were regular audits undertaken at the time of the unlawful

activity?

4. What measures have been taken, or will be taken, to ensure

compliance with the law? Has the defendant agreed to implement adequate

compliance measures, including institution of a corporate integrity

plan?

D. Financial Responsibility

If permitted to continue program participation, is the defendant

able to operate without a real threat of bankruptcy and without a real

threat to its ability to provide quality health care items or services?

Dated: October 14, 1997.

June Gibbs Brown,

Inspector General.

[FR Doc. 97-28202 Filed 10-23-97; 8:45 am]

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