One of the recent enforcement trends landing practitioners in hot water is the federal government's pursuit of those who employ Medicare or Medicaid excluded individuals or entities. Federal statutes allow the Office of Inspector General for the Department of Health and Human Services (OIG) to exclude individuals and entities from participating in federal healthcare programs if they have been convicted of fraud or engaged in other misconduct. State Medicaid programs are required to exclude from participation any person or entity that has been excluded by the OIG. As of April 2016, more than 60,000 individuals and 3,000 entities were excluded from participation in federal healthcare programs.

Federal healthcare programs are prohibited from paying for items or services that have been furnished by someone who has been excluded from participation in these programs. Providers must ensure that they do not bill for services furnished by excluded persons. An excluded individual or entity engaged by a provider directly or even indirectly, such as through a staffing agency can raise concern. Companies, like home health agencies and labs, that bill federal programs for services prescribed or ordered by an excluded physician are also at risk. Excluded individuals may include nurses, physicians, or x-ray technicians, among others. Excluded individuals in administrative roles, like coders or marketers, who do not directly furnish healthcare services can also cause trouble for providers.

Providers who submit claims to a federal healthcare program for any services or items furnished or ordered by excluded providers face penalties. Such penalties include civil monetary penalties of up to $10,000 for each item or service furnished, an assessment of up to three times the amount claimed for each item or service, and potential exclusion. Recently, there has been an increase in enforcement actions against providers for employing excluded individuals. For example, in Illinois, a cardiology practice paid $274,721 related to the employment of an excluded medical biller and a hospital paid $317,661 for employing two nurses who were excluded.

Resources are available to avoid doing business with excluded individuals or entities. The OIG maintains a searchable database of excluded providers, the List of Excluded Individuals/Entities (LEIE), which is updated monthly to help providers stay compliant. Providers should also check the System for Award Management database, called the Excluded Parties List System, which lists persons and companies debarred from other federal agencies. Finally, Florida makes available a list of persons and entities sanctioned by the Medicaid program.

Given the severe consequences for violations, healthcare companies should implement clear policies and processes to ensure that they do not hire, or bill for services ordered by, an excluded individual or entity. Some measures include:

Check exclusion databases prior to hiring employees or engaging vendors, suppliers or contractors.

  1. Perform regular (preferably monthly) searches of every employee's and contractor's name. 
  2. Require disclosure on employment and credentialing applications of other names by which the applicant has been known and check the LEIE and other databases for all such names.
  3. Require temporary agencies and contractors to provide documentation of background screenings that include exclusion searches.
  4. Require employees and contractors to notify you immediately if they are excluded from federal programs.
  5. Implement a procedure to ensure that ordering physicians are not excluded, if you are a healthcare provider that bills for services ordered by physicians,

If you discover that you have an excluded provider at your company or have billed for the services ordered by an excluded physician, it would be prudent to consult with an experienced health law attorney to carefully consider your options and legal obligations.