OIG Kicks off the New Year with Another Round of HHS Rule Changes
Office of Inspector General Implements Important Changes to Exclusion Rules

Continuing an onslaught of end-of-administration rule changes, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) today published a 100-plus page final rule implementing a number of changes, many mandated under the Affordable Care Act (ACA), that adjust HHS policies regarding the exclusion of providers and others from the Medicare and Medicaid programs for fraudulent billing and other problematic practices. The changes are effective February 13, 2017.

Some of the more important changes to the exclusion policies include:

  • Implementation of a statute of limitations on provider exclusions.  Based on comments to the proposed rule, OIG added a 10-year limitations period for the OIG to initiate an exclusion action. The OIG settled on the 10-year period as a means of tying exclusion actions to the 10-year limitation period provided for under the False Claims Act (FCA), noting in their comments that, “[p]roviding for a 10-year limitations period for exclusion…will better align the resolution of FCA and section 1128(b)(7) remedies.”[i]
  • Expanded definitions that reflect modern payment methodologies. The rule broadens the definitions of the terms “directly,” “furnished,” and “indirectly” to more clearly reflect that federal health care programs make payments through methods other than the submission of fee-for-service claims, “and that individuals and entities who request to receive such payment, directly or indirectly, are subject to exclusion.” Examples cited in the OIG comments include (a) payment models that involve issuing shared saving payments or performance-based payments and (b) capitated payments in managed care and other models.
  • Increased financial loss aggravating factors. The final rule increases the amount of the financial-loss aggravating factors to $50,000 (up from $5,000 and $1,500 under the old rule). The aggravating factors as used to determine the length of exclusion. Comments to the rule state: “We believe that this increase better reflects the threshold amount when a period of exclusion should be increased on the basis of our experience resolving health care fraud matters.” In addition, the $50,000 figure tracks the OIG’s recently issued rule on civil monetary penalties, where certain aggravating factors are triggered at the $50,000 mark.
  • Mitigation based on access to care. Noting several commentator concerns, the OIG has determined that access to care, or more accurately, the lack thereof, is more appropriately considered as an argument against the imposition of a permissive exclusion, rather than as a factor that would limit the length of the exclusion.  Therefore, access to care issues are appropriately raised upon receipt of a notice of intent to exclude or a notice of proposal to exclude.
  • Exclusion based on obstruction of audits. As required under the ACA, entities may be excluded from participation for the obstruction of an audit. The OIG clarified that the term “audit” covers all of the generally accepted meanings of the terms, including “inspection,” “verification,” and examination. In other words, quibbling over the meaning of an OIG request for information that is meant to verify compliance with the law may well be deemed an obstructive act leading to exclusion.
  • Early reinstatement of participation. The new rules implement a reinstatement policy for those that have been excluded for a number of reasons, including issues with financial integrity and professionalism. The process varies depending upon the reasons behind the original exclusion and steps taken to correct those circumstances, and gives the OIG a great deal of discretion in determining outcomes. The process also looks at the benefits of reinstatement to the beneficiaries of federal programs and any increased access to care. In cases of exclusion for loss of licensure, providers that seek reinstatement to non-licensed positions may apply after 3-years (down from a proposed 5), but only after overcoming a presumption against the reinstatement. An exception to the 3-year term is made for instances in which the authority that revoked the license imposed a longer term of revocation or suspension, in which case the longer term applies.
  • Exclusion of entities and related individuals. The rule also provides for the exclusion of entities that are controlled by an excluded individual and vice-versa. The term of exclusion is the same for both the person and the entity, whether or not the relationship between the two is somehow severed. As the exclusions are of the “permissible” variety, the OIG exerts broad discretion in the implementation of this rule based on the circumstances and role of the individual in the acts that prompt the exclusion. Per the OIG, “We believe it is appropriate to determine the individual’s exclusion length consistent with the entity’s exclusion length….OIG exercises its discretion…in accordance with factors we published in 2011….As a result, when OIG has determined that an individual is untrustworthy based on the conduct of an entity, it is appropriate to exclude him or her for the same period for which the entity is excluded.”

Given that the new rules encompass over 100 pages of text and commentary, not all of the changes have been addressed here.  For that reason, we welcome your questions and are ready to assist you in understanding the depth and breadth of the new rules as regard your individual circumstances.  Please contact any of the listed attorneys for assistance.

Amy Butler, FisherBroyles Partner
Amy Butler
Cleveland (Toledo Branch), Chicago, Detroit Offices

Anthony Calamunci, FisherBroyles Partner
Anthony Calamunci
Cleveland (Toledo Branch), Chicago, Detroit and New York Offices

Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson
Naples and Washington D.C. Offices

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid
Naples and Washington D.C. Offices

Katy Wane, FisherBroyles Partner
Katy Wane
Cincinnati Office



[i] In re: FCA enforcement activity. While not the subject of this alert, FCA enforcement activity and OIG activity often proceed concurrently. Therefore we note that U.S. Attorney General nominee Senator Jeff Sessions remarked, during questioning by Senator Chuck Grassley, an original architect of the FCA, that he would fully support the continued vigorous enforcement of the FCA, including whistleblower/qui tam actions, during his confirmation hearing on January 11, 2016. It is also likely that Sessions would continue to follow the Yate’s Memo mandate to pursue individual actors in cases of corporate wrongdoing.  Apparently vigorous FCA enforcement is something that Democrat and Republican administrations can agree upon.