The federal government is increasing their crackdown on healthcare fraud, and it is no surprise as to why. For 2014, it is estimated that 25{5460a4de8013038d4595608f48191d314818d6c27f4872c4c47bcc9e4b7b3c2b} of the federal budget will be comprised by healthcare spending ̶ mainly for Medicare, Medicaid, and the Patient Protection and Affordable Care Act’s (ACA) exchange subsidies. With the creation of the Center for Program Integrity within CMS (Centers for Medicare and Medicaid Services), there is now a consolidated entity for the antifraud activities of Medicare and Medicaid, versus them previously being dispersed across numerous divisions of the Department of Health and Human Services (HHS). Further with HEAT (Health Care Fraud Prevention and Enforcement Action Team), the joint venture between HHS and the Department of Justice (DOJ), Medicare fraud has become a Cabinet-level priority.

Although projections vary, $85 Billion in federal funds is estimated to be lost annually, due to fraud, waste, and abuse in the healthcare industry. Fraud is deliberate deceptive actions, while abuse includes policies, procedures, and services that are inconsistent with generally accepted medical, fiscal, or industry best practices (such as miscoding a procedure in order to receive higher reimbursement). In 2013, $5.8 Billion of these misused federal funds was recovered, with it only costing the federal government about $1.5 Billion in expenses, so it is a revenue generator for the government, and thus the impetus to continue to pursue these misused funds. The amount of recovered funds is increasing, with the OIG (Office of Inspector General) estimating that for the first 6 months of 2014, $3.1 Billion is expected to be recovered.

Under United States Code 42 U.S.C. Section 1320a-7, the OIG is required to impose mandatory exclusions from participation in all federal healthcare programs on individuals, providers and contractors who have been convicted of certain criminal offenses. Further, under 42 U.S.C. 1320a-7(b), the OIG has discretion to also exclude individuals and entities for less serious offenses, including defaulting on healthcare education loans. So yes, that means an employee who previously was not “sanctioned” but later defaults on their student loans, can become sanctioned while working for your healthcare company, putting your hospital, hospice, medical practice, or healthcare facility at risk for significant Civil Monetary Penalties (CMPs) and cause your company to be excluded from federal healthcare programs.

There is also a reciprocal effect with typically non-medical debarments. If an individual or entity is debarred (excluded – debarment is essentially a non-medical entity sanction) from participating in any federal agency program, then they are debarred from all other federal agency programs, including Medicare, Medicaid, TRICARE, and other healthcare programs. An example would be a security guard firm or an office cleaning firm that overbilled the Department of Defense, and was subsequently debarred. If your hospital, medical practice, hospice, or medical facility was to contract with this debarred entity, your company, if it receives federal healthcare funds, would be in violation, and subject to penalties (just as if you employed an excluded “sanctioned” individual).

Further there is also a need to review state exclusion databases. If a person/entity is excluded by one state, they are excluded from all states. Section 6501 of the Affordable Care Act and CMS Informational Bulletin CPI-B (January 20, 2012) direct that State Medicaid agencies are required to terminate the participation of any individual or entity if such person/entity has been terminated under Medicare or any other State Medicaid plan.

Hospitals, medical practices, and other healthcare facilities must check for exclusion prior to employing or contracting with persons and entities and then background screen “periodically” after hire. “Periodic” background screening is now generally viewed to be defined as monthly screening. This monthly background screening should be performed minimally through the List of Excluded Individuals and Entities (LEIE). The OIG Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (May 8, 2013) clarifies that “periodic” means monthly background screening. Further Medicare contractors must review State licensure board data on a monthly basis to determine if providers and suppliers remain in compliance with State licensure requirements (42 CFR Part 1007, Federal Register, Vol. 76, No. 22, pp. 5865-5866).

Civil Monetary Penalties (CMPs) of up to $10,000 per service provided (e.g., per examination performed or per prescription filled, etc. by the “sanctioned” individual or entity), plus treble damages, and program exclusion can be imposed. Further for example, if the “sanctioned” individual worked for your firm for 3 years, the audit can go back 3 years and require reimbursements and damages for all services performed by this individual during that period of time (that received any federal reimbursements). This audit nightmare may actually pale in comparison to the extremely onerous financial penalties that can be imposed.

The bottom line: If your firm, be it a hospital, nursing home, medical practice, hospice, or other healthcare facility is NOT performing monthly background screenings, your company has significant exposure and liability, should a “sanctioned” or “debarred” individual or entity ever be discovered that has worked for your company.

Posted by: Rudy Troisi. President, Reliable Background Screening.