OIG Exclusion Violations Cost Healthcare Providers $9 Million in 2014

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The Department of Health and Human Services’ Office of the Inspector General cracked down on organizations hiring prohibited employees in 2014, Modern Healthcare reported Jan. 28.

Last year, $9 million in fines were levied on a total of 75 healthcare-related entities, compared to $3.5 million in fines on 45 companies in 2013.

Lists of individuals excluded from being compensated under federal health programs such as Medicare and Medicaid are kept at both federal and state levels. Health organizations who hire or contract with these excluded individuals — even if they are performing duties not associated with patient care — are subject to monetary penalties.

Excluded individuals are typically placed on the list for Medicare or Medicaid fraud, manufacturing or trafficking controlled substances, patient abuse, or loss of license.

One of the largest 2014 penalties involved a $2 million fine on Diagnostic Laboratories and Radiology, which had employed four excluded individuals. A fine of more than $497,000 was levied against Kmart Corp., and one topping $470,000 was levied against the University of California, Los Angeles. Each had hired one excluded individual.
“Low-Hanging Fruit”

Compared to other types of healthcare fraud, exclusion list violations are relatively easy to find and prove, which means there are financial incentives for the government to stay vigilant.

“The problem for providers with the exclusion lists is that it’s really low-hanging fruit for the government,” Lisa Rivera, a former assistant U.S. attorney in Nashville who now practices private law, told Modern Healthcare.

This has led to an increase in the number of healthcare providers who voluntarily disclose violations when they’re found, in order to avoid even larger penalties.

Because of the way the system is set up, ignoring the problem will lead to a more severe implementation of sanctions, Alan Reider, JD and MPH, said earlier this month for an article in industry publication Healio.
The Challenges of Screening

In the light of potential penalties, implementing internal screening processes is a common-sense move for healthcare organizations. But the Affordable Care Act, in addition to recommending monthly screenings, also established a requirement that all health providers enrolled in Medicare or Medicaid maintain compliance programs.

The problem, as attorney Jeremy R. Morris explained in a Jan. 29 article, is that there are no clear guidelines for what standards compliance programs must meet, and compliance officers often to struggle to keep up with the new methods the OIG keeps implementing to detect violations.

An industry of third-party screening companies providing software solutions, full-service investigations or both has grown along with increased government scrutiny.

“OIG is coming on strong and it can be extremely tedious to maintain a solid internal procedure with reporting, etc,” says Jeff Josefovic of Streamline Verify. “Our company offers a guaranteed peace of mind and compliance in this area as an extremely affordable option which can free up your staff and really protect you from the harsh fines.”

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