Our story in the November issue of Shorts on the risks of employing or contracting with individuals who have been excluded from the Medicare, Medicaid or other health care programs prompted a number of questions from readers.  This month, we’ll answer  the most frequently asked questions.

What are the penalties for employing or contracting with an excluded individual?

Providers who employ or contract with an excluded individual can be fined up to $10,000 for each claim submitted that involved an excluded individual or entity, plus three times the amount actually claimed for reimbursement and, in extreme cases, the provider itself can be excluded from federal health care program participation.  A “claim” can be a bill for therapy services or it can be the amount of money received each day under a prospective payment (PPS) or per diem system for every resident whose care involved, even remotely, the excluded person.

What is the OIG’s “voluntary disclosure program?”

The voluntary disclosure program allows providers who discover that they have employed or contracted with an excluded individual or entity to “self report” that violation to the OIG and work out a settlement and appropriate fines with the OIG, rather than risking being “caught” by the OIG later.

Why would a provider ever use the voluntary disclosure program? 

Fines are generally substantially less than for providers who are discovered by OIG to have violated the regulations prohibiting the hiring of excluded persons.  For nursing homes in particular, since they are paid under a PPS system, the OIG will normally accept a fine that is computed as follows:  1) the full amount of the excluded individual’s salary and benefits for the entire time he or she was employed while excluded; 2) multiplied by the facility’s average Medicaid and Medicare census (this is designed to recoup only that portion of the employee’s salary that relates to federal health care program dollars; 3) times a multiplier of somewhere between 1.25% and 2% (and this could be higher depending on aggravating factors).  So the longer a provider employs or contracts with an excluded individual or entity, the larger the fine and length of employment while excluded directly drives the size of the civil money penalty. This underscores the importance of checking the OIG’s List of Excluded Individuals and Entities for all new hires and contractors, and periodically (at least annually) thereafter.

If I self-disclose, I’ll be fined for sure.  If I discover I’ve hired an excluded person, aren’t I better off taking my chances that I won’t get caught?

Not necessarily.  The odds a provider will “get caught” are not small.  If and when the employee or contractor at issue reapplies for readmission to the Medicaid, Medicare or any other federal health care program, he or she is required on the application to provide, under oath, all of the places he or she has worked during the exclusion, all educational courses taken and all periods of unemployment – in other words, a complete history of what they’ve been doing while excluded.  This includes the name of any health care provider for which he or she has worked or had contracts during the exclusion period AND each provider’s Medicare provider number, address and Universal Provider Identification Number (UPIN).  Armed with this information, the OIG then knows which providers, if any, hired that person and can find them quickly. That employee, probably without even realizing it, leads the OIG to all employers for which he or she worked while excluded.  At that point, it’s too late for the provider to self-disclose and limit its exposure for civil money penalties and other sanctions.  You should assume all employees who want to work in health care will reapply for readmission.  Otherwise, they are extremely limited in health care jobs they can hold.  This is not a small risk for providers.​