OIG Finalizes New Exclusion Rules, Including a 10-Year Limitations Period for AKS and CMP Violations

On January 12, 2017, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) published final regulations relating to the exclusion of individuals and entities from participation in federal health care programs. The final rule codifies certain statutory changes made by the Medicare Modernization Act in 2003 and the Affordable Care Act (ACA) in 2010—including new or expanded grounds for OIG’s permissive exclusion authority, as described below—and provides guidance regarding the exercise of the agency’s discretionary authority, including its consideration of aggravating and mitigating factors in determining the length of exclusion periods. The final rule includes several changes to the proposed rule dated May 9, 2014¹—most notably, the final rule establishes a 10-year limitations period for OIG’s exercise of its permissive exclusion authority based on violations of the Anti-Kickback Statute (AKS) or Civil Monetary Penalties (CMP) Law. This Alert describes some of the more significant changes included in the final rule, which is effective on February 13, 2017.

10-Year Limitations Period for Exclusions Based on AKS and CMP Law Violations

In its proposed rule, OIG stated that permissive exclusions based on violations of the AKS or CMP Law were “neither time barred nor subject to any statute of limitations period, even when the exclusion is based on violations of another statute that may have a specified limitations period.”² Commenters objected to this proposal, citing both legal and practical concerns, including the administrative burden of being forced to retain indefinitely all documentation that could be relevant to OIG’s exclusion authorities. In response, OIG adopted in the final rule a 10-year limitations period—“grounded in” the False Claims Act (FCA) period of limitations—that would address the commenters’ concerns while also giving OIG sufficient time to consider the facts uncovered during an FCA investigation and avoiding the need to file an exclusion action unnecessarily or prematurely merely to come within the statute of limitations.³ As finalized, the regulations prohibit OIG from imposing an exclusion based on a violation of the AKS or CMP Law “more than 10 years after the date when [the] act . . . occurred.”⁴

Changes Affecting Length of Exclusion Periods

The final rule also contains several changes “that reflect OIG’s policies and practices” relating to the exercise of the agency’s exclusion authority,⁵ including certain aggravating and mitigating factors that OIG considers in determining whether to increase the length of exclusion above the required minimum. Such changes include:

• Updating the dollar amounts for aggravating and mitigating factors that consider the financial loss to federal health care programs (including by increasing the financial loss required to apply an aggravating factor, from $5,000 to $50,000, for several exclusion categories,⁶ and from $1,500 to $5,000 for exclusions based on the provision of unnecessary or substandard care⁷); and
• Eliminating the mitigating factor related to the unavailability of alternative sources of the type of health care items or services furnished by the excluded person or entity (i.e., beneficiary access), which, OIG explained, it would continue to consider in its determination as to whether to impose a permissive exclusion.⁸

In addition, the final rule allows for early reinstatement of individuals who have been excluded based on the revocation or suspension of their professional license(s).⁹ Previously, such individuals were not eligible to be reinstated until the lost license was restored. Under the final rule, OIG has the discretion to permit early reinstatement for individuals who (1) obtain, or are permitted to retain, another license (either from a different licensing authority in the same state, or from the licensing authority of a second state) after making a full and accurate disclosure of the circumstances surrounding the exclusion; or (2) seek employment in unlicensed positions.¹⁰ In both cases, OIG will consider factors such as the circumstances that formed the basis for the exclusion, any remedial actions undertaken by the individual, and the resulting risk to federal health care programs and beneficiaries.¹¹ However, in an effort to protect beneficiaries, early reinstatement will not be available to individuals who lost their licenses due to reasons related to patient abuse or neglect.¹²

Codification of New and Expanded Exclusion Authorities

The ACA expanded OIG’s permissive exclusion authority—i.e., its authority to exclude individuals or entities from participating in federal health care programs based on enumerated categories of offenses, where the agency deems it appropriate to protect against fraud and abuse. The final rule codifies OIG’s authority to exclude based on the following:

• Convictions under federal or state law in connection with the interference or obstruction with health care-related investigations or audits;¹³ and
• Making false statements or omissions in any application, agreement, bid, or contract to participate or enroll as a provider or supplier under any federal health care program.¹⁴

The ACA also expanded the scope of OIG’s permissive exclusion authority based on an individual’s failure to supply payment information as required by HHS;¹⁵ the final rule codifies this statutory language as amended by the ACA.¹⁶
 

The final rule also includes clarifying, technical, and policy changes not described above. If you would like to discuss the implications of the final rule or OIG’s exclusion authorities more generally, please contact any member of Ropes & Gray’s health care practice or your usual Ropes & Gray advisor.

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¹ 79 Fed.Reg. 26,810 (May 9, 2014).
² Id. at 26,823. 
³ 82 Fed.Reg. 4100, 4102 (Jan. 12, 2017) (explaining that, “[w]hen determining whether to seek exclusion of a defendant in an FCA case, OIG considers factors that cannot be determined until the case is resolved,” and noting that “actions on parallel tracks waste Government (both administrative and judicial) and private resources”).
⁴ Id. at 4114 (codified at 42 C.F.R. §§ 1001.901(c), 1001.951(c)).
⁵ Id. at 4100.
⁶ 42 C.F.R. §§ 1001.102(b)(1), 1001.201(b)(2)(i), and 1001.301(b)(2)(viii).
⁷ 42 C.F.R. § 1001.701(d)(2)(iv).
⁸ 82 Fed.Reg. at 4104 (eliminating the factor from 42 C.F.R. §§ 1001.201, 301, 401, 501, 601,701, 801, 951, 1101, 1201, 1601, and 1701).
⁹ Id. at 4104–4105 (codified at 42 C.F.R. § 1001.501(c)).
¹⁰ See id. (codified at 42 C.F.R. § 1001.501(c)(1) and § 1001.501(c)(2), respectively).
¹¹ Id.
¹² Id. at 4105 (codified at 42 C.F.R. § 1001.501(c)(3)).
¹³ 42 C.F.R. § 1001.301.
¹⁴ 42 C.F.R. § 1001.1551.
¹⁵ As amended by the ACA, the statutory provision applies not just to providers who furnish or order health care items or supplies, but also to those who refer patients or certify the need for items or services that they themselves do not provide. See 42 U.S.C. § 1320a-7(b)(11).
¹⁶ See 42 C.F.R. § 1001.1201.