Sanction Screening Tips for Compliance Officers: HHS OIG Reports Taking Over 4,200 Administrative Sanctions in 2015

Various Federal laws provide the authority to impose administrative sanctions for fraud and abuse, as well as for other activities that pose a risk to Federal health care programs and their beneficiaries. During the second half of FY 2015, the OIG reported imposing 2,437 sanctions in the form of program exclusions or administrative actions for alleged fraud or abuse, or other activities that posed a risk to Federal health care programs and their beneficiaries. In the first half of the year, the OIG reported 1,814 actions, for a total of 4,251 actions in 2015.

A number of triggering events or improper activities may serve as the basis for either a “mandatory” or “discretionary” exclusion from participation in Federal health care programs.  Program exclusion is required where an entity or individual is convicted of a criminal offense related to the delivery of an item or service under Medicare or a State health care program, among others. Discretionary exclusions are for other types of specified misconduct, including license revocation or suspension, exclusion or suspension from another Federal or State health care program for reasons relating to “professional competence, professional performance, or financial integrity,” providing unnecessary or substandard services to patients, fraud or kickbacks, and default on health education loans.

The OIG compliance guidance calls for screening employees, physicians, vendors, and contractors against the LEIE. Failing to screen out excluded individuals or entities could result in all claims and costs associated with that excluded party being viewed as false and fraudulent, resulting in significant financial penalties. From the CMS perspective, sanction and exclusions play a role not only in terms of payment, but also in enrollment. Federal regulations state: “To obtain/maintain active enrollment status, providers may not employ or contract with individuals/entities excluded from participation in any federal health care program or debarred by the GSA from any other executive branch program or activity.”

Sanction Screening Best Practices

1. Periodically sanction screen employees, medical staff, contractors, and vendors against the LEIE.

2. Ensure that Medicaid sanction screening is occurring in states that mandate it.

3. Most exclusion in the LEIE arises from another underlying court, state agency, or licensure board action. Therefore, it is advisable to conduct background checks and seek assurances that prospective employees, contractors, and vendors have not been subject to any prior court or licensure board actions.

4. It is not uncommon for individuals to be the subject of an investigation, but not yet sanctioned. As such, it is a best practice to require applicants to attest that they have not been, nor are they now, the subject of an investigation by any duly authorized regulatory or enforcement agency as a condition of employment, gaining staff privileges, or engagement. It is also advisable to add a condition that employees must promptly report any notice of investigation that involves them.

5. Maintain detailed records of all sanction screening that include when it was done, who was checked, potential hits, and how hits were resolved. Include a certification of these reports.

The great majority of organizations use a vendor to assist in sanction screening, either through using a sanctions screening software tool or outsourcing the entire process to the vendor (including resolution of potential hits). If sanction screening is outsourced to a vendor, insist on certified, dated reports that detail how potential hits were resolved. Maintain reports in a permanent file.