On February 9, 2015, the U.S. Department of Health and Human Services Office of Inspector General (OIG) delivered an advisory opinion finding that a physician or provider previously excluded from participating in Medicare, Medicaid, and all other federal health care programs was permitted to share in federal payments with his former medical practice when the payments were based on services furnished prior to the individual’s exclusion even though payment was received by the practice after the exclusion. The Petitioner sought guidance from the OIG as to whether sharing in these payments with the practice would violate the terms of the Petitioner’s exclusion from federal health care programs and would potentially subject the Petitioner to additional administrative sanctions or other liability.
The Petitioner was a physician who was prohibited from participating in all federal health care programs for 20 years under the terms of a criminal plea and civil False Claims Act settlement (Settlement). The Settlement resolved various allegations of fraud against the Petitioner and required the Petitioner to divest all his ownership in the medical practice. The divestiture was ultimately accomplished through an asset purchase agreement between the Petitioner and specified buyers. The asset purchase agreement was executed shortly after the effective date that Petitioner became an excluded provider under the terms of the Settlement, which prohibited his or her participation in federal health care programs. Under the terms of the purchase agreement, the Petitioner was permitted to share in a portion of the Practice’s returns after the Petitioner divested his or her ownership in the Practice as long as those payments were for services that the Petitioner or Practice provided to patients and billed to federal health care programs before the Petitioner became an excluded provider.
The OIG’s February 9th, 2015, advisory opinion began its analysis by citing federal statutes that prohibit payment by all federal health care programs for items or services furnished: (1) by an excluded provider; or (2) at the medical direction or under the prescription of an excluded person. The effects of becoming an excluded provider was not elaborated upon in the February 9th advisory opinion, however the OIG more fully addressed and explained the effect of provider exclusions in its May 8, 2013, Special Advisory Bulletin titled “Effect of Exclusion from Participation in Federal Health Care Programs.”
The February 9, 2015 advisory opinion warns that an excluded provider may be subject to civil monetary penalties for every claim that the excluded provider submits, or that he or she causes to be submitted, during the period that the provider is excluded from the federal health care programs. The advisory opinion provides further clarification by explicitly stating that the prohibition on payments applies only to services or items provided by, or under the prescription of or at the medical direction of, an excluded provider on or after the date of exclusion. In sum, as the Petitioner sought to receive payments from the practice for services both furnished and billed before the effective date of exclusion, the OIG concluded that receiving those payments would not be grounds for imposition of civil monetary penalties or any other administrative liability.