Many pharmacies and clinics run background checks on their employees to assure that individuals have not been excluded from any federal health care program. Most healthcare providers incorporate this procedure into their Policies & Procedures requiring to check the OIG’s List of Excluded Individuals/Entities, as well as state databases before any employment decision is made.
However, many employers are still confused on whether they should perform exclusion checks on all employees and contractors or only on healthcare professionals. The Social Security Act states that individuals and entities are prohibited from submitting – or causing to be submitted – claims to Medicare, Medicaid, or any other federal health care program for items or services furnished during the exclusion period. See sections 1862(e) and 1902(a)(39) of the Act. If a provider contracts with or employs these excluded individuals, the provider may also be sanctioned.
Recently, Office of Inspector General (OIG) issued an opinion addressing when a provider can employ an excluded individual. An excluded individual – requestor – submitted the follow scenario:
Company would employ the excluded individual to market emergency medication discounts to long term care (LTC) pharmacies that would bill federal health care programs. The marketer would be paid a fixed salary plus a commission based on how many pharmacy accounts he brings to the company. Compensation would not be determined based on the volume, value, frequency, price or selection of any medications ordered by the LTC pharmacies and paid for by a federal health care program. Company would charge the LTC pharmacies the discounted rate plus a mark-up, which the OIG presumed included the cost to employ the requestor. The LTC pharmacies independently determine the volume, type, and frequency of any needed medications. In addition, the requestor and the company would not prepare or submit claims for items or services provided in connection with the proposed arrangement that are paid for by any federal health care program.
The OIG found that the emergency medications fit the definition of “items or services” and that if the reimbursement the LTC pharmacies received included the LTC pharmacies’ acquisition cost, then the federal health care programs would be indirectly paying for the marketing services requestor provides to the Company. Thus, requestor would be indirectly furnishing an item or service for which a claim is submitted to a federal health care program. Accordingly, the proposed arrangement would effectively fall within the statutory prohibition against furnishing an item or service while excluded. However, the OIG concluded it would not impose sanctions on the requestor because the services were “so far removed” to “pose minimal risk”to Federal health care programs and beneficiaries.
The opinion means that providers should continue exercising extreme caution when contracting with individuals that have been excluded from participating in federal health care programs. If you employ or plan to employ such individuals analyze the following:
Does the individual have any direct or indirect role in submitting claims to any federal health care program?
Does he/she have direct or indirect control over business operations?
Do his/her immediate family members have any direct or indirect ownership or control interest.
Do the salaries of such individuals depend on volume, value, frequency, price, or selection of any medications, including federally reimbursable medications?
Document the analysis, consult your attorney, and keep all the records readily available in case of an audit or an inspection.