OIG Gearing Up for More Enforcement Authority and Penalties

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In late March, OIG Inspector General Levinson informed Compliance Officers at the annual HCCA Compliance Institute Conference in San Diego that his office was very close to releasing significant changes to both their Exclusion Authority as well as the Imposition of Civil Fines and Monetary Penalties.   This week, the OIG released its two proposed rules to do just as he promised.

There are two proposed rules (RIN 0936-AA05) published in the May 9 Federal Register (79 Fed. Reg. 26,809) and (RIN 0936-AA04) published in the May 12 Federal Register (79 Fed. Reg.  27,079).  The purpose of filing proposed rules is to allow the public to comment before the OIG makes its final rule.  Comments are due by July 8 and July 11, respectively.

Part 1.  Effect of Expanding Exclusion Authority of OIG

The important issue here is that the OIG is updating its rule making authority to comply with the sections enacted in the Affordable Care Act, which broadened its authority to exclude and to make the rules to be easier to read and follow.  There will therefore be a renumbering and better organized listing of exclusion authority, penalties and mitigating factors the OIG will take into consideration before excluding and individual or entity.

As a refresher, pursuant to Section 1128 of the Social Security Act, the OIG has been granted the authority to exclude individuals and entities from participation in federal health care programs. Under the ACA, OIG was statutorily authorized to exclude for three new infractions:

  1. Failure of ordering, referring or prescribing providers to furnish payment information under Section 1128(b)(11),
  2. Knowingly making or causing to be made, false statements, omissions, or misstatements of material fact on a federal health care program application under Section 1128(b)(16), or,
  3. Convictions in connection with obstruction of an audit, under Section 1128(b)(2).

The OIG has two bases for exclusion- mandatory and permissive.  The proposed OIG rules touch upon several significant areas: 

  1. Adding three new bases for permissive exclusion,
  2. Providing the OIG the power to issue testimonial subpoenas during exclusion investigations, (any delegate of the OIG can issue such a subpoena to compel the testimony of witnesses and the production of evidence related to the exclusion action),
  3. Removing the statute of limitations on exclusion actions under Section 1128(b)(7)- false claims. 
  4. Increasing the threshold of aggravating and mitigating factors for higher dollar amounts of government losses from $5,000 to  $15,000 or more).
  5. The OIG is proposing a rule change that would grant it more flexibility to reinstate an individual who was excluded due to the loss of a state healthcare license.  

Currently, individuals who are excluded due to the loss of a state issued healthcare license (47% of those found in the OIG LEIE in 2012-2013) are not eligible for reinstatement until the state restores his/her license.  The proposed rule would allow for early reinstatement in an individual “obtained a health care license, was allowed to retain a healthcare license in another State, or retained a different healthcare license in the same State.”  The proposed rule would also allow the individual an opportunity to prove they were no longer a threat to federal healthcare programs.


As we have written before section 6501 states that if an individual is excluded in any one state, he/she is considered excluded and prevented to enroll in Medicaid in any other state. This proposed rule would relax that mandate in “special instances” and allow “early reinstatement” where the OIG has taken a “permission action based on a licensing board action” if a determination is present that the person  is not deemed a threat to patients and programs, and is not likely to get reinstated by the original licensing board yet has received licensing in another state.


This “early reinstatement” provision is predictably problematic since state licensing boards do not always communication with each other, the individual simply needs to convince another board to grant them a license to obviate the effect Section 6501 has on that excluded provider. 

*Note: Under a False Claims Act there is a ten year limitation from the date of the occurrence for filing a claim.  Under this proposed rule, the OIG will not have a  statute of limitations bar. The OIG stated that the age of the claim will be one of the factors in weighing the value of the conduct  on the individual or entity’s trustworthiness). 

*Note: For certain permissive authority exclusion bases such as medically unnecessary or other improper claims, kickbacks/fraud, or entities controlled by a sanctioned individual(s) controlling a sanctioned entity, this new authority will expand the OIG’s ability to fully investigate potentially improper conduct that could lead to a permissive exclusion.

Part 2. Boosting OIG Authority to issue Civil Fines and Monetary Penalties (CMP).

The proposed rules would allow the OIG to implement the assessment of CMP’s for the following new infractions, according to Sections 6402 and 6408 of the ACA.  The OIG anticipates that CMP will significantly increase under these new proposed rules. 

  1. Failing to provide the OIG with quick access to documents,
  2. Ordering or prescribing medication or services while excluded from participation in federal health care programs, making false statements on enrollment applications to participate in federal healthcare programs,
  3. Making false statements on enrollment applications to participate in federal healthcare programs,
  4. Failing to report and return overpayments,
  5. Making a false statement that is part of a fraudulent claim.
  6. Allow CMP to be imposed on Medicare Advantage and Medicare Part D organizations, if any of their employees or contractors  engaged in fraudulent activity.  This is in accordance with ACA Section 6408(b)(2),
  7. Impose CMP if a Medicare Advantage or Part D organization enrolls someone without their consent, transfers an enrollee to another plan without the enrollee’s consent, transfers an enrollee to make a commission, or failed to comply with marketing restrictions. 

NOTE:  The later two sections above has the effect of broadening the general liability of principals for the actions of their agents.  

Finally, the new proposed CMP rules set out primary factors for determining the amount of CMPs based upon:

  1. The nature of the violation,
  2. The degree of guilt by individual,
  3. Prior offenses of the individual,
  4. Additional bad conduct of the individual 

The OIG does recognize a mitigating factor in the proposed rules in terms of the degree of guilt factor if an individual takes corrective action- including self-disclosure through the OIG self-disclosure protocol and full cooperation by the individual.  Also, the claims mitigating factor will be increased from $1,000 to $5,000 as a threshold to help the OIG determine the severity of a program violation.

These proposed rule changes will help bring the regulations in comport with the ACA provisions, grant the OIG more exclusion powers and increase the Civil and Monetary Fines and Penalties that can be accessed.  Time will tell how this will impact the compliance programs, audits thereof an financial fines issued to individuals and/or their employer.


civil monetary fines

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