[Federal Register Volume 62, Number 173 (Monday, September 8, 1997)]
[Proposed Rules]
[Pages 47182-47195]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23379]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
42 CFR Parts 1000, 1001, 1002 and 1005
RIN 0991-AA87
Health Care Programs: Fraud and Abuse; Revised OIG Exclusion
Authorities Resulting From Public Law 104-191
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This rulemaking addresses proposed revisions to the OIG's
sanction authorities in conjunction with sections 211, 212 and 213 of
the Health Insurance Portability and Accountability Act of 1996, along
with other technical and conforming changes to the OIG exclusion
authorities set forth in 42 CFR parts 1000, 1001, 1002 and 1005. These
proposed revisions are specifically designed to expand the protection
of certain basic fraud authorities, and revise and strengthen the
current legal authorities pertaining to exclusions from the Medicare
and State health care programs.
DATES: To assure consideration, public comments must be delivered to
the address provided below by no later than 5 p.m. on November 7, 1997.
ADDRESSES: Please mail or deliver your written comments to the
following address: Office of Inspector General, Department of Health
and Human Services, Attention: OIG-20-P, Room 5246, Cohen Building, 330
Independence Avenue, S.W., Washington, D.C. 20201. Because of staffing
and resource limitations, we cannot accept comments by facsimile (FAX)
transmission. In commenting, please refer to file code OIG-20-P.
FOR FURTHER INFORMATION CONTACT:
Joel Schaer, (202) 619-0089, OIG Regulations Officer.
SUPPLEMENTARY INFORMATION: Comments will be available for public
inspection September 22, 1997 in Room 5550 of the Office of Inspector
General at 330 Independence Avenue, S.W., Washington, D.C., on Monday
through Friday of each week from 8:00 a.m. to 4:30 p.m., (202) 619-
0089.
I. Background
A. Overview of OIG Exclusion Authorities
All exclusions imposed by the Office of Inspector General (OIG) are
based on the authorities set forth in sections 1128, 1156 and 1892 of
the Social Security Act (Act). In imposing these exclusions, the
Secretary's primary objective and obligation is to protect the health
and safety of patients receiving care under the Medicare and State
health care programs, and to safeguard the integrity of these programs.
The authorities contained in these sections of the Act were designed to
protect the programs and their beneficiaries from unfit health care
providers, individuals and businesses whose behavior has demonstrated
that they pose a risk to program beneficiaries or to the integrity of
the Medicare and State health care programs.
In 1987, the OIG's civil administrative sanction authorities were
significantly revised and expanded by the Medicare and Medicaid Patient
and Program Protection Act (MMPPPA), Public Law 100-93. Congress
enacted MMPPPA ``to improve the ability of the [Department] to protect
the Medicare and Medicaid programs for fraud and abuse, and to protect
the beneficiaries of these programs from incompetent practioners and
from inappropriate and inadequate care.'' MMPPPA authorized both
mandatory and discretionary program exclusions intended to protect the
integrity of the Medicare and State health care programs, as well as
beneficiaries.
Manadatory exclusions. Section 1128(a) of the Act specifically sets
forth the exclusion authorities with mandated enforcement provisions.
This section of the Act requires the OIG to exclude from program
participation any individuals or entities convicted of a program-
related crime or patient abuse or neglect. These mandatory exclusions
must be imposed for a minimum 5-year period.
Permissive exclusions. In addition, section 1128(b) sets forth a
variety of sanction authorities all of which are permissive authorities
that do not
[[Page 47183]]
necessarily mandate an action by the Department. Prior to recent
statutory changes discussed below, a conviction relating to the
delivery of a health care item or service that was not program-related,
whether a felony or a misdemeanor, served as grounds for a permissive
exclusion only. A number of these authorities are ``derivative''
exclusions, based on actions previously taken by a court, or other law
enforcement or regulatory agencies. For example, these exclusions have
been based on convictions for fraud, theft, financial misconduct and
controlled substance violations, as well as license suspensions and
revocations, and sanctions by other health agencies. Other permissive
exclusions are ``non-derivative'' exclusions, that is, they are based
on OIG-initiated determinations of misconduct that relate to such
matters as quality of care and access of information. There were no
specified minimum periods of exclusion under these permissive exclusion
authorities, with the exception of the exclusion for failure to grant
``immediate access'' under section 1128(b)(12) of the Act.
These authorities have provided for the imposition of an exclusion
from the Medicare (title 18), Medicaid (title 19), Maternal and Child
Health Service Block Grant (title 5) and Block Grants to States for
Social Services (title 20) programs, and are codified in 42 CFR parts
1001 and 1002 of the OIG regulations.
B. The Health Insurance Portability and Accountability Act of 1996
In the first significant amendments to the OIG's exclusion
authorities since MMPPA, the Health Insurance Portability and
Accountability Act (HIPAA) of 1996, Public Law 104-191, contains many
important improvements to the laws that are intended as major steps
towards the elimination of health care fraud and abuse. Among other
things, HIPAA revises and strengthens the OIG's current sanction
authorities pertaining to exclusions from Medicare and the State health
care programs. Specifically, HIPAA broadens the OIG's mandatory
exclusion; and establishes a new permissive exclusion applicable to
individuals with ownership or control interest in sanctioned entities.
The revisions to the OIG's sanction authorities regarding our
mandatory exclusion authority and the permissive exclusion authorities
related to fraud under section 1128(b)(1) of the Act are effective upon
enactment; the amendments regarding the minimum exclusion period and
the permissive exclusion of individuals with ownership or control
interest are effective on January 1, 1997. The provisions do allow,
however, the Department some policy discretion in their implementation.
As a result, we are developing this proposed rulemaking to address
these new statutory provisions, along with other technical revisions to
the OIG's exclusion authorities codified in 42 CFR parts 1000, 1001,
1002 and 1005.
II. Provisions of the Proposed Rule
A. Mandatory OIG Exclusion From Participation in the Medicare and State
Health Care Programs
Section 211 of HIPAA has expanded the minimum 5-year mandatory
exclusion authority of the OIG to cover any felony conviction under
Federal, State or local law relating to health care fraud, even if
governmental programs were not involved. Felony convictions relating to
controlled substances are also the basis for a mandatory exclusion. The
expanded mandatory exclusion provisions serve to recognize the
seriousness of such felony convictions and ensure that beneficiaries of
the Medicare and State health care programs are well protected from
dealing with such individuals and entities. Section 211 still provides
the Secretary with discretionary authority to exclude those individuals
and entities from Medicare and State health care programs who have been
convicted of a misdemeanor criminal health care fraud offense or who
have been convicted of a criminal offense relating to fraud, theft,
embezzlement, breach of fiduciary responsibility or other financial
misconduct in programs (other than health care programs) funded by any
Federal, State or local agency.
In accordance with section 211 of HIPAA, we would revise
Sec. 1001.101 of our regulations by adding new paragraphs (c) and (d)
to address the mandatory provisions set forth in sections 1128a(3) and
1128a(4) of the Act. In terms of the scope of this provision, in order
to appropriately restrict the imposition of these mandatory exclusions
to only individuals and entities who might reasonably be expected to
have future contact with Medicare, the State health care programs or
other health care programs or systems, we are also proposing in
Secs. 1001.101(d) and 1001.401(a) to limit the applicability of this
provision to any individual or entity that: (1) Is or has ever been a
health care practitioner, provider or supplier; (2) holds or has held a
direct or indirect ownership or control interest, as defined in section
1124(a)(3) of the Act, in an entity that is a health care provider or
supplier; or (3) is or has ever been an officer, director, agent or
managing employee, as defined in section 1126(b) of the Act, of such an
entity, or is or has ever been employed in any capacity in the health
care industry. A conforming change to our regulations at
Sec. 1001.102(b)(1), consistent with the sections 1128(a)(3) 1128(a)(4)
of the statute, would also be made to reference any fraudulent acts--
including theft, breach of fiduciary responsibility or other financial
misconduct--committee in other governmental programs as a basis for an
exclusion by the OIG from Medicare and the State health care programs.
The section heading for Sec. 1001.201 would be revised to read as
``Conviction relating to fraud'' to indicate that this authority is not
just relating to program and health care fraud. The section heading for
Sec. 1001.401 would be revised to read as ``Misdemeanor conviction
relating to controlled substances.''
B. Establishment of Minimum Periods of Exclusion for Certain Permissive
Exclusions
The absence of a statutorily required minimum exclusion period for
permissive exclusions has resulted in an exceptional amount of
administrative litigation over the issue of the length of exclusion in
these cases. Since the reasonableness of the length of exclusions
imposed is the single most litigated issue, this has required
significant agency resources in each instance to defend the exclusion
period imposed by the OIG. Section 212 has established minimum periods
of exclusion from 1 to 3 years for permissive exclusions from the
Medicare and State health care programs.
For (1) convictions of misdemeanor criminal health care fraud
offenses, (2) criminal offenses relating to fraud in non-health care
Federal or State programs, (3) convictions relating to obstruction of
an investigation of health care fraud and (4) convictions of
misdemeanor offenses relating to controlled substances, section 212 of
HIPAA has established a minimum period of exclusion of 3 years, unless
the Secretary determines that a longer or shorter period is appropriate
due to aggravating or mitigating circumstances.
For permissive exclusions from Medicare and the State health care
programs as a result of revocation, surrender or suspension of an
individual's or entity's health care license, section 212 establishes a
minimum exclusion period that would be not less than the period during
which the individual's or entity's license was
[[Page 47184]]
revoked or suspended. Likewise, for permissive exclusions due to a
suspension or exclusion from other Federal health care programs (such
as CHAMPUS or the Veterans' Administration) or other State health care
programs for reasons bearing on an individual's or entity's
professional competence, professional performance or financial
integrity, section 212 of HIPAA also establishes a minimum period of
exclusion of not less than the period the individual or entity is
excluded or suspended from that Federal or State health care program.
As indicated above, this statutory provision is effective for any
exclusion imposed or proposed by the OIG on or after January 1, 1997.
In addition, section 212 establishes a minimum of a 1-year period
of exclusion for (1) individuals or entities who are found to have
submitted (or caused to be submitted) claims for excessive charges, or
who furnished (or caused to be furnished) unnecessary items or
services; or (2) health maintenance organizations (as defined by
section 1903(m) of the Act), or entity under a waiver established by
section 1915(b)(1) of the Act, that are found to have failed to provide
medically necessary items and services. The establishment of these
minimum exclusion periods will aid to conserve governmental resources
by reducing the amount of litigation and will foster more consistency.
Consistent with these statutory amendments, we would revise
Secs. 1001.701(d)(1) and 1001.801(c)(1) to add that with regard to the
length of exclusion under these authorities, in no case may the period
be shorter than one year. Furthermore, we would also revise
Sec. Sec. 1001.501 and 1001.601 to state that the length of exclusion
under this authority will never be for a period of time less than the
period during which the individual or entity is excluded from that
Federal or State health care program.
C. Permissive Exclusions of Individuals With Ownership or Control
Interest in Sanctioned Entities
Prior to HIPAA, section 1128(b)(8) of the Act permitted the
Secretary to exclude an entity when a convicted individual had an
ownership, control or agency relationship with such entity. However, if
an entity, rather than an individual, was convicted of Medicare or
State health care program fraud, the OIG did not have the authority to
exclude the individuals(s) who owned or controlled the entity and who
may, in fact, have been responsible for the fraud. This created an
obvious loophole whereby an individual who was indicted for fraud along
with a business entity owned or controlled by that individual could
avoid program exclusion by agreeing to have the business entity plead
guilty and pay the fines. Having avoided conviction, the individual was
then free to form a new corporation and continue to participate in the
health care programs.
Section 213 of HIPAA has now expanded the statute by adding a new
permissive exclusion authority (section 1128(b)(15) of the Act)
applicable to individuals who have an ownership interest in, or have
significant control over the operations of, an entity that has been
convicted of a program-related offense. Specifically, under this
provision, an individual who has a direct or indirect ownership or
control interest in a sanctioned entity and who knows, or should know,
of the action constituting the basis for the conviction or exclusion,
may also be excluded from participation in Medicare and the State
health care programs if the entity has been convicted of an offense
under sections 1128(a) or 1128 (b)(1) through (b)(3) of the Act, or
otherwise excluded from program participation. Under this authority,
the culpable individual is also subject to program exclusion even if
not initially convicted or excluded.
Accordingly, we would add a new Sec. 1001.1051, Exclusion of
individuals with ownership or control interest in sanctioned entities,
to reflect the new statutory authority. Consistent with the statute,
under this regulatory authority the OIG would need to demonstrate that,
in the case of an investor, the individual acted in deliberate
ignorance of the offense constituting the sanctionable action. In the
case of an officer or managing employee of the business entity, the OIG
will not need to demonstrate such knowledge. Under proposed
Sec. 1001.1051, when the entity has been excluded, the length of the
individual's exclusion would be for the same period as that of the
sanctioned entity with which the individual has had the prohibited
relationship. Consistent with statutory intent, we are defining the
term ``sanctioned entity'' under this section to mean an entity that
has been convicted of any offense under Secs. 1001.101 through 1001.104
of these regulations, or that has been terminated or excluded from
participation in Medicare or a State health care program. Thus, under
this authority, when an entity is no longer reimbursed under Medicare
or the State health care programs as a result of a termination or
exclusion by the Department, the owners of the entity will be subject
to an exclusion as well.
In a conforming change, we also propose to revise Sec. 1001.3002 by
adding a new paragraph to clarify that if the specified criteria of
this section are met, an individual excluded in accordance with the new
proposed Sec. 1001.1051 would be reinstated only upon an OIG
determination that the excluded entity upon which the individual's
exclusion was based has been reinstated in accordance with
Secs. 1001.3002(a) or 1001.3005.
D. Technical and Conforming Regulatory Revisions
In addition to the changes to the OIG regulations at 42 CFR parts
1001 and 1002 to comply with the revised sanction provisions set forth
in HIPAA, we are proposing a number of technical and conforming
regulatory changes in accordance with the HIPAA. Specifically, under
the new statute, the OIG has been delegated authority for 3 new
authorities referenced in Public Law 104-191--sections 1128 (a)(3) and
(a)(4) and 1128 (b)(15) of the Act. As a result, technical and
conforming changes to the OIG regulations are necessary. In addition,
several minor conforming changes are also being proposed to correct
omissions from previous regulatory issuances, and to clarify and expand
the applicability of the existing regulations. A limited number of
policy decisions are being proposed that relate to the clarification of
(1) The definition of the term ``furnished;'' (2) the OIG's exclusion
authority under section 1128(a)(2) of the Act concerning patient
neglect and abuse convictions; (3) time limits on payments to suppliers
for services by excluded providers; (4) when a reinstatement request
will be received in accordance with an OIG exclusion taken under
section 1128(b)(5) of the Act; and (5) terms ``incarceration'' and
``patient.''
Section 1000.10, General definitions: We would clarify the current
definition of the term ``furnished'' to indicate that exclusions will
apply to any individual or entity that provides or supplies items or
services, directly or indirectly. When an individual or entity is
excluded from Medicare and the State health care programs, the effect
of the exclusion is that the programs may not pay for items and
services furnished by that excluded individual or entity. The OIG has
the authority--and sometimes the obligation when a mandatory exclusion
is appropriate--to impose an exclusion on individuals or entities when
the statutory requirements of section 1128 of the Act are met,
regardless of whether (1) The individual or entity is paid by the
programs directly or (2) the items or
[[Page 47185]]
services provided by the individual or entity are reimbursed by the
programs indirectly through the submission of claims by a third party
who is a direct provider, supplier or practitioner. In the past, we
have elected not to exercise this authority in the case of
manufacturers or distributors that do not submit claims for the items
they provide because of concern that it would be difficult to
administer exclusions against such entities are not reimbursed directly
by the Department. At this time, the OIG is proposing to change this
approach by exercising the authority given to us and clarifying the
existing definition for ``furnished.''
Notwithstanding the difficulty in monitoring and administering
exclusion against so-called ``indirect'' providers--such as
manufacturers and distributors of drugs, medical devices and other
items of durable medical equipment reimbursable under Medicare and the
State health care programs--the OIG has determined that an exception
for indirect providers and suppliers is not appropriate as a matter of
policy. As a result, in clarifying the definition for the term
``furnished,'' we would make clear that exclusions of indirect
providers will be imposed when appropriate, and that the effect of such
exclusions will be that no payment may be made to any direct provider,
practitioner or supplier for items or services manufactured,
distributed or otherwise provided by any excluded individual or entity.
Section 1001.2, Definitions: Throughout part 1001, the current
regulations list various aggravating factors to be considered as a
basis for lengthening a period of exclusion. One aggravating factor in
all instances when the exclusion is based on a conviction is whether
the sentence imposed by the court included incarceration. Because many
white collar criminals are not actually placed in jails, there has been
some uncertainty over what incarceration entails. Consistent with
Federal sentencing guidelines, we are proposing to add a definition in
Sec. 1002 for the term ``incarceration'' to include imprisonment or any
type of confinement with or without supervised release. This would
include, but would not be limited to, a correctional facility or other
community confinement (such as a work release center), as well as house
arrest and home detention.
We are proposing a new definition for the term ``patient'' to
include any individual who is receiving health care items or services,
including any item or service provided to meet his or her physical,
mental or emotional needs, whether or not the item or service is
reimbursed under Medicare or a State health care program and regardless
of the location in which it is provided. We are concerned that the term
``patient'' has been narrowly defined in some instances to restrict its
meaning to only an individual in a traditional medical care setting or
within a traditional physician/patient relationship. We believe that
the statute intended to prohibit neglect and abuse of all individuals
receiving health care items and services regardless of the caretaker or
the location within which the items or services are provided.
We are also proposing two changes to the existing definition of the
term ``exclusion.'' To conform to the statutory language set forth in
MMPPPA, Public Law 100-93, we are adding the words ``ordered or
prescribed'' to indicate that items and services will not be reimbursed
under Medicare and the State health care programs when furnished,
ordered or prescribed by a specified individual or entity (underlining
added). Under this definition, we are also codifying current OIG policy
to indicate that even after an exclusion has expired, the individual or
entity will not be eligible for program reimbursement until they are
formally reinstated by the OIG.
A revision to the term ``sole source of essential specialized
services in the community'' is also being proposed to indicate that it
is a health professional shortage area (formally known as a health man
power shortage area); and that this designation is now made by the
Health Resources Services Administration, and not the Public Health
Service. A proposed change under the term ``professionally recognized
standards of health care'' would remove the specific references to the
``Food and Drug Administration,'' the ``Health Care Financing
Administration'' (HCFA) and the ``Public Health Service,'' and
substitute ``the Department'' as the entity in general who may declare
a particular treatment modality as not being safe and effective.
Section 1001.101, Basis for liability: We are proposing to revise
paragraph (b) to clarify the scope of the term ``neglect or patient
abuse'' to indicate that it covers both the individual's custodial as
well as medical treatment. In recent years, we have been seeing more
cases arise from abuse and neglect in residential settings where the
abused or neglected individual is not referred to as a ``patient.''
Further, the individual may not be receiving strictly medical care
treatment, but rather may be provided with custodial care, such as
ensuring that medicines are taken and meals are prepared. In
implementing the OIG's exclusion authorities, administrative law judges
(ALJs) have varied in their interpretation of the statute and have not
developed a consistent standard for defining a patient and patient
abuse. In order to provide consistent protection for all individuals
similarly situated, notwithstanding the variations of State law, we are
proposing to revise the regulations to indicate that the delivery of a
health care service includes the provision of any items or services to
an individual designed to meet their physical, mental or emotional
needs or well-being, whether or not reimbursed under Medicare or a
State health care program.
Section 1001.102, Length of exclusion: We are proposing to add a
new factor that may be considered aggravating and therefore a basis for
lengthening the exclusion period. In order to help distinguish between
more egregious and less egregious cases involving patient abuse, we
propose to include a new Sec. 1001.102(b)(4) to provide that in the
case of any conviction involving patient abuse or neglect, we will
consider whether the action that resulted in the conviction (1) was
premeditated, (2) was part of a continuing pattern of behavior, or (3)
consisted of non-consensual sexual acts.
In addition, we are proposing an additional aggravating factor for
consideration in Sec. 1001.102 and elsewhere throughout part 1001 (see
Secs. 1001.201(b)(2)(vi), 1001.301(b)(2)(vi), 1001.401(c)(2)(v),
1001.501(b)(2)(iv), 1001.601(b)(2)(iii), 1001.701(d)(2)(v),
1001.801(c)(2)(v), 1001.901(b)(4), and 1001.951(b)(1)(iv). The proposed
factor specifically relates to any other adverse action taken by any
other Federal, State or local government agency or board based on the
same set of circumstances that is serving as the basis for imposition
of the exclusion. This additional factor is consistent with ALJ
decisions regarding aggravating factors and the length of exclusion.
Further, Sec. 1001.102(b) and the other sections referenced above,
as currently written, do not allow the OIG to increase the length of
exclusion if an individual or entity was convicted of other offenses at
the same time as he or she was convicted of the offense that served as
the basis for the exclusion. For example, this aggravating factor
permits the OIG to increase the length of exclusion when the individual
convicted of Medicare fraud has a prior drug conviction or income tax
evasion conviction. However, if the individual is simultaneously
convicted of Medicare fraud and any other offense, such as drug
distribution or income tax evasion, there is currently no aggravating
factor
[[Page 47186]]
that permits the OIG to consider the additional conviction or
convictions. We believe it is not sensible to factor in conduct or
wrongdoing that occurred in the past to demonstrate that an individual
or entity lacks trustworthiness, but not to give as much weight to more
recent conduct. To address this problem and allow greater flexibility
to the OIG, we are proposed to amend Sec. 1001.102(b) to indicate that
in determining the length of exclusion, the OIG will consider whether
the individual or entity (1) was convicted of other offenses besides
those which formed the basis for the exclusion, or (2) has a documented
history of criminal, civil or administrative wrongdoing. This would
permit the OIG to consider any conviction prior to, concurrent with or
subsequent to the conviction upon which the exclusion is based.
(Parallel changes would be made, as applicable, throughout part 1001 in
Secs. 1001.201(b)(2), 1001.301(b)(2), 1001.401(c)(2), 1001.501(b)(2),
1001.601(b)(2), 1001.701(d)(2), 1001.801(c)(2), 1001.901(b),
1001.951(b)(1), 1001.1101(b), 1001.1201.(b), 1001.1301(b)(2),
1001.1401(b), 1001.1601(b)(1) and 1001,1701(c)(1).)
In addition to these aggravating factors, we are also proposing to
include in Sec. 1001.102(c)(3) (as well as in
Secs. 1001.201(b)(3)(iii), 1001.301.(b)(3)(ii), 101.401(c)(3)(i),
1001.501(b)(3)(i) and 1001.601(b)(3)(ii)) a new mitigating factor that
would take into account whether the cooperation of an individual or
entity resulted in additional cases being investigated, or reports
being issued, by the appropriate law enforcement agency identifying
program vulnerabilities or weaknesses. This new mitigating factor would
only be taken into consideration in those situations where the law
enforcement agency validated the person's information by opening up a
case or by writing a report where, for example, a system vulnerability
to HCFA or other program agency is identified and a solution
recommended. We believe that the inclusion of this additional
mitigating factor would (1) encourage greater cooperation by
individuals and entities, and (2) afford the OIG greater flexibility in
identifying and addressing issues related to program waste, fraud and
abuse.
Section 1001.501, License revocation or suspension: Consistent with
and to conform to the new statutory authority, we would delete
paragraph (c) of Sec. 1001.501, currently setting forth exceptions
related to the length of exclusion for license revocation or
suspension.
Section 1001.601, Exclusion or suspension under a Federal or State
health care program: Prior to HIPAA, Sec. 1001.601 set forth both
mitigating and aggravating factors that are to be considered in
determining the length of exclusion under this authority. To conform
with the statute, we would revise paragraph (b)(3) of this section to
indicate that with the establishment of a base exclusion period under
this authority, mitigating factors may only be considered if
aggravating factors exist that would justify a longer exclusion beyond
the base period.
We are also proposing to clarify OIG policy and correct an
inadvertent inconsistency that exists in the language set forth in
Sec. 1001.601(b)(4). The current paragraph states that ``[t]he OIG will
normally not consider a request for reinstatement * * * until the
period of exclusion imposed by the OIG expires.'' This language has
created a problem for these OIG exclusions which are based entirely on
State-imposed exclusions, and which must continue until the State
exclusion ends. Since the law requires the Medicaid program to exclude
for the same period as Medicare, this has resulted in a loop that makes
it technically impossible for either the OIG of the State to end the
exclusion except by an arrangement to do so simultaneously.
Specifically, in many instances, a State is prepared to reinstate an
individual or entity but is unable to do so because of the existing
Medicare exclusion that the OIG has imposed in as a result of the
original State Action. To solve this problem, we are proposing to
revise paragraph (b)(4) of this section to state that if an individual
or entity is eligible to apply for reinstatement, and the sole reason
that the State has denied reinstatement is that the existing exclusion
under Medicare imposed by the OIG is still in effect, the OIG will
consider a request for reinstatement.
Section 1001.701, Excessive claims or furnishing of unnecessary or
substandard items or services: In an effort to more clearly define the
scope of an action under section 1128(b)(6) of the act, we are
proposing to revise paragraph (a)(1) of this section to further clarify
to whom an individual's or entity's excess charges or costs apply. The
revised language would indicate that the OIG may exclude an individual
or entity that has submitted, or caused to be submitted, bills or
requests for Medicare or State health care program payments that
contain charges or costs that are substantially in excess of their
usual charges or costs for items or services furnished to any of their
customers, clients or patients. We specifically welcome comments on
this OIG policy clarification.
Section 1001.953, OIG report on compliance with investment interest
safe harbor: We would delete this section since the time frame being
reflected in this section is no longer operative. The current language
stipulates that an OIG report to the Secretary be prepared within 180
days of the effective date addressing the investment interest safe
harbor provisions. Those provisions were published as part of a final
rulemaking (56 FR 35952, July 29, 1991) became effective upon the date
of its publication. The report was not prepared for several reasons.
The overriding reason for not issuing this report within the stipulated
time frame was that it was not practical to effectively study this
subject area until health care businesses had the opportunity to alter
their practices to take advantage of this safe harbor. By the time a
study might appropriately have been undertaken, this subject was
superseded to a large degree by the enactment of section 1877 of the
Act.
Section 1001.1001; Exclusion of entities owned or controlled by a
sanctioned person: Questions have been raised regarding the legitimacy
of the transfer of health care entities from excluded individuals to
their spouses, and the circumstances under which such a transfer should
constitute divestment of ownership and control of the entity by the
excluded individual, and should thus preclude exclusion of the entity
under Sec. 1001.1001. In an effort to reiterate and emphasize existing
OIG policy on this matter, we are proposing to revise the definition
set forth in Sec. 1001.1001(a)(2) for the term ``agent.'' This policy
was clearly enunciated in the preamble of the final regulations
implementing amendments to the OIG's exclusion authorities resulting
from Public Law 100-93 (57 FR 3309, January 29, 1992), and we are now
proposing to codify it in regulations.
Section 1001.1901, Scope and effect of exclusion: Some individuals
and entities have mistakenly believed that merely obtaining a program
provider number would automatically result in their reinstatement back
into the programs. This has never been the case; an individual or
entity must formally be reinstated by the OIG in order to again
participate in the Medicare and State health care programs. We would
revise paragraph (b)(1) of this section, regarding the effect of an
exclusion on excluded individuals and entities, to specifically clarify
existing OIG policy that an excluded individual or entity
[[Page 47187]]
continues to be excluded until officially reinstated by the OIG,
regardless of whether he, she or it has obtained a program number--
either as an individual or as a member of a group--prior to their being
reinstated for program participation. (A similar clarification would be
made in Secs. 1001.3001(a)(1) and 1001.3002(a) to indicate that the
obtaining of a program provider number does not in and of itself
reinstate eligibility for an entity or an individual, either as a
single person or as a member of a group.) The word ``person'' appearing
in the first sentence of paragraph (b)(1) would be revised to read as
``individual or entity.''
In addition, we would revise paragraph (b)(3) of this section to
clearly indicate that submitting claims, or causing claims to be
submitted or payment to be made by the programs for items or services
that were furnished, ordered or prescribed by the excluded individual
or entity--including any administrative and management services or
salaries--may serve as the basis for denying the individual's or
entity's reinstatement back into the programs. The addition of this
language would serve to more clearly define what an excluded individual
or entity can do, and would codify and re-enforce existing OIG policy
that is currently contained in the exclusion notice letters sent to
individuals and entities.
We are also proposing to add a new Sec. 1001.1901(c)(4) that serves
to codify the current HCFA policy with regard to payment to suppliers
for claims after notice of an excluded provider's exclusion.
Specifically, we would reiterate that HCFA will not pay for any claims
submitted by, or for items or services ordered or prescribed by, an
excluded provider for dates of service 5 days or more after the date
that notice of the provider's exclusion was mailed by the contractor to
the supplier.
Section 1001.2001, Notice of intent to exclude: We propose to
delete existing paragraph (b) of Sec. 1001.2001. The language currently
states that if the OIG proposes to exclude an individual or entity in
accordance with Sec. 1001.701 or 1001.801, the individual or entity may
submit a written request to present evidence or argument orally to the
OIG. In eliminating the in-person hearing on these cases, the
individual or entity would still have the opportunity to submit
additional material for review to the OIG. The vast majority of cases
for proposed exclusion are medical in nature, and while the OIG
contracts for the review of medical records and related material, we do
not retain an in-house medical review officer that would be readily
accessible to hear and review such submitted material. We believe this
existing provision does not represent an effective use of time and
current OIG resources, and are therefore proposing to delete this
language. This change would not diminish due process since the
individual or entity retains the ability to challenge the OIG's
proposed exclusion.
Section 1001.2002, Notice of exclusion: We are proposing to amend
this section by adding a new paragraph (e) indicating, consistent with
existing OIG policy, that the notice letter to the affected individual
or entity could be amended should any additional information come to
our attention or wrongdoing occur subsequent to the issuance of the
initial notice letter. We are also proposing to make a similar
clarifying change in Sec. 1005.15 by revising paragraph (f) to
explicitly state that, with certain exceptions, additional items or
information--including any aggravating and mitigating circumstances
that arose or became known subsequent to the issue of the notice
letter--may be introduced by either party.
Section 1001.2003, Notice of proposal to exclude: A discrepancy
currently existing between the language in Sec. 1001.2003(a)--
indicating that an exclusion is effective 60 days after the date of
notice, unless an individual or entity files a written request for a
hearing--and the language set forth in Sec. 1005.2(c)--that a request
for a hearing is to be filed 60 days after the notice letter is
received by the respondent, which is presumed to be 5 days after the
date of the notice unless there is a reasonable showing to the
contrary. To be consistent in our language and intent, we would revised
Sec. 1001.2003(a) to reference the language and procedure set forth in
Sec. 1005.(c). i.e., that a request for a hearing be made 60 days after
service of the notice letter.
Section 1001.2005, Notice to State licensing agencies: We propose
deleting paragraph (b) of this section. While the regulations would
still indicate that the Department will notify the appropriate State or
local agencies or authorities responsible for licensing or
certification of the circumstances leading to an individual's or
entity's exclusion, we do not want to be locked into a specific
notification process if alternative methods can be considered for
notifying provider licensing and certification boards.
Section 1001.2006, Notice to others regarding exclusion: Section
221 of HIPAA established a new national health care fraud and abuse
data collection program for the reporting of final adverse actions
against health care providers, suppliers and practitioners. As a
result, we would revise Sec. 1001.2006(a) to indicate that, in addition
to the general public and program beneficiaries, the Department will
not also provide notice of the exclusion and its effective date to the
new Adverse Action Data Bank.
Section 1001.3001, Timing and method of request for reinstatement:
Because there has been some misunderstanding as to when an exclusion
period ends, in addition to clarifying that the act of obtaining a
provider number does not reinstate program eligibility (see discussion
of Sec. 1001.1901 above), we would also revise paragraphs (1) (a) and
(b) to indicate that an excluded individual or entity (other than those
excluded in accordance with Secs. 1001.1001, 1001.1051 and 1001.1101)
may submit a request for reinstatement to the OIG only after the
minimum period of exclusion specified in the notice of exclusion has
expired. A conforming change would also be made in
Sec. 1001.3002(a)(1).
Section 1001.3002, Basis for reinstatement: Section 214(b) of HIPAA
has amended the statute by indicating that in making a determination on
whether to sanction a practitioner or other person--based on a
recommendation from a Peer Review Organization (PRO)--for failing to
comply with statutory obligations relating to quality and medical
necessity of health care services, the Department will no longer to be
required to prove that the practitioner or other person was either
unwilling or unable to comply with such obligations. While this
statutory change is being addressed through separate rulemaking
addressing the PRO sanctions process and changes to part 1004 of our
regulations, we would make a conforming change to paragraph (b) of
Sec. 1001.3002 to delete the ``unwillingness and inability'' factor as
a basis for consideration by the OIG in making a reinstatement
determination.
Section 1002.3, Disclosure by providers; information on persons
convicted of crimes: Under part 1002, which addresses State-initiated
exclusions from the Medicaid program, we would revise Sec. 1002.3(b) to
codify in regulations as new paragraph (b)(3) concerning Medicaid State
agency requirements for notification to the OIG. Specifically, the new
paragraph would clearly state that the Medicaid agency is required to
promptly notify the OIG of any and all actions it takes to limit the
individual's or entity's ability to participate in its program. Th is
would include, but would not be limited to: (1)
[[Page 47188]]
Suspension actions, (2) settlement agreements and (3) situations where
the individual or entity may have voluntarily agreed to withdraw from
the program in order to avoid a formal sanction action.
III. Regulatory Impact Statement
Executive Order 12866 and Regulatory Flexibility Act
The Office of Management and Budget (OMB) has reviewed this
proposed rule in accordance with the provisions of Executive Order
12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and has
determined that it does not meet the criteria for a significant
regulatory action. Executive Order 12866 directs agencies to assess all
costs and benefits of available regulatory alternatives and, when
rulemaking is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health, safety distributive and equity effects). In addition, under the
Regulatory Flexibility Act, if a rule has a significant economic effect
on a number of small businesses the Secretary must specifically
consider the economic effect of a rule on small business entities and
analyze regulatory options that could lessen the impact of the rule.
The provisions set forth in this proposed rulemaking, for the most
part, implement statutory requirements, and are designed to lengthen
and broaden the scope of the OIG's authority to include individuals and
entities from the Medicare and the State health care programs. As
indicated above, these provisions would implement the new statutory
requirements regarding the period of exclusion for some individuals and
entities by: (1) Broadening the minimum 5-year mandatory exclusion
authority to cover felony convictions under Federal, State or local law
relating to health care fraud, and (2) establishing minimum periods of
exclusion for certain permissive exclusions. We believe that the number
of individuals and entities effected by this lengthening of exclusions
would be minimal.
Further, while the provisions in this rule serve to clarify the
OIG's sanction authorities by (1) Establishing a new permissive
exclusion applicable to individuals having majoring ownership interest
in (or significant control over the operations of) an entity convicted
of a program-related offenses; (2) clarifying what would constitute
patient abuse or neglect for purposes of exclusion; and (3) setting
forth a definition for ``furnished'' that would apply to individuals
and entities that provide or supply items or services directly or
indirectly, we likewise believe the increase in the number of exclusion
cases will be small. Specifically, while the statutory requirement to
impose exclusions in cases of certain types of convictions has been
broadened in sections 1128 (a)(3) and (a)(4) of the Act, the process
for excluding individuals and entities who are convicted in accordance
with the new requirements remains essentially the same. Cases to be
processed under the new mandatory provisions set forth in sections 1128
(a)(3) and (a)(4) for the minimum mandatory 5-year exclusion were
previously processed under the permissive authority provisions in
sections 1128 (b)(1) and (b)(3) of the Act, with a benchmark of 3
years. As a result, while there may be minor increases in the number of
mandatory exclusions imposed, we see no significant increase or
decrease in the number of these cases. Similarly, the clarification of
what constitutes patient neglect or abuse should not result in a
significant increase in the number of cases under section 1128(a)(2) of
the Act, but merely support prior findings of abuse and neglect while
delivering health care services.
In addition, we do not anticipate a significant workload resulting
from the implementation of section 1128(b)(15) of the Act, and proposed
Sec. 1001.1051 of these regulations, as the requirements for
effectuating this authority are rather stringent at the present time,
and will limit the number of exclusions to be implemented under this
authority.
Since the vast majority of individuals, organizations and entities
addressed by these regulations do not engage in such prohibited
activities and practices, we believe that any aggregate economic effect
of these revised exclusion regulations will be minimal, affecting only
those limited few who engage in prohibited behavior in violation of the
statute. As such, this proposed rule should have no significant
economic impact. Similarly, while some sanctions may have an impact on
small entities, it is the nature of the violation and not the size of
the entity that will result in an action by the OIG. We believe that
the aggregate economic impact of this rulemaking should be minimal,
affecting only those limited few who have chosen to engage in
prohibited arrangements, schemes or practices in violation of statutory
intent. Therefore, we have concluded, and the Secretary certifies, that
this proposed rule would not have a significant economic impact on a
number of small business entities, and that a regulatory flexibility
analysis is not required for this rulemaking.
Paperwork Reduction Act
Section 1002.3 of this rulemaking contains information collection
requirements that require approval by OMB. We are required to solicit
public comments under section 3506(c)(2)(A) of the Paperwork Reduction
Act of 1995. Specifically, we are inviting comments on (1) whether the
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (2) the accuracy of the estimate of the burden
of the collection of information; (3) ways to enhance the quality,
utility and clarity of the information collected; and (4) ways to
minimize the burden of the collection of information on practitioners
and other persons, including through the use of automated collection
techniques or other forms of information technology.
Title: Information on persons convicted of crimes.
Summary of the collection of information: In order to effectuate
the requirements of section 1128(b)(5) of the Social Security Act,
authorizing the OIG to exclude individuals and entities that are
sanctioned by a Federal or State agency (including State Medicaid
agencies), a State Medicaid agency must promptly notify the OIG of any
action it takes to limit an individual's or entity's participation in
Medicaid. To implement this statutory authority, we are clarifying in
Sec. 1002.3 of the regulations the scope of conduct constituting a
basis for State Medicaid notice of denials of participation or
imposition of a sanction. Specifically, under section 1902(a) (39) and
(41) of the Social Security Act, State agencies are required to notify
the Secretary when a provider has been denied participation status in
Medicaid, or has been terminated, suspended or ``otherwise sanctioned''
under the Medicaid program. We are clarifying what actions fall within
the ambit of these provisions. The reporting obligation set forth in
Sec. 1002.3 is consistent with the requirements of the statute.
Respondents: The ``respondents'' for the collection of information
described in Sec. 1002.3 are the individual State Medicaid agencies.
Estimated number of respondents: The OIG annually receives
approximately 500 notifications from State Medicaid agencies regarding
actions taken against an individual or entity. While we are
specifically clarifying that these actions are to
[[Page 47189]]
include any suspension actions, settlement agreements and situations
where an individual or entity voluntarily withdraws from the program to
avoid a formal sanction, we believe that the number of actions reported
by the State agencies to the Secretary will remain low.
Estimated number of responses per respondent: 1.
Estimated total annual burden on respondents: We believe that the
burden on the State Medicaid agencies in preparing the notification to
the OIG will be minimal. We estimate that the average burden for each
submitted notification to the OIG will be less than one-half hour. The
total burden for this information collection activity is estimated not
to exceed 250 hours annually.
Comments on these information collection activities should be sent
to both:
Cynthia Agens Bauer, OS Reports Clearance Officer, ASMB Budget Office,
Room 503-H, Humphrey Building, 200 Independence Avenue, S.W.,
Washington, D.C. 20201, FAX: (202) 690-6352
Allison Herron Eydt, OIG Desk Officer, Office of Management and Budget,
Room 10235, New Executive Office Building, 715 17th Street, N.W.,
Washington, D.C. 20053, FAX: (202) 395-6974
Comments on these paperwork reduction requirements should be
submitted to the above individuals within 60 days following the Federal
Register publication of this proposed rule.
List of Subjects
42 CFR Part 1001
Administrative practice and procedure, Fraud, Health facilities,
Health professions, Medicaid, Medicare.
42 CFR Part 1002
Fraud, Grant programs--health, Health facilities, Health
professions, Medicaid, Reporting and recordkeeping.
42 CFR Part 1005
Administrative practice and procedure, Fraud, Penalties.
Accordingly, 42 CFR Parts 1000, 1001, 1002 and 1005 would be
amended as set forth below:
A. Part 1000 would be amended as follows:
PART 1000--[AMENDED]
1. The authority citation for part 1000 would continue to read as
follows:
Authority: 42 U.S.C. 1320 and 1395hh.
2. Section 1000.10 would be amended by republishing the
introductory paragraph and by revising the definition for the term
Furnished to read as follows:
Sec. 1000.10 General definitions.
In this chapter, unless the context indicates otherwise--
* * * * *
Furnished refers to items or services provided or supplied,
directly or indirectly, by any individual or entity. This includes
items and services manufactured, distributed or otherwise provided by
individuals or entities that do not directly submit claims to Medicare
or State health care programs, but that supply items or services to
providers, practitioners or suppliers who submit claims to these
programs for such items or services.
* * * * *
B. Part 1001 would be amended as follows:
PART 1001--[AMENDED]
1. The authority citation for part 1001 would be revised to read as
follows:
Authority: 42 U.S.C. 1302, 1320a-7, 1320a-7b, 1395u(j),
1359u(k), 1395y(d), 1395y(e), 1395cc(b)(2) (D), (E) and (F), and
1395hh; and sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 U.S.C.
6101 note).
(2) Section 1001.2 would be amended by revising the definitions for
the terms Exclusion, Professionally recognized standards of health
care, and Sole source of essential specialized services in the
community; and by adding definitions for the terms Incarceration and
Patient to read as follows:
Sec. 1001.2 Definitions.
* * * * *
Exclusion means that items and services furnished, ordered or
prescribed by a specified individual or entity will not be reimbursed
under Medicare or the State health care programs until the individual
or entity is reinstated by the OIG.
* * * * *
Incarceration means imprisonment or any type of confinement with or
without supervised release, including, but not limited to, community
confinement, house arrest and home detention.
* * * * *
Patient means any individual who is receiving health care items or
services, including any item or service provided to meet his or her
physical, mental or emotional needs or well-being, whether or not
reimbursed under Medicare or a State health care program and regardless
of the location in which such item or service is provided.
* * * * *
Professionally recognized standards of health care are Statewide or
national standards of care, whether in writing or not, that
professional peers of the individual or entity whose provision of care
is an issue, recognized as applying to those peers practicing or
providing care within a State. When the Department has declared a
treatment modality not to be safe and effective, practitioners who
employ such a treatment modality will be deemed not to meet
professionally recognized standards of health care. This definition
shall not be construed to mean that all other treatments meet
professionally recognized standards.
* * * * *
Sole source of essential specialized services in the community
means that an individual or entity--
(a) Is the only practitioner, supplier or provider furnishing
specialized services in an area designated by the Health Resources
Services Administration as a health professional shortage area for that
medical specialty, as listed in 42 CFR part 5, appendices B-F;
(b) Is a sole community hospital, as defined in Sec. 412.92 of this
title; or
(c) Is the only source of specialized services in a reasonably
defined service area where services by a non-specialist could not be
substituted for the source without jeopardizing the health or safety of
beneficiaries.
* * * * *
3. Section 1001.101 would be revised to read as follows:
Sec. 1001.101 Basis for liability.
The OIG will exclude any individual or entity that--
(a) Has been convicted of a criminal offense related to the
delivery of an item or service under Medicare or a State health care
program, including the performance of management or administrative
services relating to the delivery of items or services under any such
program;
(b) Has been convicted, under Federal or State law, of a criminal
offense related to the neglect or abuse of a patient, in connection
with the delivery of a health care item or service, including any
offense that the OIG concludes entailed, or resulted in, neglect or
abuse of patients (the delivery of a health care item or service
includes the provision of any item or service to an individual to meet
his or her physical, mental or emotional needs or well-being, whether
or not reimbursed under Medicare or a State health care program);
(c) Has been convicted, under Federal or State law, of a felony
that occurred
[[Page 47190]]
after August 21, 1996 relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other misconduct--
(1) In connection with the delivery of a health care item or
service, including the performance of management or administrative
services relating to the delivery of such items or services, or
(2) With respect to any act or omission in a health care program
(other than Medicare or the State health care programs) operated by, or
financed in whole or in part, by any Federal, State or local government
agency; or
(d) Has been convicted, under Federal or State law, of a felony
that occurred after August 21, 1996 relating to the unlawful
manufacture, distribution, prescription or dispensing of a controlled
substance, as defined under Federal or State law. This applies to any
individual or entity that--
(1) Is, or has ever been, a health care practitioner, provider or
supplier;
(2) Holds, or has held, a direct or indirect ownership or control
interest (as defined in section 1124(a)(3) of the Act) in an entity
that is a health care provider or supplier, or is, or has ever been, an
officer, director, agent or managing employee (as defined in section
1126(b) of the Act) of such an entity; or
(3) Is, or has ever been, employed in any capacity in the health
care industry.
4. Section 1001.102 would be amended by revising paragraph (b);
republishing the introductory text of paragraph (c); and revising
paragraph (c)(3) to read as follows:
Sec. 1001.102 Length of exclusion.
* * * * *
(b) Any of the following factors may be considered to be
aggravating and a basis for lengthening the period of exclusion--
(1) The acts resulting in the conviction, or similar acts, resulted
in financial loss to a government program or to one or more entities of
$1,500 or more. (The entire amount of financial loss to such programs
or entities, including any amounts resulting from similar acts not
adjudicated, will be considered regardless of whether full or partial
restitution has been made);
(2) The acts that resulted from in the conviction, or similar acts,
were committed over a period of one year or more;
(3) The acts that resulted in the conviction, or similar acts, had
a significant adverse physical, mental or financial impact on one or
more program beneficiaries or other individuals;
(4) In convictions involving patient abuse or neglect, the action
that resulted in the conviction was premeditated, was part of a
continuing pattern or behavior, or consisted of non-consensual sexual
acts;
(5) The sentence imposed by the court included incarceration;
(6) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing;
(7) The individual or entity has at any time been overpaid a total
of $1,500 or more by Medicare or State health care programs, or other
third-party payers, as a result of improper billings; or
(8) Whether the individual or entity was convicted of other
offenses besides those which formed the basis for the exclusion, or has
been the subject of any other adverse action by any Federal, State or
local government agency or board, even if the adverse action is based
on the same set of circumstances that serves as the basis for
imposition of the exclusion.
(c) Only if any of the aggravating factors set forth in paragraph
(b) of this section justifies an exclusion longer than 5 years, may
mitigating factors be considered as the basis for reducing the period
of exclusion to no less than 5 years. Only the following factors may be
considered mitigating--
* * * * *
(3) The individual's or entity's cooperation with Federal or State
officials resulted in--
(i) Others being convicted or excluded from Medicare or any of the
State health care programs,
(ii) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or
(iii) The imposition against anyone of a civil money penalty or
assessment under part 1003 of this chapter.
5. Section 1001.201 would be amended by revising the section
heading; revising paragraph (a); republishing the introductory text of
paragraph (b)(2), revising paragraphs (b)(2) (iv) and (v), and adding a
new paragraph (b)(2)(vi); and by republishing the introductory text of
paragraph (b)(3) and revising paragraphs (b)(3)(i) and (b)(3)(iii) to
read as follows:
Sec. 1001.201 Conviction relating to fraud.
(a) Circumstance for exclusion. The OIG may exclude an individual
or entity convicted under Federal or State law of--
(1) A misdemeanor relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct--
(i) In connection with the delivery of any health care item or
service, including the performance of management or administrative
services relating to the delivery of such items or services, or
(ii) With respect to any act or omission in a health care program,
other than Medicare or a State health care program, operated by, or
financed in whole or in part by, any Federal, State or local government
agency; or
(2) Fraud, theft, embezzlement, breach or fiduciary responsibility,
or other financial misconduct with respect to any act or omission in a
program, other than a health care program, operated by or financed in
whole or in part by any Federal, State or local government agency.
(b) Length of exclusion. * * *
(2) Any of the following factors may be considered to be
aggravating and a basis for lengthening the period of exclusion--
* * * * *
(iv) The sentence imposed by the court included incarceration;
(v) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
(vi) Whether the individual or entity was convicted of other
offenses besides those which formed the basis for the exclusion, or has
been the subject of any other adverse action by any Federal, State or
local government agency or board, even if the adverse action is based
on the same set of circumstances that serves as the basis for the
imposition of the exclusion.
(3) Only the following factors may be considered as mitigating and
a basis for reducing the period of exclusion--
(i) The individual or entity was convicted of 3 or fewer offenses,
and the entire amount of financial loss to a government program or to
other individuals or entities due to the acts that resulted in the
conviction and similar acts is less than $1,500;
* * * * *
(iii) The individual's or entity's cooperation with Federal or
State officials resulted in--
(A) Others being convicted or excluded from Medicare or any of the
State health care programs,
(B) Additional cases being investigated or reports being used by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or
(C) The imposition of a civil money penalty against others; or
* * * * *
6. Section 1001.301 would be amended by republishing the
[[Page 47191]]
introductory text of paragraph (b)(2); revising paragraphs (b)(2) (iv)
and (v); by adding a new paragraph (b)(2)(vi); by republishing the
introductory text of paragraph (b)(3); and by revising paragraph
(b)(3)(ii) to read as follows:
Sec. 1001.301 Conviction relating to obstruction of an investigation.
* * * * *
(b) Length of exclusion. * * *
(2) Any of the following factors may be considered to be
aggravating and a basis for lengthening the period of exclusion--
* * * * *
(iv) The sentence imposed by the court included incarceration;
(v) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
(vi) Whether the individual or entity was convicted of other
offenses besides those which formed the basis for the exclusion, or has
been the subject of any other adverse action by any Federal, State or
local government agency or board, even if the adverse action is based
on the same set of circumstances that serves as the basis for the
imposition of the exclusion.
(3) Only the following factors may be considered as mitigating and
a basis for reducing the period of exclusion--
* * * * *
(ii) The individual's or entity's cooperation with Federal or State
officials resulted in--
(A) Others being convicted or excluded from Medicare or any of the
State health care programs,
(B) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or
(C) The imposition of a civil money penalty against others; or
* * * * *
7. Section 1001.401 would be amended by revising the section
heading; revising paragraph (a); by republishing the introductory text
of paragraph (c)(2); by revising paragraphs (c)(2) (iii) and (iv); by
adding a new paragraph (c)(2)(v); by republishing introductory
paragraph (c)(3); and by revising paragraph (c)(3)(i) to read as
follows:
Sec. 1001.401 Misdemeanor conviction relating to controlled
substances.
(a) Circumstance for exclusion. The OIG may exclude an individual
or entity convicted under Federal or State law of a misdemeanor
relating to the unlawful manufacture, distribution, prescription or
dispensing of a controlled substance, as defined under Federal or State
law. This section applies to any individual or entity that--
(1) Is, or has ever been, a health care practitioner, provider or
supplier;
(2) Holds or has held a direct or indirect ownership or control
interest, as defined in section 1124(a)(3) of the Act, in an entity
that is a health care provider or supplier, or is or has been an
officer, director, agent or managing employee, as defined in section
1126(b) of the Act, of such an entity; or
(3) Is, or has ever been, employed in any capacity in the health
care industry.
* * * * *
(c) Length of exclusion. * * *
(2) Any of the following factors may be considered to be
aggravating and a basis for lengthening the period of exclusion--
* * * * *
(iii) The sentence imposed by the court included incarceration;
(iv) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
(v) Whether the individual or entity was convicted of other
offenses besides those which formed the basis for the exclusion, or has
been the subject of any other adverse action by any other Federal,
State or local government agency or board, even if the adverse action
is based on the same set of circumstances that serves as the basis for
the imposition of the exclusion.
(3) Only the following factors may be considered as mitigating and
a basis for shortening the period of exclusion--
(i) The individual's or entity's cooperation with Federal or State
officials resulted in--
(A) Others being convicted or excluded from Medicare or any of the
State health care programs,
(B) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or
(C) The imposition of a civil money penalty against others; or
* * * * *
8. Section 1001.501 would be amended by revising paragraph (b)(1);
republishing the introductory text of paragraph (b)(2), revising
paragraphs (b)(2) (ii) and (iii), and adding a new paragraph
(b)(2)(iv); by republishing the introductory text of paragraph (b)(3)
and revising paragraph (b)(3)(i); and by deleting paragraph (c) to read
as follows:
Sec. 1001.501 License revocation or suspension.
* * * * *
(b) Length of exclusion. (1) An exclusion imposed in accordance
with this section will not be for a period of time less than the period
during which an individual's or entity's license is revoked, suspended
or otherwise not in effect as a result of, or in connection with, a
State licensing agency action.
(2) Any of the following factors may be considered aggravating and
a basis for lengthening the period for exclusion--
* * * * *
(ii) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing;
(iii) The acts, or similar acts, had or could have had a
significant adverse impact on the financial integrity of the programs;
or
(iv) The individual or entity has been the subject of any other
adverse action by any other Federal, State or local government agency
or board, even if the adverse action is based on the same set of
circumstances that serves as the basis for the imposition of the
exclusion.
(3) Only if any of the aggravating factors listed in paragraph
(b)(2) of this section justifies a longer exclusion may mitigating
factors be considered as a basis for reducing the period of exclusion
to a period not less than that set forth in paragraph (b)(1) of this
section. Only the following factors may be considered mitigating--
(i) The individual's or entity's cooperation with a State licensing
authority resulted in--
(A) The sanctioning of other individuals or entities, or
(B) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses; or
* * * * *
9. Section 1001.601 would be amended by revising paragraph (b) to
read as follows:
Sec. 1001.601 Exclusion or suspension under a Federal or State health
care program.
* * * * *
(b) Length of exclusion. (1) An exclusion imposed in accordance
with this section will not be for a period of time less than the period
during which the individual or entity license is excluded or suspended
from a Federal or State health care program.
(2) Any of the following factors may be considered aggravating and
a basis for lengthening the period of exclusion--
(i) The acts that resulted in the exclusion, suspension or other
sanction under the Federal or State healthy care program had, or could
have had, a significant adverse impact on Federal or State health care
programs or the
[[Page 47192]]
beneficiaries of those programs or other individuals;
(ii) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
(iii) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, even if the adverse action is based on the same set of
circumstances that serves as the basis for the imposition of the
exclusion.
(3) Only if any of the aggravating factors set forth in paragraph
(b)(2) of this section justifies a longer exclusion may mitigating
factors be considered as a basis for reducing the period of exclusion
to a period not less than that set forth in paragraph (b)(1) of this
section. Only the following factors may be considered mitigating--
(i) The individual or entity's cooperation with Federal or State
officials resulted in--
(A) The sanctioning of other individuals or entities, or
(B) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses; or
(ii) Alternative sources of the types of health care items or
services furnished by the individual or entity are not available.
(4) If the individual or entity is eligible to apply for
reinstatement in accordance with Sec. 1001.3001 of this part, and the
sole reason for the State denying reinstatement is the existing
Medicare exclusion imposed by the OIG as a result of the original State
action, the OIG will consider a request for reinstatement.
10. Section 1001.701 would be amended by republishing introductory
paragraph (a) and revising paragraph (a)(1); revising paragraph (d)(1);
and by republishing introductory paragraph (d)(2), revising paragraphs
(d)(2) (iii) and (iv), and adding paragraph (d)(2)(v) to read as
follows:
Sec. 1001.701 Excessive claims or furnishing of unnecessary or
substandard items or services.
(a) Circumstance for exclusion. The OIG may exclude an individual
or entity that has--
(1) Submitted, or caused to be submitted, bills or requests for
payments under Medicare or any of the State health care programs
containing charges or costs for items or services furnished that are
substantially in excess of such individual's or entity's usual charges
or costs for such items or services to any of their customers, clients
or patients; or
* * * * *
(d) Length of exclusion. (1) An exclusion imposed in accordance
with this section will be for a period of 3 years, unless aggravating
or mitigating factors set forth in paragraphs (d)(2) and (d)(3) of this
section form a basis for lengthening or shortening the period. In no
case may the period be shorter than 1 year.
(2) Any of the following factors may be considered aggravating and
a basis for lengthening the period of exclusion--
* * * * *
(iii) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing;
(iv) The violation resulted in financial loss to Medicare or the
State health care programs of $1,500 or more; or
(iv) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, even if the adverse action is based on the same set of
circumstances that serves as the basis for the imposition of the
exclusion.
* * * * *
11. Section 1001.801 would be amended by revising paragraph (c)(1);
and by republishing introductory paragraph (c)(2), revising paragraphs
(c)(2) (iii) and (iv), and adding a new paragraph (c)(2)(v) to read as
follows:
Sec. 1001.801 Failure of HMOs and CMPs to furnish medically necessary
items and services.
* * * * *
(c) Length of exclusion. (1) An exclusion imposed in accordance
with this section will be for a period of 3 years, unless aggravating
or mitigating factors set forth in paragraphs (c)(2) and (c)(3) of this
section form a basis of lengthening or shortening the period. In no
case may the period be shorter than 1 year.
(2) Any of the following factors may be considered aggravating and
a basis for lengthening the period of exclusion--
* * * * *
(iii) The entity's failure to provide a necessary item or service
that had or could have had a serious adverse effect;
(iv) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing; or
(v) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, even if the adverse action is based on the same set of
circumstances that serves as the basis for the imposition of the
exclusion.
* * * * *
12. Section 1001.901 would be amended by republishing introductory
paragraph (b), revising paragraph (b)(3), redesignating existing
paragraph (b)(4) as (b)(5), and adding a new paragraph (b)(4) to read
as follows:
Sec. 1001.901 False or improper claims.
* * * * *
(b) Length of exclusion. In determining the length of exclusion
imposed in accordance with this section, the OIG will consider the
following factors--
* * * * *
(3) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior is
to be considered neutral);
(4) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, even if the adverse action is based on the same set of
circumstances that serves as the basis for the imposition of the
exclusion; or
(5) Other matters as justice may require.
13. Section 1001.951 would be amended by republishing introductory
paragraph (b)(1), revising paragraph (b)(1)(iii), redesignating
existing paragraph (b)(1)(iv) as (b)(1)(v), and adding a new paragraph
(b)(1)(iv) to read as follows:
Sec. 1001.951 Fraud and kickbacks and other prohibited activities.
* * * * *
(b) Length of exclusion. (1) The following factors will be
considered in determining the length of exclusion in accordance with
this section--
* * * * *
(iii) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior
record is to be considered neutral);
(iv) The individual or entity has been the subject of any other
adverse action by any Federal, State or local government agency or
board, even if the adverse action is based on the same set of
circumstances that serves as the basis for the imposition of the
exclusion; or
* * * * *
Sec. 1001.953 [Removed]
14. Section 1001.953 would be removed.
15. Section 1001.1001 would be amended by republishing the heading
for paragraph (a) and introductory paragraph (a)(2); and by revising
the
[[Page 47193]]
definition for the term agent set forth in paragraph (a)(2) to read as
follows:
Sec. 1001.1001 Exclusion of entities owned or controlled by a
sanctioned person.
(a) Circumstances for exclusion. * * *
(2) For purposes of this section, the term:
Agent means any person who has express or implied authority to
obligate or act on behalf of an entity. The excluded individual may be
considered an agent even if he or she has transferred ownership or
control interest to his or her spouse or children. For example, if the
excluded individual transfers control of an entity to his or her
spouse, but still acts on behalf of the entity or exercises some
control over the entity, the excluded individual would be an agent
since he or she would have the implied authority to act on behalf of
that entity.
* * * * *
16. A new Sec. 1001.1051 would be added to read as follows:
Sec. 1001.1051 Exclusion of individuals with ownership or control
interest in sanctioned entities.
(a) Circumstance for exclusion. The OIG may exclude any individual
who--
(1) Has a direct or indirect ownership or control interest in a
sanctioned entity, and who knows or should know (as defined in section
1128A(i)(6) of the Act) of the action constituting the basis for the
conviction or exclusion set forth in paragraph (b) of this section; or
(2) Is an officer or managing employee (as defined in section
1126(b) of the Act) of such an entity.
(b) For purposes of paragraph (a) of this section, the term
sanctioned entity means an entity that--
(1) Has been convicted of any offense described in Secs. 1001.101
through 1001.401 of this part; or
(2) Has been terminated or excluded from participation in Medicare
or a State health care program.
(c) Length of exclusion. (1) If the entity has been excluded, the
length of the individual's exclusion will be for the same period as
that of the sanctioned entity with which the individual has the
prohibited relationship.
(2) If the entity was not excluded, the length of the individual's
exclusion will be determined by considering the factors that would have
been considered if the entity had been excluded.
(3) An individual excluded under this section may apply for
reinstatement at any time in accordance with the procedures set forth
in Sec. 1001.3001.
17. Section 1001.1101 would be amended by revising paragraph (b)(3)
to read as follows:
Sec. 1001.1101 Failed to disclose certain information.
* * * * *
(b) Length of exclusion. The following factors will be considered
in determining the length of an exclusion under this section--
* * * * *
(3) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior
record is to be considered neutral);
* * * * *
18. Section 1001.1201 would be amended by revising paragraph (b)(4)
to read as follows:
Sec. 1001.1201 Failure to provide payment information.
* * * * *
(b) * * *
(4) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior
record is to be considered neutral); and
* * * * *
19. Section 1001.1301 would be amended by revising paragraph
(b)(2)(iv) to read as follows:
Sec. 1001.1301 Failure to grant immediate access.
* * * * *
(b) * * *
(2) * * *
* * * * *
(iv) Whether the entity has a documented history of criminal, civil
or administrative wrongdoing (The lack of any prior record is to be
considered neutral).
* * * * *
20. Section 1001.1401 would be amended by revising paragraph (b)(5)
to read as follows:
Sec. 1001.1401 Violations of PPS corrective action.
* * * * *
(b) Length of exclusion. * * *
* * * * *
(5) Whether the individual or entity has a documented history of
criminal, civil or administrative wrongdoing (The lack of any prior
record is to be considered neutral).
21. Section 1001.1601 would be amended by revising paragraph
(b)(1)(iv) to read as follows:
Sec. 1001.1601 Violations of the limitations on physician charges.
* * * * *
(b) Length of exclusion. (1) * * *
(iv) Whether the physicians has a documented history of criminal,
civil or administrative wrongdoing (The lack of any prior record is to
be considered neutral); and
* * * * *
22. Section 1001.1701 would be amended by revising paragraph
(c)(1)(v) to read as follows:
Sec. 1001.1701 Billing for services of assistant at surgery during
cataract operations.
* * * * *
(c) Length of exclusion. * * *
(v) Whether the physician has a documented history of criminal,
civil or administrative wrongdoing (The lack of any prior record is to
be considered neutral); and
23. Section 1001.1901 would be amended by revising paragraphs
(b)(1) and (b)(3); revising existing paragraph (c)(4) and redesignating
is as (c)(5); and by adding a new paragraph (c)(4) to read as follows:
Sec. 1001.1901 Scope and effect of exclusion.
* * * * *
(b) Effect of exclusion on excluded individuals and entities. (1)
Unless and until an individual or entity is reinstated into the
Medicare program in accordance with subpart F of this part, no payment
will be made by Medicare or any of the State health care programs for
any item or service furnished, on or after the effective date specified
in the notice period, by an excluded individual or entity, or at the
medical direction or on the prescription of a physician or other
authorized individual who is excluded when the individual or entity
furnishing such item or service knew, or had reason to know, of the
exclusion. This section applies regardless of whether an individual or
entity has obtained a program provider number, either as an individual
or as a member of a group, prior to being reinstated.
* * * * *
(3) An excluded individual or entity that submits, or causes to be
submitted, claims for items or services furnished during the exclusion
period is subject to civil money penalty liability under section
1128A(a)(1)(D) of the Act, and criminal liability under section
1128B(a)(3) of the Act and other provisions. In addition, submitting
claims, or causing claims to be submitted or payments to be made for
items or services furnished, ordered or prescribed, including
administrative and management services or salary, may serve as the
basis for denying reinstatement to the programs.
[[Page 47194]]
(c) Exceptions to paragraph (b)(1) of this section.
* * * * *
(4) HCFA will not pay any claims submitted by, or for items or
services ordered or prescribed by, an excluded provider for dates of
service 5 days or more after that notice of the provider's exclusion
was mailed by the contractor to the supplier.
(5) * * *
(ii) Notwithstanding paragraph (c)(5)(i) of this section, no claim
for emergency items or services will be payable if such items or
services were provided by an excluded individual who, through an
employment, contractual or any other arrangement, routinely provides
emergency health care items or services.
24. Section 1001.2001 would be revised to read as follows:
Sec. 1001.2001 Notice of intent to exclude.
(a) Except as provided in paragraph (b) of this section, if the OIG
proposes to exclude an individual or entity in accordance with subpart
C of this part, or in accordance with subpart B of this part where the
exclusion is for a period exceeding 5 years, it will send written
notice of its intent, the basis for the proposed exclusion the
potential effect of an exclusion. Within 30 days of receipt of notice,
which will be deemed to be 5 days after the date on the notice, the
individual or entity may submit documentary evidence and written
argument concerning whether the exclusion is warranted and any related
issues.
(b) Exception. If the OIG proposes to exclude an individual or
entity under the provisions of Secs. 1001.1301, 1001.1401 or 1001.1501
of this part, paragraph (a) of this section will not apply.
(c) If an entity has a provider agreement under section 1866 of the
Act, and the OIG proposes to terminate that agreement in accordance
with section 1866(b)(2)(C) of the Act, the notice provided for in
paragraph (a) of this section will so state.
25. Section 1001.2002 would be amended by adding a new paragraph
(e) to read as follows:
Sec. 1001.2002 Notice of exclusion.
* * * * *
(e) No later than 15 days prior to the final exhibit exchanges
required under Sec. 1005.8 of this chapter, the OIG may amend its
notice letter if information comes to light that justifies the
imposition of a different period of exclusion other than the one
proposed in the original notice letter.
26. Section 1001.2003 would be amended by revising introductory
paragraph (a) to read as follows:
Sec. 1001.2003 Notice of proposal to exclude.
(a) Except as provided in paragraph (c) of this section, if the OIG
proposes to exclude an individual or entity in accordance with
Secs. 1001.901, 1001.951, 1001.1601 or 1001.1701, it will send written
notice of this decision to the affected individual or entity. The
written notice will provide the same information set forth in
Sec. 1001.2002(c). If an entity has a provider agreement under section
1866 of the Act, and the OIG also proposes to terminate that agreement
in accordance with section 1866(b)(2)(C) of the Act, the notice will so
indicate. The exclusion will be effective 60 days after the receipt of
the notice (as defined in Sec. 1005.2 of this chapter) unless, within
that period, the individual or entity files a written request for a
hearing in accordance with part 1005 of this chapter. Such request must
set forth--
* * * * *
27. Section 1001.2005 would be revised to read as follows:
Sec. 1001.2005 Notice to state licensing agencies.
HHS will promptly notify the appropriate State(s) or local agencies
or authorities having responsibility for the licensing or certification
of an individual or entity excluded (or directed to be excluded) from
participation of the facts and circumstances of the exclusion.
28. Section 1001.2006 would be amended by republishing introductory
paragraph (a); revising paragraphs (a)(1) and (a)(7); redesignating
existing paragraph (a)(8) as (a)(9); and by adding a new paragraph
(a)(8) to read as follows:
Sec. 1001.2006 Notice to others regarding exclusion.
(a) HHS will give notice of the exclusion and the effective date to
the public, to beneficiaries (in accordance with Sec. 1001.1901(c)),
and, as appropriate, to--
(1) Any entity in which the excluded individual is known to be
serving as an employee, administrator, operator, or in which the
individual is serving in any other capacity and is receiving payment
for providing services (The lack of this notice will not affect HCFA's
ability to deny payment for services);
* * * * *
(7) The State and Area Agencies on Aging established under title
III of the Older Americans Act;
(8) The Adverse Action Data Bank; and
* * * * *
29. Section 1001.3001 would be amended by revising paragraphs
(a)(1) and (a)(2) to read as follows:
Sec. 1001.3001 Timing and method of request for reinstatement.
(a)(1) Except as provided in paragraphs (a)(2) and (a)(3) of this
section or in Sec. 1001.501(b)(4) of this part, an excluded individual
or entity (other than those excluded in accordance with
Secs. 1001.1001, 1001.1051 and 1001.1501) may submit a written request
for reinstatement to the OIG only after the minimum period of exclusion
specified in the notice of exclusion has expired. Obtaining a program
provider number does not reinstate eligibility.
(2) An entity excluded under Sec. 1001.1001 of this part may apply
for reinstatement prior to the minimum period of exclusion specified in
the notice of exclusion by submitting a written request for
reinstatement that includes documentation demonstrating that the
standards set forth in Sec. 1001.3002(c) have been met.
* * * * *
30. Section 1001.3002 would be amended by revising paragraph (a);
republishing introductory paragraph (b), revising paragraphs (b) (3)
and (4) and removing paragraph (b)(5); revising introductory paragraph
(c); revising existing paragraph (d) and redesignating paragraphs (d),
(e), and (f) as paragraphs (e), (f) and (g) respectively; and by adding
a new paragraph (d) to read as follows:
Sec. 1001.3002 Basis for reinstatement.
(a)(1) The OIG will authorize reinstatement if it determines that--
(i) The minimum period of exclusion has expired;
(ii) There are reasonable assurances that the types of actions that
formed the basis for the original exclusion have not recurred and will
not recur; and
(iii) There is no additional basis under sections 1128 (a) or (b)
or 1128A of the Act for continuation of the exclusion.
(2) Submitting claims or causing claims to be submitted or payments
to be made by the programs for items or services furnished, ordered or
prescribed, including administrative and management services or salary,
may serve as the basis for denying reinstatement. This section applies
regardless of whether an individual or entity has obtained a program
provider number, either as an individual or as a member of a group,
prior to being reinstated.
[[Page 47195]]
(b) In making the reinstatement determination, the OIG will
consider--
* * * * *
(3) Whether all fines, and all debts due and owing (including
overpayments) to any Federal, State or local government that relate to
Medicare or any of the State health care programs, have been paid or
satisfactory arrangements have been made to fulfill these obligations;
and
(4) Whether HCFA has determined that the individual or entity
complies with, or has made satisfactory arrangements to fulfill, all of
the applicable conditions of participation or supplier conditions for
coverage under the statutes and regulations.
(c) If the OIG determines that the criteria in paragraphs (a)(1)
(ii) and (iii) of this section have been met, an entity excluded in
accordance with Sec. 1001.1001 will be reinstated upon a determination
by the OIG that the individual whose conviction, exclusion or civil
money penalty was the basis for the entity's exclusion--
* * * * *
(d) If the OIG determines that the criteria in paragraphs (a)(1)
(ii) and (iii) of this section have been met, an individual excluded in
accordance with Sec. 1001.1051 will be reinstated upon a determination
with paragraph (a) of this section of Sec. 1001.3005.
(e) Reinstatement will not be effective until the OIG grants the
request and provides notice under Sec. 1001.3003(a) of this part.
Reinstatement will be effective as provided in the notice.
(f) A determination with respect to reinstatement is not appealable
or reviewable except as provided in Sec. 1001.3004.
(g) An ALJ may not require reinstatement of an individual or entity
in accordance with this chapter.
C. Part 1002 would be amended as follows:
PART 1002--[AMENDED]
1. The authority citation for part 1002 would continue to read as
follows:
Authority: 42 U.S.C. 1302, 1320a-3, 1320a-5, 1320a-7,
1396(a)(4)(A), 1396(p)(1), 1396a(30), 1396a(39) 1396b(a)(6),
1396b(b)(3), 1396b(i)(2) and 1396b(q).
2. Section 1002.3 would be amended by revising paragraph (b)(2) and
by adding a new paragraph (b)(3) to read as follows:
Sec. 1002.3 Disclosure by providers; information on persons convicted
of crimes.
* * * * *
(b) Notification to Inspector General. * * *
(2) The agency must promptly notify the Inspector General of any
action it takes on the provider's application for participation in the
program.
(3) The agency must also promptly notify the Inspector General of
any action it takes to limit the ability of an individual or entity to
participate in its program, regardless of what such an action is
called. This includes, but is not limited to, suspension actions,
settlement agreements and situations where an individual or entity
voluntarily withdraws from the program to avoid a formal sanction.
* * * * *
3. Section 1002.203 would be amended by revising paragraph (a) to
read as follows:
Sec. 1002.203 Mandatory exclusion.
(a) The State agency, in order to receive Federal financial
participation (FFP), must provide that it will exclude from
participation any HMO, or entity furnishing services under a waiver
approved under section 1915(b)(1) of the Act, if such organization or
entity--
(1) Could be excluded under Secs. 1001.1001 or 1001.1051 of this
chapter, or
(2) Has, directly or indirectly, a substantial contractual
relationship with an individual or entity that could be excluded under
Secs. 1001.1001 or 1001.1051 of this chapter.
* * * * *
4. Section 1002.211 would be amended by revising paragraph (a) to
read as follows:
Sec. 1002.211 Effect of exclusion.
(a) Denial of payment. Except as provided for in Sec. 1001.1901
(c)(3), (c)(4) and (c)(5)(i) of this chapter, no payment may be made by
the State agency for any item or service furnished on or after the
effective date specified in the notice by an excluded individual or
entity, or at the medical direction or on the prescription of a
physician who is excluded when a person furnishing such item or service
knew, or had reason to know, of the exclusion.
PART 1005--[AMENDED]
D. Part 1005 would be amended as follows:
1. The authority citation for part 1005 would continue to read as
follows:
Authority: 42 U.S.C. 405(a), 405(b), 1302, 1320a-7, 1320a-7a and
1320c-5.
2. Section 1005.15 would be amended by revising introductory
paragraph (f)(1) to read as follows:
Sec. 1005.15 The hearing and burden of proof.
* * * * *
(f)(1) A hearing under this part is not limited to specific items
and information set forth in the notice letter to the petitioner or
respondent. Subject to the 15-day requirement under Sec. 1005.8,
additional items and information, including aggravating or mitigating
circumstances that arose or became known subsequent to the issuance of
the notice letter, may be introduced by either party during its case-
in-chief unless such information or items are--
* * * * *
Dated: March 13, 1997.
June Gibbs Brown,
Inspector General, Department of Health and Human Services.
Approved: June 18, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 97-23379 Filed 9-5-97; 8:45 am]
BILLING CODE 4150-04-M