For quite some time, the Office of Inspector General (OIG) has had the authority to exclude an owner, officer and/or manager of an entity convicted of certain criminal offenses or that is excluded from participation in Federal health care programs. In section 6502 of the Patient Protection and Affordable Care Act (PPACA), Congress expanded this concept to authorize Medicaid programs to exclude the owner and/or manager of a sanctioned entity.
An owner of a sanctioned entity can be excluded only if the OIG can demonstrate that the owner knew or should have known about the conduct that led to the entity’s sanction. The standard is much lower for managers: a manager of a sanctioned entity can be excluded if the OIG can demonstrate that the manager “exercises operational control” or “conducts the day-to-day operations” of the entity—the OIG is not required to demonstrate that the manager knew or should have known of the improper conduct. 42 U.S.C. § 1320a-7a.
As reported on the Beyond Health Care Reform blog last Friday, the OIG has issued Guidance for Implementation of Permissive Exclusion Authority which sets forth the factors the OIG will consider when deciding whether to exclude the manager of a sanctioned entity. The OIG stated that this guidance is designed to help develop effective investigations into alleged misconduct, to establish a framework for permissive exclusion decision-making, to assist in appropriate allocation of the OIG’s resources, and to positively influence individuals’ behavior.
While this guidance provides some insight into the OIG’s view of its permissive exclusion authority, the value of this guidance to individuals is limited. In fact, rather than providing useful guidance to the health care community, this document from the OIG is better seen as a warning flare.
By publishing this guidance, the OIG is publically reminding the health care community of the OIG’s authority to excluded individuals based upon their roles as owners or managers. The OIG states as much stating that one purpose of the guidance is to “positively influence individuals’ future behavior and compliance with Federal health care program requirements by holding individuals accountable for misconduct within entities in which they are in positions of responsibility.” As such, officers and managing employees should be involved, watchful, active participants in their businesses and not turn a blind eye to improper conduct.