HR REPORT: What Municipal HR Professionals Need to Know About the U.S. Department of Health and Human Services Office of the Inspector General

The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.

In certain circumstances, municipalities receiving payments from federally funded healthcare programs for the delivery of healthcare services are prohibited from employing or entering into contracts with individuals or entities on the List of Excluded Individuals/Entities (LEIE) maintained by the U.S Department of Health and Human Services Office of Inspector General (OIG).  In other words, towns and cities billing Medicare or Medicaid for emergency medical services, ambulance transportation, community nursing, or other health care services must consider the LEIE when hiring employees or otherwise entering into contracts.

Broadly, the OIG was established in 1976 to identify and eliminate fraud, waste, and abuse in federally funded health care programs, such as Medicare and Medicaid.  Sections 1128 and 1156 of the Social Security Act grant the OIG the authority to exclude individuals and entities from receiving payments or compensation from federally funded healthcare programs. In fact, the OIG must exclude individuals or entities and place them on the LEIE if they have been convicted of certain serious criminal offenses related to health care fraud, the sale or distribution of a controlled substances, the abuse or neglect of a patient, and financial or fiduciary misconduct.  In addition, the OIG has additional discretion to exclude individuals or entities on a number of other bases including, but not limited to, other criminal conduct; defaulting on health education loan or scholarship obligations; and, in certain circumstances, the suspension, revocation, or surrender of a license to provide health care.  The OIG updates the LEIE on a monthly basis to provide current information about individuals and entities who are currently excluded and to remove those whose eligibility has been reinstated

If a municipality employs or contracts with an individual or entity that the municipality knows or should have known is excluded by OIG for services or items billed to a federally funded healthcare program, the municipality may be subject to civil monetary penalties for each covered item or service delivered by the excluded individual or entity.  Additionally, for more egregious violations, the OIG could place the municipality itself on the LEIE, which would block the municipality from receiving Medicare, Medicaid, or other federally funded healthcare program funds until reinstated by OIG.  Importantly, it is presumed that if an individual or entity appears on the LEIE that the municipality should have known the individual or entity was excluded even if the municipality did not actually review the LEIE. 

From an HR perspective, municipalities can proactively establish policies and practices to reduce the risk of inadvertent violation involving an employee. 

First, municipalities should consider which positions, including volunteer and per diem positions, implicate the OIG’s exclusion authority and ensure that its background check process for those positions includes a review of the LEIE.  Exclusions are not limited to licensed healthcare professionals such as EMTs, paramedics, or nurses and therefore municipalities should also review any position that provides administrative and management support to the healthcare service including billing support, information technology, human resources, training, or strategic planning to determine if that position implicates the OIG’s authority. 

With respect to current employees, municipalities have an ongoing responsibility to ensure that employees involved in the delivery of health care services (including certain ancillary support) are not excluded by the OIG and on the LEIE. Internal processes should be developed, taking into consideration existing employment contracts and collective bargaining agreements, to provide for routine review of the LEIE for all covered positions. In addition, municipalities should develop a plan for efficiently responding if an employee in a covered position is or becomes excluded. Such a plan may include steps necessary to reduce the civil monetary penalty liability for the municipality, as well as employment consequences for the individual employee.

If a municipality is concerned that a violation has occurred because it has employed or contracted with an individual or entity on LEIE, it is strongly recommended that it reach out to counsel to counsel.