47182 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules

§ 101–46.203 What special authorizations

have been made for use of the exchange/

sale authority?

(a) You may exchange, without

monetary appraisal or detailed listing or

reporting, books and periodicals in your

libraries not needed for permanent use

for other books and periodicals.

(b) In acquiring items for historical

preservation or display at Federal

museums, you may exchange historic

items in the museum property account

without regard to the FSC group or the

requirement in § 101–46.202(b)(3),

provided the exchange transaction is

documented and certified by the head of

your agency to be in the best interests

of the Government and all other

provisions of this part are met. The

documentation must contain a

determination that the item exchanged

and the item acquired are historic items.

Subpart 101–46.3—Exchange and Sale

Procedures

§ 101–46.300 What are the exchange

procedures?

(a) Most exchange transactions should

occur when a vendor delivers a

replacement item and removes the item

being replaced. This is the most efficient

and cost effective exchange procedure

because the item being replaced may

remain in use up to the time the

replacement item is delivered, when it

is immediately removed by the vendor,

and storage, handling, and

administrative costs are minimized.

(b) You may internally reassign

eligible items no longer needed by one

organizational unit to another unit for

exchange with the supplier of a

replacement item. Physical movement

of the reassigned item is not required

unless specified by the contract.

§ 101–46.301 What are the sales

procedures?

(a) The methods of sale, terms and

conditions of sale, and forms prescribed

in § 101–45.304 of this subchapter shall

be used in the sale of property being

replaced, except for the provisions of

§ 101–45.304–2(a) of this subchapter

regarding negotiated sales. Section 3709,

Revised Statutes (41 U.S.C. 5), is

applicable to such sales and specifies

the following conditions under which

property being replaced can be sold by

negotiation:

(1) The reasonable value involved in

the contract does not exceed $500, or

(2) Otherwise authorized by law.

(b) Property eligible for exchange/sale

may be sold by negotiation at fixed

prices in accordance with the provisions

of § 101–45.304–2(b) of this subchapter.

§ 101–46.302 What are the accounting

requirements for the proceeds of the sale?

Except as otherwise authorized by

law, proceeds from sales of personal

property disposed of under this part

must be accounted for in accordance

with the General Accounting Office

Policy and Procedures Manual for

Guidance of Federal Agencies, Title 7,

Fiscal Procedures, Section 5.5D.

Dated: September 2, 1997.

G. Martin Wagner,

Associate Administrator for Governmentwide

Policy.

[FR Doc. 97–23669 Filed 9–5–97; 8:45 am]

BILLING CODE 6820–24–M

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.

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
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules 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 programrelated, 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 ‘‘nonderivative’’ 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 § 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 §§ 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 § 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 § 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 § 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
47184 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules

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

§§ 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

§ § 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

§ 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 § 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

§§ 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 § 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 § 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 §§ 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
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules 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 § 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

§ 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 § 1001.102 and

elsewhere throughout part 1001 (see

§§ 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, § 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
47186 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules

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 § 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

§§ 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 § 1001.102(c)(3) (as well as in

§§ 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

§ 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,

§ 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 § 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 § 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 § 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
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules 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

§§ 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

§ 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 § 1001.2001. The

language currently states that if the OIG

proposes to exclude an individual or

entity in accordance with § 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 inhouse 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 § 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

§ 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

§ 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 § 1001.2003(a) to

reference the language and procedure

set forth in § 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

§ 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

§ 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 §§ 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

§ 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 § 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 § 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)
47188 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules

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 § 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 § 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 § 1002.3 is

consistent with the requirements of the

statute.

Respondents: The ‘‘respondents’’ for

the collection of information described

in § 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
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules 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:

§ 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:

§ 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 § 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:

§ 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
47190 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules

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:

§ 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:

§ 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
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules 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:

§ 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:

§ 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:

§ 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:

§ 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
47192 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules

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 § 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:

§ 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:

§ 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:

§ 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:

§ 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

* * * * *

§ 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
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules 47193

definition for the term agent set forth in

paragraph (a)(2) to read as follows:

§ 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 § 1001.1051 would be

added to read as follows:

§ 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 §§ 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 § 1001.3001.

17. Section 1001.1101 would be

amended by revising paragraph (b)(3) to

read as follows:

§ 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:

§ 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:

§ 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:

§ 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:

§ 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:

§ 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:

§ 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.
47194 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules

(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:

§ 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 §§ 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:

§ 1001.2002 Notice of exclusion.

* * * * *

(e) No later than 15 days prior to the

final exhibit exchanges required under

§ 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:

§ 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 §§ 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 § 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 § 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:

§ 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:

§ 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 § 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:

§ 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 § 1001.501(b)(4) of this

part, an excluded individual or entity

(other than those excluded in

accordance with §§ 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

§ 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

§ 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:

§ 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.
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Proposed Rules 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

§ 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

§ 1001.1051 will be reinstated upon a

determination with paragraph (a) of this

section of § 1001.3005.

(e) Reinstatement will not be effective

until the OIG grants the request and

provides notice under § 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

§ 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:

§ 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:

§ 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

§§ 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 §§ 1001.1001 or

1001.1051 of this chapter.

* * * * *

4. Section 1002.211 would be

amended by revising paragraph (a) to

read as follows:

§ 1002.211 Effect of exclusion.

(a) Denial of payment. Except as

provided for in § 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:

§ 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

§ 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

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Office of Inspector General

42 CFR Part 1001

Negotiated Rulemaking Committee on

the Shared Risk Exception; Meetings

AGENCY: Office of Inspector General

(OIG), HHS.

ACTION: Meeting of Negotiated

Rulemaking Committee.

SUMMARY: In accordance with the

Federal Advisory Committee Act, this

document announces the dates and

location for the fourth and fifth set of

meetings by the Negotiated Rulemaking

Committee on the Shared Risk

Exception. The purpose of this

committee is to negotiate the

development of an interim final rule

addressing the shared risk exception to

the Federal health care programs’ antikickback provisions, as statutorilymandated by section 216 of the Health

Insurance Portability and

Accountability Act of 1996.

DATES: The fourth series of meetings

will be held from 9:00 a.m. to 5:00 p.m.

on October 8 and 9, 1997, and from 9:00

a.m. to 2:00 p.m. on October 10, 1997.

The fifth series of meetings will be held

from 9:00 a.m. to 5:00 p.m. on

November 19, 20 and 21, 1997.

ADDRESSES: The October meeting will be

held in the OIG Conference Room,

Room 5542, Cohen Building, 330

Independence Avenue, S.W.,