CMS Preclusion vs OIG Exclusion

Posted by Joe Stefansky on February 8, 2021 in CMS, CMS Preclusion,

On January 1, 2019, the Centers for Medicare & Medicaid Services (CMS) introduced a new tool for Medicare plans – the CMS Preclusion List.  A previous article posted in 2018 provides an excellent overview of the new policy and process.

The Preclusion List, updated monthly, provides the name of providers and prescribers who are precluded from receiving payment for Medicare Advantage (MA) plan items or services, or Medicare Part D drugs furnished or prescribed to Medicare beneficiaries. This payment limitation applies to MA plans, Medicare Cost plans and Programs of All-Inclusive Care for the Elderly (PACE) plans and Medicare Part D plans.  Effective April 1, 2019, MA plans were required to deny payment for a health care item or service furnished by an individual or entity on the CMS Preclusion List and Part D plans were required to reject a pharmacy claim (or deny a beneficiary request for reimbursement) for a Part D drug prescribed by an individual on the Preclusion List.

Why Was a CMS Preclusion List Developed?

Per the Final Rule issued by CMS on April 16, 2019, the Preclusion List offered the most effective means of reducing the burden of the MA and Part D provider/prescriber enrollment requirements without compromising Medicare’s financial integrity by shifting focus toward providers and prescribers that pose an elevated risk to Medicare beneficiaries. Rather than requiring the enrollment of MA providers and Part D prescribers regardless of the level of risk they might pose, CMS established a policy under which problematic parties would be placed on a ‘‘preclusion list” and payment for MA services and items and Part D drugs furnished or prescribed by these individuals and entities would be rejected or denied, as appropriate.

Who Ends Up on the CMS Preclusion List?

The CMS Preclusion List is comprised of any individual or entity that meets the following criteria:

> Is currently revoked from the Medicare program and is under an active reenrollment bar, and CMS has determined that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program,

> Has engaged in behavior for which CMS could have revoked the individual or entity to the extent applicable if they had been enrolled in Medicare, and CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare Program, or

> Have been convicted of a felony under federal or state law within the previous 10 years that CMS deems detrimental to the best interests of the Medicare program.

The Preclusion List can include not only individual medical practitioners and providers, but also dentists, pharmacists, pharmacies, medical practices and medical suppliers.  In addition, providers who voluntarily opt out of Medicare will appear on the Preclusion List. It should be noted that CMS precludes individuals and entities at the Tax Identification Number (TIN) level. Therefore, individuals and entities will not appear on the preclusion list unless ALL Medicare enrollments under their TIN are revoked or inactive.

How Do the CMS Medicare Preclusion List and the OIG Medicare Exclusion List Relate?

First, a couple of caveats:

> Use of the CMS Medicare Preclusion List does not eliminate the requirement that Medicare Advantage and Part D plans validate their providers monthly against the OIG’s Exclusion List, which is the List of Excluded and Ineligible Entities (“LEIE”).  This list is updated monthly by the OIG to reflect exclusions from participation and payment under Medicare or Medicaid contracts due to criminal behavior.

> The CMS Preclusion List does not replace regulatory requirements related to provider selection, credentialing, and oversight to which MA, Medicare Cost and PACE plans are subject. 

There is indeed substantial overlap between the lists but they are not entirely consistent:

> Providers excluded by the OIG’s LEIE will be on the CMS Preclusion List.  OIG exclusions are imposed due to criminal behavior and as such are part of the CMS Preclusion List criteria.  Therefore, if a plan finds a provider in the OIG LEIE, the plan is not required to check the CMS Preclusion List.

> However, there are other providers who are precluded by CMS from participation in a Medicare plan and yet will not appear on the OIG Exclusion List because the preclusion is based on other criteria.  In that case, a MA or Part D plan should check the CMS Preclusion List as well.

An additional factor to consider is why a provider was excluded or precluded. Once a provider is removed from the OIG’s LEIE and is no longer excluded due to a reinstatement by the OIG, a MA and Part D plan must then turn to the CMS Preclusion List because there are instances in which a provider remains precluded by CMS from plan participation even though they are no longer excluded by the OIG. For example, CMS may bar reinstatement from Medicare plan participation or perhaps the provider was precluded for behavior which CMS deems sufficiently problematic to warrant being removed from participation in a Medicare plan even though it did not result in a criminal conviction.  

Another difference between the two lists is data capture. Unlike the OIG’s LEIE list which deletes the names of providers who are reinstated or have completed their period of exclusion, impacted providers will not drop off the CMS Preclusion List. Instead, the updated CMS List will indicate a reinstatement date that an impacted provider is no longer precluded.

Challenges to the Impact of the CMS Preclusion List on Part D Fraud

An area of likely development in the near future includes CMS Preclusions or other enhanced enforcement activities in the area of Part D. The limitations of the CMS Preclusion List on fraud reduction are currently evident in the area of Part D.

In March of 2020, the OIG HHS issued a brief outlining significant gaps in fraud waste and abuse enforcement related to Part D plans. These include:

> Medicare Part D does not have three key tools to protect against pharmacy fraud that are available in other parts of Medicare: pharmacy enrollment, revocation, and preclusion. If these tools were available to Part D, CMS could take direct action against pharmacies when needed and stop Medicare payments to pharmacies that are detrimental to the program.

> Pharmacies must enroll in Medicare to bill Part B, but they are not required to enroll to bill Part D.

> Pharmacies that have their enrollment revoked for failing to meet Medicare requirements are still allowed to bill Part D.

> Preclusion, which CMS uses to prevent problematic pharmacies from billing Part C, is not used to address problematic pharmacies in Part D.

Consequently, the OIG made the following recommendations to CMS to address these gaps:

> Allow revocation of Medicare enrollment for inappropriate billing of Part D.

> Include on the Preclusion List pharmacies that inappropriately bill Part D.  Under current law, CMS may place a pharmacy on the Preclusion List if the pharmacy’s enrollment is revoked and its conduct is detrimental to Medicare. However, CMS cannot place a pharmacy on the Preclusion List because the pharmacy has billed Part D inappropriately.

> Apply the Preclusion List payment prohibitions to pharmacies and other providers that dispense Part D drugs.  CMS should prohibit all Part D sponsors from paying precluded pharmacies and other providers that dispense Part D drugs. Without a requirement that prevents payment, precluded pharmacies can continue to bill and be paid by Part D even after these pharmacies are proven to be detrimental to the program.

In her January 2020 response, Seema Verma, CMS Administrator, concurred with a commitment to explore the feasibility of each recommendation. It remains to be seen what actions may be taken by the new CMS leadership team and changes in agency priorities moving forward, but it is likely that there will be enhancements implemented to address the above gaps.

In conclusion, the use of a Preclusion List by CMS to control fraud through excluding problematic providers moved toward a less burdensome role from a provider enrollment perspective. However, as evidenced by the issues with Part D discussed above, there remain significant gaps in process which allow continued payment as relates to Part D in particular. How these will be addressed moving forward remains unknown.

Please refer to this resource for more helpful information on OIG Exclusions and LEIE searches.

About Joe Stefansky

About Joe Stefansky

Joe Stefansky has a keen sense of business opportunities in complex problems, using technology to transform difficulty into efficiency. The CEO and founder of Streamline Verify specializes in solving compliance, legal and administrative issues through intuitively designed software that reduces costs and saves time.

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