With state officials still in the dark over applications of the law, healthcare organizations grapple 
with the risks of single-state exclusion screening.

“Yes, you do have to.  No, you don’t.  Well, you don’t, but we might do it for you.  Actually, we’re not really sure.”

These are the types of answers that we’ve been getting in response to a fairly simple question: Are healthcare organizations required to screen their employees and providers for exclusion by states other than their own, or not?

In theory, the question should be moot.  Theoretically, fraudulent providers who have been excluded in one state should automatically be excluded in all other states – both because logic dictates that frauds should not be allowed to collect Medicaid payments simply by moving over a state or two…and because the Affordable Care Act explicitly requires states to ban or terminate providers who have been excluded from other state Medicaid programs ‘for cause’.  In practice, however, these exclusions are neither automatic, nor guaranteed.

Grand Confusion

According to Steven Grossman, an exclusion screening specialist here at Streamline Verify, OIG officials are confused themselves.  Grossman reached out to state OIG officials when one of our clients came across an employee who was not listed on the Texas exclusion database, but was excluded in California.  The client wanted to know whether or not the employee could be employed by a Texas healthcare organization. Grossman inquired with the Texas OIG, but could not get a straight answer.

Intrigued, Grossman contacted officials in other states, to ask their opinion of similar situations in their own states.  The replies were befuddling.  Some officials felt that it would not be a problem; others said it would.  Officials from some states said that they would exclude a provider from their own Medicaid programs if the reason for the original exclusion was deemed sufficient for their own standards; but that they would only make that distinction weeks, months, or even years after the initial exclusion was issued.

Public Scrutiny Turning to Discrepancies in Medicaid Exclusion across States

Streamline Verify is not the first to come across this issue.  In mid-May, Reuters’ issued a special report, Banned from Medicare, Still Billing Medicaid, spotlighting medical providers who had been banned by Medicare and/or state Medicaid programs, yet were still collecting payment for fraudulent services by ‘practicing’ – and billing – in other states.  Reuters found that “more than one in five of the thousands of doctors and other healthcare providers in the U.S. prohibited from billing Medicare are still able to bill state Medicaid programs.”  In response to the Reuters analysis, officials in 17 states are attempting to take action against providers who had been paid a combined total of at least $874,000 while revoked.

Similar findings are cropping up in the online press with increasing rapidity.  According to an article  released just days after the Reuters report (Colorado Invites Medicaid Fraud), Colorado Medicaid paid $3.8 million to providers who continued billing the program after an owner was put on the federal banned list in 2001, while Maryland and District of Columbia Medicaid paid $74 million to the owner of three home care agencies, despite the fact that she had been banned from federal health care programs.

Absurd?  True.

OIG Scrambling to Fix a Broken System

There’s no telling whether the OIG decided to act on this problem thanks to its own realization of the issue, or only as result of the damning publicity by Reuters.  But either way, the OIG released a new study on August 5th titled Providers Terminated from One State Medicaid Program Continued Participating in Other States.  The study found that:

• Twelve percent of providers who were reported as terminated for cause from State Medicaid programs continued participating in Medicaid in other States.  Of these, more than half were still participating two or more years after their termination in another state.
• State Medicaid programs paid approximately $7.4 million to providers for services performed after the providers had each been terminated for cause in 2011 by another State Medicaid program.

The report highlights the growing focus on clamping down on individuals excluded by state OIG officials, ensuring that they can no longer slip through the cracks in other states. The federal OIG study team (which, parenthetically, was led almost exclusively by Texas representatives, just as we guessed on our blog last month,) has made several recommendations, including improved data-sharing; development of uniform terminology to clearly denote for cause terminations; requiring State Medicaid programs to enroll all providers participating in Medicaid managed care; and educating State agencies as to the fact that termination is not contingent upon the provider’s active licensure status. CMS concurred with all of the team’s recommendations.

Protecting the Innocent…

All of this is good news for taxpayers, who have every right to see justice served.  Still, it can be worrisome for some healthcare providers, who may be caught in the dragnet through no fault of there own.  Not every excluded individual is a felon – a fact which presents a tragic flip-side to this entire mess.

Grossman has come across innocent providers who had no idea that they were excluded in other states.  In one instance, a nurse had been reinstated on the Federal LEIE, but Streamline Verify found that her name was still listed as being excluded in Illinois, the state of her original exclusion, which had apparently picked up the exclusion from the LEIE database ten years earlier.

“Exclusion is kind of like a virus,” Grossman explained.  “It spreads from state to state.  The problem is that it spreads unpredictably, and there’s no way to know which states will choose to exclude a provider who has been excluded by a different state, and when.  Even worse, the exclusion can remain in effect in a different state, even after the individual has cleared his or her name and been reinstated.”

…And Protecting Yourself 

Facility owners and compliance officers need to be aware of the potential ramifications to their own healthcare organizations as well.  For as officials begin to catch up with excluded providers in their new states of residence, they will also inevitably begin to go after their ill-fated employers.

“There’s no way to know exactly how and when newly vigilant policies will begin to affect healthcare organizations,” Grossman asserts.  “The smartest thing to do is to be proactive in taking steps to protect yourself.”

In response to the heightened atmosphere of vigilance, software programs, such as the one offered by Streamline Verify, are being tailored to instantaneously and automatically screen against all state databases, in addition to the federal LEIE.  Employers who find employees with flagged exclusions in other states can go directly to their own state officials for clarification – and evidence of due diligence, should the OIG come back to bite them.

“Simple knowledge is your first line of defense,” Grossman asserts.  “Know if, when, and where your employees may be excluded; know that you’ve responsibly screened to the best of your ability.  Vigilance is the name of the game when it comes to compliance.  Luckily, we have protocols and systems to support that.”