OIG Regulation Excludes Student Loan Defaulters from Federal Health Programs

Posted by Frank Strafford on August 2, 2017 in Exclusion Screening,
Mini graduation cap on US money — education costs in the design of information related to the cost of education

Healthcare providers who did not fulfill their obligations under a student loan, scholarship or loan repayment program can be placed on the Office of Inspector General (OIG) exclusion list, as per OIG regulation. Once on the list, these individuals will not be able to participate in Medicare, Medicaid or any other federal healthcare program until the Public Health Service says they have fulfilled their obligations.

Amended OIG Regulation

The U.S. Department of Health and Human Services (HHS) published a regulation in January 2017 that expands and clarifies the OIG’s authority to exclude health providers from participating in federal health care programs for a variety of reasons. It also clarifies the circumstances under which the OIG can waive those exclusions, and makes other changes to reflect OIG policies.

The new regulation was drafted to comply with mandates included in the Affordable Care Act of 2010 (ACA) as amended by the Health Care and Education Reconciliation Act of 2010, and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). The regulation is in effect as of March 2017.

OIG Exclusions for Individuals Defaulting on Student Loan 

Section 1001.1501: Default on Health Education Loans Or Scholarship Obligations addresses this expanded exclusion authority. The new regulation states broadly that anyone who defaults on a federally subsidized “health education loan, scholarship, or loan repayment program” may be put on the OIG exclusion list. The exclusion for loan defaulters is a permissive exclusion, meaning that the OIG is allowed to exclude these individuals but is not required to do so (in contrast to mandatory exclusions).

The previous regulation specified only federal loan defaulters as candidates for the exclusion list, and the new regulation adds people who fail to meet their obligations under a loan repayment program. Currently, many of the individuals benefiting from federal assistance with health education costs do not receive a loan. Instead, they get federally subsidized loan forgiveness in exchange for a commitment to practice in an underserved community for a certain time period. The regulation ensures that HHS has the authority to exclude those who default on service obligations, not just loan payments.

How Loan Defaulters Get Off the Exclusion List

The regulation clarifies the process for being restored as a participating provider, indicating that the provider can be restored once the loan is paid or obligation fulfilled. Once a provider has fulfilled the obligations of the loan or program, the provider can apply to be removed from the list and reinstated as a provider. The OIG will check with the loan administrator to make sure the provider has, in fact, fulfilled the obligations.

Concerns with the New Regulation

Federal loan forgiveness programs are designed to incentivize new health professionals to serve in areas that have been underserved, and improve access to care in these areas. Some of those who commented on the regulation expressed a concern that the potential for exclusion from federal health programs might make potential program applicants think twice about participating. One commenter expressed concern specifically about the Indian Health Service program, citing the difficulty that Indian Health Service has in finding and retaining providers.

Some commenters wanted the regulation writers to be mindful of the wider societal problem of student loan repayment and default. It is possible that they were concerned that high default rates could lead to a large number of providers excluded from participation, which could have a negative impact on federal health programs—and on new health providers, making it more difficult for IHS providers to retain qualified staff.

The agency responded that Section 1128(b)(14) of the Social Security Act (as amended by the ACA) requires these exclusions, and specifically cites Indian Health Service scholarship programs. In addition, the agency stated that exclusion has been an effective way to ensure repayment in the past.

Regulation Enforces OIG Exclusion List as Compliance Tool

The updated regulations demonstrate the OIG’s continuing commitment to using the exclusion list as a tool to promote provider compliance and keep federal health programs corruption-free. While HHS is concerned with access to care and increasing provider participation, it is equally concerned with ensuring that its participating providers practice ethically, comply with laws, and honor their loan repayment commitments. Therefore, healthcare organizations must continue to stay updated about exclusions and avoid engaging the services of those on the exclusion list.

About Frank Strafford

About Frank Strafford

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