In the first week of April 2020, the Office of the Inspector General (OIG) released a pair of reports regarding States that allowed terminated and unenrolled providers to serve Medicaid beneficiaries. Human resources, credentialing and contracting processes would be remiss to not comply with the two reports’ recommendations. Conducting proper screening processes can mitigate the incursion of significant monetary loss.

OIG has the authority to exclude individuals and entities from federally funded healthcare programs pursuant to section 1128 of the Social Security Act. It stipulates that anyone who hires an individual or entity on the LEIE may be subject to Civil Monetary Penalties (CMP). Additionally, 43 States maintain their own exclusion lists, pursuant to 42 CFR section 1002.210 or State authority, which includes individuals and entities whom the State has barred from participating in State government programs.

Recently, pursuant to the 21st Century Cures Act (Cures Act), OIG commissioned and released two reports that quantify the extent of the fraud, waste and abuse problem. The exposure of Medicaid beneficiaries to terminated and/or unenrolled providers necessitates their screening. To strengthen Medicaid provider enrollment, Cures Act stipulated States must require all Medicaid providers; both those in Medicaid fee-for-service (FFS) and Medicaid managed care to enroll with their respective State Medicaid agencies.

CMS Study Report

The study used CMS’s termination database, which contained information on terminated providers reported by States. OIG reviewed the State enrollment rosters dated between January and May 2019, and compared terminated providers listed in CMS’s February 2019 termination database to the providers in States’ rosters of enrolled Medicaid providers. They also identified FFS claims and managed care encounter records associated with terminated providers on or after July 1, 2018.

CMS Study Report Key Findings

Terminated providers were responsible for $50.3 million in post-termination Medicaid payments.
Specifically, they accounted for 11 percent of all terminated providers and constituted nearly 1,000 individuals.
The terminations were comprised of concerns such as criminal convictions, licensure issues and provider misconduct.

The impact of these terminations is illustrated in the study’s Exhibit D-1. The number of claims and encounter records occurring with each type of service suggests pharmacy services are clearly some of the most susceptible sectors to find fraud, waste and abuse.

Exhibit D-1: Number of Claims and Encounter Records Associated With Each Service Type

State Review Report

OIG based this study on data from the 49 States and the District of Columbia (States) that responded to our survey. They conducted follow-up with 39 States to clarify their survey responses and asked States to report the Federal dollars associated with unenrolled providers. Many States could not report federal financial participation (FFP) associated with unenrolled managed care organization (MCO) network providers. As a result, OIG used information about capitation payments (i.e., payments that States make to MCOs) from Transformed Medicaid Statistical Information System (T-MSIS). Lastly, OIG queried staff from CMS on their work with States to enforce the Federal provider enrollment requirements.

State Review Report Key Findings

States that exposes their respective Medicaid program to potentially harmful providers numbers 23. This number constituted those that had non-enrolled providers not previously screened for fraud, waste and abuse serving Medicaid beneficiaries.

Medicaid managed care had non-enrolled providers serving beneficiaries in Medicaid Fee-for-Service (FFS). Additionally, many of these providers were not enrolled from Ordering, Referring, or Prescribing (ORP).

Differentiation of Terms

There is a difference between the two terms Exclusion and Termination. Providers excluded by OIG are not permitted to work, directly or indirectly. A provider who is terminated may be able to work in a different capacity, so long as they do not bill CMS for services. CMS can “terminate” providers for many additional reasons, including failure to furnish ownership information and failure to comply with civil rights requirements. The Sanctioned Providers list contains those providers that were sanctioned or terminated while delivering services for the Medicaid program.

Exclusion (or sanctioning) often is a severe, mandatory form of sanctioning. A provider can be placed on the Exclusion List due to a State licensing board mandatory obligation to report them. These occurrences happen usually for a minimum of five years and could be due to issues such as abuse of substances, patients or healthcare fraud. OIG imposes exclusions under the authority of sections 1128 and 1156 of the Social Security Act. A list of all OIG exclusions and their statutory authorities can be found on the Exclusion Authorities page, and on the OIG page you can also search their database of excluded providers. Excluded providers can no longer participate in any federal or state funded healthcare programs.

An excluded provider will be prohibited receiving reimbursements from CMS. If an employer, submits a claim for and/or receives federal health care reimbursements either directly or indirectly for that individual or entity, your organization is subject to civil fines and monetary penalties. In addition, the provider’s malfeasance can also lead to General Services Administration (GSA)/ System for Award Management (SAM) debarments and/or a State(s) exclusion.

The less severe Permissive Exclusions could also be placed on providers. This form of exclusion stems from violations categorized as misdemeanors and may include issues such as student loan payment default. Permissive Exclusion can be levied up to 5 years in duration, however they’re typically imposed for 1-3 years.

Lastly, there is a difference between a preclusion list and an exclusion file. Excluded individuals or entities may be on the CMS Preclusion List. Prescribers and providers identified as bad actors may be placed on the preclusion list because they were removed from Medicare or acted in such a way that would cause their removal had they been enrolled. However, precluded providers who are not excludedwill not be on the exclusionfile. If a provider is found on the OIG exclusion file, it is not necessary to look for them on the CMS preclusion list. The Preclusion List denotes providers and prescribers who are precluded from receiving payment for Medicare Advantage (MA) and services or Part D drugs furnished or prescribed to Medicare beneficiaries.

In sum, CMS concurred with all the OIG recommendations within these two reports.

Recommendations on Provider Eligibility

With these two reports’ and their recommendations, both federal agencies are now emboldened to be vigilant to rectify providers’ eligibility to serve beneficiaries.

To learn more about State Medicaid compliance, visit our STATE MEDICAID EXCLUSION LISTS page.