On January 12, 2017, less than a week before the official transition from one administration to the next, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a rule finalizing changes to its most potent compliance tool: exclusion authority. The Affordable Care Act (ACA) significantly expanded the OIG’s permissive authority to impose exclusion, a bar on individuals’ and entities’ participation in federal healthcare programs. Despite moderating some initial interpretations of this considerable authority, the final rule broadens the OIG’s exclusion power.

Although the proposed rule envisioned no time limitation on fraudulent wrongdoing as a basis for exclusion, the final rule imposed a 10-year limitation, coordinating it with the federal False Claims Act. The OIG also significantly heightened the loss threshold to be met in order to consider a longer exclusion, from $5,000 to up to $50,000 in some cases. And from an initial proposal that excluded individuals with an ownership interest in excluded entities, even if they left prior to its exclusion, the OIG ultimately decided that exclusion would only apply to such an individual if they were still a part of the entity when it was excluded. The OIG even instituted a new early reinstatement process for excluded individuals who can prove they are no longer a threat to federal healthcare programs. On the other hand, none of these interpretations diminish the fact that the final rule achieves a clear expansion of the scope of the OIG’s permissive exclusion authority. The OIG may now consider exclusion for the obstruction of “audits,” which it does not define, rather than solely for the obstruction of investigations. It may also now consider exclusion for failure to disclose information related to indirect requests for or receipts of federal payments, versus a previous focus only on direct actions.

The fraud and abuse provisions, including exclusion authority, continue to be an effective enforcement tool of the OIG and other agencies tasked with oversight of federal healthcare programs. Hence, we remind our healthcare clients that compliance is an important aspect in responding to any oversight review.