Check Medicare Status of Contractors
Hospitals and physicians now face yet another concern when entering into contracts for supplies and services indirectly covered by Medicare. By failing to check whether the other party has ever been sanctioned or excluded from Medicare, they could face severe penalties, including fines of up to $10,000 per item or service, treble damages, denial of reimbursement and exclusion from Medicare.
Exclusion of Indirect Providers
The Health Care Financing Administration (HCFA) and the Office of the Inspector General (OIG) recently began cracking down on indirect providers who have defrauded or abused Medicare. As of Oct. 2, the OIG expanded its authority to exclude these indirect providers from Medicare.
Indirect providers include suppliers of drugs, medical devices and other reimbursable items as well as some service providers. They are referred to as indirect providers as they do not submit claims directly to Medicare. Rather, they supply products or services to hospitals and physicians who then submit claims (which often include the cost of the supplies or services) directly to Medicare for reimbursement.
Effect On Hospitals and Physicians
The exclusion of indirect providers may have a significant effect on hospitals, physicians and other providers who submit bills directly to Medicare. Under the Balanced Budget Act, it is illegal to submit claims to Medicare for products or services provided by sanctioned or excluded suppliers or service providers.
However, only those hospitals and physicians who know or should know a supplier or service provider has been excluded will be subject to the civil monetary penalties. The OIG's interpretation of "know or should know" mandates all hospitals and physicians keep themselves apprised of all exclusions. According to the OIG, this duty is part of the ongoing responsibility physicians and hospitals have to refrain from contracting with excluded entities.
To assure hospitals and physicians do not unknowingly bill Medicare for products or services furnished by an excluded indirect provider, the OIG will inform the public of any exclusions quickly over the Internet at the OIG's web site. (See "Precautions" box.) Thus, the OIG is advising hospitals and physicians to check the site regularly to avoid any contracts or arrangements with excluded suppliers or service providers.
Enrollment Disclosure
HCFA is using the Medicare General Enrollment Form 855 to prompt hospitals and physicians to make inquiries of all their suppliers and service providers. This form requires hospitals and physicians to disclose specific information regarding all medical suppliers and service providers who are paid more than $10,000 per year by the enrolling hospital or physician.
All hospitals and physicians must provide this information so HCFA may ensure they are not contracting with excluded entities. This may be burdensome for some facilities and corporate offices which negotiate a number of national contracts for all their facilities.