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Understanding California Exclusion Screening Requirements

April 8, 2020

On a federal level, certain providers, individuals, and organizations are barred from receiving payments from the federal government for committing certain violations. Over the years, these databases and lists have been run by individual government agencies and departments. Currently, two main databases exist: the List of Excluded Individuals/Entities (LEIE) and the System for Award Management. The LEIE is managed by the Office of the Inspector General (OIG) at Health and Human Services (HHS).

However, some states have their own exclusion databases for individuals or entities participating in state benefit programs, including Medicaid. In California, Medi-Cal maintains their exclusion list on their website. What do the California exclusion screening requirements entail? What does it mean for individuals and entities on the list (including health care organizations)? And what are best practices for complying with these requirements?

What are the California exclusion screening requirements?

Medicaid providers are required to screen all employees and contractors to ensure they are not on any federal or state exclusion lists. This screening should not only be done when an individual is hired or enters into a contract, but also conducted regularly to check against any new exclusions. If an excluded individual is discovered, quick action should be taken to resolve the issue and prevent payments.

What is a Medicaid Exclusion?

Once a provider has been identified as participating in fraud or abuse, health care organizations and government agencies have measures in place to prevent them from receiving any additional payments on false claims. Payment bans are one of the most effective ways to prevent further abuse or fraud, and state and federal exclusion lists give health care providers a valuable tool to assist in this effort.

According to a 2009 letter sent to state Medicaid directors, “This payment ban applies to any items or services reimbursable under a Medicaid program that are furnished by an excluded individual or entity, and extends to:

  • All methods of reimbursement, whether payment results from itemized claims, cost reports, fee schedules, or a prospective payment system;
  • Payment for administrative and management services not directly related to patient care, but that are a necessary component of providing items and services to Medicaid recipients, when those payments are reported on a cost report or are otherwise payable by the Medicaid program; and
  • Payment to cover an excluded individual’s salary, expenses or fringe benefits, regardless of whether they provide direct patient care, when those pay.”

Who gets excluded? Why are exclusions imposed?

According to Medi-Cal, the Department of Health Care Services (DHCS) may suspend a Medi-Cal provider of health care services (provider) from participation in the Medi-Cal program when the individual or entity has:

  • Been convicted of a felony;
  • Been convicted of a misdemeanor involving fraud, abuse of the Medi-Cal program or any patient, or otherwise substantially related to the qualifications, functions, or duties of a provider of service;
  • Been suspended from the federal Medicare or Medicaid programs for any reason;
  • Lost or surrendered a license, certificate, or approval to provide health care; or
  • Breached a contractual agreement with the Department that explicitly specifies inclusion on this list as a consequence of the breach.

In California, suspension is automatic and suspended Medi-Cal providers cannot request a hearing under the California Administrative Procedures Act, but providers who are suspended by Medicare or HHS must appeal through the federal government before they can re-enroll with Medi-Cal.

What is the effect of a Medicaid exclusion?

Rendering payments to providers on an exclusion list is a violation of state and federal law. Organizations who inadvertently pay an excluded provider or entity can expect to have that money recouped.

For organizations, the effect of an exclusion is broad and prohibits the payment of providers in any way and includes the following:

  • The suspension by the director of any provider of service shall preclude the provider from submitting claims for payment, either personally or through claims submitted by any clinic, group, corporation, or other association to the Medi-Cal program for any services or supplies the provider has provided under the program, except for services or supplies provided prior to the suspension.
  • No clinic, group, corporation, or other association which is a provider of service shall submit claims for payment to the Medi-Cal program for any services or supplies provided by a person within the organization who has been suspended or revoked by the director, except for services or supplies provided prior to the suspension.

Best practices for complying with the California Medicaid Exclusion Screening requirements

Health care organizations that render payments for providers or entities on a federal or state exclusion list can be subject to stiff penalties and legal action. It is crucial to have a robust compliance process in place to protect the organization and patients from any provider known to cause harm. Here are a few suggestions for compliance:

  • Screen employees (including administration such as owners, directors, and managers), vendors, and contractors before hiring.
  • Complete monthly maintenance screening for all staff, vendors, and contractors.
  • Verify that vendors also have a screening system in place for their employees.

Using a platform or vendor with the proper accreditation can help reduce the administrative burden of initial and ongoing screenings. Verisys offers clients the gold standard in screening with the use of thousands of primary sources and simple, easy-to-read reports.

Verified true matches are communicated to our partners in near real-time. Rather than waiting for a monthly (or less frequent) check, we identify potential concerns soon after publication from primary sources so our clients can rest easy knowing that any potential red flags will appear promptly.

Juliette Willard Written by Juliette Willard
Healthcare Communications Specialist
Being creative is my passion! Writer. Painter. Problem Solver. Optimist.
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