Employers must check its employees, contractors and vendors to see if an individual or organization is excluded from participating in federal and/or state programs. While there are a variety of exclusion programs at the federal and state level affecting individuals, entities, contractors and others related and unrelated to healthcare services, this post will address exclusion by the U.S. Department of Health and Human Services, Office of Inspector General (the “OIG”), a well-known entity that excludes individuals or entities from participation in federal healthcare programs. 42 U.S.C. § 1320a-7.

On April 11, 2024, a jury convicted Northern Kentucky Center for Pain Clinic owner Dr. Timothy Ehn (who was not a medical doctor) and medical director, Dr. William Lawrence Seifert, for their roles in a scheme that defrauded Medicare, Medicaid and commercial insurance companies of over $4 million for medically unnecessary urine drug testing.

On April 16, 2024, the U.S. Department of Health and Human Services (HHS) finalized a rule modifying the Confidentiality of Substance Use Disorder (SUD) Patient Records (the Final Rule) codified at 42 C.F.R. Part 2 (Part 2). Part 2 regulations protect the confidentiality of individuals with SUDs and applies to “[r]ecords of identity, diagnosis, prognosis, or treatment of any patient which are maintained in connection with the performance of any program or activity relating to substance use abuse education prevention, training, treatment, rehabilitation, or research” which is conducted, regulated, or directly or indirectly assisted by any department or agency of the United States. The rule increases coordination among providers while strengthening confidentiality and patient protections, and it seeks to become better aligned with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and the Health Information Technology for Economic and Clinical Health Act (HITECH).

In 2023, Arizona uncovered one of the largest behavioral health fraud schemes in the United States. The scheme targeted homeless individuals and/or Native Americans for fraudulent substance use treatment. Organizers of the scheme bribed victims by providing them housing in unlicensed “sober living” homes. They also enrolled victims into Arizona’s American Indian Health Program, even if they were not Native Americans. The victims were then sent to behavioral health treatment centers, not for the purpose of receiving proper treatment, but simply so that the treatment centers could bill for services to the Arizona Health Care Cost Containment System (AHCCCS). The fraud fell into two major categories: (1) fraudulent billings by behavioral health treatment providers and (2) patient brokering (referring patients to addiction treatment providers in exchange for payment).