Medicare Exclusions Disproportionately Attacking Nursing: The Auditing Hunt: Part I

Nursing suffers disproportionately.

Are Medicare auditors similar to ancient hunting parties, roaming the tundra for wild game? Are audits applied equally and randomly across all healthcare providers, or is there intelligent design directed by a hidden network of influencers, working behind the scenes and shifting first to one area, then another?

RACmonitor is going to look at the data to see if we can find patterns in auditing and settlements, and if possible, identify the driver behind these waves of aggressive activity. We will start with the sanction of exclusion.

Exclusion from the Medicare system is a drastic punishment. The company or individual sanctioned in this way may have no employment with any organization (hospital, clinic, or other healthcare facility) that receives funding from Medicare.

For all practical purposes, the excluded party is prohibited from working in healthcare. If this is their only source of livelihood, it is a very tough sanction.

Statutory Basis of Exclusions

Exclusion comes in two forms: mandatory and permissive. Mandatory exclusions are specified in the Social Security Act §§1128(a)(1)–(4) and in 42 USC §1320a–7(a)(1)–(4), which identify commission of program-related crimes, abuse or neglect of patients, fraud on the system, or illicit involvement with controlled substances. Conviction of any of these crimes automatically leads to a five-year exclusion. If there is conviction of a second of these crimes, then exclusion is 10 years. A third time and exclusion is permanent, per 42 USC §1320a–7(c)(3)(G)(I)–(ii); three strikes and you’re out.

Permissive Exclusions

Permissive exclusion means that under some circumstances, the sanction does not have to be applied. These include commission of fraud in a non-healthcare program, obstruction of an investigation or audit, working while one’s license is revoked or suspended, making excessive charges for services, providing unnecessary services, providing poor services, taking kickbacks, making false statements relevant to Medicare matters, or defaulting on education loans. Given vague and flexible terms such as “obstruction,” “excessive,” “poor services,” or “false statements,” it is clear that these rules may be in some way arbitrarily enforced. That is, they depend on the harshness with which the auditor wishes to interpret the actions of the healthcare provider.

Exclusions are reported according to the type of provider: a clinic, therapist, nursing firm, hospital, pharmacy, durable medical equipment (DME) company, skilled nursing facility, podiatry practice, laboratory, and many others.

Exclusion of Business Entities

Business entities are only 4.2 percent of the excluded population. There are 3,236 businesses excluded, out of 76,790 current exclusions. Of these, there are 50 different types of excluded businesses. Of these types, 33 account for less than 1 percent of business exclusions. The leading type of company excluded is the DME provider, accounting for 19.2 percent of all business exclusions. “Other” businesses, pharmacies, and clinics are each currently at approximately 10 percent each, and all others are 5 percent or less.

Exclusion of Individuals

For individuals (not companies) that have been excluded, by far the greatest number are in the nursing profession, and in the category of individually licensed healthcare service providers.

There are 26 categories of specialized individuals providing healthcare. These include nurses, aides, pharmacists, counselors, chiropractors, dentists, psychologists, social workers, nurse practitioners, podiatrists, acupuncturists, and others. But of the 16,961 current exclusions, 11,907, or 70.2 percent, are nurse’s aides. The next most common type is healthcare aides, 1,094 (6.5 percent). After that, the numbers drop rapidly, with 18 of the 26 types being less than 1 percent of the exclusions.

Nursing Suffers Disproportionately

In the second-greatest category, the nursing profession, there are 13,930 exclusions. Of those, almost all, 13,908, are for nurse’s aides. Only 52 out of the 13,930 are for other types of actors in nursing. If the exclusion number for nurses and nurse’s aides provided by licensed service providers are added, the total is 25,837 entities, but keep in mind that the 11,907 figure refers to exclusion of companies, not individuals, so the likely number of individuals blocked from work in healthcare is much greater.

In Figure 1 is plotted the current exclusions, arranged by the date of the exclusion. Although it is possible to apply to be reinstated, we do not know from this data how many persons or businesses no longer appear, if any. The earliest exclusion record was created in 1978, and it appears to still remain in effect.

There were fewer than 250 exclusions being enacted per year from 1978 through the first 10 years of the program, whereupon the number started to rise. There is strong growth in the number of exclusions per year until the peak is reached in 2018, when 3,550 exclusions were imposed, an average of about 14 per working day, including the holidays. It is peculiar that most exclusions occurred on the 18th-20th of the month.

Although it is not shown in the figure, there is a strong correlation between the growth (or decrease) in the number of exclusions per year and the political party in the White House.

From this first look at the “hunting game” of auditors, we might make the following conclusions:

• The nursing profession, including nursing support staff (nurse’s aides) are disproportionately excluded;

• Aides and support staff in nursing account for most exclusions in the nursing field; and

• This suggests a very urgent need for better compliance education among these workers.

In addition, it is possible to suggest a few observations regarding the overall exclusion program:

• The number of exclusions is not related closely to the amount of Medicare fraud, waste, and abuse, because, for example,  there is no evidence that from 1978 until 2018, the level of fraud went up by a factor of more than 3,000; likewise, there is no indication that the amount of fraud waste and abuse decreased by one-half from 2018 until 2020.

• Instead, we can surmise that the number of exclusions is a reflection of how much bureaucratic effort is put toward seeking out and excluding offenders, and the number goes up and down depending on the effort made, not on the amount of fraud. More inspectors and auditors translate to more fraud.

Finally, we should wonder why so many nurse’s aides are caught up in the exclusion program. One factor might be lack of adequate legal representation. After all, relative to other parts of the healthcare profession, this class of worker on average makes less money, is less educated, and certainly is less trained in the intricacies of Medicare compliance. They are the poorest and least able to fend for themselves when audited.

The above is what can be seen from a small set of data provided by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG). Other data not available and not reviewed might alter these observations.