OIG Approves Real Estate Transaction With a Medicare-Excluded Individual

September 23, 2019 | Ada Kozicz | Fraud and Abuse | Legislation and Public Policy | Medicare and Medicaid

The U.S. Department of Health and Human Services’ Office of Inspector General (OIG) recently issued a favorable Advisory Opinion (No. 19-05) involving a proposed transaction with an excluded individual. Healthcare entities and providers must always use caution when contemplating proposed transactions with an individual who is excluded from participating in Medicare, Medicaid or other federally funded healthcare programs. Any person or entity that contracts with an excluded individual for the provision of items or services for which payment may be made under a federal program may be subject to a civil monetary penalty if the person or entity knew, or should have known, that the individual was excluded.

The Advisory Opinion addressed a community health center (CHC) that receives federal funding. The CHC wished to purchase real estate from a limited liability company that was owned and managed by a husband and wife team, and the husband was excluded from participating in federal healthcare programs. The OIG concluded that the transaction was permissible and would not subject to the parties to civil monetary penalties because it did not involve items or services that were federally reimbursable.

Although the CHC receives federal funding and planned to utilize the purchased space as an additional site that would be enrolled as a federally qualified health center, the real estate transaction itself did not involve federal funds.  The CHC certified that it would not use any federal grant money to purchase the real estate. Moreover, the husband and wife would not have any ongoing involvement with the site after the purchase and, therefore, there was no risk that the excluded individual would be involved in the provision of items or services that are reimbursable by a federal healthcare program.

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