Credentialing looms as major concern for OIG, DOJ

Inadequate screening of physicians and other entities can create a host of legal problems

First, a national study on the credentialing practices of hospitals surfaced on the Health and Human Services’ (HHS) Office of Inspector General’s (OIG) Work Plan in the form of a national study. More recently, it surfaced on the laundry list of major concerns of Assistant U.S. Attorney James Sheehan, chief of the civil division in Philadelphia. Those are two good reasons compliance officers should make this a top priority.

Sheehan underlines his caution with the case of a Philadelphia hospital that billed federal government health care programs for the services of a psychiatrist who, it turned out, was not even licensed in the state. The end result was a settlement with the U.S. Department of Justice.

Former Inspector General Richard Kusserow says there are several reasons hospitals must screen physicians, vendors, and other appropriate parties with whom they do business. The first is that as a condition of participation in the Medicare program, hospitals are responsible for making sure physicians are properly credentialed and have not had their license revoked or been excluded from the program.

The OIG has stated that, to submit a claim to Medicare or Medicaid, hospitals must ensure that person has not been excluded, says Kusserow, president of Strategic Management Associates in Alexandria, VA. "That also means that if you include in your cost report people who have been excluded, the cost report comes into question," he adds.

"You have a lot of risk there," warns Kusserow. In the first instance, providers are risking their qualification as a Medicare provider. In the second case, they can suffer sanctions from the OIG, including exclusion. "Needless to say, if you submitted 1,000 bills and part of that bill included an excluded party, those bills would be called into question," asserts Kusserow. "That could add up to a lot of money."

The third area amounts to a risk-management issue, says Kusserow. He paints the following scenario: A nurse is stripped of her credential for stealing narcotics and later has the credential restored. A hospital hires her without knowing her sanction history and has her dispensing Category III drugs. "If she did the same thing and a patient is harmed, the liability would be horrendous," says Kusserow.

The biggest penalty on hospitals in a case like this often is bad publicity and private liability, he adds. "In some respects, the larger penalty is not the government action but private litigation and tort liability," says Kusserow. "That’s why it is a risk-management issue first and foremost."

"Credentialing is not a new requirement," says Harry Shulman, a health care attorney with Davis Wright Tremain in San Francisco.

He says failure to meet those responsibilities can lead to liability in tort litigation, which is not the same thing as being responsible for a physician’s negligence.

"It is a separate cause of action against the hospital for negligent credentialing."

According to Shulman, the logic of that line of case law has been extended by the courts not only to hospitals but also to other types of entities that are responsible for negligent credentialing.

In order to cover all the necessary bases, Kusserow says hospitals must utilize the OIG’s National Practitioner Databank.

In addition, the OIG has published the list of excluded individuals and entities on its web site. He says a third area that should be examined is the General Services Administration (GSA) debarment list, which covers all federal programs. "If you have been debarred from all federal programs, that certainly includes hospitals," he warns.

According to Kusserow, if providers rely solely on the OIG’s web site, they will be getting only one piece of the pie. While the OIG cannot mandate that hospitals check the GSA site, it still could prosecute them if they employed a physician who had been barred.

A fourth area hospitals must check is state agencies, says Kusserow. "The doctor in the Philadelphia case was not even licensed," he asserts. "That’s why you have to begin with the state to make sure the person is licensed to do whatever it is they are doing."

Kusserow points out that hospitals can accomplish these steps inexpensively. [Hospitals can check 750 agencies nationwide for a person for $5 or all federal agencies for $1.]

"It is not a major expense," he asserts. "When you weigh the cost of doing that against the potential liability that would come from tort liability suits, federal sanctions, or fraud investigations, it’s a no brainer."

Finally, Kusserow says that compliance officers, human resource staff, and the medical credentialing committee all should be engaged in this process. Human resources staff should verify credentials while the medical credentialing committee approves staff privileges. "What hospitals should do is have a coordinated effort rather than have each group perform it piecemeal, which will drive up the cost," Kusserow says.