[Code of Federal Regulations]
[Title 42, Volume 3]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR1001.801]

[Page 1108-1109]
 
                         TITLE 42--PUBLIC HEALTH
 
                     CHAPTER V--OFFICE OF INSPECTOR
                          GENERAL--HEALTH CARE,
                        DEPARTMENT OF HEALTH AND
                             HUMAN SERVICES
 
PART 1001--PROGRAM INTEGRITY--MEDICARE AND STATE HEALTH CARE PROGRAMS--Table of Contents
 
                    Subpart C--Permissive Exclusions
 
Sec. 1001.801  Failure of HMOs and CMPs to furnish medically necessary items and services.

    (a) Circumstances for exclusion. The OIG may exclude an entity--
    (1) That is a--
    (i) Health maintenance organization (HMO), as defined in section 
1903(m) of the Act, providing items or services under a State Medicaid 
Plan;
    (ii) Primary care case management system providing services, in 
accordance with a waiver approved under section 1915(b)(1) of the Act; 
or
    (iii) HMO or competitive medical plan providing items or services in 
accordance with a risk-sharing contract under section 1876 of the Act;
    (2) That has failed substantially to provide medically necessary 
items and services that are required under a plan,

[[Page 1109]]

waiver or contract described in paragraph (a)(1) of this section to be 
provided to individuals covered by such plan, waiver or contract; and
    (3) Where such failure has adversely affected or has a substantial 
likelihood of adversely affecting covered individuals.
    (b) The OIG's determination under paragraph (a)(2) of this section--
that the medically necessary items and services required under law or 
contract were not provided--will be made on the basis of information, 
including sanction reports, from the following sources:
    (1) The QIO or other quality assurance organization under contract 
with a State Medicaid plan for the area served by the HMO or competitive 
medical plan;
    (2) State or local licensing or certification authorities;
    (3) Fiscal agents or contractors, or private insurance companies;
    (4) State or local professional societies;
    (5) CMS's HMO compliance office; or
    (6) Any other sources deemed appropriate by the OIG.
    (c) Length of exclusion. (1) An exclusion imposed in accordance with 
this section will be for a period of 3 years, unless aggravating or 
mitigating factors set forth in paragraphs (c)(2) and (c)(3) of this 
section form a basis for lengthening or shortening the period.
    (2) Any of the following factors may be considered aggravating and a 
basis for lengthening the period of exclusion--
    (i) The entity failed to provide a large number or a variety of 
items or services;
    (ii) The failures occurred over a lengthy period of time;
    (iii) The entity's failure to provide a necessary item or service 
that had or could have had a serious adverse effect;
    (iv) Whether the individual or entity has a documented history of 
criminal, civil or administrative wrongdoing; or
    (v) The individual or entity has been the subject of any other 
adverse action by any Federal, State or local government agency or 
board, if the adverse action is based on the same set of circumstances 
that serves as the basis for the imposition of the exclusion.
    (3) Only the following factors may be considered as mitigating and a 
basis for reducing the period of exclusion--
    (i) There were few violations and they occurred over a short period 
of time; or
    (ii) Alternative sources of the type of health care items or 
services furnished by the entity are not available.
    (iii) The entity took corrective action upon learning of 
impermissible activities by an employee or contractor.

[57 FR 3330, Jan. 29, 1992, as amended at 63 FR 46688, Sept. 2, 1998]