Health Law Daily Purchase of real estate from ‘excluded person’ would not trigger sanctions
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Thursday, September 12, 2019

Purchase of real estate from ‘excluded person’ would not trigger sanctions

By Jeffrey H. Brochin, J.D.

The purchase of a community health center site from a company owned and managed by a person who was excluded from program participation, would not constitute grounds for the imposition of sanctions.

A community health center operator’s proposal to purchase a real estate site from a person who was excluded from participation in all federal health care programs would not constitute grounds for the imposition of sanctions, the HHS Office of Inspector General (OIG) said in an advisory opinion. The OIG would not impose sanctions against the purchaser under section 1128A( a)(6) of the Social Security Act (SSA) because the transaction would not be considered the purchase of items or services (OIG Advisory Opinion, No. 19-05, September 6, 2019).

Excluded persons. Any person who arranges or contracts with an individual or entity that the person knows or should know is excluded from participation in a federal health care program, for the provision of items or services for which payment may be made under such a program, is subject to civil monetary penalty liability under section 1128A(a)(6) of the ASS Act. For purposes of section 1128A of the SSA, the term "items or services" includes without limitation, any item, device, drug, biological, supply, or service (including management or administrative services), including, but not limited to, those that are listed in an itemized claim for program payment or a request for payment, for which payment is included in any federal or state health care program reimbursement method. This includes a prospective payment system or managed care system, or claims based on costs that are required to be entered in a cost report, books of account, or other documents supporting the claim (whether or not actually entered).

Proposed transaction. The requestor is a community health center that receives federal grant funding from the Health Resources and Services Administration (HRSA) through the HRSA Bureau of Primary Health Care’s Health Center Program (HRSA Health Center Program). The requestor owns and operates eight community health center sites, and each site is enrolled in the Medicare program as a Federally Qualified Health Center (FQHC). Under the proposed arrangement, the requestor would purchase the real estate located at one of his sites from a company that is owned and managed by an individual who is excluded from participation in all federal health care programs.

No site-based claims to be submitted. The requestor certified to the OIG that the requestor and the excluded person’s company would obtain an independent appraisal of the site and use the appraised value as the purchase price for the site. The requestor further certified it would not submit any claims to, or otherwise request payment from, any federal health care program for the purchase of the site from the company. Specifically, the requestor certified that the purchase of the site would not be: (1) listed in an itemized claim for federal health care program payment or a request for payment; (2) included in any federal or state health care program reimbursement method, such as a prospective payment system or managed care system; (3) included in any claim based on costs; or (4) required to be entered in a cost report, books of account, or other documents supporting a claim based on costs (whether or not actually entered). The requestor also certified that it would not use any HRSA Health Center Program grant funds to purchase the site or receive any financing from the company or the excluded person for the purchase of the site.

The requestor further certified that neither the company nor the excluded person would have any ongoing relationship—financial, ownership, control, management, or otherwise—with the requestor after the requestor’s purchase of the site from the company. After purchasing the site, the requestor would be the sole titleholder of the site

Purchase not a violation. The OIG ruled that the proposed arrangement would not involve the provision of an "item or service" for which payment may be made under any federal health care program, and therefore would not subject the requestor to administrative sanctions under section 1128A(a)(6) of the SSA in connection with the proposed arrangement.

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