The Healthcare Industry’s International Exclusion Screening Compliance Requirements

Businesses that operate on a global scale often have to work with suppliers, distributors, client organizations, and other partners overseas. What results is a trade of goods and services across borders, which the government regulates heavily.

Export and trade regulations often ban domestic companies from working with certain foreign individuals and groups in order to protect against fraud and national security concerns. Compliance is achieved with effective denied party and exclusion screening processes. The medical industry is certainly no exception, with several federal and state agencies governing what exclusions, or debarred parties, that a medical organization must follow.

In order to avoid the financial penalties, legal sanctions, and losses in market reputation associated with non-compliance, healthcare businesses must have dedicated exclusion screening compliance teams and policies in place.

Part of the job is third-party due diligence and denied party screening, including regular checkups to ensure that any new business partners or onboarding employees and physicians are not part of any government exclusion list. Excluded entities are considered risky to work with anyway, so it makes sense why the business itself wouldn’t want to work with them.

Compliance programs in healthcare run into unique challenges involving the complexity of healthcare regulations and their notoriously stringent punishments for non-compliance. For instance, there are several exclusion screening lists to keep track of, and the companies in this space are expected to uphold their own screening procedures.

And since many hospitals and other institutions are focused on expanding their operations internationally, the challenge of vetting third parties increases goes up over time as new individuals and organizations join the company.

When designing an international export compliance program that also covers exclusion screening, management teams need to consider all the lists that apply to them. The following is a rundown of the most well-known lists, but you should consult with legal teams for more details.

The Office of Inspector General (OIG) maintains its own exclusions database that’s searchable from here. It’s known formally as the List of Excluded Individuals and Entities (LEIE).

Entities end up on this list for many reasons:

• Fraudulent activity, especially regarding federal or state funding programs like Medicare and Medicaid.
• History of abusing and distributing controlled substances illegally.
• Generally poor quality of products and services, which may include patient abuse and neglect.

But no matter what, all entities on the LEIE are forbidden from participating in federally funded healthcare programs.

Actually screening the LEIE takes a bit of work. This exclusion screening database itself is searchable through identifiers like a Social Security Number or Employer Identification Number. And much like other exclusion lists mentioned here, the LEIE is updated regularly, often multiple times a month. It’s up to you to have the latest version when checking for barred parties in your organization.

While not entirely healthcare-focused, the Office of Foreign Assets Control (OFAC) is still of note to organizations in this industry. OFAC works with the U.S. Department of the Treasury to protect foreign policy and national security with regard to cross-border financial transactions.

Recent actions by the agency show that OFAC screening applies not only to financial institutions but also to medical ones as well. OFAC actually handles multiple sanction lists like the Specially Designated Nationals and Blocked Persons List, the Consolidated Sanctions List, and the Foreign Sanctions Evaders List. It’s recommended to check the agency’s website for more information on how it applies to you.

The General Services Administration (GSA) began under the Affordable Care Act and has since been dedicated to helping federal agencies function at a basic level. Among its responsibilities is keeping up an exclusion list known as the excluded parties list system (EPLS), which is now known as the system for awards management (SAM).

The change from EPLS to SAM involved some improvements to make the list more readable and accessible to businesses. The search contains automated suggestions and allows you to sort by the type of exclusion among other changes.

It’s worth noting that an entity on the SAM is not necessarily barred from working with a domestic medical organization. Instead, it simply cannot receive federal contracts for products and services sold.

This list is by no means exhaustive. There are other agencies and sanction lists to keep track of, including:

• The Foreign Corrupt Practices Act (FCPA): Prior to the implementation of the FCPA, it was not uncommon for American businesses to bribe foreign officials to advance their own operations overseas. The FCPA, while not exclusive to the healthcare industry, aims to change that through internal controls, recordkeeping policies, and enforced accountability.
• The Drug Enforcement Administration (DEA): Most medical professionals are aware of the DEA, which handles illegal drug distribution through the Controlled Substances Act. There is an analogous exclusion list to keep track of here.
• State Medicaid Programs: Not only are there federal sanction lists, but individual states often have their own guidelines and exclusions for regional Medicaid. And under the Affordable Care Act, you are responsible for essentially all states’ debarred party lists. While the states are encouraged to report their exclusions to the federal LEIE, most fail to do so or are slow to send updates, so it’s up to you to catch the whole list.

The sheer number of separate exclusion screening lists only highlights the complexity of medical compliance and why they require special attention within a medical organization.

What are the best practices to prevent you from accidentally missing an exclusion and putting your company at risk of government sanctions and penalties?

It may sound like a cliche at this point, but collaboration across the organization empowers a compliance program more than anything else. That’s because the risk involved can impact any part of the business:

• Procurement teams are most likely to get in contact with sanctioned third-parties while searching for suitable vendors and suppliers.
• Human resources needs to scan through its candidates for employees and physicians.
• Business strategists need to make their plans with government regulations in mind.

Exclusion screening is too important a task to delegate to only a few compliance officers. Keep everybody accountable at least partly for the overall compliance posture of the business. This way, you can find and address issues before they crop up.

A comprehensive screening procedure leaves no stone unturned. Almost everyone must be checked, including new employees and physicians during onboarding processes and any vendors and suppliers the procurement team picks up.

Individuals must be cross-checked by their names and any variations on those names. Vendors can be checked through the company name or the Employer Identification Number. Though denied party screening should aim to cover as much ground as possible, it’s not uncommon for larger healthcare businesses to prioritize their most active suppliers first.

In the same vein, denied party screening should be conducted every month at the least since exclusion lists get updated every month on average. The Office of Inspector General actually recommends this frequency in its official bulletin.

In order to take control of your own compliance, it’s recommended to turn to automated solutions for exclusion screening for this reason. Having the most up-to-date copy of the lists is a prerequisite to a comprehensive screening program.

This fact is especially true for individual Medicaid exclusion screening lists provided by each state. Even though the states are meant to notify the OIG of any changes, many state-specific exclusions don’t end up on federal lists like the LEIE.

Exclusion screening doesn’t have to be an expensive hassle. Being a data and analytics-heavy process, denied party screening is naturally a field where technology can be leveraged effectively. Healthcare compliance, with so many best practices and individual agencies involved, is too complicated to entrust to a manual business process.

That’s why Descartes has been working with some of the world’s most prominent hospitals to support their work on customs and regulatory compliance. Contact us to learn more about how our tools help boost global trade intelligence and empower denied party screening departments across the country.

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