OFCCP Posts Directive Regarding Jurisdiction Over Hospitals

In December of 2010 the OFCCP issued a new directive regarding jurisdiction over hospitals who have certain contracts. Historically, hospitals have avoided the compliance requirments under Executive Order 11246 because Medicare provided insurance - not direct services. However, in 2010, an Administrative Law Judge (ALJ) determined that OFCCP does have jurisdiction under other contracts where services are being provided. Since the OFCCP v. Florida Hospital of Orlando, ALJ Case No. 2009-OFC-00002, the OFCCP has been sending out desk audit letters to hospitals citing the TRICARE contracts to support their jurisdiction and prior argument that hospitals are indeed subcontractors.

The OFCCP directive can be found through the link here:


http://op.bna.com/dlrcases.nsf/id/jaca-8dbq53/$File/OFCCP%20Health%20Care%20Directive.pdf

Below is an excerpt from the directive, outlining the basic premise:


OBSOLETE DATA: This Directive supersedes two earlier Directives. They are: Directive Number 189, Health Care Entities that Receive Medicare and/or Medicaid (December 16, 1993); and Directive Number 262, Coverage of Health Care Providers Based on their Relationship with Participants in the Federal Employees Health Benefits Program (March 17, 2003).

BACKGROUND:

A wide range of relationships exist between health care providers and/or insurers, and Federal health care programs and/or participants in Federal health care programs. Some of these relationships constitute contracts within OFCCP jurisdiction, while others do not. Recent case decisions and changes in the health care industry and Federal health care programs have given rise to questions about which health care provider/insurer relationship constitute covered Federal contracts. This Directive addresses these coverage questions with respect to three nationwide Federal health care programs – Medicare, TRICARE, and the Federal Employees Health Benefit Plan (FEHBP) – and provides guidance for assessing when a health care provider or insurer is a covered federal contractor for purposes of OFCCP jurisdiction.

Three significant OFCCP cases address health care provider coverage issues and provide the basis for a framework for the analysis of these issues. In OFCCP vs. UPMC Braddock, UPMC McKeesport, and UPMC Southside, ARB Case No. 08-048 (May 29, 2009), a case involving the FEHBP, the Department of Labor Administrative Review Board (ARB) determined that three hospitals under review by OFCCP were covered subcontractors. Each hospital had a Health Maintenance Organization (HMO) contract with UPMC Health Plan to provide medical products and services to Federal Government employees covered by the UPMC Health Plan, pursuant to the Health Plan’s contract with the U.S. Office of Personnel Management (OPM). The decision found that, under the terms of the HMO contract, the hospitals were to provide the medical services necessary for the UPMC Health Plan to meet at least a portion of its contractual obligation to OPM to put an HMO into operation. Thus, the hospitals were subcontractors subject to OFCCP jurisdiction.