This article details, in question and answer format, recent efforts by the federal government’s Office of Contract Compliance Programs (OFCCP) to assert jurisdiction over hospitals and other health care providers.
What is the OFCCP?
The OFCCP is a unit within the Department of Labor (DOL) which imposes specified rules and regulations on companies doing business with the federal government. The OFCCP requires employers that contract or subcontract with the federal government to supply goods or non-personal services to abide by certain affirmative action rules in the employment context. Providing insurance is a “non-personal service” under OFCCP regulations. Therefore, any entity that contracts with the federal government to provide insurance services is a government contractor subject to OFCCP jurisdiction. Moreover, any entity that subcontracts with a main contractor covered by the regulations is subject to the same jurisdiction. The OFCCP has used this broad definition of “non-personal services” to assert jurisdiction over hospitals that contract with insurers to provide medical care.
Historically, hospitals have avoided the compliance requirements under Executive Order 11246 because Medicare provided insurance - not direct services. In December of 2010 the OFCCP issued a directive regarding jurisdiction over hospitals superseding two earlier directives on this subject. Gearing up for aggressive enforcement, the OFCCP released another new directive, the Active Case Enforcement Directive (ACE). The ACE procedures will result in more in-depth OFCCP audits and will greatly increase the chances of OFCCP making findings that are adverse to the employers they audit. Because of these two directives, the OFCCP has increased its enforcement activities and more and more health care organizations are being contacted by the OFCCP for audit.
Employers subject to OFCCP jurisdiction must have an affirmative action plan with regard to hiring minorities, women, disabled individuals, and veterans. Failure to create an affirmative action program and undertake the additional affirmative action obligations prescribed by federal regulations could subject the organization to significant fines and penalties, including exclusion/debarment from future government contracts.
What kinds of medical service provider contracts fall under OFCCP jurisdiction?
Two recent cases demonstrate the broad jurisdiction that the OFCCP believes can be asserted over health care services contracts.
What is OFCCP Directive 293?
Bolstered by the Braddock and Florida Hospital decisions, the OFCCP issued Directive 293 on December 16, 2010. The Directive outlines the OFCCP’s objectives for asserting jurisdiction over hospitals and other health care entities. The main principles of the Directive are as follows:
Directive 293 can be found by clicking here.
I’m a health care provider that may be covered under the Directive. What should I do?