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Medicare Payments and the Drug-Free Workplace Act

Question: Do Medicare reimbursement payments subject healthcare providers to the requirements of the Drug-Free Workplace Act?

Response & Analysis:


The Drug-Free Workplace Act (DFWA) requires some federal contractors and federal grant recipients to prohibit the “unlawful … use of a controlled substance” by employees in their workplace as a condition of employment.

Marijuana is currently listed as a Schedule I controlled substance under the Controlled Substances Act, and therefore any use of it is strictly prohibited by the DFWA.

Thus, federal contractors and federal grantees subject to the DFWA are legally required to maintain a drug-free workplace with no exceptions for employees’ use of medical marijuana, and therefore to do not have to revise their drug-free workplace policies regardless of what is required by state medical marijuana laws.

Medicare third-party reimbursements to hospitals and other healthcare providers are not covered by the DFWA because such sales are not made through a procurement contract or a grant.1 Thus, merely receiving Medicare payments will not exempt providers from state medical marijuana laws that require reasonable accommodations for or prohibit discrimination against medical marijuana users.2

However, some hospitals that receive federal procurement contracts or grants will likely be subject to the DFWA’s requirements—assuming some other requirements are met—and thus would likely not have to comply with state medical marijuana laws. Additional information on whether your organization is subject to the DFWA can be found here.

2 Even if a hospital or other healthcare provider is not exempt under the DFWA, state medical marijuana laws will generally include exceptions for safety-sensitive positions, thus allowing providers to maintain zero-tolerance drug-free workplace policies for at least some of their employees.

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This document and/or presentation is provided as a service to our customers. Its contents are designed solely for informational purposes, and should not be inferred or understood as legal advice or binding case law, nor shared with any third parties. Persons in need of legal assistance should seek the advice of competent legal counsel. Although care has been taken in preparation of these materials, we cannot guarantee the accuracy, currency or completeness of the information contained within it. Anyone using this information does so at his or her own risk.

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