Who are Excluded Individuals and Entities?

Under federal law, no payment under any federal health care program may be made for items or services furnished by an excluded individual or entity. Here are some of the circumstances that can cause an exclusion:

  • Individuals and entities may become excluded from participation in federal health care programs for a variety of reasons, including fraud, theft, embezzlement, breach of fiduciary responsibility, financial misconduct, unlawful kickbacks, or interference or obstruction of a criminal investigation.

  • Exclusion is mandatory under certain circumstances, such as upon conviction of a criminal offense related to the delivery of an item or service under Medicare or of a felony relating to the unlawful manufacture, distribution, prescription or dispensing of a controlled substance.

  • In addition to those circumstances where exclusion is mandated, the OIG has sweeping authority to order permissive exclusion in a variety of circumstances.

  • While a common basis for exclusion is the submission of false or improper claims to Medicare or Medicaid, exclusion need not result from billing misconduct or even from misconduct in the health care setting. For example, the OIG has the permissive power to exclude any individual or entity upon the suspension or revocation of a license to provide health care for reasons bearing on the individual’s or the entity’s professional competence, professional performance or financial integrity.

  • Additionally, exclusion can be imposed when an individual or entity is sanctioned by a federal or state health care program.

  • Even maintaining certain types of direct or indirect ownership or control interests of excluded entities may provide a basis for exclusion.

These examples illustrate the diverse grounds for exclusions and the concomitant difficulty a health care provider may encounter in discovering that it employs or contracts with an excluded party

How Can Excluded Individuals and Entities Affect You

You should not employ or contract with excluded individuals and entities, since they are prohibited from participating in federal health care programs, and doing so violates Medicare and Medicaid provider agreements. In addition, you cannot submit claims for any items or services furnished by excluded individuals and entities to federal health care programs.

This prohibition applies to all methods of federal health care program reimbursement, including fee for service claims, prospective payment system (PPS) payments, and the submission of costs on Medicare and Medicaid cost reports. Moreover, the prohibition extends beyond direct patient care services to include administrative, clerical, and management services. Any individual or entity submitting claims or reporting costs to any federal health care program has an affirmative duty to ensure that all employees and contractors providing services encompassed in those claims or costs are not excluded.


What Can You Do?

Although anyone who submits claims to federal health care programs is at risk of mistakenly billing for services or supplies furnished by excluded individuals or entities, there are steps that you can take to mitigate this risk:


  • Check government and state exclusion lists for all employees and contractors on a MONTHLY basis, and VALIDATE any results.

    Your organization’s corporate compliance program should contain a policy and procedures addressing exclusions. The policy should require that all new hires, current employees, and outside contractors be screened against available Federal and State exclusions lists, including OIG LEIE, GSA EPLS, OFAC, and State lists. It is very important to conduct appropriate investigative techniques to ensure that your results are verified before taking any legal or HR actions.

    When working with vendors/contractors, you can address exclusions in contracts. Current regulatory guidance advises including the following provisions in all agreements with outside contractors: (1) contractor’s representation that neither the entity nor any of its employees is excluded and that periodic exclusion checks are performed to ensure continued compliance; (2) contractor’s responsibility to notify you if the contractor or any of its employees are excluded; and (3) your right to invoke immediate termination of the contract in the event the contracting entity is excluded.

  • Develop a policy and practice for regular exclusion updates.

    In addition to checking federal/state databases upon hire or prior to entering into a contract, providers should check the databases on a regular basis to determine whether current employees or contractors have been excluded post-hire or after the contract has been signed. These checks are important because the databases are continually updated, and employees may be excluded for reasons that would not be obvious to an employer. The OIG’s List of Excluded Individuals or Entities, (LEIE), and the U.S. General Services Administration’s Excluded Parties List System (EPLS) are updated monthly. Update schedules for states that maintain exclusions lists are more varied, and range from daily to weekly to monthly. Regulations are also continually changing, which affects sanction screening requirements. In conjunction with the Jan 2011 PPACA statute, CMS issued Final Guidelines and Rules, effective 3/25/2011, requiring termination of provider participation under Medicaid if terminated under Medicare or another State plan (ACA Sect. 6501). CMS also recommends in Section 455.436 that States make sanction screening checks for exclusions a requirement for all providers and contractors, including managed care contractors in Medicaid/CHIP programs.

  • Develop a procedure for managing any exclusions that are discovered.

    While the compliance steps outlined above should help you screen out most excluded individuals, situations can arise where an individual’s exclusion appears in the databases between periodic checks, or claims for services by the individual or entity are submitted before the exclusion is discovered. If you discover an excluded individual or entity, do not panic. There are many complex rules regarding calculating when exclusion takes effect and how long after that date claims may still be processed. It is best to consult with counsel in these cases. In most circumstances, an internal investigation followed by self-disclosure to the state Medicaid Fraud Control Unit, or directly to OIG, is the recommended course. Exclusions are a serious matter; once an individual or entity appears on the public exclusions lists, the government imputes knowledge of that individual’s or entity’s excluded status to anyone submitting claims to a federal health care program. In other words, providers will be considered to have known that the individual or entity was excluded, and, therefore, could be found liable for civil monetary penalties, treble damages, and even exclusions. Organizations that have a robust screening program in place, who are able to present to the government documentation of employee and contractor screens and periodic checks, can likely avoid criminal false claims administrative sanctions and exclusions.

  • OIG Compliance NOW partners with you as a third-party administrator to assess and document your compliance efforts against OIG sanctions. We offer MONTHLY screening, robust validation efforts using a licensed investigative team, regulatory updates, and dedicated support for your internal efforts with program design, policies, documentation, and reporting. Contact us to learn more!