(March 17, 2022): Over the last few months (from mid-November 2021 through mid-March 2022), the number of excluded individuals and entities on the Department of Health and Human Services, Office of Inspector General’s (OIG’s) List of Excluded Individuals/Entities (LEIE) has grown by approximately 15%. According to our friends at Exclusion Screening, this rapid expansion of the LEIE is due (at least in part), to better sanction reporting by the states and an increase in enforcement activity by federal and state regulators. Regardless of the reasons, this is a troubling. If this trend continues, we should expect to see an annualized increase in growth of 45% by November 2022. Now, more than ever before, it is important that health care providers and suppliers participating in federal health care benefit programs ensure that they are meeting their screening obligations. In this article, we examine several recent OIG cases brought against individuals and entities for their failure to properly screen against applicable federal and state exclusion databases.
I. Legislative and Regulatory History of the OIG’s Exclusion Authorities
As reflected below, the improper submission by an excluded individual or entity of Medicare and Medicaid claims to the government for payment has been unlawful for more than 40 years.
- 1981: Congress enacted the Civil Monetary Penalties (CMP) law (as part of the Omnibus Budget Reconciliation Act of 1981) which authorized the Secretary, HHS to impose CMPs against any individual or entity found to have submitted claims for payment by Medicare or Medicaid for items or services furnished by an excluded individual. Since first being passed, there have been several additional statutes further expanding the OIG’s authority to assess CMPs.
- 1988: The Secretary, HHS delegated it’s CMP authority to the OIG 
- 1997: The OIG published guidance outlining how they assess and evaluate whether to impose a permissive exclusion action.
- 2016: In April 2016, the OIG issued updated criteria for assessing and evaluating the imposition of permissive exclusions in health care fraud cases.
Being excluded from participation in the Medicare and Medicaid programs is the most severe administrative action that may be imposed by the OIG against you or your company. This is primarily due to the fact that any payment made by a federal health care program for an item or service furnished, ordered, or prescribed by an excluded party is a potential overpayment, and because the OIG may impose CMPs against providers that employ or contract with excluded individuals or entities. This payment prohibition, and the resulting employment embargo on excluded entities are enforced by simply requiring providers to know the exclusion status of everyone they employ or do business with. It is essential to remember that a lack of knowledge is no defense. Health care providers and suppliers face strict liability if they fail to properly screen the members of their staff, their vendors, agents and contractors.
It is worth noting that even unpaid volunteers can trigger an overpayment and can expose a provider or supplier to CMP liability if the items or services they furnish are not “wholly unrelated” to federal health care programs and the provider fails to ensure that appropriate exclusion screening procedures were performed.
II. Types of HHS-OIG Exclusions
There are two types of OIG Exclusions – Mandatory and Permissive.
- Mandatory exclusions are identified in Sections 1128(a)(1) – 1128(a)(4) of the Social Security Act (SSA), and they are imposed as a result of convictions for program fraud, patient abuse and certain drug offenses.
- Permissive exclusions, on the other hand, are discretionary and can be imposed for a broad range of conduct. Most permissive exclusions are based on disciplinary actions taken by state licensing boards. And most of these actions (approximately 70% involve nurses and nursing assistants). Physicians accounted for only 9% of the permissive exclusions, while business owners only accounted for 3%.
III. What is the Scope of an Exclusion Action?
The effect of an OIG exclusion is extremely broad and is intended to broadly prohibit the participation in federal health care programs by excluded parties. The “payment prohibition” extends to all items or services that are furnished, either directly or indirectly, by an excluded individual or entity, or at the medical direction or on the prescription of an excluded person.
The following is a list of services identified by the OIG in its “Updated Special Advisory” that would be subject to the payment prohibition:
- Management, administrative or any leadership roles.
- Surgical support or other activities that indirectly support care.
- Claims processing and information technology.
- Transportation services including ambulance company dispatchers.
- Selling, delivering, or refilling orders for medical devices.
The bottom line here is simple—a provider cannot employ an individual or entity who has been excluded in practically any capacity without violating the exclusion restrictions. As the OIG has stated:
IV. Have You Checked the OIG Exclusion List?
Not surprisingly, post-COVID, the OIG has been extraordinarily active reviewing cases where a provider has improperly hired an excluded individual. Several illustrative cases brought against participating providers for improperly employing an excluded individual are set out below.
- September 2021: An Arlington, Texas rehab facility agreed to pay approximately $247,000 for allegedly violating the CMP laws by employing an excluded individual. OIG’s investigation revealed that the excluded individual, a nurse, provided items or services that were billed to federal health care programs.
- September 2021: A McAllen, Texas nursing home agreed to pay approximately $91,000 for allegedly violating the CMP laws by employing an excluded individual. Once again, OIG’s investigation revealed that the excluded individual, a nurse, provided items or services that were billed to federal health care programs.
- August 2021: A Des Plaines, Illinois physician home care company agreed to pay the government more than $84,000 as part of a settlement agreement with the OIG. The OIG's investigation revealed that the excluded individual, a medical clerk, provided items or services that were billed to federal health care programs.
- May 2021: A Reno, Nevada gastroenterology practice agreed to pay more than $13,000 as settlement with the OIG for improperly employing an excluded individual. The OIG's investigation revealed that the excluded individual, a medical assistant, provided items or services that were billed to federal health care programs.
V. What Happens if an Excluded Individual or Entity Submits (Causes to be Submitted) a Claim to Medicare or Medicaid
If an excluded individual or entity submits, or causes to be submitted, a claim during their exclusion period, they are subject to Civil Money Penalty Liability under section 1128A(a)(1)(D) of the Social Security Act as well as criminal liability under section 1128B(a)(3).
Submitting claims or causing claims to be submitted or payments to be made, for items or services furnished, ordered, or prescribed by an excluded person or entity can serve as the basis for civil money penalties.
In most cases, the OIG has the authority to impose a penalty of up to $10,000 for each individual violation, however, this is increased to $25,000 for violations with respect to Managed Care Organizations, Medicare Advantage Plans and Part D Contractors.
In order to avoid the risk of overpayment liability and the imposition of CMPs, providers must screen their employees, vendors and contractors in order to ensure that none are excluded.
VI. Are Health Care Providers Really Required to Screen Contractors and Vendors?
Yes! The following contractors and vendors are likely candidates who should be screened:
- IT providers
- Ambulance and other transportation service providers
- Medical equipment suppliers
- Food service workers
- Lab Technicians
- Outside billers and coders
- Third party billing companies
- Staffing agencies and those that they staff
VII. When Must a Health Care Provider Screen in Order to Avoid Penalties?
Although the OIG concedes that there isn’t a specific regulation as to how often one must screen, it has unequivocally expressed its view that providers should screen upon hire and monthly thereafter in order to minimize the risk of “potential overpayment and CMP liability. To be clear, even if a provider is able to avoid CMP liability by engaging in proper screening activities, the provider will still be responsible for any overpayments that may be owed.
VIII. How Do We Take Remedial Action if an Excluded Individual is Inadvertently Hired?
The OIG specifically added a new section for self-disclosing exclusion violations when it updated its Self-Disclosure Protocol in May of 2013 (and Updated in November 2021). The update injected some certainty into the self-disclosure process by providing a simple formula for calculating the “loss” amount where an excluded employee provided non-billable services that contributed to claims – (for example, hospital nurses, administrators, etc.).
IX. Expanded Medicaid Screening Requirements.
Medicaid providers must enroll and re-enroll every 3 – 5 years (depending on the provider type) in order for the state to determine initial and ongoing eligibility to participate in the program.
As part of the recredentialling process, providers must disclose their owners (anyone with a 5% interest), officers, directors, agents, managing employees, and any agent of the provider that has contracted with the state Medicaid agency.
The enrollment and disclosure process is an important part of the overall effort to ensure that only eligible providers receive Medicaid reimbursement, and state Medicaid agencies are specifically authorized to impose screening requirements “in addition to or more stringent than” the ones required by existing regulations.
It is also worth noting that a number of states require that providers ensure and verify that none of their employees, vendors and contractors are – or ever have been – excluded from any federal or state benefit program! In Texas, for example, prior to enrolling or re-enrolling in Medicaid, providers "must conduct an internal review" to confirm that neither the applicant “nor any of its employees, owners, managing partners, or contractors…have been excluded from participation in any program under Title XVIII, XIX, or XXI of the Social Security Act.
- Screening employees takes time: Screening is a complicated process even for small health care providers. At a minimum, Health care providers and suppliers are required to screen current and prospective employees, as well as any contractors, against the OIG exclusion list or state exclusion list (if a Medicaid provider). Depending on your state and your circumstances, your obligation could include several more databases.
- Proper screening is prudent: In addition to protecting against overpayment and possible civil monetary penalties, the employment or engagement of an excluded party provides additional risks to your patients and the economic well-being of your practice. There is really no good reason to hire or contract with an excluded person or entity.
- Regardless of whether there is actual fraud or an overpayment, the employment of excluded individuals is quite serious to the OIG: The OIG won’t hesitate to pursue civil monetary penalties against a provider who employs excluded individuals, despite the fact that no mention is made of any wrongful billings. Regular screenings of employees and contractors should be made to ensure that no employees have been excluded from participation.
- The government is serious about self-disclosing problems: To be clear, if you owe money to the government, you must pay it back, and the OIG’s voluntary disclosure protocol was updated to facilitate exclusion disclosures. Thus, the issue to be resolved is not if, but how, to go about returning funds you are not entitled to. Depending on the circumstances, a provider may be better off working with their Medicare Administrative Contractor (MAC) to resolve a problem. In other cases, the OIG’s self-disclosure protocol may be the best option. Every situation is different and should be carefully assessed before action is taken.
- Federal and state law enforcement teams are coordinating their actions and findings: We have seen examples of violations being identified by state MFCUs who then contacted the OIG, by Medical Boards who advised a CMS program integrity contractor, and of initiatives by different arms of the Office of Inspector General.
- When entering into contracts, screen your contractors and require that they prove their employees have not been excluded: Rather than focusing solely on employees, look at your contractual business relationships as well, and don’t just take their word!
- Ensure that your policy and procedures manual has been updated to include this issue: All employees should be advised that they have an affirmative obligation to tell you if they have been excluded or debarred from a federal program.
In summary, it is essential that health care providers continually monitor the exclusion status of not only applicants for employment, but also existing personnel, vendors, agents and contractors. In addition to the OIG exclusion list and the GSA Debarment List, there are currently 43 state exclusion databases that must be checked.
Robert W. Liles, Esq. is Managing Partner at the health law firm, Liles Parker PLLC. With offices in Washington, DC, Houston, TX, and Baton Rouge, LA, our attorneys represent health care providers and suppliers around the country in connection with OIG exclusion appeals, CMS preclusion appeals, postpayment / prepayment audits, Compliance Plan reviews and state peer review actions. Should you have any questions, please call us for a free consultation. Robert can be reached at: 1 (800) 475-1906.
-  For questions regarding your screening obligations, you can contact Kip McGuire at (800) 294-0952 www.exclusionscreening.com.
-  53 Fed. Reg. 12,993 (April 20, 1988).
-  62 Fed. Reg. 67,392 (Dec. 24, 1997).
-  See U.S. DEP’T OF HEALTH & HUMAN SERVS.: OFFICE OF INSPECTOR GEN., Criteria for Implementing 1128(b)(7) Exclusion Authority (Apr. 18, 2016).
-  Sections 1128(a)(1) – 1128(a)(4) of the Social Security Act.
-  Over the last decade, the OIG has been quite active in its exclusion-related enforcement efforts. To illustrate this point, please see our 2013 article titled “Medicare Exclusion Screening is essential to Compliance – Failure to Properly Screen Can be Costly.”
-  Section 1128B(a)(3) of the Social Security Act.