Posted by Joe Stefansky on August 9, 2021 in Exclusions, OIG Penalties,

The Basics – Failure to Monitor Federal Exclusion Lists Can Hit Your Bottom Line

Health care providers which serve Medicare and Medicaid enrollees have a duty to know if their employees, contractors or potential hires have been excluded by the Health and Human Services Office of the Inspector General (HHS-OIG) from participating in federal health care programs .  Since the vast majority of US health care providers and organizations have patients covered under some federally funded program, either directly or indirectly, very few health care entities can risk failing to regularly check for exclusions.

The financial impact of failing to monitor the OIG’s List of Excluded Individuals/Entities (LEIE) can be dire.    If a health care provider or organization employs or contracts with  excluded individuals/entities , and bills for their services or supplies, both  federal and state programs will deny payment.   In addition, the employer can face hefty fines and penalties for employing  excluded providers and billing for their services.  Both CMS and state Medicaid contracts expressly prohibit the employing of excluded individuals/entities by health care providers/entities which receive payment from a government program.

Having excluded providers on your payroll is not only bad for business, it is also bad for your patients. Many excluded providers have been convicted of fraud, patient abuse or neglect, or have a felony conviction related to misuse of controlled substances.

A Brief Overview of the OIG Exclusion List

The LEIE was created to assure the integrity of federal healthcare programs such as Medicare and Medicaid. The purpose of the LEIE is both ensure that federal program beneficiaries have access to high quality providers and to prevent any federal funds from flowing to individuals or entities who have demonstrated their disregard for the law and high standards of professional conduct. The LEIE is updated monthly by the OIG to assure the currency of the information available to states and health care individuals and entities regarding exclusion status.

What Happens if You Employ an Excluded individual/Entity?

The primary effect of employing an excluded individual or entity is that you will not be paid for any services rendered or supplies provided by the excluded employee/ contractor to a patient covered under a federal funded health care program like Medicare or Medicaid. If you submit a claim for such services, it also can result in heightened OIG or state Medicaid program scrutiny for your organization.

How Does Someone Get on the OIG Exclusion List?

An individual or entity can end up in the OIG exclusion list database  for a variety of reasons. An OIG exclusion is the most extreme civil sanction that the OIG can impose. Most exclusions by the OIG start with a state’s report of a criminal conviction or professional sanction of a provider/entity. States are required to notify the OIG of such actions taken. 

There are two types of exclusions that the OIG can impose. The misconduct or criminal action dictates which type of exclusion applies:

  1. Mandatory Exclusion.  If an individual/entity is convicted of the following criminal offenses, the OIG is required by law to impose a minimum 5-year term of exclusion:
    1. Health care fraud related to Medicare, Medicaid, SCHIP, or any state’s healthcare program;
    2. Patient abuse or neglect;
    3. Felony conviction under Federal or State law relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of a health care item or service, including the performance of management/administrative services relating to the delivery of such items or services; or
    4. Felony conviction under Federal or State law relating to the unlawful manufacture, distribution, prescription or dispensing of a controlled substance, as defined under Federal or State law.

      If a provider or entity commits a second criminal offense that requires mandatory exclusion, the minimum term is 10 years. In the event of a third felony conviction, the exclusion is permanent.
  2. Permissive Exclusion. Unlike mandatory exclusions, the OIG has some discretion when imposing permissive exclusions and the term of exclusion. However, it should be noted that even for permissive exclusions, there are legal requirements related to the term of exclusion for certain offenses. Examples of circumstances for permissive exclusion include:
    1. A misdemeanor conviction relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in connection with the delivery of any health care item or service;
    2. Profession license suspension or revocation by any State licensing authority for reasons bearing on the individual’s or entity’s professional competence, professional performance or financial integrity. Also, if a provider surrenders his or her license while a formal disciplinary proceeding is underway and it relates to professional competence, professional performance or financial integrity, the OIG may impose a permissive exclusion;
    3. Defaulting on a student loan;
    4. Receiving a misdemeanor conviction for illegally distributing, manufacturing, dealing, or prescribing a controlled substance;
    5. Making  any false statement, omission, or misrepresentation of a material fact in any application, agreement, bid, or contract to participate or enroll as a provider of services or supplier under a Federal health care program; or
    6. Taking an unlawful kickback;  
    7. Submitting false claims or claims containing charges or costs for items or services furnished that are substantially in excess of such individual’s or entity’s usual charges or costs for such items or services; relate to items or services which are medically unnecessary.

How Can an Employer Screen the OIG Exclusion List?

The OIG makes the LEIE available in both an online searchable form as well as a downloadable file;

Using the employee or job candidate’s name and date of birth, the databases will return a list of potential matches, including individuals with similar names. The employer must then independently verify whether any of the matches pertain to the employee or candidate in question. The LEIE is just one of the two federal lists which must be checked, in addition to state exclusion lists.

There is a simpler solution, however. Streamline Verify can perform searches across all available databases at both the state and federal levels to assure that any matches or potential matches are identified and verified. Streamline Verify’s screening and monitoring software offer employers the peace of mind knowing that this required monthly function is being performed by experts who have honed their product with over ten years of research and customer feedback. They offer a turnkey screening process that can efficiently screen all of your employees, contractors and potential hires with just one click.


In addition to the OIG’s Exclusion List, there are many other lists that a health care employer needs to consider. Screening against the GSA’s SAM.gov database is also required in federal healthcare contracts. There are Medicare specific lists as well as state Medicaid lists that should be checked as well. For more information about these other lists, please refer to the article OIG Exclusions and LEIE searches.

About Joe Stefansky

About Joe Stefansky

Joe Stefansky has a keen sense of business opportunities in complex problems, using technology to transform difficulty into efficiency. The CEO and founder of Streamline Verify specializes in solving compliance, legal and administrative issues through intuitively designed software that reduces costs and saves time.

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