The Office of the Inspector General of the Department of Health and Human Services (OIG) has released a Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs. The Bulletin, issued May 8, 2013, supersedes and replaces a similar bulletin from 1999. It describes the scope and effect of the legal prohibition on payment by Federal health care programs for items or services furnished by excluded persons. The Bulletin also highlights the importance of rigorous screening for excluded persons and provides practical guidance on the frequency and scope of screening that the OIG expects.

Exclusion; Penalties 

The OIG has the authority to exclude people or entities that have committed various violations from participation in Federal health care programs such as Medicare or Medicaid. The effect of OIG exclusion is that no Federal health care program payment may be made for any items or services furnished (1) by an excluded person or (2) at the medical direction of an excluded person. If a health care provider arranges or contracts – by employment or otherwise – with a person that the provider knows or should know is excluded, the provider may be subject to civil monetary penalties (CMPs) to the extent that the excluded person provides services payable, directly or indirectly, by a Federal health care program. CMPs can be as high as $10,000 for each item or service furnished by the excluded person, and an assessment of up to three times the amount claimed can be imposed. Other civil or criminal penalties may apply as well.1

Breadth of Prohibition 

The Bulletin provides several examples of the breadth of this prohibition. First, the prohibition applies to all methods of Federal health care program payment, including fee-for-service and bundled payment methodologies. For example, no Medicare payment should be made to a hospital for the services of an excluded nurse, even if the nurse’s services are not separately billed. Second, the prohibition extends to items and services beyond direct patient care. The Bulletin states that excluded persons are prohibited from furnishing administrative and management services such as health information technology, strategic planning, staff training, and human resources, unless those services are wholly unrelated to Federal health care programs. Third, the prohibition applies to orders or prescriptions written by an excluded person even if the excluded person does not actually furnish the items or services ordered or prescribed. For example, if an excluded physician prescribes imaging services or durable medical equipment for a patient, such services or items are not reimbursable by Federal health care programs even if the provider or supplier who actually does the test or furnishes the item is not excluded. The Bulletin provides other examples of the breadth of the prohibition as well.


To avoid the potential steep penalties for hiring or contracting with an excluded person, the Bulletin recommends that providers screen employees and contractors both at the time of hiring and periodically thereafter. There is no statutory or regulatory requirement that providers perform such screens, or that the screens be performed at specified intervals, but the OIG recommends monthly screens to minimize potential overpayment and CMP liability.

The OIG recommends that providers use its List of Excluded Individuals and Entities (LEIE) as the primary database for purposes of exclusion screening for current and potential employees and contractors. The Bulletin notes that the LEIE (available here) is updated monthly and that it provides more details about a person’s exclusion than does the System for Award Management (or SAM, available here, which is another database that providers can use to obtain information about other types of sanctions).2

The OIG notes in the Bulletin that the risk of potential CMP liability is greatest for those persons that provide items or services integral to the provision of patient care. Consequently, the OIG recommends that providers screen nurses provided by staffing agencies, physician groups that contract with hospitals to provide ER coverage, and billing or coding contractors. Alternatively, the provider could require a contractor to conduct screens on the provider’s behalf. For example, the Bulletin advises that “a hospital may reduce or eliminate its CMP liability if the hospital is able to demonstrate that it reasonably relied on [its contracted] staffing agency to perform a check of the LEIE for the nurses furnished by the staffing agency (e.g., the staffing agency agreed by contract to perform the screening of the LEIE and the hospital exercised due diligence in ensuring that the staffing agency was meeting its contractual obligation.)” (Emphasis added). In other words, if a provider relies on a third party to perform such screens, the OIG recommends that the provider request and maintain copies of the screening documentation. The Bulletin notes that if a provider learns it has employed or contracted with an excluded person, the provider may use the OIG’s Provider Self-Disclosure Protocol (SDP) to disclose and resolve the potential CMP liability.3


Providers of items or services reimbursable by Federal health care programs should be aware of the potentially severe penalties associated with employing or contracting with excluded persons. To avoid these penalties, providers should screen all employees and contractors against the LEIE both at the time of hiring and regularly (preferably monthly) thereafter. If providers rely on third parties, such as staffing agencies, to perform screens on their behalf, the provider should validate that the screens are taking place by requiring documentation. Providers should consider reviewing the Bulletin in its entirety, available here.

If you have any questions, please contact any of the attorneys in our Healthcare Practice Group or Healthcare Fraud Task Force.


1 For example, the Patient Protection and Affordable Care Act of 2010 requires that any overpayments by Federal health care programs must be returned within 60 days after they are identified. Medicare reimbursement stemming from items or services provided by excluded persons can be deemed to be an overpayment. Failure to return an overpayment within the 60-day period provides a basis for pursuing a false claims action, which could include statutory penalties of up to $11,000 per claim, plus treble damages. In addition, the Bulletin notes that an excluded person that knowingly conceals or fails to disclose any action affecting the ability to receive any benefit or payment with the intent to fraudulently receive such benefit or payment may be subject to criminal liability.

2 The National Practitioner Data Bank can also be accessed for information regarding additional types of sanctions.

3 Providers who self-disclose via the SDP are generally subjected to lower fines than providers who are discovered by the OIG. Providers who become aware that they have employed or contracted with excluded persons should promptly consult with competent health care counsel to discuss utilizing the SDP.