Five Takeaways from the OIG’s Special Advisory Bulletin on Exclusion

by Mintz Levin - Health Law & Policy Matters

This week the Office of Inspector General for the Department of Health and Human Services (“OIG”) issued an updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs, an update that was more than thirteen years in the making.

The initial Special Advisory Bulletin on Exclusion, published in September 1999, warned health care providers that the practical effect of exclusion is that they are precluded from employing or contracting with an excluded party in any capacity. To protect providers from potential civil monetary penalties, the OIG strongly advised that providers screen all employees and contractors for exclusion prior to hiring or contracting with them and then “periodically” thereafter.

In the ensuing thirteen years, statutory and regulatory changes have enhanced the OIG’s civil monetary penalty authority. In its new issuance, the OIG tacitly acknowledges that exclusion does not completely bar health care related employment, but still takes an expansive view of the impact of an exclusion. This advisory articulates the five top takeaways from the OIG’s Special Advisory Bulletin (the “Advisory”).

1. Why Does Exclusion Matter?

Federally funded health care programs cannot pay for any item or service furnished by an individual or entity excluded by the OIG. Excluded individuals and entities also cannot order or prescribe products or services to be paid for federally funded health care programs.

Based on that prohibition, the OIG has regulatory authority to impose civil monetary penalties on any person or entity that submits claims for items or services furnished by an excluded employee or contractor. The regulatory definition of “items or services” extends to claims based on items or omissions in cost reports or other supporting documents, or items counted in other reimbursement methodologies such as prospective payment systems.

2. Can a Health Care Provider Employ/Contract with Excluded Parties?

In the Advisory, the OIG continues to take a broad view of the prohibition on hiring or contracting with excluded individuals or entities. According to the OIG, health care providers can be subject to civil penalties if they:

  • employ or contract with excluded parties to provide direct patient care, “indirect” services, administrative services, or management services paid directly or indirectly with federally funded health care program dollars; or
  • furnish items or services for federal health care program beneficiaries at the direction or prescription of an excluded individual, even if the excluded individual receives no payment (such as an excluded physician working as a volunteer).

And it is the prohibition on items or services paid for “indirectly” with federal health care program dollars that the OIG believes applies to prohibit providers from employing or contracting with excluded parties if the party, or their items or services, are financed with federal health care program dollars received through itemized claims, cost reports, fee schedules, capitated payments, bundled payments, or payments made to other non-excluded individuals or entities.

The OIG does recognize that there may be circumstances where a health care provider may contract with or employ an excluded party, but those circumstances are limited. The provider must be able to show that:

  • federally funded health care programs do not pay, directly or indirectly, for the items or services at issue; or
  • the excluded party furnishes items or services solely to non-federally funded health care beneficiaries.

3. How and How Often Should Employees and Contractors Be Screened?

The OIG is adamant that any screening for exclusion be conducted using the OIG’s own List of Excluded Individuals and Entities (“LEIE”) on the OIG’s website. While providers have discretion to also check other databases, the OIG maintains the LEIE, updates it monthly, and recommends that it be the primary source of exclusion screening.

Determining who should be screened depends on the job category or the nature of the contractual relationship, but the issue of whether the party provides items or services directly or indirectly financed with federal health care program dollars again comes into play. If an argument can be made that the employment or contract costs are indirectly supported by Medicaid or Medicare payments, the OIG recommends exclusion screening.

The OIG recognizes that there is no legal requirement for providers to screen for exclusion, but states it maintains the LEIE for providers’ benefit. Exclusion screening is a tool to protect providers from potential liability both for civil monetary penalties and, as will be discussed later, for false claims.

The OIG continues to advise providers to check the LEIE prior to employing or contracting with individuals and entities, and “periodically” thereafter. But the OIG also notes that recent guidance from the Centers for Medicare & Medicaid Services (“CMS”) recommends providers screen employees and contractors for exclusion on a monthly basis. And in the wake of CMS guidance, Medicare and Medicaid contractors may already be including monthly exclusion screening requirements in provider or subcontractor agreements.

4. Do I Need to Document Exclusion Screening Efforts?

Even though the LEIE is an online database, the OIG advises providers to maintain some documentation on their screening process. If providers conduct screening in-house, the OIG recommends maintaining documentation of the initial search, such as a printed screen-shot, and document subsequent screening efforts.

5. How Should Providers Address Potential Liability for Excluded Parties?

According to the OIG, a health care provider who arranges or contracts with a person who the provider knows or should know is excluded may be subject to a civil monetary penalty of up to $10,000 for each claimed item or service, as well as treble damages; per the OIG, penalties may also be assessed if an excluded person participates in “any way” in the furnishing of items or services payable by a federal health care program, as those terms are defined. But when it comes to liability for claims submission, providers should also consider potential exposure under the federal False Claims Act (“FCA”).

The FCA subjects providers to potential treble damages and penalties for submission of false or fraudulent claims to government programs when the provider acted with actual knowledge, reckless disregard or deliberate ignorance that the claims were false or fraudulent. The FCA was amended in 2011 to add the “Sixty Day Rule” as a basis for FCA liability. Once a provider identifies a federal health care payment to which it is not entitled, the provider must refund or adjust the payment within sixty days, or the date the corresponding cost report is due; failure to do so is potentially actionable under the FCA.

The Advisory states that a provider who identifies potential civil monetary penalty liability for employing or contracting with a party it knew or should have known was excluded may use the OIG’s Self-Disclosure Protocol to resolve that liability. As noted in another recent Mintz Levin advisory, the Self-Disclosure Protocol was recently updated to specifically address disclosure of conduct involving excluded parties. But the OIG Self-Disclosure Protocol may also be used to address potential FCA liability for the disclosed conduct.


While the OIG’s new Advisory provides more direction than the OIG’s previous issuance addressing exclusion, providers still may have difficulty determining where to draw the line on employees and contractors who receive “indirect” payments from federally funded health care programs. And providers may legitimately question whether the existing legal authority was really intended to extend penalty exposure to the hiring or retention of employees or contractors who have no ability to impact items or services provided to federal health care program beneficiaries, or the claims submitted for those items or services.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Mintz Levin - Health Law & Policy Matters | Attorney Advertising

Written by:

Mintz Levin - Health Law & Policy Matters

Mintz Levin - Health Law & Policy Matters on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.