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Compliance Perspectives: How to Perform Excluded Provider Checks

by | May 31, 2023 | Compliance Perspectives-lca, Essential, Lab Compliance Advisor

Hiring, retaining, or simply doing business with the wrong people may expose your lab to significant financial penalties.

For labs that participate in Medicare and other federal health programs, hiring the right people isn’t just a staffing but also a compliance imperative. Hiring, retaining, or simply doing business with the wrong people may expose your lab to significant financial penalties. The “wrong people” that you must avoid are the individuals and entities that the U.S. Department of Health and Human Services Office of Inspector General (OIG) has excluded from participating in federal health programs. Here’s a briefing on your liability risks and the exclusion monitoring you must perform to manage them:

What Exclusion Is All About

For those enrolled in Medicare and other federal health programs, federal exclusion could result in substantial loss of clients and even the closure of your healthcare entity. The OIG can exercise its exclusion authority when a healthcare provider or entity is convicted of a crime or misdemeanor or engages in professional misconduct which exhibits disregard for patient safety, federal program integrity, or the law. Exclusion comes in two varieties:1

Mandatory exclusion can last from five to 50 years (or even be permanent) and must be handed out to individuals or entities that receive a felony conviction or revocation of license for:

  • Substance or alcohol abuse
  • Patient abuse
  • Fraud and abuse
  • Sexual assault

Permissive exclusion is handed out at the OIG’s discretion for offenses that include but aren’t limited to the following:

  • Misdemeanor convictions for fraud in a program other than a federal or state health program
  • Misdemeanor convictions relating to the unlawful manufacture, distribution, prescription, or dispensing of controlled substances
  • Suspension, revocation, or surrender of a healthcare license based on professional competence, professional performance, or financial integrity
  • Furnishing medically unnecessary or substandard services
  • Submitting false or fraudulent claims to a federal health program
  • Involvement in illegal kickback arrangements
  • Defaulting on health education loan or scholarship obligations
  • Being a controlling owner, officer, or managing employee of a “sanctioned” entity (see sidebar)

Compliance Pointer: What a “Sanction” Is

A healthcare sanction, aka medical sanction, is a disciplinary action by a state administrative body against an individual or entity for violating an administrative rule, or civil or criminal law. Common reasons for sanctions include patient abuse and neglect, criminal conviction for diverting controlled substances, fraudulent billing, and other forms of healthcare fraud. Penalties for sanctions vary depending on the offense and circumstances.

While permissive exclusions typically last between one and three years, the OIG has discretion to shorten or extend the period based on how severe the matter is.

Liability Risks for Labs

Federal law bans payment by a federal health program for any items or services furnished by or at the medical direction or prescription of an excluded person. The prohibition applies regardless of whether the excluded provider bills directly or billing is done by a third party. Billing Medicare or another federal health program for any services furnished by an excluded individual can get you into trouble, regardless of whether the person is an employee, contractor, unpaid volunteer, or has any other relationship with your lab. Example: You’d be at risk of penalties if a temporary or per diem excluded phlebotomist supplied by a staffing agency provides services to Medicare patients.

The OIG can impose significant civil monetary penalties (CMPs) against providers that employ or enter into contracts with excluded persons to provide services or items payable by federal health programs. In 2020, the average penalty for an exclusion violation was $101,000, according to healthcare consulting firm Provider Trust.2 The cost of noncompliance increases each year. Adjusted for inflation, maximum CMPs for 2023 are $13,508 per item or service billed.3 If you subsequently bill federal programs for the services and items provided by an excluded person, you also face the risk of treble damages and liability for violating the False Claims Act (FCA), as well as potential criminal charges. Excluded person violations can even land your lab on the exclusion list.

Protecting Your Lab: 4 Steps to Ensure Compliance

To ensure that your lab doesn’t hire or do business with excluded persons, there are four things you must do:

1. Use LEIE to Determine If a Person Is Excluded

The good news is that the OIG keeps a publicly accessible exclusions list on its website that providers can use to determine whether an individual or entity has been excluded. The so-called List of Excluded Individuals/Entities (LEIE) contains the following information:4

  • The excluded person’s/entity’s name and address at the time of exclusion
  • The type of provider the person is
  • The type and date of exclusion
  • The state where the excluded individual resided or excluded entity was doing business at the time of exclusion
  • The excluded person’s National Provider Identifier (NPI)

There are two ways you can use the LEIE. First, you can enter the name of the entity or individual into the OIG’s Online Searchable Database to determine whether they’re currently excluded. If you get a match, you can use the database’s mechanism for verifying search results via an individual’s Social Security number (SSN), Employer Identification Number (EIN), date of birth (DOB), or other identifiers.5

The other possibility is to download the entire LEIE using the OIG’s Downloadable Database.6 Caveat: The Downloadable Database doesn’t include SSNs or EINs the way the Online Searchable Database does.

2. Screen the Right Persons

Screen all employees, vendors, and potential business partners or associates that could get your lab into trouble were they to be on the exclusion list. In May 2013, the OIG issued a Special Advisory Bulletin recommending that providers review each job category or contractual relationship to determine whether the item or service it provides for is payable by a federal health program, whether in whole or in part, directly or indirectly. Flag each “Yes.” Then screen all persons that hold positions in the “Yes” job categories and all persons that perform under the “Yes” contracts.7

Providers should also perform the same basic analysis to consider which contractors, subcontractors, and employees of contractors to screen, according to the OIG. “The risk of potential CMP liability is greatest for those persons that provide items or services integral to the provision of patient care because it is more likely that such items or services are payable by the federal healthcare programs,” the Special Advisory cautions.7

It may also be okay to rely on the screening your contractors and subcontractors do of their own employees, if you validate that the contractor/subcontractor is actually doing such screening on your behalf. For example, to verify the screening, you could request the contractor provide their documentation.

3. Perform New LEIE Checks Once a Month

You must perform excluded person checks on a continuous and not just one-time basis. Explanation: Federal law bans not just hiring and engaging excluded individuals and entities but also retaining them. OIG also constantly updates the LEIE to add new persons. The OIG Special Advisory calls on labs and other providers to “check the LEIE prior to employing or contracting with persons and periodically…to determine the exclusion status of current employees and contractors” (emphasis added). “Periodically” essentially means once a month because that’s how often the OIG updates the LEIE.7

4. Screen Other Exclusions Databases

It’s crucial to recognize that the OIG isn’t the only agency that has authority to exclude providers from federal health programs. That means that the LEIE isn’t the only list your lab needs to check to avoid inadvertently hiring or contracting with an excluded person. Other sources to monitor include:

Medicare Preclusion List: In addition to the LEIE, the Centers for Medicare & Medicaid Services (CMS) has created a separate Medicare Preclusion List compiling information on providers and prescribers that have been barred from receiving payment for Medicare Advantage (MA) items and services or Part D drugs furnished or prescribed to Medicare beneficiaries.8 The list includes individuals and entities that meet at least one of the following criteria:

  • Are currently revoked from Medicare and barred from reenrollment for conduct that CMS has determined “is detrimental to the best interests of the Medicare program”
  • Have engaged in behavior that could have been the basis for revocation had they actually been enrolled in Medicare
  • Have been convicted of a federal or state law felony within the last 10 years that CMS deems detrimental to the best interests of Medicare

State Medicaid Exclusion Lists: Forty-four states and jurisdictions maintain their own Medicaid exclusion lists, which are compiled from reports of fraud and wrongdoing provided by the state’s Medicaid Fraud Control Unit (MFCU). Although MFCUs are required to report state Medicaid exclusions to the OIG for ultimate inclusion in the LEIE, there are often time lags and bureaucratic snafus. As a result, 50 percent of state Medicaid exclusions never show up on the OIG LEIE list, according to Provider Trust.9

SAM.gov Database: Maintained by the General Services Administration (GSA), the System for Award Management (SAM) database includes information on contractors that have been barred from participating in the federal procurement process.10 That includes not just providers barred from federal health programs but companies in other sectors barred by federal agencies other than CMS. Because it’s so much broader in scope, a SAM.gov database screening may be more cumbersome than an LEIE check. However, it may also be well worth the effort since it enables you to identify excluded persons who aren’t in the LEIE.

Hiring, retaining, or doing business with any person or organization that has been excluded from federal health programs can be disastrous for your lab, but with a proper exclusion monitoring program in place, you can avoid liability risks.


  1. https://oig.hhs.gov/exclusions/background.asp
  2. https://www.providertrust.com/blog/oig-exclusion-list-monitoring-need-to-know/
  3. https://www.federalregister.gov/documents/2023/01/30/2023-01704/civil-monetary-penalties-inflation-adjustments-for-2023
  4. https://oig.hhs.gov/exclusions/index.asp
  5. https://exclusions.oig.hhs.gov/
  6. https://oig.hhs.gov/exclusions/exclusions_list.asp
  7. https://oig.hhs.gov/exclusions/files/sab-05092013.pdf
  8. https://www.cms.gov/medicare/provider-enrollment-and-certification/preclusion-list
  9. https://www.providertrust.com/blog/oig-sam-state-medicaid-exclusion-lists-differences/
  10. https://sam.gov/data-services/Exclusions?privacy=Public

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