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OIG Exclusion Update: The Who, What, When, Where, and Why

on Friday, 31 May 2013 in Health Law Alert: Erin E. Busch, Editor

The U.S. Department of Health and Human Services Office of Inspector General (“OIG”) recently released an updated Special Advisory Bulletin1 covering the scope and effect of exclusion from Federal health care programs. The updated bulletin replaces and supersedes the OIG’s 1999 Special Advisory Bulletin on the effect of exclusion, and provides guidance on the scope of exclusion, civil monetary liability for employing or contracting with an excluded individual or entity, and tips for screening the List of Excluded Individuals and Entities (“LEIE”).


Scope of Exclusions

Federal law provides that no Federal health care program payment may be made for items or services furnished by an excluded individual or at the medical direction or prescription of an excluded individual. The prohibition extends to all methods of Federal health care program payment, including payments based on cost reports, fee schedules, capitated payments, and prospective payments. The updated bulletin lists many examples where payment is prohibited, including: (i) when items or services are furnished by an excluded nurse (even if the services are included in the DRG payment and not billed separately); (ii) when items or services are furnished by an excluded physician who works at a hospital as a volunteer; and (iii) when an excluded pharmacist inputs billing information into an information system for drugs that are billed to a Federal health care program. The prohibition extends beyond items or services associated with patient care, and captures administrative and management services such as executive leadership, practice management, health information technology support, strategic planning, billing and accounting, and human resources, unless these services are wholly unrelated to Federal health care programs.


Civil Monetary Penalty Liability

The OIG may impose civil monetary penalties (“CMPs”) of up to $10,000 for each item or service furnished by an excluded individual, as well as an assessment of up to three times the amount claimed. The updated bulletin emphasizes that CMPs may be imposed if an excluded individual or entity participates in any way in the furnishing of items or services payable under a Federal health care program. The updated bulletin also points out that potential CMP liability exists where a hospital or other healthcare entity contracts with a staffi ng agency for temporary personnel. The OIG recommends that the entity itself screen contracted personnel, including nurses provided by staffi ng agencies, physicians and groups that provide coverage, and billing/ coding contractors. Alternatively, the entity could rely on the outside agency’s screening. However, the entity’s CMP liability is not eliminated, and to reduce or eliminate CMP liability, the entity would need to demonstrate that it contractually relied on the staffi ng agency to screen the LEIE and that the entity did its own due diligence by requesting and maintaining screening documentation from the staffi ng agency. An entity that identifi es potential CMP liability due to employing or contracting with an excluded individual or entity may use the OIG’s new Provider Self Disclosure Protocol to resolve the CMP liability.


Screening for Excluded Individuals and Entities

Prior to the updated bulletin, one of the most frequently asked questions by health care organizations was how often to screen the LEIE. The OIG notes that there is no statutory requirement to check the LEIE, and, ultimately, providers may decide how frequently to screen the LEIE. However, in the updated bulletin, the OIG states that it updates the LEIE monthly “so screening employees and contractors each month best minimizes potential overpayment and CMP liability.” In addition, in 2009, the Centers for Medicare and Medicaid Services issued a letter to State Medicaid Directors directing states to require providers to screen all employees and contractors monthly. The updated bulletin recommends providers cross-check any LEIE fi ndings by using the LEIE’s social security number or Employer Identifi cation Number (“EIN”) verifi cation function. The OIG plans to include National Provider Identifi er (“NPI”) information in the LEIE database. Finally, the OIG recommends that entities maintain documentation showing the results of LEIE searches performed.



Health care organizations that receive reimbursement or funding from Federal health care programs should review the updated bulletin and develop or revise policies and procedures to implement the new guidance as follows:

  • Who? Confirm the exclusion status of all individuals and entities that furnish, order or prescribe any item or service, including administrative services, reimbursable through a Federal health care program. If contracting with an outside vendor or agency, ensure the contract addresses each party’s obligation to screen for excluded individuals and to provide periodic reports to the other party. This applies to all types of Medicare and Medicaid suppliers and providers.
  • What? Check (and double or triple check!) individuals and entities against the LEIE. Use broad search terms and maintain documentation of the LEIE searches performed (e.g., screen shots of the name search). Cross check any names that appear by using a social security number or EIN.
  • When? Develop a policy and procedure to screen individuals and entities at the time of employment or contracting and periodically thereafter (state a frequency – for example, monthly). Follow the policy and procedure.
  • Where? The LEIE is available at
  • Why? Reduce potential overpayments, CMP liability, and promote quality health care.


Read the Full Newsletter: Health Law Advisory May 31, 2013 »

Michael W. Chase

1 Available at exclusions/fi les/sab-05092013.pdf.

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