By Paul Weidenfeld

I.  What is an OIG Exclusion?

An OIG Exclusion is a final administrative action by the Office of the Inspector General (OIG)  that  prohibits participation in any Federal Health Care Program.  Exclusions are imposed because the individual or entity is found to pose unacceptable risks to patient safety and/or program fraud.  As a result, Federal health care programs such as  Medicare, Medicaid and TRICARE will not pay for any service provided — either directly or indirectly — by an excluded person or entity. 

II.  Who Has the Authority to Impose an OIG Exclusion?

The Department of Health and Human Services (HHS) has the overall responsibility of administering the Medicare and Medicaid Programs. HHS decides who may receive benefits under these programs and who will be allowed to provide them.  

The authority to exclude individuals and entities from federal health care programs is delegated to OIG.^[1] OIG enforces the exclusion penalty through its authority to impose civil money penalties (CMPs) where claims are submitted for services performed or furnished by an excluded person or entity and the person making the claim “knew or should have known” of the exclusion. 

III. OIG Exclusion Types

There are two types of OIG exclusions, mandatory and permissive, and both have the effect of barring an individual or entity from participating in all Federal health care programs from the time they are excluded until such time, if ever, that their privilege is reinstated.^[2]  Mandatory exclusions last a minimum of 5 years and must be imposed if a person or entity is convicted of certain criminal offenses.  These include:

• Conviction for Medicare or Medicaid fraud, or any other offense related to the fraudulent delivery of items or services to Federal or State health care programs;
• Patient abuse or neglect;
• Felony convictions for other health care related fraud, theft, or other financial misconduct; and
• Felony convictions relating to unlawful manufacture, distribution, prescription, or dispensing of controlled substances.

The discretionary authority to exclude individuals and entities implicates a much wider range of conduct. We discuss this topic in a later article, but examples for which permissive exclusions may be imposed include:

• Misdemeanor convictions related to defrauding a heath care fraud program,
• Misdemeanor convictions relating to the unlawful manufacture, distribution, prescription, or dispensing of controlled substances,
• Suspension, revocation, or surrender of a license to provide health care for reasons bearing on professional competence, performance, or financial integrity,
• Provision of unnecessary or substandard services;
• Submission of false or fraudulent claims to a Federal health care program,
• Engaging in unlawful kickback arrangements,
• Defaulting on health education loan or scholarship obligation, and
• Controlling a sanctioned entity as an owner, officer, or managing employee.

IV.  Consequences of OIG Exclusion

Federal health care programs, principally Medicare and Medicaid, will not pay for any item or service that is furnished or performed by, or on the prescription or direction of, an excluded individual.^[3] Since federal health programs subsidize virtually all hospitals and account for 60-65% of all health care dollars spent, exclusion is a severe restriction and is often a death knell to providers.

Providers of the federal health care programs must ensure that their employees, contractors, and vendors are not excluded and the failure to do so can result in significant penalties.  The OIG has the authority to impose penalties of up to $10,000 for each item or service furnished by the excluded person or entity, as well as assessments of up to three times the amount claimed.^[4]  In addition, providers may be liable for overpayments.  

Even when a provider is unaware that a person was excluded at the time the claim was made, OIG has issued guidance advising that such inadvertent violations must be reported and repaid.^[5] In light of this guidance, any claim that might involve an excluded person or entity could potentially have False Claims Act implications under the Affordable Care Act if it is not dealt with in a timely and proper manner.

v. Conclusion

This article is just intended to be an introductory outline of the basics to the subject matter. Our other posts have additional information, but if you have any questions about exclusions and your screening obligations, feel free to contact any of us at Exclusion Screening, LLC^SM. 

 Paul Weidenfeld, Co-Founder and CEO of Exclusion Screening, LLC, is the author of this article. He is a longtime health care lawyer whose practice has focused on False Claims Act cases and health care fraud matters generally. Contact Paul should you have any  questions at: pweidenfeld@www.exclusionscreening.com or 1-800-294-0952.

---

[1] Sections 1128 and 1156 of the Social Security Act.

[2] Mandatory exclusions are found at 42 USC § 1320a-7; permissive exclusions are principally found at 42 USC § 1320a-7(b).

[3] Section 1862(e)(1) of the Social Security Act and 42 CFR § 1001.1901(b)(1).

[4] 42 CFR §1003.102 (a)(2).

[5] It was issued April 17, 2013 and it is also the subject of an article posted on our site.