California Exclusion List Screening Requirements

California at a glance

Official list name	California Medi-Cal Suspended and Ineligible Provider List
Administering agency	California Department of Health Care Services
Format	Online searchable list
Screening cadence	Monthly (CMS SMDL #08-003 and #09-001)
Official source	View California’s official list →

Recent cases from across California

Each settlement below started with one missed exclusion check. All were preventable. Don’t let your organization become the next example.

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What are the California Exclusion List Screening requirements?  The Medi-Cal Program will not pay for any item or service furnished directly or indirectly by individuals or entities that have been excluded or suspended from the Medi-Cal Program or that have been placed on the Office of Inspector General’s Exclusion List.  This results in a broad “suspension” for any providers that have found themselves on this list which is enforced by the California Department of Health Care Services (DHCS). This article will discuss what an exclusion is, how providers wind up on this list, how they are impacted by these regulations and the exclusion screening obligations they impose; the risks of compliance failures; and it will suggest best practices to help providers comply with their obligations and avoid those risks and understand how to screen for exclusions in California.

What is a Medicaid Exclusion? 

“Exclusions” are final administrative action by a State or Federal agency that bars an individual or entity from participating in one of its benefit programs. When a State forecloses participation in its Medicaid programs, that action is often referred to as a “Medicaid Exclusion.” Similarly, when the Department of Health and Human Services (HHS), Office of Inspector General (OIG) bars participation in Medicare program, that is commonly referred to as a “Medicare Exclusion.”  Medi-Cal Exclusions are posted on database maintained on the website, and Medicare Exclusions are posted on the OIG’s “List of Excluded Individuals and Entities” (LEIE) which is maintained on its website.

Who Gets Excluded From the California Exclusion List? Why are Exclusions Imposed? 

Medicaid Exclusions in California are imposed by DHCS pursuant to Medi-Cal law, Welfare and Institutions Code (W&I Code), sections 14043.6 and 14123.

The primary reasons for the agency to take this action are:

• Been convicted of a felony;
• Been convicted of a misdemeanor involving fraud, abuse of the Medi-Cal program or any patient, or otherwise substantially related to the qualifications, functions, or duties of a provider of service;
• Been suspended from the federal Medicare or Medicaid programs for any reason;
• Lost or surrendered a license, certificate, or approval to provide health care; or 
• Breached a contractual agreement with the Department that explicitly specifies inclusion on this list as a consequence of the breach. [i]

Since suspensions/exclusions are designed to protect patients and the programs that serve them, it is not surprising to see that most are based on fraud, adverse license board actions, or exclusions imposed by the OIG. The chart showing the breakdown of current exclusions in California by occupation. As you can see, it is consistent with this focus as Nurses account for almost half of all current exclusions. However, when added to others who receive licenses (physicians, pharmacists, etc.) those with a license account for almost three-fourths of all exclusions in California.

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III.  What is the Effect of a Medicaid Exclusion? 

“Exclusions [are] one of the most important tools we have to protect beneficiaries and stem fraud and abuse [and]…ensure that Medicare, Medicaid and other federal health care programs are protected. [W]e need…to help make sure excluded individuals are not involved in any way in the care of… beneficiaries.” 

Inspector General June Gibbs Brown. [ii]

Medicaid Exclusions imposed by DHCS states that  “Services rendered, prescribed or ordered by a suspended Medi-Cal provider shall not be covered by the Medi-Cal program while the suspension is in effect”. This sanction is commonly referred to as a “Payment Prohibition,” and California Code, Welfare and Institutions Code – WIC § 14123 (d) (1) describes the effect of sanction as follows:

• The suspension by the director of any provider of service shall preclude the provider from submitting claims for payment, either personally
• or through claims submitted by any clinic, group, corporation, or other association to the Medi-Cal program for any services or supplies the provider has provided under the program, except for services or supplies provided prior to the suspension.
• No clinic, group, corporation, or other association which is a provider of service shall submit claims for payment to the Medi-Cal program for any services
• or supplies provided by a person within the organization who has been suspended or revoked by the director, except for services or supplies provided prior to the suspension.

States also must terminate the participation of any provider that has been listed as an “excluded individual” by the OIG LEIE Database.  The requirement, contained in Section 6501 of the Affordable Care Act, is intended to strengthen Medicaid program integrity by stopping providers excluded in one State from moving to another and providing services there. Thus, stated simply, a Medicaid Exclusion in any state makes an individual radioactive when it comes to providing services in California or in any other State benefit program. 

IV. Provider Exclusion Screening Requirements: 

Medicaid Exclusions are only effective if the payment prohibition is enforced and California seeks to achieve this goal largely by imposing extensive “exclusion screening” obligations on its Medicaid providers.  These exclusion screening requirements were outlined in a state wide letter sent by CMS to all State Medicaid Directors (SMDL #09-001) (Exhibit 1) asking States to advise providers of their obligation to:

A. Screen all Employees and Contractors 

Within the letter sent by CMS, Medicaid providers were informed that they are obligated to screen all employees and contractors against the Office of the Inspector General’s Federal List of Excluded Individuals/Entities (LEIE) upon enrollment and reenrollment.

While the primary part of the Medicaid Manual does not refer to screening upon hire, there are a large number of programs that operate under the umbrella of the Medicaid Program with manuals of their own that supplement the main Provider Enrollment Manual. The manuals of at least 20 of these “programs within the program” have an appendix that states that require providers screen upon hiring and contracting, and least monthly thereafter, to ensure compliance with Federal regulations at 42 CFR 1001.1901(b) and State Medicaid Director Letter #09-001 from the Centers for Medicare & Medicaid Services (CMS).

B. Continuously Conduct Screens  

Additionally, the 2009 CMS Letter asked states to require providers to:

1. Require providers to comply with exclusion screening obligations as a condition of enrollment;
2. Screen all employees and contractors against the Office of the Inspector General’s Federal List of Excluded Individuals/Entities (LEIE) monthly to capture any exclusions and reinstatements that have occurred since the last search;
3. Screen the State list routinely when the provider searches the LEIE. California maintains its own State Excluded Provider List; and
4. Immediately report to the State any exclusion information discovered.

V. Enforcement: 

Excluded individuals and entities may not  “[submit] claims for payment, either personally or through claims submitted by any clinic, group, corporation, or other association to the Medi-Cal program for any services or supplies the provider has provided under the program, except for services or supplies provided prior to the suspension.  No clinic, group, corporation, or other association that is a provider of service shall submit claims for payment to the Medi-Cal program for any services or supplies provided by a person within the organization who has been suspended or revoked by the director, except for services or supplies provided prior to the suspension.”

This limitation includes assessing care, ordering or prescribing services, having a separate entity indirectly submitting claims, and being employed by a third party who then includes those costs in cost reports or some other form of payment. Violations can result in federal civil money penalty or criminal liability under § 1128A and § 1128B of the Social Security Act.

VI. Best Practices for Complying with the California Medicaid Exclusion Screening Requirements: 

Compliance with exclusion screening requirements is critical. Providers that fail to ensure the exclusion status of their owners, managers, employees, and contractors risk overpayment liability, the imposition of civil money penalties, and even possible criminal consequences.  Only proper exclusion screening can help providers mitigate or avoid these risks, and this section will suggest some practices which providers should consider including in their compliance plans. 

A. Screen all Employees, Contractors, and Vendors. 

Medicaid does not pay for services furnished directly or indirectly by an excluded entity. The same rule applies to Medicare, and the payment prohibition is broadly interpreted by federal authorities to include administrators, IT support personnel – even unpaid volunteers – if any of the services they provide contribute to any reimbursements that are received. A basic rule to follow is if the individual has any access to your patients, patient facilities, patient records, or financials, then they NEED to be screened.

B. Owner, Officer, Manager and Director Screening. 

Owners, Officers, Managers, Directors, and even shareholders MUST be screened. According to California Code WIC § 14123 (a)(2):

“If the provider of service is a clinic, group, corporation, or other association, conviction of any officer, director, or shareholder with a 10 percent or greater interest in that organization, of a crime described in paragraph (1) shall result in the suspension of that organization and the individual convicted if the director believes that suspension would be in the best interest of the Medi-Cal program.”

C. Special Rules for Billers and Coders. 

Billers and third-party billing companies receive “special attention” when it comes to exclusion screening. It recognizes that providers may have to delegate their screening obligation to the billing contractor (particularly if it is a large one) and provides guidelines to be followed, however, it makes clear that the provide remains legally responsible for any overpayment liability. The OIG guidelines are found below, and providers should consider adopting some or all of them:

• Require the biller to have (and produce) a policy of not employing excluded persons
• Require the biller to screen its employees upon hire and monthly thereafter and maintain documentation of its screening
• Require the biller to provide training to its employees in connection with the applicable requirements and preparation of the claims they are submitting. (Adopted from Paul Weidenfeld) 

D. Screening Should be Done on Hire or Contract Initiation, and Monthly Thereafter. 

As previously discussed on pages 2 and 3, providers must screen upon hire and monthly thereafter. This is supported by 42 CFR 1001.1901(b) and State Medicaid Director Letter #09-001 from the Centers for Medicare & Medicaid Services (CMS).

E. Providers Should Hire a Vendor to Fulfill their Exclusion Screening Requirements. 

Some providers are able to perform the “basic” screening obligation of checking the Medi-Cal California Exclusion List and the LEIE upon hire and monthly thereafter, but providers that attempt to screen all 40+ State Exclusion Lists are almost certainly going to find the task to be insurmountable. The difficulty stems from several factors: there is no uniformity in the list formats (they could be in WORD, Excel or PDF); California’s list is currently provided in PDF format and is extremely difficult to search. Each list also contains different fields on information; States have different reasons and standards for including people on their list; and some States may have little to identify the person or entity beyond a name and city. In short, as with many other necessary services, providers need specialized assistance to meet a regulatory obligation. 

There are a number of reputable exclusion screening vendors, but providers should be aware that vendors, and the services they provide, can vary significantly.  Some vendors, for example, assist in investigating whether potential matches are actual matches whereas others may not; there can be differences in the sophistication of their software and the ability to identify “potential matches” when names are similar but not a “perfect match;” and the ease of access can differ.

VIII.  Closing Comments: 

The goal of this article was to help providers gain a better understanding of Medicaid Exclusions in California.  Exclusions are imposed on people and entities that pose risks to the Program and its beneficiaries, and that is why California Medicaid will not pay for any item or service furnished by them, whether directly or indirectly.  The article is also intended to help providers gain an understanding of their exclusion screening obligations and how they can fulfill them. 

Article written by Cason Liles. 

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[i]https://files.medi-cal.ca.gov/pubsdoco/sandilanding.asp

[ii]Press Release announcing the issuance of the OIG’s “Special Advisory Bulletin on the Effects of Exclusion from Federal Health Care Programs, issued September 29, 1999.