Most healthcare providers and suppliers in the State of California are aware that exclusions imposed by the Department of Health and Human Services, Office of Inspector General (OIG) effectively prevent an excluded individual or entity from participating in Federal healthcare programs. However, they may not fully appreciate the fact that employing or doing business with an excluded individual or entity can result in the imposition of significant financial penalties. Many healthcare providers are also unaware that state regulators have broad, independent authorities with respect to California’s suspension regulations and sanctions enforcement. This article focuses on helping providers understand the scope and impact of Medicaid exclusion screening activities around the country, focusing on California’s Medi-Cal Suspended and Ineligible Provider List. We also discuss the specific regulatory and contractual obligations that California now requires if you or your practice are a Medi-Cal participating provider. Finally, we will review the impact of violating these mandates and how to reduce your company’s level of risk when providing health care services under the Medi-Cal program.
I. Brief History of the Medicaid Program:
On July 30, 1965, President Lyndon B. Johnson signed the “Social Security Amendments of 1965” into law, thereby establishing the Medicare and Medicaid programs. Broadly speaking, under the Medicare program, qualified individuals ages 65 or older (and younger individuals who are disabled), are eligible to receive medical care that is paid for by the government. In contrast, under Medicaid, qualified individuals of any age with limited income and assets are eligible to receive medical care and long-term custodial care. The Medicaid program is jointly funded by both the Federal and state governments. The percentage paid by the Federal government varies from state to state.
While the decision to participate in the Medicaid program has always been at the discretion of each state, all 50 states had chosen to offer Medicaid coverage and care to their constituents by 1972. Although all states choosing to participate in the Medicaid program must comply with a core set of Federal coverage requirements, states have been given a fair degree of discretion and flexibility with respect to the scope of services offered to Medicaid beneficiaries. Many of the state-specific Medicaid programs that are offered have adopted alternative names, ranging from “DenaliCare” (Alaska) to “Medi-Cal” (California). Regardless of the name that has been adopted, all 50 state Medicaid programs are required to implement credentialing, enrollment and screening processes that meet Federal regulatory and contractual requirements.
II. What is the Medi-Cal Suspended and Ineligible Provider List?
One of the many tools that the state of California utilizes to safeguard the health and safety of Medi-Cal beneficiaries and protect the financial integrity of the program is the Medi-Cal Suspended and Ineligible Provider List. This list is a regulatorily-mandated database of individuals and entities (typically health care providers and suppliers) that have suspended from participation in the Medi-Cal program.
A. Is California’s “Medi-Cal Suspended and Ineligible Provider List” Essentially the Same as Another State’s Medicaid Exclusion List?
Great question. Essentially, “Yes.” Most states maintain a “sanction” database in one form or another. The terminology used from state to state varies, whereas Texas refers to its list as the “Texas Exclusions Database,” the Commonwealth of Pennsylvania refers to its list as the “Medicheck List (Precluded Providers).” Regardless of the terminology used, the unified purpose of these state databases is to bar sanctioned individuals and entities from participating in the state’s Medicaid program. California’s Medi-Cal Suspended and Ineligible Provider List includes the names of 21,730 individuals and entities who have been suspended or otherwise found to be ineligible to participate in California’s Med-Cal program. Unfortunately, the basis for an individual’s inclusion on the list is not provided. Additionally, literally every entry is annotated as “Indefinitely Effective.” While we recommend that the Mei-Cal list continue to be included in your sanctions search, we also strongly recommend that you check the LEIE, the GSA SAM registry AND all available state Medicaid exclusion lists.
B. Why Would an Individual or Entity be Suspended from Participating in the Medi-Cal Program?
Among its many duties and responsibilities, the California Department of Health Care Services (DHCS) is required by law to suspend individuals and entities from participating in the Medi-Cal program if the health care provider or supplier has violated one or more of the provisions set out in the California Welfare and Institutions Code (Cal. Welf. And Inst. Code) §14123. As this regulation provides:
“Participation in the Medi-Cal program by a provider of service is subject to suspension in order to protect the health of the recipients and the funds appropriated to carry out this chapter.”California Welfare and Institutions Code (Cal. Welf. And Inst. Code) §1412
There are a number of events that may give rise to the suspension of a provider’s participation in the Medi-Cal program. These include, but are not limited to:
- Cal. Welf. and Inst. Code §14043.6: The department shall automatically suspend, as a provider in the Medi-Cal program, any individual who, or any entity that, has a license, certificate, or other approval to provide health care, which is revoked or suspended by a federal, California, or another state’s licensing, certification, or approval authority, has otherwise lost that license, certificate, or approval, or has surrendered that license, certificate, or approval while a disciplinary hearing on that license, certificate, or approval was pending. The automatic suspension shall be effective on the date that the license, certificate, or approval was revoked, lost, or surrendered.
- Cal. Welf. and Inst. Code §14123(a)(1): “. . . Conviction of any felony or any 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.”
- Cal. Welf. and Inst. Code §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. . . A plea or verdict of guilty, or a conviction following a plea of nolo contendere is deemed to be a conviction within the meaning of this section.”
- Cal. Welf. and Inst. Code §14123(a)(3): “After conviction, but before the time for appeal has elapsed or the judgment of conviction has been affirmed on appeal, the director, if he or she believes that suspension would be in the best interests of the Medi-Cal program, may order the suspension of a provider of service . . .”
- Cal. Welf. and Inst. Code §14123(b): “Whenever the director receives written notification from the Secretary of the United States Department of Health and Human Services that a physician or other individual practitioner has been suspended from participation in the Medicare or Medicaid programs, the director shall promptly suspend the practitioner from participation in the Medi-Cal program and notify the Administrative Director of the Division of Workers’ Compensation of the suspension. . .”
- Cal. Welf. and Inst. Code §14123(c): “. . . The director may temporarily suspend any provider of service prior to any hearing when in his or her opinion that action is necessary to protect the public welfare or the interests of the Medi-Cal program. . .”
- Cal. Welf. and Inst. Code §14123(f): “. . . [T]he director may suspend a provider of service from further participation under the Medi-Cal dental program for the provision of services that are below or less than the standard of acceptable quality, as established by the California Dental Association Guidelines for the Assessment of Clinical Quality and Professional Performance, Copyright 1995, Third Edition, as periodically amended. . .”
C. How Does the Medi-Cal Program Prevent the Enrollment or Re-Enrollment of Problematic Providers?
In the State of California, before providing services to Medi-Cal beneficiaries, providers must ensure that their Credentialing package is complete, submit an Enrollment Application, a Disclosure Statement, and a completed Provider Agreement to DHCS.
- Credentialing and Recredentialing. It is important to remember that credentialing is separate and distinct from enrollment. Credentialing is “a systematic approach to the collection and verification of a health care provider’s professional qualifications. The qualifications that are reviewed and verified include, but are not limited to, relevant training, licensure, certification and/or registration to practice in a health care field, and academic background.” Credentialing typically involves an insurance payor verifying a provider’s qualifications and eligibility to participate in the payor’s plan.
- Provider Enrollment. In contrast to credentialing, provider enrollment is the process of registering with an insurance network to become an approved provider and receive reimbursement for services provided to patient covered by that network.
- The Disclosure Statement. Health care providers and suppliers that have been excluded, suspended or terminated by Medicare, Medicaid or Children’s Health Insurance Program (CHIPs) in any state are not permitted to enroll in Medi-Cal. In fact, if the provider or supplier has already enrolled, it will be terminated from the program. The disclosure statement, which must be notarized and is signed under penalty of perjury, is an attempt by the State of California to proactively identify and bar these providers from enrolling in Medi-Cal in the first place. The disclosure statement requires applicants to identify all owners, officers, directors, partners, agents and managers — and with respect to each, they must disclose whether they have:
- Ever been suspended from Medicare, Medicaid or Medi-Cal program;
- Ever had a license, certificate or other approval to provide health been suspended or revoked;
- Ever lost or surrendered a license or other approval while the subject of disciplinary proceeding;
- Been convicted of a felony or misdemeanor, or been found liable civilly, in a matter involving fraud and abuse of a government program in the last 10 years;
- Any outstanding fines or debts to Medicare, Medicaid and all other federal and state health care programs; if so, the arrangements that have been made to fulfill them (emphasis in original).
Providers should be careful when filling out the disclosure statement. Categories are broader than they might appear, and the failure to disclose, or a false disclosure, can result in termination from the Medi-Cal program, overpayments and civil penalties.
- The Provider Agreement.The provider agreement is an extensive contract that specifies the applicant’s obligations and, like the disclosure, is notarized and signed under penalty of perjury. Providers agree to comply with all of the provisions in the agreement and all “applicable provisions of California and Federal law;” and they agree that compliance with those provisions is a condition of payment.” Importantly, there is also a paragraph in the Provider Agreement that extends the disclosure certifications to include employees. Specifically, the paragraph states:
“Provider certifies that it and its owners, officers, directors, employees, and agents, have not: (1) been convicted of any felony or misdemeanor involving fraud or abuse in any government program, within the last ten years; or (2) been convicted of any felony or misdemeanor involving the abuse of any patient; or (3) been convicted of any felony or misdemeanor substantially related to the qualifications, functions, or duties of a provider; or (4) entered into a settlement in lieu of conviction for fraud or abuse, within the last ten years; or, (5) been found liable for fraud or abuse in any civil proceeding, within the last ten years.” (Emphasis added).Provider Agreement
This certification is significant. Its terms require providers to make a good-faith effort to determine the legal background of their employees. Also, since the certification describes conduct that could have occurred outside of the State of California, it should be considered in the construction of a provider’s exclusion screening program.
III. The Effect of Exclusion: Overpayments and Civil Money Penalties:
In addition to barring or suspending excluded providers, the monetary enforcement tools available to the state of California are similar to those available to the U.S. Department of Health and Human Services, Office of Inspector General (OIG). Items or services provided by excluded parties are subject to recovery as overpayments, and the claims are subject to the imposition of civil money penalties.
Excluded parties are not permitted to enroll or participate in the Medi-Cal program, and any payments made by DHCS for any services provided directly or indirectly by an excluded party are overpayments subject to reimbursement. Providers should also be aware that payments made for services provided by persons who were excluded by another State, or who had their “licensing, certification, or approval authority” taken away by a different State could be considered overpayments under California Code of Regulations §5148.1(a)(6) and / or (a)(13). Specifically, payments made for services ordered, prescribed or rendered by persons “who did not meet the standards for participation in the Medi-Cal program” are overpayments subject to recovery under (a)(6); and payments made “in violation of a Medi-Cal regulation” are overpayments under (a)(13).
B. Civil Money Penalties (CMPs).
As the “single state agency” with the authority to administer the Medi-Cal program, DHCS is authorized to “impose civil penalties identified in §1128A of the federal Social Security Act (42 U.S.C. Sec. 1320a-7a), and its implementing regulations” against excluded providers and billing agents. It is also authorized by State law to impose “a civil money penalty of one thousand dollars ($1,000) per adjustment by the department to the costs submitted by the provider, or three times the amount claimed for each item or service, whichever is greater” in addition to any other penalties that may be prescribed by law. In addition to the imposition of CMPs up to three times the amount claimed for each item or service.
IV. Reducing Your Level of Regulatory Risk.
Exclusion enforcement is based on the principle that providers are responsible for ensuring that the people they employ and do business with are not excluded by Federal or State authorities. Providers who fail in this obligation face overpayment liability and the imposition of CMPs. A robust, ongoing exclusion screening protocol is the best way to minimize these risks, which leads providers to ask: Who should I screen; How often should I screen; and Which Databases Should be Screened?
Who Should be Screened?
Since exclusion enforcement is intended to protect health care programs and the beneficiaries they service, and the programs that provide them, The OIG posits that they should be the focus of a provider screening.” However, since unintentional violations can result in overpayments and possible civil money penalty liability, providers should also consider their risks, and the risk to their patients, in making screening decisions.
As noted earlier, enrollment and screening is “separate and distinct” from credentialing. This is an important distinction because credentialling is limited to direct billers whereas screening includes any employee, vendor or contractor that provides an item or service that is payable, directly or indirectly, in whole or in part, by any federal health care program (which includes Medicaid) should be screened. This would include administrators, those who provide transportation and IT services, even volunteers unless their contributions are “wholly unrelated” to payment by Federal programs.
With this in mind, in addition to employees, providers might want to include everyone identified in their disclosure statement to the screening list. Also, when considering which vendors to include, providers should consider whether they impact billing or patient care. Vendors that provide billing services, transportation, IT and security, for example, should probably be included; whereas vendors that provide phone services probably would not.
How Often Should Providers Screen?
Screening upon hire and monthly thereafter is the universally accepted requirement in this regard. The OIG has unequivocally stated that monthly screening is required to avoid civil money penalties. CMS has also made it clear that State Medicaid Programs should require monthly screening, and DHCS has adopted that requirement.”
In addition to the economic risk avoided by monthly screening, there are also practical considerations. Many exclusion lists are updated monthly, removing an excluded employee as soon as possible is the best action a practice can take, and robust screening programs can bring significant benefits to compliance and risk management programs.
Which Databases Should be Screened?
Considering the extensive network of Federal and State exclusion regulations, the resources dedicated to helping ensure compliance, and the risks associated with non-compliance — providers are well-advised to consider having an aggressive, proactive exclusion screening program. Such a program would give significant thought to the databases that are screened in addition to who and how often.
The bottom line is simple — all California providers should screen California’s DHCS Suspended and Ineligible Provider List and the OIG’s List of Excluded Individuals and Entities (LEIE). These are required by both the OIG and DHCS. Even providers that don’t take Medicare or Medicaid should screen these lists as most private insurers require that they be screened. Providers enrolled in Medicaid Managed Care Programs or Medicare Part C are also required to screen the General Services Administration/System of Award Management System (GSA/SAM).
Beyond these lists, California providers should give serious consideration to also screening all of the other State exclusions lists. Since, as we have already discussed, providers that have been excluded or suspended by a state other than California cannot be enrolled in California – or if enrolled, then subject to suspension or termination – from an overall compliance perspective, keeping them out of the workforce is strongly supported.
V. Final Thoughts Regarding the Medi-Cal Suspended and Ineligible Provider List:
Employing or contracting with an excluded party in California, whether knowingly or unknowingly, can result in overpayments and CMP liability, as well as suspension or termination from the Medi-Cal program. The best way for a provider to avoid those risks is by having a comprehensive Exclusion Screening program as part of their overall compliance plan. Unfortunately, it isn’t merely enough to periodically check the Medi-Cal Suspended and Ineligible Provider List. You need to check the LEIE, the GSA SAM database and each of the other state Medicaid exclusion lists.
The government has readily recognized that healthcare providers may seek to delegate their screening obligation to a qualified vendor such as Exclusion Screening. For most health care providers, this is a cost-effective way of fulfilling their screening obligations. Having Exclusion Screening regularly screen your list can also provide a strong defense against the imposition of any penalties and damages associated with the submission of improper claims for services and supplies.
Need help? Call the experienced professionals at Exclusion Screening for a complimentary consultation to discuss your sanction monitoring needs. Exclusion Screening is the ONLY screening company developed by nationally recognized former Federal prosecutors with your regulatory compliance needs in mind. We can be reached at 1 (800) 294-0952.
 Exclusion authority was delegated to the Office of Inspector General for the Department of Health and Human Services (OIG or HHS/OIG) pursuant to 53 Fed. Reg. 12,993 on April 20, 1988. See also, 42 CFR 1003.150.
 The term “Federal Health Care Program” means “any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government (other than the Federal Employees Health Benefits Program), or any State health care program as defined in this section.” See 42 CFR §1000.10
 Employing or contracting with excluded parties can result in overpayments, civil money penalty liability of up to $22,427 per claim, and even false claims act liability. 42 CFR 1003.200; 42 C.F.R. 1001.1901(b)); and 42 §1001.10. An additional article focusing on the impact of Federal exclusion actions can be found at this link.
 Medi-Cal is California’s version of the Medicaid health care program. Medi-Cal pays for a variety of medical services for children and adults with limited income and resources.
 The Henry J. Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured. “A Historical Review of How States Have Responded to the Availability of Federal Funds for Health Coverage.” August 2012. A copy of the report may be found here.
 Title 42 of the CFR, Part 455, Subparts B and E. These requirements were initially limited to Medicaid fee for service and were extended to managed care plans in 42 CFR §438.602(b).
 Under Cal. Welf. and Inst. Code §14043.6 and §14123, DHCS is required by law to suspend individuals and entities from participating in the Medi-Cal program if the health care provider or supplier has been convicted of a felony, convicted of certain misdemeanors, lost or surrendered a professional license or certificate to provide health care, OR breached one or more contractual obligations with DHCS which expressly provides for automatic suspension.
 The submission can be through the DHCS Provider Enrollment Division or a Managed Care Plan with an enrollment process “substantially equivalent” to the process employed by DHCS. All Plan Letter, 22-013, July 19, 2022..
 Credentialing is the process of recognizing professional or technical competence and ensuring that providers have proper licensure and certification according to State and Federal law. See, DHCS APL 22-013, July 19, 2022, page 2.
 Providers will want to consider the fact that actions in other states have a direct impact on participation in California when constructing their exclusion screening program.
 Managing Employees, for example, include anyone “who exercises operational or managerial control, or who directly or indirectly conducts the day-to-day operation of an applicant or provider.” Similarly, “Agents” are defined as any “person who has been delegated the authority to obligate or act on behalf of an applicant or provider.
 Per paragraph 12 of the Provider Agreement.
 Cal. Welf. and Inst. Code §14043.25(a):
 Paragraphs 1, 2, 7, 12 16 (among others) in the provider agreement.
 Paragraph 28 (c)(5) of the DHCS Form 6208.
 Cal. Welf. and Inst. Code §14043.36(b);
 Cal. Welf. and Inst. Code §14043.6 and §14043.36(b).
 Cal. Welf. and Inst. Code §14123.25(a).
 Cal. Welf. and Inst. Code §14123.25(c)(2)(B)(ii).
 Cal. Welf. and Inst. Code §14123.2(c) authorizes the imposition penalties in this amount to be imposed for each day the violation continues. These penalties would be in addition to any penalties that the OIG is authorized.
“Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs” issued by the Office of Inspector General (OIG), Updated in November 2021.
 Discussions of these requirements can be found in the OIG’s Special Advisory and in the Federal Register at 81 Fed. Reg. 88, 334 (Dec. 7, 2016).
 OIG’s Special Advisory
 See State Medicaid Director Letter (SMDL #08-003) that provided guidance to Medicaid directors on checking providers and contractors for excluded individuals, and that CMS issued a follow-up directive in 2009 (SMDL #09-001)
 The value of screening is discussed at length in HCCA’s, Measuring Compliance Program Effectiveness: A Resource Guide(Jan. 2017).
 The OIG states that it only authorized to require screening of its own list — the LEIE. DHCS requires screening of both lists.
 Medicaid MCPs are required to screen this list and virtually all plans pass this obligation on to their providers
 Both Robert W. Liles and Paul Weidenfeld (the founders of Exclusion Screening) served as Assistant U.S. Attorneys and were appointed to serve in Washington, DC as “National Health Care Fraud Coordinator” for the Executive Office for U.S. Attorneys, U.S. Department of Justice.