A Provider’s Guide to OIG Exclusions

A Provider’s Guide to OIG Exclusions

Federal Exclusion Regulations and Enforcement Authorities, and How Providers Can Avoid Risk with Proper Exclusion Screening–Part 1.1

Paul S. Weidenfeld, JD

This article was originally written by Paul Weidenfeld and published by GreenBranch Publishing.  This article is 1.1 of Part I from a 2-Part article originally published by GreenBranch Publishing on their website.

OIG ExclusionOffice of Inspector General (OIG) exclusions[1] are one of the most powerful weapons available to the law enforcement in its efforts to fight healthcare fraud. Individuals and entities subject to an OIG exclusion are barred from participation in all Federal healthcare benefit programs, resulting in a payment prohibition on all items and services they provide, whether directly or indirectly. Additionally, providers that employ or contract with excluded individuals or entities risk the imposition of civil money penalties, overpayment liability, and even potential exposure under the False Claims Act. However, even though OIG exclusions are one of law enforcement’s oldest tools, many providers often fail to appreciate their compliance obligations and the risks associated with employing or contracting with excluded individuals or entities. Indeed, many providers take only minimal efforts to screen their employees and contractors to ensure compliance—and some make no effort at all. This article seeks to educate providers on the existing legal and regulatory framework, the risks and potential consequences of a failure to comply with those laws and regulations, and how best to comply and avoid those risks.[2]


Congress initially authorized the use of exclusions as an enforcement tool in the battle against healthcare fraud over 40 years ago with the passage of the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977. The bill granted the Department of Health, Education and Welfare, which later became the Department of Health and Human Services (HHS), the authority to exclude physicians and others convicted of crimes related to Medicare and Medicaid from participating in those programs.[3] In 1981, the Civil Money Penalties Law (Public Law 97-35 [codified at section 1128A of the SSA]) extended the authority to impose penalties to providers that submitted claims for items or services that had been furnished by an excluded entity, and the Secretary of HHS delegated his exclusion authority to its Office of Inspector General (OIG) in 1988 (53 Fed. Reg. 12,993 (April 20, 1988)). The current framework of mandatory and permissive exclusions was then established by the Medicare and Medicaid Patient and Program Protection Act of 1987.

In 1995, Attorney General Janet Reno declared healthcare fraud to be one of the top priorities of the Department of Justice, second only to violent crime.[4] Shortly thereafter, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L.105-33, 111 Stat.1936, enacted August 21, 1996) extended the OIG’s exclusion authority to all Federal healthcare programs.[5] The Balanced Budget Act of 1997 (BBA) (Pub.L.105-33, 111 Stal. 251. enacted August 5, 1997) expanded the OIG’s Civil Money Penalty (CMP) authority to apply to providers that employed or contracted with entities subject to an OIG exclusion. Prior to the passage of the BBA, the OIG could impose penalties only on excluded entities or persons who submitted claims on their behalf. The OIG’s permissive exclusion authorities were expanded in both the Medicare Modernization Act of 2003 (MMA) (Public Law No: 108-173, enacted December 8, 2003) and the 2010 Affordable Care Act (ACA). Initially passed as the “Patient Protection and Affordable Care Act,” Pub. L. No 111-148 (2010), and shortly thereafter amended by the “Health Care and Education Reconciliation Act of 2010,” Pub. L. No. 111-152 (2010), these two pieces of legislation are collectively referred to as the “Affordable Care Act” (ACA).


OIG exclusions are final administrative actions that bar individuals and entities from any and all participation in Medicare, Medicaid, and all other federal healthcare programs.[6] They are imposed “to protect beneficiaries…stem fraud and abuse…ensure that federal health care programs are protected…and help make sure excluded individuals are not involved in any way in the care of federal program beneficiaries.”[7] Excluded entities are deemed, as a matter of fact and law, to pose unacceptable risks to federal healthcare programs and to the patients they serve.

The effect of an OIG Exclusion is extremely broad. Federal healthcare programs, broadly defined to include “any plan or program that provides health benefits either directly or indirectly, will not pay for “any items or services” that are “furnished” by an excluded individual or entity, or at the medical direction or on the prescription of an excluded person. (see 42 C.F.R. 1001.1901(b), 42 C.F.R. § 1001.10). “Items or services” include any item, device, drug, biological, supply, or service—including management or administrative services; and they are “furnished” if provided or supplied, either directly or indirectly, by an individual or entity; and an “indirect claim” is “furnished” even if a non-excluded provider submits the claim if an excluded entity actually provided the service in the first place.[8]

The “payment prohibition” is a complete payment ban applicable to “all methods of Federal program reimbursement” regardless of whether it is from an itemized claim, cost report, capitated payment, or other bundled payment. It extends beyond direct patient care and includes, for example, services performed by excluded individuals who work for or under an arrangement with a hospital, nursing home, home health agency, or managed care entity where they are separately billed or part of a bundled payment. (See 2013 Special Advisory, at pages 6 and 7.) The following are examples of activities identified by the OIG in the Special Advisory as potentially problematic and susceptible to the imposition of civil money penalties if not properly screened for exclusions:
  • Management, administrative or any leadership roles;
  • Surgical support such as the preparation of a surgical tray that indirectly assists in care;
  • Claims processing and information technology;
  • Providing transportation services with excluded ambulance drivers or by employing excluded ambulance company dispatchers;
  • Selling, delivering or refilling orders for medical devices or equipment (whether reimbursed directly or indirectly);
  • Review of treatment plans, and other support services, whether billed separately or as part of a bundled payment.
Even unpaid volunteers can trigger overpayment and CMP liability if the items or services they furnish are not “wholly unrelated to Federal Health Care Programs” and the provider “does not ensure that appropriate exclusion screening was performed!” (Emphasis added, 2013 OIG Special Advisory, at 11-12, 16; see also Advisory Opinion No. 18-01.)

The payment prohibition also extends to providers that furnish items or services on the basis of orders or prescriptions they receive from others. Thus, in addition to screening their own employees, vendors, and contractors, providers such as laboratories, imaging centers, and pharmacies “should ensure, at the point of service, that the ordering or prescribing physician is not excluded. A failure to do so on their part would violate the payment prohibition and could result in both overpayments and CMPs. (2013 Advisory, page 8.)


Provider's Guide to OIG ExclusionsPaul Weidenfeld is a former federal healthcare fraud prosecutor and Department of Justice National Health Care Fraud Coordinator. His principle area of practice is healthcare fraud and abuse and the Federal False Claims Act, and he has represented providers and individuals in healthcare matters since leaving government in 2006. He is currently “Of Counsel” to the firm of Liles Parker. Mr. Weidenfeld also has an extensive litigation background that includes numerous trials and appeals and appearances before the United States Supreme Court, the Federal 5tht Circuit Court of Appeals, and the Louisiana Supreme Court. He has received recognition both as a prosecutor and as defense counsel and has been recipient of numerous awards. These include Nightingale’s Outstanding Healthcare Litigators, the Attorney General Award for Fraud Prevention, the Office of Inspector General Cooperative Achievement Award, and the National “Case of the Year” honors by the NHCAA. In 2014, Mr. Weidenfeld cofounded Exclusion Screening, LLC. Exclusion Screening helps providers navigate the difficulties and issues related to the screening for excluded individual and entities, and along the way he has become one of the foremost experts in the field of IG exclusions and Exclusion-related issues.
  1. “OIG” in this paper refers to Office of Inspector General, Department of Health and Human Services unless otherwise The term “OIG exclusion” is used as shorthand for an administrative action taken by the OIG barring an individual or entity from participating in Federal healthcare programs pursuant to §1128(a)(1)-(4), (b)(1)-(b)(16) or §1156 of the Social Security Act (SSA).
  1. This article focuses on exclusions from a regulatory and enforcement perspective, but exclusions also play a critical role in compliance and risk management See, e.g., HCCA, Measuring Compliance Program Effectiveness: A Resource Guide (Jan. 2017), available at https://oig.hhs.gov/compliance/compliance-resource-portal/files/HCCA-OIG-Resource-Guide.pdf. (guidance reconfigures the traditional “Seven Elements of an Effective Compliance Program” and makes the “Screening and Evaluation of Employees, Physicians, Vendors and other Agents” an element unto itself – or the new “Seventh Element of Compliance”).
  2. The Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, Public Law 95-142. In 1979, the Department of Health Education and Welfare was renamed the Department of Health and Human Services (HHS).
  3. See g. Crackdown on Health Care Fraud, www.nytimes.com/1995/ 12/22/us/in-crackdown-on-health-care-fraud-us-focuses-on- training-hospitals-and-clinics.html.
  4. In addition to establishing the principle of insurance portability, HIPAA contains several provisions related to healthcare fraud enforcement, including containing legislation that significantly increased the ability of law enforcement agencies to obtain and share information and establishing the Health Care Fraud and Abuse Fund (HCFAC) as a permanent funding source specifically designated for healthcare fraud
  5. The effect of an OIG exclusion is addressed in the Special Advisory Bulletin on the Effects of Exclusion from Federal Health Care Programs, issued September 2, 1999, and in the Updated Special Advisory Bulletin on the Effect of Exclusions from Participation in Federal Health Care Programs, issued May 8, Hereinafter, the initial advisory will be referred to as the “1999 Special Advisory” and the update will be referred to as the “Updated Special Advisory” or the “2013 Special Advisory.” The 1999 Special Advisory can be found at:
  6. https://oig.hhs. gov/fraud/docs/alertsandbulletins/effected.htm
  7. The 2013 Updated Special Advisory can be found at https://oig.hhs.gov/exclusions/files/sab-05092013.pdf.
  8. Inspector General June Gibbs Brown, in the press release for the 1999 Special
  9. See 42 C.F.R. § 10. Definitional changes were made to direct and indirect claims pursuant to rulemaking authority granted to the OIG in the MMA and the ACA; See also, OIG Advisory Opinion No. 18-01 at 5 (Feb. 20, 2018) available at https://oig.hhs.gov/fraud/docs/ advisoryopinions/2018/AdvOpn18-01.pdf.