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Question: What are the penalties for not complying with the Office of Inspector General’s (OIG) excluded parties list requirements?

Response & Analysis:

The monetary penalties for noncompliance with the OIG’s prohibition on payments to excluded individuals or entities can be significant. The average fine for hiring or contracting with an excluded person or entity is over $100,000. For example, in February 2015, the Denver North Care Center skilled nursing facility agreed to pay a civil monetary penalty of $242,434.92 after an OIG investigation revealed that it had employed an excluded nurse who provided items and services to patients that were paid for by Medicare and Medicaid. In a similar case against the Grafton School in Virginia, the provider agreed to pay $324,055.11 after the OIG alleged that Grafton employed two individuals that it knew or should have known were excluded from participation in federal healthcare programs.

The standard used to determine an organization’s liability is whether it “knew or should have known” that the person or entity was excluded. This is a very low standard to meet, and it is often difficult to defend noncompliance because there are public federal and state lists of excluded individuals and entities that are readily available.

The HHS-OIG website provides: “If a health care provider arranges or contracts (by employment or otherwise) with an individual or entity who is excluded by the OIG from program participation for the provision of items or services reimbursable under such a Federal program, the provider may be subject to Civil Monetary Penalty (“CMP”) liability if they render services reimbursed, directly or indirectly, by such a program. CMPs of up to $10,000 for each item or service furnished by the excluded individual or entity and listed on a claim submitted for Federal program reimbursement, as well as an assessment of up to three times the amount claimed and program exclusion may be imposed.”²

For example, in March 2015, Ambulatory Health Care Services, LTD—a Skokie, Illinois home health agency—was excluded from participation in all federal health programs for a period of three years as a result of its employment of an excluded nurse. The exclusion was a result of an OIG investigation that revealed that Ambulatory Health Care Services had billed the federal healthcare programs for services provided by the excluded nurse to Medicare and Medicaid beneficiaries.

Thus, providers and contracting entities have an affirmative duty to check the program exclusion status of individuals and entities prior to entering into employment or contractual relationships, or run the risk of CMP liability for failing to do so. Additionally, this affirmative duty continues throughout the course of the employment or contractual relationship, creating an obligation for organizations to periodically screen individuals or entities for inclusion on the excluded parties list. CMS has recommended that states require providers to search the HHS-OIG website monthly to capture exclusions and reinstatements that have occurred since the last search. For additional information on how often your organization should conduct excluded parties screening, see our Compliance Issue Analysis titled: “Frequency of OIG Screening.”

¹42 C.F.R. 1001.1901.
²Sec. 1128A(a)(6) of the Social Security Act; 42 CFR 1003.102(a)(2). See https://oig.hhs.gov/exclusions/effects_of_exclusion.asp.

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