OIG Revises Special Advisory Bulletin on Exclusions

May 10, 2013

OIG continues its aggressive interpretation of scope and effect of exclusion from participation in Federal health care programs and clarifies several open questions.

On May 8, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) issued its updated "Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs" (SAB), which replaces and supersedes its previous 1999 bulletin.[1] With the publication of this long-awaited updated bulletin, OIG seeks to clarify several excluded-person issues for which the healthcare industry has sought guidance. These issues include best practices for screening for excluded persons as well as the following:

  • The interplay between exclusion and the ban on program payment for services furnished by excluded persons that are directly or indirectly payable by Federal health care programs
  • The frequency of screening employees and contractors on the OIG's List of Excluded Individuals and Entities (LEIE)

In the SAB, OIG also offers guidance on exclusion screening that, while not required by law, may reduce healthcare providers' potential liability for overpayments or penalties. In the most forward-leaning example, OIG suggests that providers should engage in "point of service" screening of referring or ordering physicians by laboratories; imaging centers; durable medical equipment, prosthetics, and orthotics suppliers (DMEPOS); and pharmacies. Medicare Part D requirements have pushed such point-of-service screening of prescribing physicians down the contracting chain to pharmacies, but for other supplier and provider types, these screening practices would be new. Whether point-of-service screening represents "best practice" in an evolving healthcare compliance landscape is debatable, but such screening would certainly involve considerable, additional coordination and expense by healthcare providers, as most do not have systems in place to effectively effectuate point-of-service screening for ordering or prescribing physicians.

Scope of Exclusion on Direct and Indirect Payments

The SAB references a multitude of payment methods in the definition of payment by Federal health care programs, including cost reports, fee schedules, prospective payment systems, and capitated rates. In its updated SAB, OIG explains that "[e]xcluded persons are prohibited from furnishing administrative and management services that are payable by Federal health care programs. This prohibition applies even if the administrative and management services are not separately billable." Notably, OIG also prohibits excluded persons from working in health information technology support, strategic planning services, and even human resources, "unless wholly unrelated to Federal health care programs." This aggressive interpretation is nothing new for OIG, as it has consistently taken this position in enforcement actions over the past decade. Query whether Federal health care programs in fact reimburse or cover some of these services. In fact, it may not at all be the case that marketing and "strategic planning services" are reimbursed by Federal health care program payments—a point highly relevant to the defense of an excluded-person matter. However, as a practical matter, most healthcare providers will bear considerable risk by employing or contracting with an excluded person if its business involves serving Federal health care program beneficiaries. And certainly it should come as no surprise to them that OIG has a very broad interpretation of the scope and effect of exclusion.

Best Practices for Screening

Providers have also expressed concern about how to limit Civil Monetary Penalty (CMP) liability for knowingly employing or contracting with an excluded person for items or services reimbursed by Federal health care programs. The SAB acknowledges that the statutes and regulations do not, on their face, require screening of employees or contractors, but OIG has long recommended frequent screening of the LEIE, which is updated monthly by OIG, and other federal databases.

As to the frequency of screening, OIG continues to recommend screening names and aliases/maiden names upon hiring or contracting as well as periodically thereafter. OIG does not go so far as to recommend monthly screening, although it notes that the Centers for Medicare & Medicaid Services has instructed Medicaid programs to screen monthly, and some states have, in turn, instructed Medicaid participating providers to screen their employees monthly. OIG leaves such frequency of screening up to the providers. However, this may serve as a prelude to similar screening "frequency" requirements in Medicare's upcoming regulations on compliance programs as a condition of Medicare enrollment, as mandated by the Affordable Care Act.

Ultimately, OIG concludes whether monthly screening is practical and reasonable for a specific provider must be determined by each organization. In addition, OIG highlights that the ultimate responsibility for screening rests with the billing provider, even if it uses a contractor to screen against the sanctions lists. Somewhat ominously, OIG states that the provider may still "be subject to CMP liability if the provider does not ensure that an appropriate exclusion screening was performed." Consequently, providers should internally maintain evidence that such a screening was performed and should have robust contract provisions that contractors and subcontractors acknowledge their duty to screen employees and agents. As OIG makes clear, it may not be enough merely to accept assurances from subcontractors on screening to avoid CMP liability.


While much of the updated SAB reiterates earlier guidance from OIG, there is new ground covered regarding ordering or prescribing physicians. Also, while this issue is not raised at all in the updated SAB because it falls outside of the purview of Federal health care programs, the reality is that many commercial payors have followed OIG's lead and, by contract, ban excluded person participation as network providers. Consequently, the creation and maintenance of robust excluded-person screening processes and corresponding policies are consistent with prudent risk-mitigation practices.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the authors, Howard J. Young (202.739.5461; and Law Clerk Jacob J. Harper (202.739.5260;, or your other Morgan Lewis contact.

[1]. View the full SAB here.