US Department of Health and Human Services Issues Updated "Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs"

Health Law Alert

May 29, 2013
Health Law Alert

On May 8, 2013, the U.S. Department of Health and Human Services, Office of Inspector General (OIG) issued an Updated Special Advisory Bulletin on the Effect of Exclusion From Participation in Federal Health Care Programs (Updated Bulletin). The Updated Bulletin replaces the original Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs, which was issued in 1999 (the 1999 Bulletin).

Since the 1999 Bulletin was issued, various statutory amendments have strengthened and expanded the OIG’s authority to exclude individuals and entities from the federal health care programs. These include:

These statutory amendments have introduced new penalties. For example, the ACA provides for criminal penalties on excluded providers that order or prescribe services or items in situations where the provider knows that the services or items will be payable under a federal health care program. The Updated Bulletin also notes that the submission of a prohibited claim will be treated as an overpayment and could be a false claim in situations where the excluded provider knowingly submits the claim.

The Breadth and Scope of Excluded Activities
The Updated Bulletin clarifies the effect of exclusion in several scenarios and advises that:

Potential Penalties for Violation of Excluded Person Prohibitions

An excluded person who submits a claim for payment to a federal health care program, or causes such a claim to be submitted, may be subject to:

Violation is also grounds for OIG to deny reinstatement to federal health care programs

A provider that employs or enters into contracts with excluded persons to provide items or services payable by federal health care programs may be subject to:

Limitations on an Excluded Provider’s Ability to Have an Ownership Interest in a Health Care Entity

The Updated Bulletin notes that exclusion does not directly prohibit an excluded person from owning a provider that participates in federal health care programs. However, it cautions that:

The List of Excluded Individuals/Entities (LEIE) Database for Screening Excluded Persons
The Updated Bulletin encourages providers to screen potential employees or contractors by using the LEIE database (available at

While there is no regulatory requirement to use the LEIE, the OIG recommends:

Using Third Parties for Staffing and LEIE Database Screening:

While providers may outsource screening to a third-party contractor, the OIG cautions that the provider retains potential liability for civil monetary penalties. For example, in situations where health care workers are provided through a staffing agency, the OIG states that a provider may reduce or possibly eliminate CMP liability if it can demonstrate that it reasonably relied on the staffing agency’s agreement by contract to perform the LEIE screening. The Updated Bulletin states that this delegation needs to be documented in the agreement between the parties and that the provider should exercise appropriate due diligence in ensuring that the staffing agency is complying with its screening obligation.


The OIG also notes that providers that identify potential CMP liability for contracting with or employing an excluded provider could use the OIG’s Provider Self-Disclosure Protocol to disclose and resolve potential CMP liability.

If you have questions concerning the changing health care landscape, we are here to help. Hinshaw has an interdisciplinary team of advisors with deep experience in the health care industry to help guide you through the health care maze and its impact on your business. Contact your regular Hinshaw attorney for more information.

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This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.