What Are Healthcare Sanctions and Exclusions and Why Do They Matter?

This blog was originally published on October 16, 2020. 

Healthcare jobs account for 14% of the U.S. workforce, the second-largest employment segment in the nation. With patients’ safety at stake, organizations that deliver healthcare must ensure that the individuals they employ are properly licensed, have a clean history with their licensing board, and are not excluded from any state or federal programs.

That’s why it is critical for healthcare organizations to screen prospective hires, current employees, and contracted businesses for both healthcare sanctions and exclusions. Although the terms sanctions and exclusions are used interchangeably by healthcare insiders, there are important differences that employers in the healthcare industry need to know.

A healthcare sanction is the result of an administrative hearing where an individual or entity is found to be in violation of an administrative rule, civil law, or criminal offense. These types of actions can result in restrictions, license revocation, suspension, or voluntary surrender of license, or an exclusion from participation in any federal or state funded healthcare program, such as Medicare or Medicaid. This has severe financial consequences for employers.

A healthcare exclusion is one of several possible results of an administrative sanction mandated by the Office of the Inspector General (OIG) in the U.S. Department of Health and Human Services or a state Medicaid program. Exclusions are imposed because the individual or entity is found to pose unacceptable risks to patient safety or program integrity.

Healthcare sanctions are enforced by the OIG or a state Medicaid division. State sanctions can lead to exclusion by state Medicaid and/or federal exclusion by the OIG. The OIG’s List of Excluded Individuals or Entities (LEIE), combined with the Systems for Award Management (SAM), contains exclusion records for many industries, including healthcare. Any employer who hires or continues to employ an individual or entity on the LEIE exclusion list or SAM may be subject to civil monetary penalties (CMPs).

Mandatory and permissive exclusions

The OIG has the authority to exclude individuals and entities from federally funded healthcare programs for a variety of reasons, including a conviction for Medicare or Medicaid fraud. Those who are excluded can receive no payment from federal healthcare programs for their services.

Types of OIG exclusions include:

• Mandatory exclusions: Federal law mandates that the OIG must exclude individuals and entities convicted of fraud related to Medicare, Medicaid, State Children’s Health Insurance Program, or other state healthcare programs.

• Permissive exclusions: The OIG may also exclude individuals and entities for a variety of reasons, such as misdemeanor convictions related to healthcare fraud other than Medicare or State health programs.

In addition to tracking updates to regulatory requirements and exclusion lists, healthcare organizations should have a process in place to mitigate compliance risk and ensure quality of care. The right technology and comprehensive information derived from checking the primary source data can provide employers the key information they need to help prevent hiring, employing, and doing business with a sanctioned or excluded individual or entity.