What is the Federal Exclusion Statute?

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Introduction

This article discusses the federal Exclusion Statute, a federal law that grants the Department of Health and Human Services' Office of Inspector General (OIG) the authority to exclude individuals and entities from participation in federal healthcare programs. 

What is the Exclusion Statute and How Does it Operate?

The Exclusion Statute (sometimes referred to as the “List of Excluded Individuals and Entities” (LEIE) statute) is a federal law, located at 42 U.S.C. Section 1320a-7.  This law is designed to curb fraud, waste, and abuse. HIPAA-covered entities can be subject to the federal exclusion law 42 U.S.C. § 1320a-7, even though it is not a HIPAA law itself.

Mandatory Exclusions

Under the Exclusion Statute, the Department of Health and Human Services’ Office of Inspector General (OIG) is required to exclude individuals and entities convicted of any of the following offenses from participation in all federal healthcare programs:

• Medicare or Medicaid fraud, as well as any other offenses related to the delivery of items or services under Medicare or Medicaid 
• Patient abuse or neglect 
• Felony convictions for other health care-related fraud, theft, or other financial misconduct 
• Felony convictions for unlawful manufacture, distribution, prescription, or dispensing controlled substances 
  
  

Permissive Exclusions

The OIG also may impose permissive exclusions on certain grounds, including: 

• Misdemeanor convictions related to health care fraud other than Medicare or Medicaid fraud, or misdemeanor convictions for unlawfully manufacturing, distributing, prescribing, or dispensing controlled substances 
• Suspension, revocation, or surrender of a license to provide health care for reasons bearing on professional competence, professional performance, or financial integrity 
• Providing unnecessary or substandard services 
• Submitting false or fraudulent claims to a Federal health care program 
• Engaging in unlawful kickback arrangements 
• Defaulting on health education loan or scholarship obligations 

What are the Consequences of Exclusion?

Excluded providers may not participate in federal healthcare programs for a designated period. If a provider is excluded by OIG, then federal healthcare programs, including Medicare and Medicaid, will not pay for items or services that the provider furnishes, orders, or prescribes. Excluded providers may not bill directly for treating Medicare and Medicaid patients, and an employer or a group practice may not bill for an excluded provider’s services. At the end of an exclusion period, an excluded provider must seek reinstatement; reinstatement is not automatic. 

The OIG maintains a list of excluded parties called the List of Excluded Individuals/Entities (LEIE).

Additional Medicare Fraud, Waste and Abuse laws (FWA laws) can be found here.