Moving the HME Industry Forward

General Healthcare

Exclusion of Individual – A Primer

June 15, 2015

AMARILLO, TX – If a person is convicted of a crime, then he is likely to be excluded from participating in Federal health care programs. If a person is a target of a civil investigation brought by the Department of Justice/Office of Inspector General, then he may end up being excluded. Normally, exclusion is for five years although it could be longer or shorter. So what does it mean when a person is excluded?

The OIG released a Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (The Bulletin) that provides guidance to providers  that might arrange with, contract with, or employ an excluded person.

The Bulletin provides that the OIG has the authority to exclude individuals and entities that have engaged in fraud or abuse from participation in Medicare, Medicaid, and other Federal health care programs and to impose civil money penalties (CMPs) for certain misconduct related to Federal health care programs. The effect of exclusion is that no Federal health care program payment may be made for any items or services furnished by an excluded individual or entity.  

In addition, excluded persons are prohibited from furnishing administrative and management services that are payable by Federal health care programs. As a practical matter, this means that “an excluded individual may not serve in an executive or leadership role (e.g., chief executive officer, chief financial officer, general counsel, director of health information management, etc.) at a provider that furnishes items or services payable by Federal health care programs.” 

The term “furnished” encompasses “items and services manufactured, distributed or otherwise provided by individuals or entities that do not directly submit claims to Medicare, Medicaid, or other Federal health care programs, but that supply items or services to providers, practitioners or suppliers who submit claims to these programs for such items or services.”  As a result, this prohibition applies even when the federal payment itself is made to another provider, practitioner, or supplier that is not excluded.  

Furthermore, the Bulletin provides that although an exclusion does not directly prohibit the excluded person from owning a provider that participates in Federal health care programs, the OIG has the discretion to exclude any provider owned in part (five percent or more) by an excluded person and the OIG has the discretion to impose CMP liability against an excluded individual that has an ownership or control interest in a provider.  Thus, “an excluded person may own a provider, but may not provide any items or services, including administrative and management services, that are payable by Federal health care programs.”  

Additionally, the Bulletin provides guidance regarding the circumstances under which an excluded person may be employed by or contract with, a provider that receives payments from Federal health care programs. 

“First, if Federal health care programs do not pay, directly or indirectly, for the items or services being provided by the excluded individual, then a provider that participates in Federal health care programs may employ or contract with an excluded person to provide such items or services. Second, a provider that employs or contracts with an excluded person to furnish items or services solely to non-federal health care program beneficiaries would not be subject to CMP liability.”

For additional information, go to the OIG website and click the “Exclusions” tab. Under this tab, you can search whether a particular person has been excluded.

All references available on request.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or