A Look at CMS Preclusion vs OIG Exclusion

CMS Preclusion

The Centers for Medicare & Medicaid Services (CMS) established the Preclusion List under its authority to administer Medicare Advantage (MA) and Part D programs. The list features healthcare providers and prescribers who are precluded from receiving payment for items or services furnished to Medicare beneficiaries enrolled in MA plans or for prescriptions covered under Part D.

CMS derives its preclusion authority from regulations at 42 C.F.R. §§ 422.222 and 423.120(c)(6).

Below are some common reasons for landing on the CMS Preclusion List:

• The provider’s Medicare enrollment was revoked
• The provider is under an active re-enrollment bar
• The provider engaged in conduct CMS deems detrimental to the best interests of the Medicare program

Consequences

Being on the Preclusion List means:

• The provider cannot be reimbursed for services under MA or prescriptions under Part D.
• MA plans and Part D sponsors must deny claims involving precluded providers.

OIG Exclusion

The U.S. Department of Health and Human Services, Office of Inspector General (OIG) maintains the List of Excluded Individuals and Entities (LEIE) under the authority of the Social Security Act §§ 1128 and 1156. Exclusions are imposed on individuals or entities found to have engaged in certain misconduct, such as fraud or patient abuse.

Types of Exclusions

• Mandatory Exclusion (such as felony healthcare fraud or patient abuse): Must last at least five years.
• Permissive Exclusion (such as license revocation, misdemeanor fraud): Discretionary term and variable in duration.

Consequences

• Excluded individuals/entities are barred from participation in all federal healthcare programs (Medicare, Medicaid, TRICARE, etc.).
• Payment prohibition is absolute, including indirect payments through employers or contractors.
• Claims submitted in violation can trigger Civil Monetary Penalties (CMPs) and potential False Claims Act (FCA) exposure.

The LEIE is publicly searchable, and providers are expected to routinely screen employees, contractors, and vendors.

Why the Distinction Matters for Legal and Compliance Strategy

For healthcare providers and other individuals and entitles conducting business in the healthcare industry, it is important to understand key differences between both mechanisms and how they limit participation in federal healthcare programs.

For CMS Preclusion:

• Preclusion is not the same as exclusion; a provider can be precluded but not excluded.
• Providers may not be aware of their status unless informed by a Medicare Advantage or Part D plan.
• Counsel should advise clients involved in revocation appeals or under investigation to consider the downstream implications for preclusion, even absent formal exclusion.

For OIG Exclusion:

• Exclusion carries broader legal implications due to its statutory mandate and potential linkage to FCA liability.
• Consider implementing robust exclusion screening protocols, such as monthly LEIE checks and documentation of compliance efforts.
• Employment of excluded individuals, knowingly or unknowingly, can result in significant penalties, even if the excluded person is not directly involved in patient care.

Practical Compliance Considerations

• Perform regular screening of employees, contractors, and vendors against the LEIE to remain aware of any changes or status updates
• Conduct due diligence to avoid employing or contracting with those who are on either list
• Ensure your operational staff understands how to handle denial notices and what to do if a provider appears on either list.
• Maintain thorough documentation

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It should be noted that I am not your lawyer (unless you have presently retained my services through a retainer agreement). This post is not intended as legal advice, it is purely educational and informational, and no attorney-client relationship shall result after reading it. Please consult your own attorney for legal advice. If you do not have one and would like to retain my legal services, please contact me using the contact information listed above.

All information and references made to laws, rules, regulations, and advisory opinions were accurate based on the law as it existed at this time, but laws are constantly evolving. Please contact me to be sure that the law which will govern your business is current. Thank you.