Exclusion from Federal Healthcare Programs

By: Courtney Kleshinski

July 14, 2014

The US Code bars certain individuals and businesses with criminal convictions on their records from participating in Medicare and state health care programs. The exclusion program targets individuals and businesses convicted of crimes related to Medicare or fraud. If you, your business or someone you contract with has been convicted of this type of crime, you may be affected by the exclusion program.

There are two types of exclusion from the Medicare program: mandatory and permissive. As the name suggests, under mandatory exclusion certain individuals and entities must be barred from participating in any Federal or State health care program. Permissive exclusion, on the other hand, means that a person or entity may be barred from participating.

a.      Mandatory and Permissive Exclusion

Mandatory exclusion includes those individuals or entities who have been: (1) convicted of a criminal offense related to the delivery of Medicare covered services (42 USC §1320a-7(a)(1)); or (2) convicted of any felony conviction relating to health care fraud (42 USC §1320a-7(a)(3)). Permissive exclusion includes those who have been: (1) convicted for an offense, under Federal or State law, of misdemeanor fraud in connection with Medicare (42 USC §1320a-7(b)(1)(A)); (2) convicted in connection with the interference or obstruction of any investigation or audit related to Medicare fraud (42 USC §1320a-7(b)(2)); (3) having charged or rendered an excessive amount of services related to Medicare (42 USC §1320a-7(b)(6)); or (4) determined by the OIG to have commitment fraud or accepted or provided an illegal kickback (42 USC §1320a-7(b)(7)).

b.      Convicted

For purposes of mandatory and permissive exclusion, an individual or entity is considered to be “convicted” of a criminal offense when: 

  1. A judgment of conviction has been entered against the individual or entity by a court, regardless of whether there is a pending appeal or whether the judgment has been expunged;
  2. Where there has been a finding of guilt against the individual or entity by a court;
  3. When a plea of guilty or nolo contender has been accepted by a court; or
  4. When the individual or entity has entered into an arrangement where judgment of conviction has been withheld.

42 USC §1320a-7(i).

c.       Exceptions from Exclusion

The OIG has the authority to waive an individual or entity’s exclusion from participating as a provider in Federal health programs. 42 C.F.R. 1001.1801(b). Waivers, however, are only available for those excluded providers who are the sole community physician or the sole source of essential specialized services in a community.

d.      The Effect of Exclusion

The effect of an exclusion is that no payment from any federal health care program will be made to the excluded individual or entity for any items or services furnished. This payment prohibition applies to the excluded person or entity, anyone who employs or contracts with the excluded person, and any hospital or other provider for which the excluded person performs services. The exclusion applies regardless of who submits the claims and applies to all administrative and management services furnished by the excluded person. See Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs, HHS OIG, May 8, 2013, available online at: http://oig.hhs.gov/exclusions/files/sab-05092013.pdf.

There is a limited exception to this payment prohibition for the provision of certain emergency items or services not provided in a hospital emergency room. 42 CFR 1001.1901(c). However, this most likely will not apply to any Medicare providers in the Chicagoland area.

e.       Period of Exclusion

The length of time an individual or entity is excluded from the Medicare program is determined by their offense. For mandatory exclusion offenses, the OIG imposes a minimum five-year exclusion period. If convicted of two mandatory exclusion offenses, the minimum exclusion period is ten years. If convicted of three mandatory exclusion offenses, an individual or entity is permanently excluded. The exclusion period for permissive exclusions varies. Minimum periods may be reviewed on the following website: http://oig.hhs.gov/exclusions/authorities.asp.

f.       Exclusion and Business Ownership

Although exclusion does not directly prohibit an excluded person from owning a provider that participates in federal health care programs, there are several risks. The OIG may exclude the provider if the provider is owned in part by an excluded person. The OIG’s ability to exclude is discretionary in these cases; however, all restrictions on the excluded person still apply. The excluded may not provide any items or services, including administrative and management services, that are payable by Federal healthcare programs. 42 CFR §1003.102(a)(12).

g.      Reinstatement After Exclusion

Reinstatement of excluded entities and individuals is not automatic once the specified period of exclusion ends. Those wishing to again participate in the Medicare, Medicaid and all Federal health care programs must apply for reinstatement and receive authorized notice from OIG that reinstatement has been granted. See 42 USC §1320a-7(g).

To apply for reinstatement, an individual or an entity must send a written request to OIG at:


Attn: Exclusions

P.O. Box 23871

Washington, DC 20026

(202) 691-2298 (Fax)

Upon receipt of the request, OIG will provide Statement and Authorization forms that the excluded must complete, have notarized, and return. The information contained in these forms will be evaluated and a written notification of OIG’s final decision on reinstatement will be issued. Generally, this process requires up to 120 days to complete, but can take longer.

Excluded providers may begin the process of reinstatement 90 days before the end of the period specified in the exclusion notice letter. If reinstatement is denied, the excluded party is eligible to reapply after 1 year.

If you, your business, or someone you contract with has been convicted of a criminal offense related to Medicare or fraud, contact our office at 847-705-7555 to discuss your options.