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Section 1128 (h) of the Social Security Act provides the authority to exclude various health care providers, individuals, and businesses from receiving payment for services under Medicare and other programs. "The Office of Inspector General has been delegated the authority by the Secretary of Health and Human Services to exclude or terminate the agreement of practitioners, providers, or suppliers who have engaged in certain forms of program abuse. In accordance with this Act, the providers' responsibilities are outlined below:" (©1998 by CCH Incorporated. All Rights Reserved. Reprinted with permission from 1998 Medicare Explained.)

It is the provider's responsibility to have controls in place to ensure no bills are submitted or costs claimed for employees, physicians, consultants, etc. that have been sanctioned or excluded from Medicare and other programs. The listings change monthly, so ongoing verifications are needed.

When an exclusion/sanction is imposed, no payment is made to anyone for any item or services (other than an emergency item or service not provided in a hospital emergency room) furnished, ordered or prescribed by an excluded party under Medicare and other programs.

· Program-related crime,
· Patient abuse,
· Health care fraud, or
· A controlled substance,

the minimum period of exclusion is five years. [Soc. Sec. Act § 1128(a).] On the basis of a state's request, however, the Secretary may waive the exclusion in the case of an individual or entity that is the sole community physician or sole source of essential specialized services in a community. [Soc. Sec. Act § 1128(c)(3)(B).]

Ten year exclusion for two convictions. -For health care providers convicted a second time of a health care related criminal offense on or after August 5, 1997, for which the provider is subject to mandatory exclusion, the penalty imposed will be a minimum ten-year exclusion from any federal health care program. [Soc. Sec. Act § 1128(c)(3)(G)(ii).]

Permanent exclusion for three convictions. -The sanction is a permanent exclusion from any federal health care program for health care providers convicted on or after August 5, 1997, of a health care related criminal offense for which the provider is subject to mandatory exclusion, and who have on two or more previous occasions been subject to exclusion for health care related criminal convictions. [Soc. Sec. Act § 1128(c)(G)(I).]

Permissive exclusion. -The Secretary may exclude individuals or entities that committed an offense resulting in a conviction under federal or state law, related to:

· Misdemeanor fraud;
· Obstruction of a criminal investigation; or
· Misdemeanor manufacture, distribution, prescription, or dispensing of a controlled substance for a minimum period of three years from any federal health care program, unless the Secretary designated a shorter period on the basis of mitigating circumstances or a longer period based on the presence of aggravating factors.

The Secretary also may exclude any individual or entity whose healthcare-related license has been revoked or suspended. The minimum period of exclusion is the same time period for which the license revocation or suspension is effective.

Similarly, in the case of an exclusion or suspension under a federal or state health care program, the minimum period of exclusion is the period for which the individual or entity is excluded from the federal or state health program.

The Secretary's permissive exclusionary authority against entities controlled by sanctioned individuals is considerable. Individuals are subject to exclusion for transferring ownership of a health care provider to a family member or member of the household in anticipation of, or following, a health care related criminal conviction. Although the individual or entity, which previously had at least a five percent ownership interest in the provider, could no longer be described as having such interest, the provider may still be excluded by the Secretary. A member of the household would be anyone sharing a common abode as part of a single family home, including domestic employees, but not roomers or boarders.

Other conduct subject to the Secretary's permissive exclusion authority includes:
· the submission of claims or excessive charges or unnecessary services, and failure to furnish medically necessary services;
· activities subject to civil money and criminal penalties;
· failure to disclose required information, requested information on subcontractors or suppliers, or payment information;
· failure to grant immediate access;
· failure to take corrective action;
· default on health education loan or scholarship obligations; and
· ownership or controlling interest in a sanctioned entity. This category of individuals subject to permissive exclusion affects any individual with a direct or indirect ownership or controlling interest in an entity that has been mandatorily excluded or permissively excluded for a conviction related to fraud, obstruction of an investigation, or a controlled substance. [Soc. Sec Act § 1128(b).]

A minimum one-year exclusion period exists for providers sanctioned for failure to comply with statutory obligations related to quality of care. [Soc. Sec. Act § 1156(b)(1).] (©1998 by CCH Incorporated. All Rights Reserved. Reprinted with permission from 1998 Medicare Explained.)

(For information on CCH publications of health care regulations, click here.)

This sanction database link is provided to assist providers in complying with these regulations.