Under 42 USC 1320a-7, the federal government bars individuals and entities from participating in Medicare, Medicaid, and other federal health care programs when they commit certain crimes or engage in specified misconduct. The statute splits exclusions into two tracks: mandatory exclusions under subsection (a), where the Secretary of Health and Human Services has no discretion, and permissive exclusions under subsection (b), where the Office of Inspector General (OIG) weighs the circumstances before acting. Once excluded, no federal health care program will pay for anything the person furnishes, orders, or prescribes.
The Four Mandatory Exclusion Categories
If a person or entity falls into any of these four categories, exclusion is automatic and mitigating circumstances do not matter.1Office of Inspector General. Exclusions Authorities
- Program-related crimes. A conviction for any criminal offense related to the delivery of an item or service under Medicare or a state health care program. This is the broadest category and reaches billing schemes and kickbacks tied to program payments.2Office of the Law Revision Counsel. 42 USC 1320a-7 Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs
- Patient abuse or neglect. A conviction for criminal conduct relating to abuse or neglect of patients in connection with health care delivery. Physical harm, sexual misconduct, and severe neglect in nursing homes, hospitals, and similar settings all fall here.
- Health care fraud felonies. A felony conviction for fraud, theft, embezzlement, or other financial misconduct in connection with health care delivery or any health care program, not just Medicare or Medicaid.3Office of the Law Revision Counsel. 42 US Code 1320a-7 – Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs
- Controlled substance felonies. A felony conviction for unlawfully manufacturing, distributing, prescribing, or dispensing a controlled substance. Overprescribing prosecutions have made this an active category.4Social Security Administration. 42 USC 1320a-7 – Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs
How Long a Mandatory Exclusion Lasts
Every mandatory exclusion runs at least five years. The OIG can impose a longer period based on aggravating facts, but it cannot go below the floor.4Social Security Administration. 42 USC 1320a-7 – Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs
Repeat conduct raises the stakes sharply. A second qualifying conviction pushes the minimum to ten years. A third or subsequent conviction results in permanent exclusion, with no path to reinstatement.4Social Security Administration. 42 USC 1320a-7 – Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs
One narrow exception exists. If the administrator of a federal health care program determines that excluding a provider would create a hardship for beneficiaries, the Secretary may waive the exclusion under subsections (a)(1), (a)(3), or (a)(4) for that specific program. This is aimed at sole community physicians or the only source of an essential specialized service in a community. The waiver decision is not subject to judicial review.
Permissive Exclusions the OIG May Impose
Under subsection (b), the OIG has discretion. It looks at the severity of the conduct, the person’s intent, and any mitigating factors before deciding. Baseline periods vary by category: three years for many of the criminal categories below, at least as long as any state-imposed suspension for license-based exclusions, and until the underlying problem is resolved for loan defaults.1Office of Inspector General. Exclusions Authorities
Misdemeanor Fraud and Obstruction
A misdemeanor conviction for fraud, theft, embezzlement, or other financial misconduct in connection with health care delivery can support permissive exclusion, as can a misdemeanor conviction for fraud in non-health-care programs funded by a federal, state, or local government agency. Obstructing or interfering with an investigation or audit related to health care offenses is also grounds, which captures destroying records or lying to investigators even when no separate fraud conviction results.3Office of the Law Revision Counsel. 42 US Code 1320a-7 – Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs
License Revocation or Surrender
The OIG may exclude a provider whose license has been revoked or suspended by a state licensing authority for reasons related to professional competence, professional performance, or financial integrity. Surrendering a license while a formal disciplinary proceeding is pending has the same effect. The OIG weighs the reasons for the state action and any corrective steps the provider has taken.5eCFR. 42 CFR 1001.501 – License Revocation or Suspension
Entities Tied to Sanctioned Individuals
The OIG can exclude an entity if a person with a direct or indirect ownership or control interest of 5 percent or more, or who serves as an officer, director, or managing employee, has been convicted of an exclusion-triggering offense, assessed a civil monetary penalty, or excluded from a federal health care program. This provision blocks people from sidestepping their own exclusion through a business entity, and it also applies when the person transfers ownership to a family or household member in anticipation of a conviction or exclusion.3Office of the Law Revision Counsel. 42 US Code 1320a-7 – Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs
Health Education Loan Defaults
Medical professionals who default on health education loans, scholarship obligations, or loan repayment programs secured in whole or part by the federal government face permissive exclusion. The exclusion runs until the loan or scholarship administrator notifies the OIG that the default has been resolved, at which point the individual can apply for reinstatement.6eCFR. 42 CFR 1001.1501 – Default of Health Education Loan or Scholarship Obligations
What Exclusion Actually Means
An excluded individual or entity is cut off from all federal health care program payments. Medicare, Medicaid, and other federal programs will not reimburse any item or service the excluded person furnishes. If an excluded physician orders or prescribes something, the item or service is not reimbursable when whoever fills that order knows or should know about the exclusion. The payment ban applies regardless of the payment mechanism, including itemized claims, cost reports, fee schedules, and prospective payment.7Office of Inspector General. The Effect of Exclusion From Participation in Federal Health Care Programs
The consequences extend past lost revenue. An excluded person who submits or causes a claim to be submitted to a federal health care program faces civil monetary penalties for each item or service furnished during the exclusion period, plus an assessment of up to three times the amount claimed. Submitting claims while excluded also puts any future reinstatement at risk.7Office of Inspector General. The Effect of Exclusion From Participation in Federal Health Care Programs
Employers are exposed too. A provider that employs or contracts with an excluded individual may face civil monetary penalties for each item or service that person furnished and that was billed to a federal program, plus an assessment of up to three times the amount claimed and potential exclusion of the provider itself. Liability turns on whether the billing provider “knows or should know” the person was excluded, which is why routine screening matters.8Office of the Law Revision Counsel. 42 US Code 1320a-7a – Civil Monetary Penalties
Screening Against the LEIE
The OIG maintains the List of Excluded Individuals and Entities (LEIE), the definitive source for checking exclusion status. It comes in two forms: an online searchable version where you can verify identity using Social Security numbers or Employer Identification Numbers, and a downloadable version of the full list for organizations screening large numbers of people.9Office of Inspector General. Exclusions FAQs
The LEIE is updated monthly. OIG guidance points to monthly screening of new hires and current staff as the expected standard for a reasonable compliance program. Organizations that skip it and later discover they have been billing for services rendered by an excluded person face the penalties above, and the “we didn’t know” defense is difficult when the database is free and searchable.10Office of Inspector General. Exclusions Program
Appealing an Exclusion
When the OIG excludes someone, it sends written notice identifying the legal basis, the supporting facts, the minimum exclusion period, and the effective date.2Office of the Law Revision Counsel. 42 USC 1320a-7 Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs
Every OIG exclusion can be appealed. The first step is requesting a hearing before an administrative law judge (ALJ) within HHS under 42 CFR Part 1005. Both sides present evidence, examine witnesses, and make legal arguments. For mandatory exclusions triggered by a prior conviction, the conviction itself generally supplies sufficient evidence, which narrows what the excluded party can realistically contest.11eCFR. 42 CFR Part 1005 – Appeals of Exclusions, Civil Money Penalties and Assessments
If the ALJ upholds the exclusion, the next appeal goes to the HHS Departmental Appeals Board (DAB). After a final DAB decision, judicial review is available in federal court. Courts rarely overturn exclusions in practice, especially mandatory ones where the underlying conviction is not in dispute.9Office of Inspector General. Exclusions FAQs
Getting Reinstated
Reinstatement does not happen automatically when the exclusion period ends. The individual or entity has to submit a written request to the OIG, and the request cannot come in earlier than 90 days before the exclusion period expires. Anything submitted before that window is rejected.12Office of Inspector General. Reinstatement
The OIG weighs several factors:
- Conduct before the exclusion that the OIG may not have known about, and conduct during the exclusion period.
- Whether all fines and debts owed to federal, state, or local governments relating to Medicare, Medicaid, or other federal health care programs have been paid or satisfactorily arranged.
- Whether CMS has determined the individual or entity meets all applicable conditions of participation or supplier conditions.
- Whether the person submitted claims or caused claims to be submitted to any federal health care program while excluded, which weighs heavily against reinstatement.13eCFR. 42 CFR 1001.3002 – Basis for Reinstatement
For providers excluded because of a license revocation, reinstatement typically requires regaining the license identified in the exclusion notice, though the OIG allows some flexibility for providers who obtain a different qualifying license.12Office of Inspector General. Reinstatement
Approval comes in the form of written notice from the OIG confirming that the individual or entity may again participate in federal health care programs. Until that written notice arrives, the exclusion stays in full effect.