OIG Screening Hiring: The Workflow Fix (42 CFR § 1001.1901)

By embedding screening checks into recruitment, onboarding, and ongoing employment processes, clinics can reduce the risk of non-payable claims, repayment obligations, and enforcement actions under 42 CFR Part 1003. This article explains the governing regulatory framework, outlines how to integrate OIG screening into hiring workflows, presents a real-world case example, and provides structured tools, including a self-audit checklist, common pitfalls, and best practices, tailored to small healthcare practices.

Introduction

Small clinics often hire under pressure, replacing staff quickly, expanding services, or engaging third-party vendors. In these situations, compliance tasks such as exclusion screening may be deprioritized. However, employing or contracting with excluded individuals, even unintentionally, can render related claims non-payable and expose clinics to significant financial risk.

Integrating OIG screening into the hiring workflow ensures that exclusion checks are not optional or forgotten steps. When screening is treated as a required condition of engagement, clinics are better positioned to demonstrate reasonable diligence during audits and investigations.

42 CFR § 1001.1901 – Effect of Exclusion

42 CFR § 1001.1901 provides that no payment may be made under Medicare, Medicaid, or any other federal healthcare program for items or services furnished, ordered, or prescribed by an excluded individual or entity. Key points include:

• The prohibition applies to both clinical and non-clinical roles when the individual’s work is connected to federally reimbursed services.

• Administrative functions such as billing, coding, scheduling, or claims submission may affect payment eligibility.

• Claims associated with excluded individuals are non-payable, regardless of intent or lack of knowledge.

This regulation governs payment eligibility, not hiring mechanics. Responsibility rests with the provider to prevent excluded participation.

Enforcement Authority Under 42 CFR Part 1003

When excluded individuals participate in federally reimbursed activities, enforcement consequences may arise under 42 CFR Part 1003, the Civil Monetary Penalties Law. Depending on the facts, consequences may include:

• Repayment of identified overpayments

• Civil monetary penalties and assessments

• Additional monitoring or oversight

Penalty amounts are case-specific and determined under Part 1003 and applicable inflation adjustments. 42 CFR § 1001.1901 does not establish fixed penalty amounts or treble damages.

The hiring process is the clinic’s first line of defense against exclusion-related risk. Effective integration includes:

Pre-Offer Screening

Before extending an offer of employment or engagement:

• Screen candidates against the OIG List of Excluded Individuals and Entities (LEIE).

• Screen applicable state Medicaid exclusion lists, where relevant.

• Document the search date, name screened, reviewer identity, and outcome.

No offer should be finalized until screening is complete.

Onboarding Verification

At onboarding:

• Confirm that screening was completed and documented.

• Retain evidence of screening in the personnel or vendor file.

• Communicate compliance expectations clearly to new hires and contractors.

Ongoing Screening

Exclusion status can change over time. Best practice includes:

• Conducting recurring screenings aligned with LEIE updates.

• Maintaining logs that demonstrate consistency and follow-through.

• Escalating potential matches promptly for verification.

While regulations do not mandate a specific screening frequency, auditors commonly expect recurring checks.

A small community health clinic urgently hired a billing coordinator. Interviews and references were completed quickly, but exclusion screening was not performed before the offer was extended.

Six months later, a Medicaid audit revealed that the coordinator had been excluded prior to hire. Because the clinic could not demonstrate pre-offer screening, claims associated with the coordinator’s billing activities were reviewed and deemed non-payable.

Outcome

• Identified overpayments were required to be repaid

• Additional enforcement scrutiny followed

• OIG noted that the issue could have been prevented with a pre-offer screening step

Key Lesson

Exclusion screening must occur before engagement. Post-hire discovery significantly increases exposure.

Common Pitfalls and How to Avoid Them

Skipping Screening Due to Urgency

Avoidance: Make screening a mandatory pre-offer requirement.

Screening Only Clinical Staff

Avoidance: Include administrative staff, contractors, and vendors.

One-Time Screening Only

Avoidance: Implement recurring screening procedures.

Ignoring State Exclusion Lists

Avoidance: Screen both federal and applicable state lists.

Poor Documentation

Avoidance: Maintain dated, defensible records for each screening.

• Integrate screening into recruitment checklists

• Assign clear responsibility for screening tasks

• Use OIG’s free LEIE search tools and downloadable database

• Centralize documentation for audit readiness

• Periodically review hiring files for completeness

These steps support defensible compliance without overwhelming limited resources.

Building a Culture of Compliance

Integrating exclusion screening into hiring is not merely an administrative task; it reflects a clinic’s commitment to integrity. Leadership engagement, transparency, and consistent enforcement of screening requirements reinforce accountability and reduce compliance gaps.

When staff understand that screening protects both patients and the practice, adherence improves across all roles.

Under 42 CFR § 1001.1901, employing excluded individuals renders related claims non-payable and exposes clinics to significant enforcement risk under 42 CFR Part 1003. The hiring workflow is the most effective point to prevent these violations.

By embedding OIG screening into pre-offer checks, onboarding verification, and ongoing monitoring, and by documenting each step, small clinics can reduce risk, protect revenue, and demonstrate good-faith compliance with federal healthcare program requirements.

• U.S. Department of Health & Human Services, Office of Inspector General. 42 CFR 1001.1901 – Effect of Exclusion

• Centers for Medicare & Medicaid Services. Provider Exclusion Screening Requirements

• Federal Register. Civil Monetary Penalties, Assessments, and Exclusions (42 CFR Part 1003)

• U.S. Department of Health & Human Services. HIPAA Documentation Retention Requirements (45 CFR 164.530(j)(2))