How to Verify an OIG Reinstatement Letter in Your Practice (42 CFR § 1001.3005)

Healthcare providers excluded from federal healthcare programs may only resume participation when exclusion has been formally withdrawn or reinstatement has been granted by the Office of Inspector General (OIG). Under 42 CFR § 1001.3005, exclusions may be withdrawn when the underlying basis for exclusion is reversed or vacated, resulting in reinstatement that may be retroactive. For small practices, properly verifying reinstatement letters is essential to avoid employing individuals who remain excluded and submitting non-payable claims under 42 CFR § 1001.1901.

This article explains the regulatory framework for withdrawal of exclusion, outlines the risks of improper verification, presents a real-world case study, provides a self-audit checklist, identifies common pitfalls, and details best practices for small healthcare organizations.

Small healthcare practices frequently rely on assurances from applicants or former employees who claim to have resolved prior exclusions. In many cases, individuals present documentation suggesting reinstatement or withdrawal of exclusion. Without proper verification, practices risk employing individuals who are still excluded, exposing the organization to repayment obligations and civil monetary penalties.

Federal regulations make clear that reinstatement or withdrawal of exclusion is effective only when formally granted by OIG. Practices must therefore implement reliable verification processes rather than relying on representations from individuals seeking reemployment.

Regulatory Framework

42 CFR § 1001.1901 – Effect of Exclusion

Under 42 CFR § 1001.1901, federal healthcare programs may not pay for any item or service furnished, ordered, or prescribed by an excluded individual or entity. Claims connected to excluded individuals are not payable, and payments received for such claims may constitute overpayments.

This payment prohibition applies regardless of whether the excluded individual performs clinical or administrative functions, provided their work is connected to federally reimbursed services.

42 CFR § 1001.3005 – Withdrawal of Exclusion

42 CFR § 1001.3005 governs situations in which an exclusion is withdrawn due to reversal or vacatur of the underlying basis for exclusion. Key provisions include:

• Exclusion is withdrawn and reinstatement occurs when:

  • A conviction is reversed or vacated on appeal;

  • A licensing or agency action is reversed or vacated; or

  • An OIG exclusion action is reversed or vacated during administrative appeal.

• Reinstatement under this section may be retroactive to the effective date of the original exclusion.

• OIG provides notice of reinstatement in accordance with regulatory procedures.

• Withdrawal of exclusion by OIG does not require other federal healthcare programs to reinstate the individual if those programs imposed exclusions under separate authority.

Only written notice from OIG confirms withdrawal of exclusion.

Practices that accept reinstatement letters without verification risk relying on inaccurate, incomplete, or falsified documents. Because exclusion status directly affects payment eligibility, improper verification may result in:

• Submission of non-payable claims

• Repayment of federal program funds

• Civil monetary penalties and assessments

• Heightened audit and enforcement scrutiny

Verification protects the practice by ensuring that exclusion status has been formally resolved.

A small internal medicine clinic hired a physician assistant who disclosed a prior exclusion and provided a document labeled as a reinstatement letter. The clinic did not cross-check the document against the OIG List of Excluded Individuals and Entities (LEIE).

During a Medicaid audit, investigators determined that the exclusion had not been withdrawn and that the document was invalid. All claims associated with the physician assistant were reviewed, resulting in significant repayment obligations and enforcement action.

Key Takeaway

Verification against OIG resources is essential. A letter alone is insufficient proof of reinstatement or withdrawal of exclusion.

1. Obtain the OIG Letter
   Require a copy of the official written notice issued by OIG.

2. Confirm LEIE Removal
   Search the OIG LEIE to confirm the individual no longer appears as excluded.

3. Review State Exclusions
   Check applicable state Medicaid exclusion lists.

4. Document Findings
   Save dated copies of letters and search results.

5. Approve Reemployment
   Allow participation in federally reimbursed services only after verification is complete.

Accepting Documents at Face Value

Avoidance: Verify all documents against OIG databases.

Ignoring State-Level Exclusions

Avoidance: Include state Medicaid lists in verification workflows.

Poor Record Retention

Avoidance: Retain verification records consistent with documentation retention standards.

Rushing Hiring Decisions

Avoidance: Delay onboarding until verification is complete.

Best Practices for Small Practices

• Embed verification into onboarding procedures

• Use standardized checklists and logs

• Assign clear responsibility for verification

• Centralize documentation for audit readiness

• Periodically review hiring files for compliance

These practices support consistency and defensibility without significant administrative burden.

Verification processes are most effective when compliance expectations are clearly communicated and consistently enforced. Leadership support, staff training, and transparency reinforce accountability and reduce the likelihood of errors related to reinstatement.

Under 42 CFR § 1001.3005, withdrawal of exclusion and reinstatement occur only when formally granted by OIG. A reinstatement or withdrawal letter must be verified against the OIG LEIE and relevant state exclusion lists before an individual resumes participation in federally reimbursed services.

By following structured verification procedures, maintaining documentation, and avoiding common pitfalls, small practices can protect themselves from non-payable claims, penalties under 42 CFR Part 1003, and reputational harm.

Compliance should be a living process. By leveraging a regulatory tool, your practice can maintain real-time oversight of requirements, identify vulnerabilities before they escalate, and demonstrate to both patients and payers that compliance is built into your culture.

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