OIG Exclusion List 101: A Guide for Physician-Owned Practices (42 CFR § 1001.1901)

The Office of Inspector General (OIG) Exclusion List, also known as the List of Excluded Individuals and Entities (LEIE), is a compliance tool physician-owned practices cannot afford to ignore. Under 42 CFR § 1001.1901, individuals and entities excluded from participation in Federal health care programs are subject to payment prohibitions for items or services furnished on or after the effective date of exclusion. This includes items or services furnished by an excluded person or entity, or furnished at the medical direction or on the prescription of an excluded physician or other authorized individual when the furnishing party knew or had reason to know of the exclusion. (42 CFR § 1001.1901(b)(1)(i)–(ii))

For small and physician-owned practices, engaging an excluded individual can trigger severe consequences, including civil monetary penalty exposure, repayment obligations, and reputational damage. This guide explains the key regulatory requirements, highlights real-world pitfalls, provides a compliance checklist, and offers best practices for safeguarding your practice from costly mistakes.

Running a physician-owned practice means balancing patient care with business compliance responsibilities. Among the most overlooked risks is failing to check the OIG Exclusion List.

A receptionist hired without screening, a nurse brought on under a staffing agency, or even a billing vendor not properly vetted can expose your practice to significant liability if their work is connected to Federal health care program claims. Payers and oversight bodies do not accept ignorance as an excuse when payment prohibitions apply. This article unpacks the requirements surrounding exclusions, explains how to conduct screening, and offers a roadmap for compliance that fits the workflow of smaller medical offices.

Understanding the OIG Exclusion List and § 1001.1901

What Is the OIG Exclusion List?

The LEIE is a publicly available database maintained by the OIG listing individuals and entities excluded from participation in Federal health care programs. Reasons for exclusion may include:

• Medicare or Medicaid fraud

• Patient abuse or neglect

• Licensing board disciplinary actions

• Controlled substance violations

• Other criminal convictions related to health care

What Does § 1001.1901 Require?

42 CFR § 1001.1901 defines the scope and effect of exclusion, including the core payment prohibition.

1) Scope of exclusion

Exclusions apply across Medicare, Medicaid, and other Federal health care programs as defined in § 1001.2. (42 CFR § 1001.1901(a))

2) Payment prohibition during exclusion

Unless and until reinstatement occurs, no payment will be made by Medicare (including Medicare Advantage and Prescription Drug Plans), Medicaid, or other Federal health care programs for any item or service furnished on or after the effective date specified in the notice:

• By an excluded individual or entity, or

• At the medical direction or on the prescription of an excluded physician or other authorized individual, when the furnishing party knew or had reason to know of the exclusion. (42 CFR § 1001.1901(b)(1)(i)–(ii))

  This payment prohibition applies regardless of whether an excluded person obtained a provider number or equivalent prior to being reinstated. (42 CFR § 1001.1901(b)(2))

3) Claims and liability exposure

An excluded individual or entity that submits, or causes to be submitted, claims for items or services furnished during the exclusion period may be subject to civil money penalty liability and criminal liability under applicable statutes, and such submissions may serve as a basis for denying reinstatement. (42 CFR § 1001.1901(b)(4))

Payment and operational impact

Because the regulation addresses payment prohibitions tied to excluded individuals or entities, practices must ensure their workforce and vendors do not create prohibited payment scenarios through direct furnishing, ordering, prescribing, or involvement that causes claims submission for federally reimbursable items or services.

Risk areas include:

• Clinical care and ordering/prescribing functions

• Administrative functions linked to claims submission (e.g., billing operations)

• Contractors and staffing agency personnel performing reimbursable-related work

• Vendors supporting revenue cycle and claims operations

A physician-owned cardiology practice unknowingly hired a part-time billing clerk who had previously been excluded from participation in Federal health care programs for Medicare fraud. The exclusion was not disclosed by the staffing agency that supplied the clerk, and the practice assumed that basic background checks were sufficient.

What Happened

During a routine compliance review, the practice’s workforce roster was cross-checked against the OIG’s LEIE. The billing clerk’s name appeared on the exclusion list, immediately raising compliance concerns.

Although the individual did not provide direct patient care, the clerk processed and submitted Medicare claims. When an excluded individual’s work is connected to claims for federally reimbursable items or services, the practice risks payment prohibition exposure and potential enforcement action under applicable authorities. (42 CFR § 1001.1901(b)(1); § 1001.1901(b)(4))

Consequences

The practice faced repayment exposure for claims tied to the excluded individual’s work and potential civil monetary penalty risk. The practice was also required to strengthen screening documentation and oversight controls.

Lesson Learned

Even non-clinical staff performing administrative tasks can create exclusion-related liability exposure when their work is tied to federally reimbursed claims. Screening should be systematic, documented, and performed on a consistent schedule as a compliance control, especially for employees, contractors, and staffing agency personnel.

One-time screening only: Screening at hire but failing to re-screen leaves practices exposed when exclusion status changes.
Overlooking contractors: Billing vendors, temporary clinicians, and agency staff must be included in screening processes when their work relates to federally reimbursable items or services.
Failure to document: Even if screening is performed, lacking documentation can undermine defensibility.
Inaccurate data entry: Misspellings or name variations can cause missed exclusions.
Vendor assumptions: Assuming vendors screen without proof creates unnecessary exposure.

Adopt Written Policies

Create clear policies requiring initial screening and ongoing screening on a defined schedule for all employees, contractors, and vendors.

Leverage Technology

Use compliance software to streamline screening against the OIG LEIE and relevant exclusion sources.

Vendor Contracts

Include clauses requiring vendors to maintain exclusion screening controls and provide documentation upon request.

Staff Training

Train administrative and HR staff on exclusion risk, documentation, and internal escalation procedures.

Leadership Oversight

Assign responsibility to a compliance officer or physician-owner to review screening logs on a consistent cadence.

Corrective Action Protocols (Step-by-Step)

1. Confirm the exclusion status using reliable identifiers.
   
   
2. Immediately remove the individual from any duties connected to Federal program items or services.
   
   
3. Preserve screening logs and supporting documentation.
   
   
4. Conduct an internal review to determine claims exposure.
   
   
5. Implement corrective controls to prevent recurrence.
   

Compliance with exclusion screening should not be treated as a box-checking exercise. Physician-owned practices can embed screening into their compliance culture by:

• Conducting mock audits to test readiness

• Including exclusion review in compliance committee meetings

• Communicating clearly with staff about why exclusion checks protect patients and the organization

By making screening routine, practices reduce exclusion-related risk and strengthen defensible compliance.

The OIG Exclusion List is a critical compliance risk area for physician-owned practices. Under 42 CFR § 1001.1901, payment prohibitions apply to items or services furnished by excluded individuals or entities, or furnished at the medical direction or on the prescription of excluded individuals in specified circumstances. Practices that allow excluded individuals to perform work connected to federally reimbursable items or services face repayment exposure and potential civil monetary penalty risk. (42 CFR § 1001.1901(b)(1); § 1001.1901(b)(4))

By implementing consistent screening, robust documentation, vendor oversight, and leadership review, physician-owned practices can safeguard themselves against costly mistakes and reinforce responsible program participation.

A practical step to reinforce compliance is integrating a compliance system into your operations. These tools monitor requirements, perform ongoing risk reviews, and keep your practice prepared for audits, helping you avoid costly mistakes while presenting a proactive stance to oversight bodies.

1. 42 CFR § 1001.1901 – Scope and effect of exclusion

2. OIG – List of Excluded Individuals and Entities (LEIE)

3. MLN Publications & Multimedia