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The Exclusion Statue is a section of the Social Security Act (SSA) which spells out circumstances which certain individuals or entities can be banned from participating in Medicare and other federal healthcare programs.

It is what the Office of the Inspector General (OIG) uses to exclude individuals or companies from programs like Medicare and Medicaid. The statute is found in sections 1128 and 1156 of the SSA.

Excluded individuals and entities are banned from participating in healthcare programs either directly or indirectly. Any organisation which administers Medicare or Medicaid is banned from hiring or contracting excluded individuals or entities.

The Exclusion Statute spells out two types of exclusion i.e. Mandatory Exclusions, and Permissive Exclusions. Here is a brief look at each of these types of exclusions

Mandatory Exclusions

Mandatory exclusions are supposed to be enforced by the OIG. They are legally required for individuals or entities who commit certain violations. The violations which can lead to mandatory exclusion include:

  • Patient abuse and neglect

This is where an individual or entity is convicted for abusing or neglecting patients under their care.

  • Healthcare fraud

This is where an individual or entity gets a felony conviction for fraud, theft, embezzlement, breach of fiduciary responsibility or any other financial misconduct. The convictions are supposed to be for crimes committed during healthcare service provision.

  • Controlled substances

This is where an individual or entity gets a felony conviction for illegally manufacturing, distributing, prescribing or dispensing a controlled substance.

  • Program related crimes

This is where an individual or entity gets convicted for committing crimes related to healthcare programs such as Medicare and Medicaid.

As soon as an individual or entity is proven to have committed violations spelled out under Mandatory Exclusions, they are supposed to be excluded from federal healthcare programs.

Permissive Exclusions

Permissive Exclusions are left to the discretion of the OIG. Although the Exclusion Statute suggests scenarios under which permissive exclusions may be invoked, the ultimate decision is left with the OIG.

The situations under which an individual or entity can be subjected to permissive exclusions include:

  • Conviction for fraud
  • Conviction for obstructing an audit or investigation
  • Conviction for committing a controlled substance-related misdemeanor
  • Suspension of License i.e. if an individual or entity has their license suspended by a State, Federal or regulatory authority
  • Ownership of a sanctioned entity
  • Default on educational loan and scholarship obligations.

Those are just a few of the grounds under which the OIG can subject an individual or entity to a permissive exclusion. The full list of grounds can be viewed on this Exclusion Statute web page (https://www.law.cornell.edu/uscode/text/42/1320a-7).

Other Provisions under the Exclusion Statute

Besides spelling out the two types of exclusions, the Exclusion Statute also outlines the following:

  • The steps which are taken before an individual or entity becomes excluded
  • The length of time under which the exclusion can last
  • The process by which an individual or entity can have their exclusion terminated
  • A definition of different terms used in the statute

In a nutshell, the Exclusion Statute is the law which is used by the OIG to impose healthcare sanctions on individuals or entities. The above is a summary of the major contents of the statute. To read the entire statute, visit University of Cornell’s Legal Information Institute webpage, https://www.law.cornell.edu/uscode/text/42/1320a-7.

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