DEP.lliTMENT OF HEALTH 1.\.': W Hcl\!1,\.'\1 SERYIC:E~ 
()FFICE OF INSPECTOR GENERAL 
'.IASHI'iGTOO., DC  20201 
SEP  2 7 2012 
TO: 	 Marilyn Tavenner 
Acting Administrator 
Centers for Medicare & Medicaid Services 
FROM:  Stuart Wright 
Deputy Inspector General 
for Evaluation and Inspections 
SUBJECT: 	 Memorandum Report:  Excluded Individuals Employed by Service 
Providers in Medicaid Managed Care Networks, OEI-07-09-00632 
This memorandum report provides information about Office of Inspector General 
(OIG)-excluded individuals who were employed by service providers participating in 
12 Medicaid managed care entities' (MCE) provider networks in 2011.  In addition, it 
provides information on the safeguards in place to prevent excluded individuals from 
being employed by providers in those networks. 
SUMMARY 
OIG is authorized to exclude certain individuals and entities (providers) from 
participating in federally funded health care programs, including Medicaid.  Federal 
programs are prohibited from paying for any items or services furnished, ordered, or 
prescribed by an excluded provider.  Managed care plans and their network providers 
may not employ or contract with an excluded individual to provide items or services paid 
for.by Medicaid.  Nationally, approximately 70 percent of Medicaid beneficiaries receive 
some or all oftheir Medicaid services through managed care. 
To determine whether excluded providers are present in Medicaid managed care provider 
networks, OIG has conducted two evaluations; this is the second ofthe two evaluations. 
In the prior study, entitled Excluded Providers in Medicaid Managed Care Entities 
(OEI-07-09-00630), 1 we identified 11 excluded providers out of approximately 
1 
We use the term "managed care entity" to refer to managed care organizations (MCOs), prepaid inpatient 
health plans, and prepaid ambulatory health plans. Readers should not confuse this abbreviated term with the 
statutory definition of managed care entity which only refers to MCOs and primary care case management  Page 2  Marilyn Tavenner 
 
277,000 providers checked.2  In the current study, we identified 16 excluded individuals 
out of approximately 249,000 individuals employed by 500 sampled providers.  Nine of 
these excluded individuals were in occupations that provided direct patient care.  
Contributing to the employment of these excluded individuals were gaps in information 
available on excluded individuals and failure of contracted staffing agencies and 
background check vendors to follow procedures.  Most providers reported using a variety 
of safeguards to ensure that they do not employ excluded individuals, but identified costs 
and resource burdens as challenges in executing those safeguards.  Seven percent of 
providers enrolled in the selected Medicaid MCEs reported that they do not check the 
exclusion status of their employees.     
 
BACKGROUND 
 
Office of Inspector General Exclusions 
To protect patients and Federal health care programs, OIG has been delegated authority 
from the Secretary of Health and Human Services (the Secretary) to exclude certain 
providers (e.g., doctors, physician group practices, transportation companies, hospitals, 
and home health agencies) from participating in Medicaid and other federally funded 
health care programs.3  These Federal programs are generally prohibited from paying for 
any items or services furnished, ordered, or prescribed by an excluded provider.   
Managed care plans and their network providers may not employ or contract with an 
excluded individual to provide items or services paid for by Medicaid.  OIG excludes 
providers from participation in these programs through legal authorities contained in 
sections 1128, 1128A, 1156, and 1867 of the SSA.  Some common reasons for exclusion 
include convictions for program-related fraud and patient abuse, and licensing board 
actions, such as the suspension or revocation of a medical license due to concerns about 
the licensed individuals professional competence or performance. 
 
In addition to prohibiting Federal payment, the SSA authorizes the imposition of civil 
monetary penalties against health care providers and entities, including MCEs, that 
arrange or contract with an individual or entity to provide federally reimbursed items or 
services that they know or should know were excluded from participation in Federal 
health care programs.4  Under these authorities, MCEs, hospitals, nursing homes, 
hospices, group medical practices, and other health care providers may face civil 
monetary penalties if they employ or contract with an excluded individual to provide, 
directly or indirectly, items or services paid for with Federal funds. 
 
Types and Duration of Exclusions.  Exclusions are either mandatory or permissive.  
Although mandatory exclusions are required by law, permissive exclusions are imposed 
                                                                                                                                                 
programs.  See section 1932(a)(1)(B) of the Social Security Act (SSA).  CMS has included prepaid partial-risk 
entities under managed care regulations at 42 CFR part 438.  
2
 OIG, Excluded Providers in Medicaid Managed Care Entities (OEI-07-09-00630), February 2012.  The 
evaluation examined a variety of provider types including businesses and individual providers. 
3 Federally funded health care programs include Medicare and all other plans and programs that provide health 
benefits funded directly or indirectly by the United States (other than the Federal Employees Health Benefits 
Plan) or any State health care program, including Medicaid.  SSA  1128B(f); 42 CFR  1001.2. 
4
 SSA  1128A(a)(6). 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 3  Marilyn Tavenner 
 
at OIGs discretion.5  For example, a provider convicted of a program-related crime must 
be excluded; a provider who failed to disclose required information may be excluded, as 
determined by OIG. 
 
The minimum duration of an exclusion may be fixed by law or at the discretion of OIG.  
Exclusions can be time-limited or permanent.  If an excluded provider whose minimum 
period of exclusion has expired wishes to participate in Federal health care programs, the 
provider must apply for reinstatement and OIG must approve the applicant.6 
 
Exceptions to the payment prohibition.  Limited exceptions exist that allow excluded 
providers to be paid for certain services (e.g., emergency services).7  Additionally, States 
can request that the Secretary approve waivers allowing excluded providers, such as 
providers in medically underserved areas, to be paid.8 
 
Sources of Exclusion Information.  OIG maintains a list of all currently excluded parties 
called the List of Excluded Individuals/Entities (LEIE), which is publically available on 
the OIG Web site for search or download.9  OIG updates the LEIE on a monthly basis to 
add new exclusions and reinstatements.  OIG recommends that providers rely primarily 
on the LEIE for the most accurate and timely information on Federal exclusions.   OIG 
sends monthly updates of exclusions information to the Centers for Medicare & Medicaid 
Services (CMS).  CMS then uses the updates to populate the Medicare Exclusions 
Database, which is available to State Medicaid agencies and other stakeholders.  OIG 
also sends monthly updates of the LEIE to the General Services Administration, which 
maintains the Excluded Parties List System.10  The Excluded Parties List System includes 
information regarding parties debarred, suspended, proposed for debarment, excluded, or 
otherwise disqualified from receiving Federal funds.  Another source of exclusions 
information is State sanctions and licensure databases.  States have authority to exclude 
                                                                                                                                                 
5
 SSA  1128(a) and (b); 42 U.S.C. 1320a-7(a) and (b). 
6
 SSA  1128(g); 42 U.S.C. 1320a-7(g); 42 CFR  1001.3001. 
7
 42 CFR  1001.1901(c) establishes limited exceptions allowing payment of certain services provided by 
excluded providers.  Payments may be made for up to 30 days after the effective date of an exclusion for:  
inpatient institutional services furnished to an individual who was admitted to an excluded institution before the 
date of the exclusion; home health services and hospice care under a plan of care established before the effective 
date of the exclusion; and any health care items that are ordered from an excluded manufacturer before the 
effective date of the exclusion.  Claims for items or services ordered or prescribed by an excluded individual can 
be paid for dates of service up to 15 days after the notice of the exclusion was mailed to the supplier.  Finally, 
claims for certain emergency items or services furnished by an excluded provider, or at the medical direction or 
on the prescription of an excluded physician or other authorized individual during the period of exclusion can be 
paid.  To be payable, such a claim must be accompanied by a sworn statement of the person furnishing the items 
or services specifying the nature of the emergency and why the items or services could not have been furnished 
by an eligible provider.   
8
 Section 1128(d)(3)(B)(i) of the Act; 42 U.S.C. 1320a-7(d)(3)(B)(i) allows States to request waivers for certain 
excluded providers. 
9
 When searching the LEIE online, users can enter only five names at a time.  For larger entities such as hospitals 
that may need to check many names at a time, OIG provides a downloadable LEIE database that can reduce 
administrative time by checking multiple names against the full LEIE data base.  See 
http://www.oig.hhs.gov/exclusions/exclusions_list.asp. 
10
 In late July 2012, the Excluded Parties List System was migrated to the System for Award Management, 
which combines several Federal procurement systems. 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 4  Marilyn Tavenner 
 
providers from their Medicaid programs.11  Many States maintain a databaseoften 
called a State sanctions listof providers that they have excluded.  State sanctions lists 
may also include OIG-excluded providers.  Many States also maintain databases of 
providers to whom they have issued licenses; if a provider loses his or her license 
because of exclusion, either by OIG or by a State, the licensure database reflects that 
status.   
 
State Medicaid Programs 
Medicaid is financed jointly by the Federal and State governments.  Although each State 
Medicaid program must operate within the parameters of broad Federal requirements, 
each State program is unique in structure and administration.  States use two primary 
delivery systems to provide Medicaid-covered services:  managed care and  
fee-for-service.  Approximately 70 percent of Medicaid recipients receive some or all of 
their Medicaid services through managed care.12 
 
MCEs are responsible for contracting with and paying individual providers and/or 
provider entities for the services they render to Medicaid recipients enrolled in a managed 
care plan.  Under a risk contract with the State, the MCE assumes the financial risk for 
the cost of the services covered under the contract and incurs loss if the cost of the 
services exceeds the payments under the contract.13 
 
CMS Guidance to State Medicaid Agencies Regarding Screening Employees 
A State Medicaid Director letter dated January 16, 2009, advised States of their 
obligation to direct providers to screen their employees and contractors for excluded 
persons to prevent Medicaid payments for items or services furnished or ordered by 
excluded individuals and entities.  It further advised States to require that providers 
search OIGs LEIE database monthly to capture new exclusions or reinstatements that 
have occurred since the last search. 
 
Previous OIG Work  
In a 2011 evaluation regarding 12 selected MCEs in 10 States, we found that 4 MCEs 
reviewed had 11 excluded providers enrolled in their provider networks in 2009.14   
Four of these providers were paid a total of $40,306 in 2009; the remaining 
seven providers received no payments during the review period.  All 12 MCEs and all 
10 States reviewed had safeguards to identify excluded providers; however, gaps in 
provider credentialing processes and LEIE information contributed to the enrollment of 
excluded providers.  Eleven of the twelve selected MCEs reported that they checked the 
                                                                                                                                                 
11
 Under  1902(p)(1) of the SSA (42 U.S.C. 1396a(p)(1)), a State may exclude a provider from the State 
Medicaid program for any reason that OIG could exclude a provider from Federal health care programs. 
12
 Beginning in 1981, Federal law allowed States to seek a waiver of Federal requirements to permit a State to 
require that Medicaid recipients enroll in managed care, usually under  1915(b) or the demonstration authority 
at  1115 of the Social Security Act.  In 1997, Congress amended the Medicaid statute to permit States to require 
enrollment in MCEs for most recipients as a State plan option without seeking a waiver.  SSA  1932; see 67 
Fed. Reg. 40989 (June 14, 2002) for an overview of Medicaid managed care laws. 
13
 42 CFR  438.2. 
14
 OIG, Excluded Providers in Medicaid Managed Care Entities (OEI-07-09-00630), February 2012. 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 5  Marilyn Tavenner 
 
LEIE to identify excluded providers.  All MCEs checked providers exclusion status at 
initial enrollment and rechecked them at varying frequencies ranging from monthly to 
every 3 years.   
 
METHODOLOGY 
 
In the first evaluation, entitled Excluded Providers in Medicaid Managed Care Entities 
(OEI-07-09-00630), we compared the provider networks of 12 selected Medicaid MCEs 
to the LEIE to identify whether excluded providers (i.e., individuals and entities, such as 
physicians, nurse practitioners, physician groups, community mental health centers) were 
present.  There were approximately 675 MCEs participating in Medicaid in 2009; the 
beneficiaries enrolled in the 12 selected MCEs represented 16 percent of national 
Medicaid managed care enrollment in 2009.  Overall, 277,835 providers were enrolled in 
the provider networks of the 12 MCEs.  
 
For this evaluation, we limited the provider population of the 12 MCEs to only hospitals, 
nursing facilities, home health agencies, and pharmacies.  A total of 63,606 providers of 
these four types were enrolled in the provider networks of the 12 MCEs.  We then 
stratified the population by these provider types, and selected a stratified random sample 
of 500 providers.  Table 1 shows the total providers of each type in the population and 
sample, and the employees of the sampled providers. 
 
Table 1:  Population and Sampled Providers and Employees by Strata 
   Population  Sample 
Stratum  Number of Providers  Number of Providers  Number of Employees 
Hospitals  971  125  178,489 
Nursing Facilities  272  125  38,883 
Home Health Agencies  507  125  27,986 
Pharmacies  61,856  125  3,511 
     Total in Strata  63,606  500  248,869 
Source:  OIG analysis of MCE provider network data and employee rosters from sampled providers, 2012. 
 
We requested from each sampled provider a roster of all of its employees in calendar year 
2011, including any contracted employees.15  A total of 248,869 employees were listed 
on the rosters we received.  We compared the contents of the rosters to the LEIE to 
identify any excluded individuals among the sampled providers employees.16  We also 
asked each sampled provider to complete a survey on the safeguards that it used to ensure 
that excluded individuals are not employed. 
 
                                                                                                                                                 
15
 Some providers in our sample had contracts with outside companies to provide staff for their businesses; the 
individuals we call contracted employees were employed by the outside companies, but performed services for 
the providers in our sample. 
16
 Our comparison did not include providers excluded by States or listed on the Excluded Parties List System 
that are not included on the LEIE. 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 6  Marilyn Tavenner 
 
During data collection, 19 of the 500 sampled providers were determined to be ineligible 
for inclusion in our evaluation, either because they went out of business prior to 
January 1, 2011, or because they were not actually enrolled in one of the selected 
Medicaid MCEs during our review period.  As a result, the potential number of responses 
we expected to receive from providers was 481.  We received 472 rosters, a roster 
response rate of 98 percent, and 467 surveys, a survey response rate of 97 percent. 
 
Due to the low number of excluded individuals identified in the sample, our findings 
about excluded individuals present sample counts and are not projected to the population.  
Except where noted, our findings regarding the survey of providers present projections to 
the population of 63,606 hospitals, nursing facilities, home health agencies, and 
pharmacies enrolled in the networks of the 12 MCEs.  The findings regarding the 
provider survey are based on self-reported information; we did not independently verify 
responses. 
 
This study was conducted in accordance with the Quality Standards for Inspection and 
Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. 
 
RESULTS 
 
Sixteen Excluded Individuals Were Employed By Sampled Providers Enrolled in 
the 12 Selected Medicaid MCEs 
 
Of the 248,869 individuals listed on the employee rosters requested from sampled 
providers, we identified 16 excluded individuals among the employees of 14 sampled 
providers.  Of the 16 excluded individuals we identified, 9 were employed in occupations 
that provided direct patient care.  The remaining seven excluded individuals were 
employed in occupations that did not involve providing direct patient care.  See Table 2 
for details on the occupations of the 16 excluded individuals.   
 
Our evaluation included only providers enrolled in 12 of the approximately 675 Medicaid 
MCEs in operation in 2009;17 additional excluded individuals may be employed by 
providers enrolled in the 663 MCEs not included in this study. 
   
                                                                                                                                                 
17
 The beneficiaries enrolled in the 12 selected MCEs represented 16 percent of national Medicaid managed care 
enrollment in 2009. 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 7  Marilyn Tavenner 
 
Table 2:  Occupations of 16 Excluded Individuals Identified 
Employer Provider  Number of Excluded  Patient Contact 
Occupation 
Type   Individuals  Level* 
Nursing Facility  4  Direct patient care 
Registered Nurse/Licensed Practical 
Nurse 
Hospital  1  Direct patient care 
Personal Care Attendant/Certified 
Home Health Agency  3**  Direct patient care 
Nurse Aide 
Nurse Supervisor  Nursing Facility  3  No direct patient care 
Chaplain  Hospital  1  No direct patient care 
Clinical Technician  Hospital  1  No direct patient care 
Collector (Business Office)  Hospital  1  No direct patient care 
Instrument Technician  Hospital  1  No direct patient care 
*We defined direct patient care to mean that the individuals primary function is to provide medical or personal care to patients. 
**There were 4 excluded individuals identified as personal care attendants among the 16 excluded individuals.  However, the provider for 
which one personal care attendant worked told us that the excluded individual did not actually provide any services during the period of her 
employment; although her occupation was one in which she would normally provide direct patient care, she did not serve any clients. 
Source:  OIG analysis of employee rosters and LEIE, 2012. 
 
We determined the authorities under which each of the 16 excluded individuals were 
excluded. 
  Seven individuals were excluded because their licenses had been revoked (Section 
1128(b)(4) of the Act). 
  Five individuals were excluded because of program-related convictions (e.g., 
fraud against a Federally funded healthcare program, typically Medicare or 
Medicaid) (Section 1128(a)(1) of the Act). 
  Three individuals were excluded because of convictions for patient abuse and/or 
neglect (Section 1128(a)(2) of the Act). 
  One individual was excluded because of a felony conviction of health care fraud 
(fraud against privately funded health insurance) (Section 1128(a)(3) of the Act). 
See Appendix A for information on the occupations of the individuals excluded under 
each authority.  
 
Fourteen of the excluded individuals identified were directly employed by providers in 
our sample; two of the excluded individuals were contracted employees.  The 
employment of 13 of the 16 excluded individuals was terminated by the conclusion of our 
data collection.  The termination of 6 of these 13 individuals was a direct result of our 
review.18  Of the three remaining excluded individuals, one was suspended pending the 
result of her application to OIG to be reinstated, one was on administrative leave while 
the provider for which she worked investigated her situation, and one we were unable to 
                                                                                                                                                 
18
 The employment of the other seven excluded individuals was terminated prior to our review for various 
reasons; only one of those seven was terminated because of her exclusion status. 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 8  Marilyn Tavenner 
 
determine the status of because the provider did not specify whether her employment had 
been terminated. 
 
Incorrect names and failure of contractors to follow procedures contributed to the 
employment of excluded individuals by sampled providers enrolled in Medicaid 
MCEs 
 
The sampled providers who employed the 16 excluded individuals gave the following 
explanations about how those individuals became employed despite the safeguards they 
had in place. 
 
Incorrect names.  The sampled providers that employed 9 of the 16 excluded individuals 
explained that the excluded individuals gave names on their employment applications 
and/or other documents that were different from the names listed on the LEIE.19  For 
example, one excluded individual was listed on the LEIE under her maiden name, but 
gave her married name on her employment documents.  In another example, an excluded 
individual gave a different first name than she is listed with on the LEIE.  OIG provides 
tips on the OIG Web site to improve accuracy and increase name verification.20 
 
We also identified misspellings of two employees names as an issue.  For example, one 
provider entered the excluded individuals last name incorrectly, including an extra letter, 
when searching the LEIE.  Because of the misspelling, there was no match. 
 
Contracted staffing agencies not identifying employees exclusion status correctly.  Two 
sampled providers had excluded individuals who were contracted employees.  These 
providers explained that they required the contracted companies to check the exclusion 
status of the employees they provide.  However, the contracted companies either did not 
check the employees exclusion status as required, or did not inform the providers of the 
employees exclusion status. 
 
Contracted background check vendors not identifying employees exclusion status 
correctly.  Two sampled providers contracted with outside vendors to conduct 
background checks on their employees; these background checks were supposed to 
include identifying the employees exclusion status.  However, the contracted vendors 
failed to identify the exclusion status of two excluded individuals.  No further reason or 
explanation for the failures was given. 
 
Other reasons why excluded individuals were employed.  One sampled provider searched 
the excluded individuals name on LEIE and a match was identified, but the LEIE listed a 
different birth date than the individual provided on her application.  Therefore, the 
provider concluded that the match was a false positive.  A second sampled provider hired 
the excluded individual prior to her exclusion date; the individuals exclusion status was 
identified in a later routine periodic check, and her employment was terminated.  Finally, 
                                                                                                                                                 
19
 We were able to identify these individuals despite their names on the rosters being different from the names 
listed in the LEIE, because we searched the LEIE for their SSNs first and then looked for similar names. 
20
 See http://oig.hhs.gov/exclusions/tips.asp. 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 9  Marilyn Tavenner 
 
one sampled provider explained that the human resources director at the time of the 
excluded individuals hiring simply did not follow company policy to conduct exclusion 
status screenings.  That human resources director has since been terminated. 
 
Most providers reported using a variety of safeguards to ensure they do not employ 
excluded individuals, but identified costs and resource burdens as challenges in 
executing those safeguards   
 
Seventy-eight percent of providers indicated that they used the LEIE to check the 
exclusion status of their employees.  See Table 3 for the databases used and percentages 
of providers that used them to check their employees exclusion status.  See Appendix B 
for 95-percent confidence intervals and sample sizes for all estimates presented in this 
report.  
 
Table 3:  Databases Used To Check Exclusion Status and Percentages of Providers 
Database  Percentage of Providers* 
LEIE  78.1% 
Excluded Parties List System  51.2% 
State sanctions and licensure databases  44.4% 
Medicare Exclusions Database  32.4% 
National Practitioner Data Bank/ Healthcare 
2.2% 
Integrity and Protection Data Bank 
*Many providers used more than one database to check their employees exclusion 
statues; therefore, the percentages sum to more than 100 percent. 
Source:  OIG analysis of provider survey responses, 2012 
 
Seventy-eight percent of providers indicated that they check the exclusion status of their 
employees at hire and that they also conduct a periodic check (i.e., monthly, quarterly, 
annually).  Nine percent of providers reported checking employees exclusion status only 
at hire; 7 percent of providers reported checking only periodically with no check at hire.  
See Table 4 for the percentages of providers that checked their employees exclusion 
status at different frequencies.   
   
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 10  Marilyn Tavenner 
 
Table 4:  Frequency of Checks of Employees Exclusion Status 
Frequency  Percentage of Providers 
At hire with periodic checks  77.8%* 
     Monthly  41.1% 
     Quarterly  6.0% 
     Annually  18.1% 
     Other  15.4% 
At hire only  8.6% 
Periodic checks only   6.8% 
     Monthly  0.9% 
     Quarterly  1.7% 
     Annually  3.3% 
     Other  0.9% 
No checks   6.8% 
*Some providers conducted multiple periodic checks in addition to 
checking at hire.  For example, a provider could check an employees 
exclusion status at hire, monthly, and annually thereafter.  In this 
example, the provider would be represented in the percentages of 
providers conducting both the monthly and annual periodic check.  Thus, 
the sum of the percentages of providers conducting each periodic check 
exceeds the percentage of providers conducting any periodic check. 
Source:  OIG analysis of provider surveys, 2012 
 
We asked providers what safeguards other than checking the databases listed in Table 3 
they used to check their employees exclusion status.  Forty-two percent of providers 
required prospective employees to sign an affidavit or attestation regarding their 
exclusion status.  Only four sampled providers indicated having a policy requiring 
contracted companies (such as staffing agencies) to check the exclusion status of the 
employees they supplied to the providers.  We did not identify any relationships among 
the databases used, the frequency with which the checks are conducted, or the other 
safeguards used and the presence of excluded individuals. 
 
Fifty-five percent of providers identified the costs and resource burdens of conducting 
exclusion checks as challenges.  One sampled provider stated, It take[s] about 16 hours 
to look up every employee in 2 different databases . . . It is very difficult to only be able 
to process 1 to 5 employees at a time depending on the database.21   
 
 
 
 
 
 
                                                                                                                                                 
21
 This provider was referring to the LEIE and the Excluded Parties List System.  The online LEIE allows users 
to search up to five names at a time; however, the downloadable version of the LEIE allows users to search 
multiple names against the full exclusions list.  The Excluded Parties List System allows users to search only one 
name at a time. 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 11  Marilyn Tavenner 
 
Seven Percent of Providers Enrolled in the 12 Selected Medicaid MCEs Do Not 
Check the Exclusion Status of Their Employees; Most of These Providers Lacked 
Knowledge Regarding Exclusions 
 
Seven percent of providers do not check the exclusion status of their employees.  Despite 
the vulnerability created by the lack of screening, we found that of the providers in the 
sample that did not check their employees exclusion status, none employed excluded 
individuals.  Four percent of providers do not check their employees exclusion status 
because they lack knowledge about exclusionsthey were either unaware that it is 
possible to be excluded from participation in federally funded health care programs, or 
that employers participating in federally funded health care programs are obligated to 
check the exclusion status of their employees.  One percent of providers do not check 
their employees exclusion status because they lack both knowledge about exclusions and 
the resources to conduct the checks.22   
 
CONCLUSION 
 
Sixteen excluded individuals were employed by sampled providers that participate in the 
networks of 12 Medicaid MCEs.  Of the 16 excluded individuals, 7 were excluded 
because their licenses had been revoked; 5 were excluded because of convictions of fraud 
against a Federally funded healthcare program; typically Medicare or Medicaid; 3 were 
excluded because of convictions for patient abuse and/or neglect; and 1 was excluded 
because of a felony conviction of fraud against privately funded health insurance.  
Because of issues with matching names on the LEIE, 9 of these 16 excluded individuals 
became employed despite the safeguards the providers had in place.  Providers used a 
variety of safeguards to ensure that they do not employ excluded individuals, but 
identified costs and resource burdens as challenges in executing those safeguards.  
However, 7 percent of the providers enrolled in Medicaid MCEs did not check the 
exclusion status of their employees; 4 percent of providers said they do not check their 
employees exclusion status because they lack knowledge about exclusions.   
 
Our prior study identified 11 excluded network providers out of approximately 
277,000 providers checked; this study found 16 excluded individuals out of 
approximately 249,000 individuals checked.  In both studies, the network providers and 
individuals we checked represent only the provider networks of 12 selected Medicaid 
MCEs; additional excluded individuals may be employed by providers enrolled in the 
other 650 Medicaid MCEs.  Given the number of excluded providers identified in the 
small number of MCEs examined, CMS may want to reinforce its guidance to MCEs on 
their obligation to checkand to require their network providers to checkOIGs LEIE 
on a monthly basis to identify exclusions and reinstatements.  Finally, CMS may want to 
reiterate that providers are obligated to prevent use of Federal funds for payments to 
excluded persons and entities, regardless of whether those persons are located by contract 
staffing agencies or checked by other vendors.  
 
                                                                                                                                                 
22
 Two percent of providers did not indicate why they do not check the exclusion status of their employees. 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 12  Marilyn Tavenner 
 
This report is being issued directly in final form because it contains no recommendations.  
If you have comments or questions about this report, please provide them within 60 days.  
Please refer to report number OEI-07-09-00632 in all correspondence. 
   
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 13  Marilyn Tavenner 
 
Appendix A:  Social Security Act Authorities Under Which the 16 Individuals 
Employed by Sampled Providers Were Excluded 
Number of Excluded 
Occupation  Social Security Act Authority 
Individuals 
1128(b)(4) License Revocation/Suspension/Surrender  3 
Registered Nurse/Licensed 
1128(a)(2) Patient Abuse/Neglect Convictions  1 
Practical Nurse 
1128(a)(1) Program-Related Convictions  1 
Personal Care  1128(b)(4) License Revocation/Suspension/Surrender  3 
Attendant/Certified Nurse 
Aide  1128(a)(1) Program-Related Convictions  1 
1128(b)(4) License Revocation/Suspension/Surrender  1 
Nurse Supervisor  1128(a)(2) Patient Abuse/Neglect Convictions  1 
1128(a)(1) Program-Related Convictions  1 
Chaplain  1128(a)(1) Program-Related Convictions  1 
Clinical Technician  1128(a)(1) Program-Related Convictions  1 
Collector (Business Office)  1128(a)(3) Felony Conviction for Health Care Fraud  1 
Instrument Technician  1128(a)(2) Patient Abuse/Neglect Convictions  1 
Source:  Office of Inspector General analysis of employee rosters, List of Excluded Individuals and Entities data, and legal authorities, 
2012. 
 
   
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 14  Marilyn Tavenner 
 
Appendix B:  Point Estimates, Sample Sizes, and Confidence Intervals 
95-Percent Confidence 
Estimate Description  Sample Size  Point Estimate 
Interval 
Percentage of providers that indicated they used the List of 
Excluded Individuals and Entities to check employees  467  78.1%  69.7%85.1% 
exclusion status 
Percentage of providers that indicated they used the 
Excluded Parties List System to check employees exclusion  467  51.2%  42.0%60.4% 
status 
Percentage of providers that indicated they used the State 
sanctions and licensure databases to check employees  467  44.4%  35.4%53.7% 
exclusion status 
Percentage of providers that indicated they used the 
Medicare Exclusions Database to check employees  467  32.4%  24.2%41.5% 
exclusion status 
Percentage of providers that indicated they used the National 
Practitioner Data Bank or Healthcare Integrity and Protection  467  2.2%  0.6%5.9% 
Data Bank to check employees exclusion status 
Percentage of providers that check employees exclusion 
467  77.8%  69.4%84.8% 
status at hire plus doing any periodic check 
Percentage of providers that check employees exclusion 
467  41.1%  32.3%50.4% 
status at hire plus doing monthly check 
Percentage of providers that check employees exclusion 
467  6.0%  2.5%11.8% 
status at hire plus doing a quarterly check 
Percentage of providers that check employees exclusion 
467  18.1%  11.8%26.1% 
status at hire plus doing an annual check 
Percentage of providers that check employees exclusion 
status at hire plus checking at a frequency other than  467  15.4%  9.5%23.0% 
monthly, quarterly, or yearly 
Percentage of providers that check employees exclusion 
467  8.6%  4.3%15.0% 
status at hire only 
Percentage of providers that check employees exclusion 
467  6.8%  3.0%12.8% 
status periodically only 
Percentage of providers that check employees exclusion 
467  0.9%  0.04%4.4% 
status monthly only 
Percentage of providers that check employees exclusion 
467  1.7%  0.2%5.9% 
status quarterly only 
Percentage of providers that check employees exclusion 
467  3.3%  0.9%8.4% 
status annually only 
Percentage of providers that check employees exclusion 
status only at a frequency other than monthly, quarterly, or  467  0.9%  0.03%4.5% 
yearly 
Percentage of providers that do not check the exclusion 
467  6.8%  3.0%12.8% 
status of their employees 
Percentage of providers that require employees to sign an 
467  41.7%  32.8%50.9% 
affidavit or attestation regarding their exclusion status 
Percentage of providers that identified the costs and resource 
467  54.9%  45.6%63.9% 
burdens of conducting exclusions checks as challenges 
Percentage of providers that identified lack of knowledge as 
467  4.2%  1.4%9.5% 
the reason they do not check employees exclusion status 
continued on next page 
 
 
 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)   Page 15  Marilyn Tavenner 
 
Appendix B:  Point Estimates, Sample Sizes, and Confidence Intervals (Continued) 
95-Percent Confidence 
Estimate Description  Sample Size  Point Estimate 
Interval 
Percentage of providers that identified lack of knowledge and 
lack of resources as the reason they do not check employees  467  0.8%  0.02%4.6% 
exclusion status 
Percentage of providers that did not identify a reason why 
467  1.7%  0.2%5.9% 
they do not check employees exclusion status 
Source:  Office of Inspector General analysis of provider surveys, 2012. 
 
 
Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632)