DEPARTMENT OF HEALTH & HUMAN SERVICES 	 Office of Inspector General 
Washington, D.C. 20201 
flAY IS 20tO 
TO:  Marilyn TavelUler 
Acting Administrator and ChiefOperating Officer 
Centers for Medicare & Medicaid Services 
FROM:  Stuart Wright 
Deputy Inspector General 
for Evaluation and Inspections 
SUBJECT: 	 Memorandum Report:  Excluded Medicaid Providers:  Analysis of 
Enroliment,OEI-09-08-00330  
This memorandum report provides information on the enrollment of selected Medicaid 
providers that the Office oflnspector General (OIG) later excluded from participation in 
Federal health care programs.  Our review included 188 Medicaid providers from 
26 States that OIG excluded between January 1, 2007, and June 30, 2008.  Specifically, 
we examined the providers' backgrounds before and after they enrolled to gather 
information related to potential weaknesses in States' provider enrollment procedures. 
For example, we reviewed the providers' backgrounds to determine whether providers 
with questionable financial and criminal histories gained entry into Medicaid. 
Twenty-four out 0 f 188 excluded providers had a history oftax debt, criminal 
convictions, or false disclosures before they enrolled. 
States must comply with Federal regulations at 42 CFR  455.104 and 42 CFR  455.106, 
which require States to collect specific information from providers.  States require 
providers to disclose information on ownership and control ofan entity and criminal 
convictions related to Federal health care programs.  The regulations do not require States 
to verify this information, although States may impose additional enrollment 
requirements.  According to the Centers for Medicare & Medicaid Services' (CMS) 
Medicaid Integrity Group (MIG), 18 out ofthe 19 States it reviewed in fiscal years 
2007 and 2008 did not collect the required information related to ownership, and 17 out 
of 19 States did not comply with the Federal disclosure requirement for criminal 
convictions. 
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Based on our review of 188 excluded providers and the policies and procedures of the  
26 States that enrolled them, we found: 
 
  Eight providers disclosed false information about ownership at the time of 
enrollment, 
  States impose few enrollment requirements beyond those mandated by Federal 
regulations, and 
  Current regulations do not require disclosure of nonprogram-related convictions 
or tax liens. 
   
BACKGROUND 
 
Medicaid is an entitlement program for eligible low-income and medically needy people.  
In fiscal year 2009, Medicaid covered 59 million people nationally at a cost of 
$372 billion (Federal and State expenditures).1  States spent $20 billion,2 or 5 percent of 
this amount, on program administration, which includes provider enrollment.  The 
Federal Government paid for 50 percent of States administrative costs.3   
 
Medicaid Provider Enrollment 
The Federal Government prescribes requirements for provider enrollment.  Providers 
must disclose (1) all persons with an ownership interest of 5 percent or more in a 
disclosing entity and (2) criminal convictions related to Federal health care programs.4  
(Appendix A contains additional information on these Federal disclosure requirements.)  
States must collect specific information from providers, but are not required to verify the 
accuracy of providers disclosures when entering into or renewing a provider agreement.  
However, States may impose additional requirements to improve the screening of 
potential providers. 
 
Although States must collect information about ownership and program-related 
convictions, they vary in the other information that they collect from providers and the 
procedures that providers must follow to enroll in the Medicaid program.  These 
procedures may include criminal background checks, site visits, probationary enrollment, 
and reenrollment.5  Criminal background checks range from checks of State databases to 
a national check by the Federal Bureau of Investigation (FBI).  Site visits are inspections, 
typically for certain high-risk provider types, such as durable medical equipment (DME) 
and transportation providers.  Probationary enrollment is time-limited enrollment for  
 
                                                 
1 CMS, CMS Financial Report, Fiscal Year 2009.  Accessed at 
http://www.cms.hhs.gov/CFOReport/Downloads/2009_CMS_Financial_Report.pdf on February 3, 2010. 
2 Ibid. 
3 42 CFR  433.15(b)(7). 
4 42 CFR  455.104 and 455.106. 
5 U.S. Government Accountability Office (GAO), Medicaid Program Integrity:  State and Federal Efforts 
to Prevent and Detect Improper Payments (GAO-04-707), July 2004, pp. 811. 
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certain providers, such as nonemergency transportation providers.  Reenrollment is a 
process in which providers reapply to Medicaid at specific intervals. 
 
Medicaid Integrity Group 
Since 2006, MIG has assessed States compliance with Federal requirements for provider 
enrollment.  MIG performs this function by conducting onsite reviews of States program 
integrity operations once every 3 years.  In addition to assessing compliance with Federal 
laws and regulations, the reviews (1) identify vulnerabilities and effective practices, (2) 
help States improve program integrity, and (3) identify opportunities for CMS to provide 
technical assistance to States.6  After each review, MIG issues a report to the State.  
According to MIG, 18 out of the 19 States it reviewed in fiscal years 2007 and 2008 did 
not comply with the Federal disclosure requirement for ownership (42 CFR  455.104), 
and 17 out of 19 did not comply with the Federal disclosure requirement for criminal 
convictions (42 CFR  455.106).7 
 
MIGs comprehensive plan for fiscal years 2009 to 2013 proposes to strengthen provider 
enrollment by developing a joint enrollment system with Medicare, known as the 
Uniform Provider Enrollment Project (UPEP).8  The objective of the UPEP is to develop 
and implement a secure, centralized provider enrollment system that would meet both 
Medicare and Medicaid requirements.  This system would include a Web-based 
application for providers and a national provider file that would include information 
about ownership, disciplinary actions by licensing boards, and terminations.   
 
Exclusion From Federal Health Care Programs 
Since 1977, the Secretary of Health & Human Services has had the authority to exclude 
certain individuals and entities from Medicare and Medicaid.9  Pursuant to this authority, 
between January 1, 2007, and June 30, 2008, OIG excluded a total of 4,991 individuals 
and entities.  Exclusions can be mandatory or permissive.  Mandatory exclusions are 
required by law, and permissive exclusions are imposed at the discretion of OIG.  For 
example, a provider convicted of a program-related crime must be excluded; a provider 
whose license was revoked or suspended may be excluded.   
 
An excluded provider cannot bill or cause bills to be submitted to any Federal health care 
program for direct or indirect services or for any administrative or management 
services.10  In addition, an excluded provider may be debarred from all Federal grants 
and   
                                                 
6 CMS, Medicaid Integrity Program, Program Integrity Review Annual Summary, May 2009.  Accessed at 
http://www.cms.hhs.gov/FraudAbuseforProfs/Downloads/2009pireviewannualsummaryreport.pdf on  
July 15, 2009. 
7 Ibid. 
8 CMS, Center for Medicaid and State Operations, MIG, Comprehensive Medicaid Integrity Plan of the 
Medicaid Integrity Program, FYs 20092013, July 2009, p. 10. 
9 Social Security Act,  1128, 42 U.S.C.  1320a-7. 
10 OIG Special Advisory Bulletin:  The Effect of Exclusion from Participation in Federal Health Care 
Programs.  September 1999. 
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contracts.11  However, an excluded provider may bill and receive payment for certain 
emergency services.  The current bases for mandatory exclusion include convictions 
related to program-related fraud, patient abuse and neglect, nonprogram-related health 
care fraud, and controlled substances.  Bases for permissive exclusions include licensing 
board actions and defaults on Health Education Assistance Loans (HEAL).12  Exclusion 
has national effect and applies even if the provider obtains another license or moves to 
another State.  OIG maintains a List of Excluded Individuals/Entities (LEIE) on its public 
Web site.  OIGs exclusions also are listed on the General Services Administrations 
publicly searchable Web site of all individuals and entities debarred by any Federal 
agency, known as the Excluded Parties List System.  Information about excluded 
providers also is included in the Healthcare Integrity and Protection Data Bank (HIPDB). 
 
Federal Tax Debt and the Link to Fraud 
Research suggests a correlation between tax debt and fraud.  For example, in 2007, GAO 
reported that over 30,000 Medicaid providers, about 5 percent of those paid in fiscal year 
2006, owed a total of over $1 billion in unpaid Federal taxes.  GAO selected 25 providers 
for more in-depth investigation and found abusive and criminal activity, including 
fraud.13   
 
In 2003, the Los Angeles County Office of the District Attorney established the Fraud 
Interdiction Program.  When the District Attorneys Office identifies a health care fraud 
suspect, it collects reimbursement data from a variety of public and private payers, such 
as insurance companies, and sends the information to the State of California Franchise 
Tax Board.  If the suspect failed to file or pay State income taxes, the Tax Board reports 
the information to the District Attorneys Office, which files felony tax charges.  Since 
the program began, it has identified more than 200 suspects who were responsible for 
more than $300 million in fraudulent health care claims.14  The program has resulted in 
convictions and prison sentences for the defendants. 
 
Related Work 
Both OIG and GAO have identified vulnerabilities in Medicaid provider enrollment.  In a 
2006 report, OIG reviewed Medicaid enrollment standards for DME providers and found 
that most of the 15 States it reviewed did not verify whether providers met the 
standards.15  In a 2001 report, OIG examined credentialing and enrollment policies 
among States and identified systemic weaknesses, including the lack of verification of  
                                                 
11 Federal Acquisition Streamlining Act of 1994, P.L. 103-355,  2455; 31 U.S.C.  6101; 45 CFR 76.115.  
12 From fiscal year 1978 through 1998 the Federal HEAL Program insured loans made by participating 
lenders to eligible graduate students in schools of medicine, osteopathy, dentistry, veterinary medicine, 
optometry, podiatry, public health, pharmacy, chiropractic, and clinical psychology; or in programs in 
health administration.   
13 GAO, Thousands of Medicaid Providers Abuse the Federal Tax System, November 2007, cover page. 
14 The Bureau of National Affairs, Health Care Fraud Report, Vol. 12, No. 17, August 13, 2008. 
15 OIG, Medicaid Provider Enrollment Standards:  Medical Equipment Providers, October 2006 
(OEI-04-05-00180).  
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providers disclosures.16  In 2004, GAO issued a report that identified successes and 
limitations of State and Federal efforts to control Medicaid fraud and abuse.  GAO 
described States measures to tighten enrollment.17  In 2000 testimony, GAO detailed 
how weak provider enrollment procedures allowed questionable providers easy entry into 
both Medicaid and Medicare.18  According to GAO, both programs rely heavily on 
providers honesty rather than verification.19 
 
METHODOLOGY 
 
Scope 
We reviewed individuals and entities that had enrolled in Medicaid and that OIG 
subsequently excluded from Federal health care programs, including Medicare, Medicaid, 
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), between 
January 1, 2007, and June 30, 2008.  We used national databases to review the providers 
criminal and financial histories before and after Medicaid enrollment.  Based on the 
potential correlation between tax debt and health care fraud, we analyzed the providers 
tax debt.  We reviewed the providers enrollment files, including their applications, and 
assessed States procedures to enroll providers as of September 2008.   
 
Data Sources 
We used OIGs LEIE database to identify the number of Medicaid providers out of the 
4,991 individuals and entities excluded between January 1, 2007, and June 30, 2008.20  
From these, we identified 232 individuals and entities with a Medicaid billing number 
and contacted States based on the address in the LEIE.  Because the remaining  
4,759 cases had no Medicaid billing number, we could not determine the exact number of 
Medicaid providers that had been excluded. 
 
We dropped a total of 38 providers from our group of 232.  We dropped 34 providers 
because States had no record of the provider or the provider had no billing number and 
worked for a facility such as a home health agency that billed the program (the LEIE 
showed the billing number for the facility and not the individual).  We dropped an 
additional four providers because the State disclosed that they were still active.  Finally, 
we consolidated 12 related individuals and entities into six unique providers.  We used 
                                                 
16 OIG, Credentialing of Medicaid Providers:  Fee for Service, February 2001 (OEI-07-99-00680). 
17 GAO, Medicaid Program Integrity:  State and Federal Efforts to Prevent and Detect Improper Payments 
(GAO-04-707), July 2004, p. 21. 
18 GAO, Medicaid:  HCFA and States Could Work Together to Better Ensure the Integrity of Providers, 
testimony before the Subcommittee on Oversight and Investigations, Committee on Commerce, House of 
Representatives, July 18, 2000, pp. 34.  HCFA was the predecessor to CMS. 
19 Ibid., p. 1. 
20 We used the LEIE because it is the only national database that identifies excluded Medicaid providers. 
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the resulting group of 188 providers as the basis for our analysis (Appendix B lists the 
exclusion authorities that OIG used for the providers we reviewed).   
 
We contacted each of the 26 States in which our group of 188 providers were located to 
request the enrollment files for the providers.  (Appendix C lists the number of excluded 
providers by State and provider type.)  The dates of enrollment for the providers we 
reviewed ranged from 1976 to 2007, and half the providers enrolled before 1998.  We 
were unable to obtain complete enrollment files containing the original enrollment 
applications for 30 providers because the States had purged the records.   
 
We conducted background checks of the 188 excluded providers with LexisNexis 
(SmartLinx) to identify their criminal and financial histories as well as the accuracy of 
the information that they reported on their applications.21  SmartLinx scans all 
LexisNexis databases of public records.  Public records include, but are not limited to, 
current mailing addresses, real property deeds and mortgages, records of civil and 
criminal actions, professional licenses, and liens for nearly all States.  In addition, we 
queried the HIPDB22 for each provider to identify any licensing actions against them and 
obtained additional information from State medical boards. 
 
We surveyed the 26 States that enrolled the 188 providers to determine whether they had 
used the following procedures at the time the providers in our review enrolled in 
Medicaid:  criminal background checks, probationary enrollment, reenrollment, and site 
visits.  In addition, we asked the States to complete a survey about the process they used 
to enroll providers as of September 2008. 
 
We obtained Medicaid claims data from the Medicaid Statistical Information System 
(MSIS) maintained by CMS to assess the providers billing patterns.  We identified 
claims for New York, California, and Ohio providers.  The claims data covered 2001 to 
2006.  Sixty-five percent of the excluded providers under review came from these three 
States.  We found no claims data for the excluded providers under review from the other 
23 States.  We reviewed MSIS data for these States, but the Medicaid provider numbers 
in the LEIE did not match any claims.23 
 
Data Analysis 
We used SAS statistical software to record and quantify the information that we gathered 
about the providers backgrounds as well as States enrollment policies. 
 
                                                 
21 We did not obtain or review court dockets to verify the criminal and civil histories in LexisNexis.  The 
information in LexisNexis may not reflect the complete criminal and civil history of a provider.  
22 The HIPDB is a national database that the Health Resources and Services Administration manages.  It 
contains information on actions against providers, including licensing and certification actions, civil 
judgments, and criminal convictions. 
23 A 2009 OIG report highlighted the limits of MSIS and noted that it does not capture many of the data 
elements that can assist in fraud, waste, and abuse detection.  See MSIS Data Usefulness for Detecting 
Fraud, Waste, and Abuse (OEI-04-07-00240). 
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Limitations 
We based our analysis on a selected group of 188 providers that OIG excluded between 
January 2007 and June 2008.  We were unable to obtain complete enrollment files for  
30 of these providers and could not analyze their disclosures about ownership.  We 
cannot project our results to excluded Medicaid providers as a whole, because the LEIE 
contained Medicaid numbers for only 232 out of 4,991 excluded individuals and entities, 
and we were unable to identify the universe of excluded Medicaid providers.  We 
collected information about current enrollment policy from the 26 States that enrolled the 
excluded providers we reviewed, not from all States. 
 
Standards 
We conducted this review in accordance with the Quality Standards for Inspections 
approved by the Council of the Inspectors General on Integrity and Efficiency. 
 
RESULTS 
 
Eight out of the 188 excluded providers disclosed false ownership information at the 
time of enrollment  
Providers must disclose information about ownership.  Federal regulations require States 
to collect information from providers about ownership and control.24  The States that 
enrolled these eight providers complied with Federal regulations, which require States to 
collect information about ownership from providers when they apply to Medicaid, but the 
States did not verify the accuracy of ownership information.  For example, a Texas 
provider failed to disclose the identity of the coowner when the provider applied to 
Medicaid.  Because the State collected the ownership information but did not verify it, it 
did not detect that the information was false.  
 
States impose few enrollment requirements beyond those mandated by Federal 
regulations 
Over half of the excluded providers (132 out of 188) were subject to no State enrollment 
requirements beyond the Federal regulations when they enrolled in Medicaid.  The other 
56 providers were subject to enrollment requirements in addition to the Federal 
regulations.  Specifically, States conducted limited background checks, involving checks 
of State databases only, for 51 providers; conducted site visits for two providers; and 
required reenrollment for six providers (we counted one provider twice that was subject 
to two enrollment requirements and one provider three times that was subject to three 
enrollment requirements).   
 
Criminal background checks are the most common additional enrollment requirement 
among the States we reviewed, but their use varies widely.  Although 15 out of the  
 
 
                                                 
24 42 CFR  455.104. 
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26 States we surveyed reported that they conduct background checks, the checks are 
typically limited to State databases rather than national sources, such as FBI, and to 
certain types of providers, such as transportation and personal care assistants. 
 
Several States reported that they conduct site visits (11 out of 26), reenroll providers   
(9 out of 26), or subject new providers to probationary enrollment (4 out of 26).  Among 
States that reenroll providers, the intervals between reenrollment may be several years, 
and States vary as to whether they verify providers information or conduct a new 
background check with each reenrollment.  Florida, which ranks fourth in terms of 
Medicaid spending, reenrolls providers every 5 years and conducts new FBI background 
checks at that time.  Iowa reenrolls all providers every 6 years.  Oklahoma conducts State  
criminal background checks for personal care and community service workers when they 
enroll but not when they reenroll at 3-year intervals. 
 
Three States restrict the enrollment of certain provider types.  One alternative to 
heightened review of applicants is to limit their entry into Medicaid.  New York, 
California, and New Jersey use this approach.   
 
New York uses density criteria to limit the entry of certain provider types.  For example, 
New York imposes density criteria on nonemergency transportation services in New 
York City.  The State compares the ratio of the number of claims to the number of 
recipients in New York City to the ratio in the rest of the State.  If the ratio is greater than 
5 percent, the State deems the area dense and does not enroll new providers.  The State 
also applies density criteria to pharmacies, suppliers of orthopedic shoes, and 
laboratories. 
 
California has moratoria in place for the following four provider types:  adult day health 
care centers (since 2004); Los Angeles County nonchain, nonpharmacist-owned 
pharmacies (since 2002); clinical laboratories (since 2001); and DME providers located 
outside of California and operating in Los Angeles, Orange, Riverside, and San 
Bernardino Counties (since 1999).  According to the Department of Health Care Services, 
the moratoria are necessary to safeguard public funds and to maintain the fiscal integrity 
of the Medi-Cal program.25 
 
In July 2006, New Jersey imposed moratoria on the enrollment of new partial care 
services providers (outpatient mental health services), chiropractors, DME providers, and 
podiatrists unless the State granted an exception.  As of April 2009, the State has not 
approved any new applications from chiropractors (26 applications received) or 
podiatrists (35 applications received).  New partial care providers did not apply to 
Medicaid during this period.  The State reviewed 93 applications from DME providers, 
denied 84, and approved 9 because the providers met a special need. 
                                                 
25 California Department of Health Care Services, Orders for Moratoria, August 2008, November 2008, and 
February 2009. 
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Current rules do not require disclosure of nonprogram-related convictions or tax 
liens 
Federal regulations at 42 CFR  455.104 and 42 CFR  455.106 require States to collect 
information from providers about ownership and program-related convictions.  States are 
not obligated to collect information about criminal convictions unrelated to Federal 
health care programs or tax liens. 
 
Eight of the 188 excluded providers had criminal convictions before they enrolled in 
Medicaid and committed health care-related crimes after they enrolled.  Upon enrollment 
in Medicaid, providers are required to disclose only program-related convictions.26  Eight  
providers in our review had convictions unrelated to Federal health care programs, which 
they did not have to disclose.  Examples include the following: 
 
  An Iowa aide had a felony conviction for forgery before she enrolled in 2004.  
She was convicted of theft, a program-related crime, after she enrolled.   
  The owner of an Ohio DME company was convicted of receiving stolen property 
6 months before enrollment.  After he enrolled, he was convicted of Medicaid 
fraud. 
  A New York dentist was convicted of insurance fraud in 2003 for filing a claim 
for a dental machine that he had removed from his office.  The State did not know 
about the conviction and enrolled him in 2004.  He was subsequently convicted of 
Medicaid fraud. 
  In 1989, an Indiana physician was convicted of illegal dispensing of narcotics, a 
nonprogram-related felony.  The State did not know about the conviction, and he 
enrolled in Medicaid in 1996.  He operated a drug and alcohol rehabilitation clinic 
and was later convicted of health care fraud and insurance fraud. 
 
Forty-eight of the 188 excluded providers had Federal or State tax liens before or after 
they enrolled in Medicaid.  Nine of the 188 excluded providers collectively had  
15 Federal and State tax liens totaling $443,100 before they enrolled in Medicaid.  
Additionally, 43 of the 188 excluded providers had a total of 147 Federal and State tax 
liens for a total of $4.2 million while they were active providers (four providers had tax 
liens both before and after they enrolled).   
 
Ten of the 34 excluded providers in California, New York, and Ohio that had liens 
received reimbursement from their State Medicaid programs after imposition of the liens.  
Medicaid reimbursed these providers a total of $3.8 million between the date of the first 
tax lien and the date of termination.  These providers include the following: 
 
  A New York dentist had Federal tax liens of $9,495 and State tax liens of  
$10,280 during the period when he was an active provider.  Medicaid paid him 
$709,549.  OIG excluded this provider for insurance fraud. 
                                                 
26 42 CFR  455.106. 
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  An Ohio pediatrician had $114,591 in Federal tax liens before enrollment and 
received $582,421 from the Medicaid program.  OIG excluded this provider for a 
program-related conviction. 
 
CONCLUSION 
 
We recognize that CMS is taking steps to address provider enrollment.  In addition, 
Congress passed legislation in 2010 to strengthen provider enrollment and program 
integrity.  The Patient Protection and Affordable Care Act imposed new provider 
screening requirements on providers in Medicare, Medicaid, and the Childrens Health 
Insurance Program.  This memorandum provides information that CMS may find useful 
regarding Medicaid provider enrollment.  We cannot project our results to excluded 
Medicaid providers as a whole.  Twenty-four out of 188 excluded providers had a history 
of tax debt, criminal convictions, or false disclosures before they enrolled (one provider 
had both a tax lien and a conviction).  Federal regulations only require providers to 
disclose program-related convictions, and States are not required to verify the 
information that providers submit on their enrollment applications.  We believe that 
additional reviews and oversight in this area are warranted to ensure that Medicaid 
enrollment standards are sufficient to protect the program from fraud and abuse. 
 
This review 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-09-08-00330 in all 
correspondence. 
 
 
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APPENDIX A   
Federal Provider Disclosure Requirements 
42 CFR  455.104 Disclosure by providers and fiscal agents: 
Information on ownership and control.  
  (a) Information that must be disclosed. The Medicaid agency must 
require each disclosing entity to disclose the following information 
in accordance with paragraph (b) of this section: 
 
  (1) The name and address of each person with an ownership or 
control interest in the disclosing entity or in any subcontractor in 
which the disclosing entity has direct or indirect ownership of        
5 percent or more; 
 
  (2) Whether any of the persons named, in compliance with 
paragraph (a)(1) of this section, is related to another as spouse, 
parent, child, or sibling. 
 
  (3) The name of any other disclosing entity in which a person 
with an ownership or control interest in the disclosing entity also 
has an ownership or control interest. This requirement applies to 
the extent that the disclosing entity can obtain this information by 
requesting it in writing from the person. The disclosing entity   
must-- 
 
  (i) Keep copies of all these requests and the responses to them; 
 
  (ii) Make them available to the Secretary or the Medicaid agency 
upon request; and 
 
  (iii) Advise the Medicaid agency when there is no response to a 
request. 
 
  (b) Time and manner of disclosure. (1) Any disclosing entity that 
is subject to periodic survey and certification of its compliance 
with Medicaid standards must supply the information specified in 
paragraph (a) of this section to the State survey agency at the time 
it is surveyed. The survey agency must promptly furnish the 
information to the Secretary and the Medicaid agency  (2) Any 
disclosing entity that is not subject to periodic survey and 
certification and has not supplied the information specified in  
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paragraph (a) of this section to the Secretary within the prior       
12-month period, must submit the information to the Medicaid 
agency before entering into a contract or agreement to participate 
in the program. The Medicaid agency must promptly furnish the 
information to the Secretary. 
 
  (3) Updated information must be furnished to the Secretary or the 
State survey or Medicaid agency at intervals between 
recertification or contract renewals, within 35 days of a written 
request. 
 
  (c) Provider agreements and fiscal agent contracts. A Medicaid 
agency shall not approve a provider agreement or a contract with a 
fiscal agent, and must terminate an existing agreement or contract, 
if the provider or fiscal agent fails to disclose ownership or control 
information as required by this section. 
 
  (d) Denial of Federal financial participation (FFP). FFP is not 
available in payments made to a provider or fiscal agent that fails 
to disclose ownership or control information as required by this 
section. 
 
42 CFR  455.106 Disclosure by providers: Information on 
persons convicted of crimes.  
  (a) Information that must be disclosed. Before the Medicaid 
agency enters into or renews a provider agreement, or at any time 
upon written request by the Medicaid agency, the provider must 
disclose to the Medicaid agency the identity of any person who: 
 
  (1) Has ownership or control interest in the provider, or is an 
agent or managing employee of the provider; and 
 
  (2) Has been convicted of a criminal offense related to that 
person's involvement in any program under Medicare, Medicaid, or 
the title XX Services Program since the inception of those 
programs. 
 
  (b) Notification to Inspector General. (1) The Medicaid agency 
must notify the Inspector General of the Department of any  
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disclosures made under paragraph (a) of this section within          
20 working days from the date it receives the information. 
 
  (2) The agency must also promptly notify the Inspector General of 
the Department of any action it takes on the provider's application 
for participation in the program. 
 
  (c) Denial or termination of provider participation. (1) The 
Medicaid agency may refuse to enter into or renew an agreement 
with a provider if any person who has an ownership or control 
interest in the provider, or who is an agent or managing employee 
of the provider, has been convicted of a criminal offense related to 
that person's involvement in any program established under 
Medicare, Medicaid or the title XX Services Program. 
 
  (2) The Medicaid agency may refuse to enter into or may 
terminate a provider agreement if it determines that the provider 
did not fully and accurately make any disclosure required under 
paragraph (a) of this section. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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APPENDIX B  Office of Inspector General Exclusion Authorities for Providers 
We Reviewed, January 2007 to June 200827  
Exclusion Authorities  
Mandatory Exclusions  
Number of 
Authority  Description   Providers   Percentage 
1128(A)(1)  Program-related conviction  121  64.0 
1128(A)(2)  Conviction for patient abuse/neglect  6  3.2 
1128(A)(3)  Felony conviction for health care fraud  10  5.3 
Felony conviction for controlled 
1128(A)(4)  6  3.2 
substances 
  Subtotal   143  75.7 
Permissive Exclusions   
Number of 
Authority   Description   Providers   Percentage 
Conviction for obstruction of an 
1128(B)(2)  1  0.5 
investigation 
1128(B)(4)  License revocation or suspension  30  15.9 
Suspension from government health care 
1128(B)(5)  1  0.5 
program 
Fraud, kickbacks, and other prohibited 
1128(B)(7)  3  1.6 
activities 
Entity owned/controlled by excluded 
1128(B)(8)  10  5.3 
individual 
Individual owning/controlling excluded 
1128(B)(15)  1  0.5 
entity 
  Subtotal  46  24.3 
     Total  189*  100 
Source:  Office of Inspector General analysis, 2009. 
    *We counted one provider twice because she owned two entities excluded under different authorities. 
   
                                                 
27 We listed only the authorities that applied to the group of excluded providers.  The authorities cited refer 
to sections of the Social Security Act.  
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Page 15  Marilyn Tavenner 
 
 
APPENDIX C     Excluded Providers We Reviewed by State and Provider Type, 
January 2007 to June 2008 
 
Number of Excluded Providers by State 
State  Number of Providers   Percentage 
Ohio  54  28.7 
California  37  19.7 
New York  32  17.0 
Texas  13  6.9 
Oregon  6  3.2 
Wisconsin  6  3.2 
Arkansas  3  1.6 
Illinois  3  1.6 
Indiana  3  1.6 
Louisiana  3  1.6 
Minnesota  3  1.6 
New Jersey  3  1.6 
Arizona  2  1.1 
Connecticut  2  1.1 
Iowa  2  1.1 
Michigan  2  1.1 
Nevada  2  1.1 
Oklahoma   2  1.1 
Wyoming   2  1.1 
Kansas  2  1.1 
Colorado  1  0.5 
Florida  1  0.5 
Kentucky  1  0.5 
Missouri  1  0.5 
Washington  1  0.5 
West Virginia  1  0.5 
   Total  188  100* 
Source:  Office of Inspector General analysis, 2009.  
         *Total may not add to 100 because of rounding. 
 
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Number of Excluded Providers by Type 
Provider Type  Number of Providers  Percentage 
Physician        51  27.1 
Aide  43  22.9 
Dentist  19  10.1 
Nurse         14  7.5 
Durable medical equipment company  12  6.4 
Nonemergency transportation company  10  5.3 
Pharmacist  7  3.7 
Home health agency  6  3.2 
Psychologist                      4  2.1 
Clinic           3  1.6 
Counselor                        3  1.6 
Licensed clinical social worker  2  1.1 
Chiropractor  2  1.1 
Pharmacy     2  1.1 
Physician assistant  2  1.1 
Social worker  2  1.1 
Therapist    1  0.5 
Acupuncturist        1  0.5 
Ambulance company  1  0.5 
Counseling center  1  0.5 
Mental health facility  1  0.5 
Optometrist  1  0.5 
   Total  188  100 
Source:  Office of Inspector General analysis, 2009. 
 
OEI-09-08-00330      Excluded Medicaid Providers:  Analysis of Enrollment