SMD Letter - States' obligation to notify the Department of Health and Huma...rative sanction is imposed against a Medicaid program participant 
(5/16/00)  
May 16, 2000  
Dear State Medicaid Director:  
This is to follow up on the enclosed letter sent to you on March 17, 1999, regarding the States' 
obligation to notify the Department of Health and Human Service's Office of Inspector General 
(OIG) when an administrative sanction is imposed against a Medicaid program participant.  
By way of background, each State Medicaid Plan provides that "whenever a provider of services or 
any other person is terminated, suspended, or otherwise sanctioned or prohibited from participating 
under the State plan, the State agency shall promptly notify the Secretary ... of such action," Section 
1902(a)(41) of the Social Security Act ("the Act"), 42 U.S.C. 1396a(a)(41). The above-referenced 
letter advised you about new Departmental regulations, published on September 2, 1998, which 
codified the statutory requirement as follows:  
The {State Medicaid} agency must ... promptly notify the Inspector General of any 
action it takes to limit the ability of an individual or entity to participate in its 
program, regardless of what such an action is called. This includes, but is not limited 
to suspension actions, settlement agreements and situations where an individual, or 
entity voluntarily withdraws from the program to avoid a formal sanction. (42 
C.F.R.  1002.3(b)(3)).  
Based on information submitted by a State Medicaid Agency, the OIG will determine whether the 
subject should be excluded from participation in Medicare, Medicaid, and other Federal health 
programs pursuant to section 1128(b)(5) of the Act, 42 U.S.C. 1320a-7(b)(5). Section 1128(b)(5) 
of the Act authorizes the exclusion from participation in Federal health care programs for:  
Any individual or entity which has been suspended or excluded from 
participation, or otherwise sanctioned, under ... a State health care program, for 
reasons bearing on the individual's or entity's professional competence, 
professional performance, or financial integrity.  
It is critical that State Medicaid agencies send timely and complete information to OIG regarding 
the termination of a provider's participation status. To make a proper evaluation of a case, OIG 
requests that State agencies submit the following documentation:  
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SMD Letter - States' obligation to notify the Department of Health and Huma...rative sanction is imposed against a Medicaid program participant (5/16/00)  
  The State agency's final decision to suspend, exclude, or otherwise sanction an individual or 
entity;  
  Background information if not contained in the final decision, e.g., a statement of the charges 
and evidence, upon which the agency based its decision; and     Current name, address, date of birth (if applicable), social security number, and license 
number (if known) of the sanctioned health care provider.  
 
Please send this documentation to the appropriate Field Office of the OIG Office of Investigations 
(OI) for review and processing. We enclose these Field Office addresses and phone numbers and 
their geographic jurisdictions.  
I appreciate your cooperation in implementing this reporting process. If you have any questions, 
please call the appropriate OIG/OI Field Office responsible for processing OIG exclusions.  
Sincerely,  
/s/  
Timothy M. 
Westmoreland 
Director  
cc: All HCFA Regional Administrators All HCFA Associate Regional Administrators for Medicaid 
and State Operations Lee Partridge - Director, Health Policy Unit, American Public Human 
Services Association Joy Wilson - Director, Health Committee, National Conference of State 
Legislatures Matt Salo - Director of Health Legislation, National Governors' Association  
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