Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

 

EXCLUDED PROVIDERS IN 

MEDICAID MANAGED CARE 

ENTITIES 

Daniel R. Levinson 

Inspector General

February 2012

OEI-07-09-00630
 

Executive Summary: Excluded Providers in Medicaid Managed Care Entities

OEI-07-09-00630 

WHY WE DID THIS STUDY

The Office of Inspector General (OIG) is authorized to exclude certain individuals and 

entities (providers) from participating in federally funded health care programs. These 

programs, such as Medicaid managed care, are prohibited from paying for any items or 

services furnished, ordered, or prescribed by an excluded provider or paying anyone who 

contracts with an excluded provider. Nationally, approximately 70 percent of Medicaid 

recipients receive some or all of their Medicaid services through managed care. 

However, little was known about how Medicaid managed care entities (MCE) prevent 

excluded providers from entering their provider networks, or how successful MCEs are in 

preventing excluded providers from entering their provider networks.

HOW WE DID THIS STUDY

For 12 selected MCEs in 10 States, we matched OIG exclusions data, including 

approximately 46,000 providers, and MCE provider network data, including 

approximately 277,000 providers, to identify excluded providers. We also interviewed 

MCE and State Medicaid staff, and we reviewed contracts between MCEs and States to 

identify their safeguards to prevent excluded providers from enrolling in Medicaid. 

Finally, we asked each MCE to provide information on payments made to each excluded 

provider identified. 

WHAT WE FOUND

Four of the twelve MCEs reviewed had 11 excluded providers enrolled in their provider 

networks in 2009. Four of these providers were paid a total of $40,306 in 2009; the 

remaining seven providers received no payments during our review. In 2009, 

approximately 46,000 individuals and entities were listed on OIG’s exclusion list. All 

12 MCEs and all 10 States reviewed had safeguards to identify excluded providers. 

Eleven of the twelve selected MCEs checked OIG’s List of Excluded Individuals and 

Entities to identify excluded providers. MCEs checked providers’ exclusion statuses at

initial enrollment and rechecked them at varying frequencies ranging from monthly to 

every 3 years. Six of the ten States required providers enrolled in MCE networks to first 

enroll in the State fee-for-service Medicaid program. Two other States had databases that 

combined several sources of exclusion information available to their MCEs. In the two 

remaining States, each provider was required to undergo an extensive background check 

as part of the provider enrollment process. 

WHAT WE RECOMMEND

We recognize that the number of excluded providers that we identified is small. CMS 

cited the small number of providers identified as its reason for not concurring with the 

recommendation made in the draft report. We updated the final report, recommending 

that CMS periodically remind States of their obligation to ensure that no excluded 

providers receive Medicaid payments. CMS could develop a State Medicaid Director 

letter that includes information from this report on how certain failures led to the 

inclusion of excluded providers in MCE provider networks. 
 

TABLE OF CONTENTS

Objectives ....................................................................................................1 

Background ..................................................................................................1 

Methodology ................................................................................................4 

Findings........................................................................................................8 

Four of the twelve MCEs reviewed had 11 excluded providers 

enrolled in their provider networks; 4 of these providers were 

paid a total of $40,306 .....................................................................8 

All 12 MCEs and all 10 States reviewed had safeguards to 

identify excluded providers; the specific safeguards varied 

among MCEs and States ................................................................10 

Recommendations ......................................................................................13 

Agency Comments and Office of Inspector General Response .....13 

Appendixes ................................................................................................15 

A: Selected Medicaid Managed Care Entities ..............................15 

B: Agency Comments ...................................................................16 

Acknowledgments......................................................................................18 
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 1

OBJECTIVES 

To determine the extent to which: 

1. selected Medicaid managed care entities (MCEs) enrolled Office of 

Inspector General (OIG)-excluded individuals and entities in their 

provider networks in 2009; and 

2. selected Medicaid MCEs and States have safeguards in place to 

prevent excluded individuals and entities from enrolling in their 

Medicaid managed care provider networks. 

BACKGROUND

Medicaid Managed Care

Nationally, approximately 70 percent of Medicaid recipients receive some 

or all of their Medicaid services through managed care. Capitated 

managed care is the most common arrangement for Medicaid managed 

care. Unlike claims for services paid on a fee-for-service basis—in which 

State Medicaid programs pay providers for each service rendered—in 

capitated managed care, State Medicaid programs pay MCEs a fixed rate 

per enrolled Medicaid beneficiary in exchange for all services included in 

the plan. 

Office of Inspector General Exclusions

To protect patients and the integrity of federally funded health care 

programs such as Medicaid managed care, OIG is authorized to exclude 

certain individuals and entities (e.g., physician group practices, 

transportation companies, hospitals) from participating in such programs.1

Medicaid and other federally funded health care programs are prohibited 

from paying for any items or services furnished, ordered, or prescribed by 

 

The bases for exclusions commonly include convictions for 

program-related fraud and patient abuse, and actions by licensing boards 

(e.g., suspension or revocation of a medical license). When OIG excludes 

individuals or entities (providers), it notifies the excluded providers, the 

Centers for Medicare & Medicaid Services (CMS), and State Medicaid 

agencies in the States in which the providers were enrolled in Medicaid. 

OIG also reports the exclusion to a number of databases used for licensing 

and credentialing providers (described further below). In 2009, 

approximately 46,000 individuals and entities were listed on OIG’s 

exclusion list. 

1 OIG exclusion authorities can be found in Sections 1128, 1128A, 1156, and 1867 of the Social Security Act.
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 2

an excluded provider.2 This prohibition applies to payments to the 

excluded provider and anyone who contracts with the excluded provider. 

The payment prohibition also applies to all administrative and 

management services furnished by an excluded provider, regardless of 

which entity submits the claim for reimbursement. OIG can impose civil 

monetary penalties on entities that contract with excluded providers.3

Limited exceptions allow payments for certain services (e.g., emergency 

services) furnished by excluded providers. Additionally, States can 

request that the Secretary of Health and Human Services waive a 

provider’s exclusion from a State health program.4

Sources of Exclusion Information

OIG makes exclusion information available on its Web site. OIG also 

provides exclusion information to a number of other agencies that in turn 

make the information available through databases they administer.

List of Excluded Individuals and Entities (LEIE). When OIG excludes a 

provider from participation in federally funded health care programs, it 

enters information about the provider into the LEIE, a database that houses 

information about all excluded providers. This information includes the 

provider’s name, address, provider type, and the basis of the exclusion. 

The LEIE is available to search or download on the OIG Web site and is 

updated monthly. To protect sensitive information, the downloadable 

information does not include unique identifiers such as Social Security 

numbers (SSN), Employer Identification numbers (EIN), or National 

Provider Identifiers (NPI).

Excluded Parties List System (EPLS). The General Services 

Administration (GSA) maintains the EPLS, which includes information 

regarding parties debarred, suspended, proposed for debarment, excluded, 

or otherwise disqualified from receiving Federal funds. All Federal 

agencies are required to send information to the EPLS on parties they have 

debarred or suspended as described above; OIG sends monthly updates of 

the LEIE to GSA for inclusion in the EPLS. The EPLS does not include 

any unique identifiers; it provides only the name and address of excluded 

entities. If EPLS users believe that they have identified an excluded 

entity, they should confirm the information with the Federal agency that 

made the exclusion.

2 42 CFR Section 1001.1901. 3 42 U.S.C. 1320a-7a(a)(6).

4 The limited exceptions are described in 42 CFR § 1001.1901(c); authority to grant waivers is set forth in 

§ 1128(d)(3)(B)(i) of the Social Security Act (42 U.S.C. 1320a-7(d)(3)(B)(i)).
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 3

Medicare Exclusions Database (MED). CMS maintains the MED as a 

way of providing exclusion information to its stakeholders, including State 

Medicaid agencies and Medicare contractors.5 OIG sends monthly 

updates of the LEIE to CMS. CMS uses the OIG updates to populate the 

MED (formerly Publication 69). Unlike the LEIE and the EPLS, the MED 

includes unique identifiers (e.g., SSNs, EINs, NPIs), but is available only 

to certain users to protect sensitive information. 

National Practitioner Data Bank (NPDB). The NPDB, maintained by the 

Health Resources and Services Administration, is an information 

clearinghouse containing information related to the professional 

competence and conduct of physicians, dentists, and other health care 

practitioners. OIG reports exclusions to the NPDB monthly. Although the 

NPDB includes unique identifiers, to protect sensitive information it is 

available only to registered users whose identities have been verified. The 

NPDB will also include information that is in the Healthcare Integrity and 

Protection Data Bank (HIPDB) when the two data banks are 

consolidated.6 The HIPDB is also a source of exclusion information. 

State Sanctions and Licensure Databases. States have authority to 

exclude providers from their Medicaid programs.7

CMS Guidance to State Medicaid Agencies

 Many States maintain a 

database—often called a State sanctions list—of 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 licensing database reflects that status. 

Data included in these databases vary by State.

In a State Medicaid Director letter dated May 16, 2000, CMS reminded 

States to check Publication 69 (the forerunner of the MED) to ensure that 

no excluded providers receive Medicaid payments. A subsequent State 

Medicaid Director letter dated June 12, 2008, clarified that while States 

5 The MED contains information on all OIG-excluded providers and is used by stakeholders of multiple CMS 

programs, including Medicaid managed care plans.

6 Section 6403 of the Patient Protection and Affordable Care Act (P.L. 111-148) amended § 1128E of the Social 

Security Act to provide for consolidating the HIPDB information into the NPDB and terminating the HIPDB. 

Implementation was to occur not later than 1 year after enactment (March 23, 2010) or the effective date of final 

regulations, whichever occurred later. Final regulations have not been issued as of the date of this report.

7 Under § 1902(p)(1) of the Social Security Act (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.
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 4

may delegate many provider enrollment or credentialing8 functions to 

MCEs, each State remains responsible for ensuring that it and its 

contracted MCEs do not pay an excluded provider for Medicaid-funded 

health care items or services. Most recently, on January 16, 2009, CMS 

issued a State Medicaid Director letter advising States of their obligations 

to direct providers to screen their employees and contractors for excluded 

persons. The letter advised States to communicate these obligations to 

providers on enrollment in Medicaid, to require compliance as a condition 

of enrollment, and to require providers to conduct monthly searches of 

OIG’s LEIE.

Related Studies

Two previous OIG studies examined Medicare provider exclusions. In 

August 2000, OIG reported that for a subset of excluded providers 

(1,594) for which unique numerical identifiers were available (Unique 

Physician Identification Number and/or SSNs), Medicare made improper 

payments totaling $35,833 to 21 physicians over the course of 1 year. The 

study also found that Medicare contractor staff responsible for making 

payments to providers raised some concerns regarding the timeliness, 

completeness, and reliability of exclusion data.9 In May 2010, OIG 

reported that 188 OIG-excluded Medicaid providers had, prior to their 

exclusion, enrolled in 26 State Medicaid programs. This study identified 

potential weaknesses in States’ provider enrollment procedures by 

examining whether these providers had questionable financial and 

criminal histories prior to enrolling in Medicaid. Twenty-four of these 

188 excluded providers had histories of tax debt, criminal convictions, or 

false disclosures prior to enrolling as Medicaid providers.10

METHODOLOGY

 OIG 

concluded that additional reviews and oversight were warranted to ensure 

that Medicaid enrollment standards are sufficient to protect the program 

from fraud and abuse. 

We used mixed methods, including data matches, interviews, and reviews 

of contracts, to conduct this evaluation. We conducted data matches to 

identify excluded providers. We then interviewed MCE and State staff 

about the safeguards that prevent excluded providers from enrolling in 

Medicaid. We also reviewed the contracts between the MCEs and the 

8 Credentialing is a general term for the process of ensuring that a provider is qualified to participate in a 

particular program. Specific qualifications vary by MCE and State, but credentialing generally includes 

checking a provider’s exclusion status, ensuring that a provider has a valid license, and verifying a provider’s 

education, training, criminal history, and ownership information. 9 Medicare Payments to OIG Excluded Physicians (OEI-07-98-00380).

10 Excluded Medicaid Providers: Analysis of Enrollment (OEI-09-08-00330).
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 5

States for information relating to safeguards. We looked for relationships 

between the presence of safeguards and the presence of excluded 

providers in each network, but found no such relationships. Finally, we 

asked the MCEs to provide information on payments made to each 

excluded provider that we identified. 

Scope

The data matches we conducted between the OIG exclusion data and MCE 

provider network data included all providers enrolled in the networks of 

the selected MCEs. We did not independently verify whether these 

providers had contracts with the MCEs in question, nor did we determine 

whether the excluded providers that we identified had received payments 

from other federally funded health care programs, such as Medicare. The 

OIG exclusion data used in these data matches included information on 

OIG-excluded providers; the data do not include State-excluded providers 

or providers listed on the EPLS or the NPDB but not also listed in the 

LEIE.

This evaluation was limited to those enrolled in the provider networks of 

the MCEs selected for this study; in another study, we will evaluate the 

extent to which excluded individuals are employed by the reviewed 

providers.11

Identification of OIG-Excluded Providers

We collected OIG exclusion data representing all providers excluded at 

any time from January 1 through December 31, 2009.12

Selection of MCEs

 These data 

included providers whose exclusions began before or during the review 

period. In addition to the periods of exclusion, OIG’s exclusion data 

included each provider’s name, provider type, provider specialty, date of 

birth (for individual providers), address, State, SSN or EIN, Medicaid 

provider number, and/or NPI. The data also included the dates of any 

reinstatements for the excluded providers. 

We selected 12 MCEs for inclusion in this study based on our review of 

data included in the 2008 National Summary of State Medicaid Managed 

Care Programs and the 2008 Medicaid Managed Care Enrollment 

11 In this study, we determined whether the providers enrolled in the selected MCEs were excluded. Providers 

who receive Medicaid funds are also required to screen their employees for excluded individuals, as stated in 

the State Medicaid Director letter dated January 16, 2009. We will evaluate the extent to which excluded 

individuals are employed by the MCE providers in another study (OEI-07-09-00632). Data collection for this 

evaluation began in January 2012.

12 This data was collected from the same database used to populate the LEIE; however, the SSNs and EINs that 

we obtained are not available in the downloadable version of the LEIE.
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 6

Report.

13 We selected MCEs that represented a variety of covered 

services, operating authorities, and managed care types, as shown in 

Appendix A.14 We excluded primary care case management plans.15 The 

12 MCEs that we selected provided services in 10 States: Alabama, 

California, Georgia, New York, Ohio, Oklahoma, Oregon, Tennessee, 

Texas, and Washington. They represent 15.8 percent of total Medicaid 

national managed care enrollment in 2008.16

Identification of MCE Providers

From each selected MCE, we requested data on all providers that were 

enrolled in the MCE’s provider network from January 1 through 

December 31, 2009. These data included providers whose enrollment 

began before or during the review period. In addition to beginning and 

ending dates of enrollment, these data included each provider’s name 

and/or business name, provider type, provider specialty, date of birth 

(if applicable), address, State, SSN or EIN, Medicaid provider number, 

and NPI. 

Identification of Excluded MCE Providers

To identify any excluded providers that were enrolled in the selected 

MCEs’ provider networks, we matched the OIG exclusion data to the 

MCE provider network data, primarily using SSN or EIN. If an SSN or 

EIN was not available for a particular provider, we attempted to match the 

OIG exclusion data and MCE provider network data using other 

identifying information, such as the Medicaid provider number, NPI, or 

name and date of birth. For the excluded providers identified, we 

compared their exclusion dates and reinstatement dates, if any, to the 

beginning and ending dates of their enrollment in the selected MCE. We 

also asked MCE officials:

• how each excluded provider enrolled in their network; 

13 The National Summary of State Medicaid Managed Care Programs provides descriptions of all Medicaid 

managed care programs in all States. The Medicaid Managed Care Enrollment Report provides enrollment data 

by State and by MCE for all Medicaid managed care programs in all States. Both documents are published 

annually by CMS. 14 States can establish contracts with different types of MCEs to provide specific subsets of services—for 

example, covered services can be limited to inpatient, mental health, or transportation services. Different 

sections of the Social Security Act authorize States to contract with different types of MCEs. These sections are 

known as operating authorities.

15 Primary care case management (PCCM) is a system under which a State contracts to furnish case 

management services (which include the location, coordination, and monitoring of primary health care services) 

to Medicaid recipients. We excluded PCCM plans from our study because in some cases States contract 

directly with the providers; a third-party plan is not always involved.

16Although the scope of our study is 2009, only 2008 data were available at the time of MCE selection. In 

2009, the 12 selected MCEs represented 15.8 percent of national Medicaid managed care enrollment.
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 7

• whether each excluded provider’s services fit one of the limited 

exceptions, or if the excluded provider had been granted a waiver, and 

for documentation to support any exception or waiver; and 

• the total amount paid to each excluded provider for services to 

Medicaid recipients in 2009. 

Finally, we looked for trends or patterns in the characteristics of the 

excluded providers we identified in MCE provider networks, but we found 

no such trends or patterns. 

Identification of MCE Safeguards

We conducted structured interviews with officials from the 12 selected 

MCEs to determine the extent to which they had implemented safeguards 

to ensure that excluded providers were not enrolled in their provider 

networks. We also asked if they had difficulties or concerns regarding the 

exclusions data available to them. We looked for relationships between 

MCE safeguards and the number of identified excluded providers in 

provider networks, but we found none. 

Identification of State Safeguards

We conducted interviews with 1 or more Medicaid officials in the 

10 States in which the 12 selected MCEs operate. These interviews 

identified the safeguards that States use to prevent excluded providers 

from enrolling in MCE provider networks and also identified difficulties 

or concerns State officials had with the exclusions data available to them. 

We looked for relationships between State safeguards and the number of 

excluded providers in MCE provider networks, but we found none. 

Review of Contracts

We collected and reviewed copies of the contracts between the States and 

the selected MCEs for information relating to safeguards used to prevent 

excluded providers from enrolling in MCE provider networks. We looked 

for relationships between contract requirements and the number of 

excluded providers in MCE provider networks, but we found none. 

Limitations

We selected a purposive sample of 12 MCEs for this study. The results 

can be applied only to the 12 MCEs that were reviewed; they cannot be 

projected to any other MCEs or States. 

Standards

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.
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 8

FINDINGS

Four of the twelve MCEs reviewed had 11 excluded 

providers enrolled in their provider networks; 4 of 

these providers were paid a total of $40,306

We identified 11 excluded providers in the networks of 4 MCEs. A 

total of $40,306—a State share of $19,755 and a Federal share of 

$20,551—was paid to 4 of the 11 providers after the dates of their 

exclusions by 2 MCEs (i.e., MCEs 1 and 2 in Table 1 below). We 

identified these providers by checking the 277,835 providers enrolled in 

the 12 selected Medicaid MCEs against the 45,432 OIG-excluded 

providers as of January 1, 2009. Table 1 shows the amounts paid to the 

four providers. The 11 excluded providers identified were as follows: 

5 physicians, 3 durable medical equipment (DME) suppliers, 

2 pharmacies, and 1 mental health clinic. Their dates of exclusion ranged 

from December 18, 1997, to April 20, 2009. 

Table 1: Payments to Excluded Providers 

MCE Provider 

Type

Total Payments 

in 2009

State 

Share

Federal 

Share

MCE 1 Physician (M.D.) $26,044.12 $13,022.06 $13,022.06

MCE 1 Physician (M.D.) $11,100.58 $5,550.29 $5,550.29

MCE 1 Physician (M.D.) $372.10 $186.05 $186.05

MCE 2 DME supplier $2,788.75 $996.14 $1,792.61

 Total: $40,305.55 $19,754.54 $20,551.01

Source: MCE reports of payment information to OIG, 2009.

Seven of the eleven excluded providers were enrolled in MCE provider 

networks, according to the data that MCEs gave us, but rendered no 

services and received no payments during the period of our review. 

For five of these seven providers, the corresponding MCEs—MCEs 1 

and 3—explained that the providers had joined their networks through 

their acquisitions of other MCEs and had not yet signed contracts with the 

new MCE, or the providers had simply not been removed from the 

enrollment data when their last contracts expired or were terminated. It is 

unclear whether these providers would have been paid if they had 

submitted requests for reimbursement to the MCEs. For the remaining 

two providers, staff from MCE 4 stated that they did not pay any claims 

but did not explain further. 
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 9

Gaps in provider credentialing processes and LEIE 

information contributed to the enrollment of excluded 

providers

The four MCEs that had excluded providers in their networks gave the 

following explanations about those enrollments. 

MCE 1. This MCE confirmed that five physicians enrolled in its network 

were excluded. Upon investigation, the MCE found that its credentialing 

department had correctly identified the excluded providers. However, the 

information was not entered into the MCE’s provider database. This MCE 

reported that it has taken steps to streamline the process and create greater 

accountability to prevent excluded providers from enrolling in the 

network. 

MCE 2. A second MCE confirmed that one DME provider enrolled in its 

network was excluded. MCE officials explained that an external 

contractor credentials providers in the MCE’s network, including checking 

providers’ exclusion status. The contractor follows the guidelines of a 

national organization for improving health care quality in identifying what 

types of providers require credentialing. The MCE explained that these 

guidelines do not require DME providers to be credentialed and, therefore, 

this provider was not credentialed upon enrolling in the network. 

Regardless of external organizations’ guidelines, this MCE was prohibited 

by its contract with the State from enrolling excluded providers in its 

Medicaid provider network. 

MCE 3. A third MCE confirmed that two excluded DME providers and an 

excluded mental health clinic were enrolled in its provider network. These 

three providers joined the MCE’s network when it acquired another MCE 

in October 2005. These providers’ contracts were assigned to the MCE as 

part of the acquisition. The providers were not recredentialed during the 

acquisition, and therefore the MCE was not aware of their exclusion 

status.

MCE 4. The fourth MCE confirmed that two excluded pharmacies were 

enrolled in its network. The MCE explained that it had mistakenly 

identified the pharmacies as “false positive” matches with the LEIE and 

had allowed them in its network despite their exclusion status. The MCE 

further explained that the downloadable file from the OIG Web site does 

not contain unique identifiers such as a National Association of Boards of 

Pharmacy number or an NPI. Therefore, the MCE matches records 

without such unique identifiers based on specific criteria. The match 

criteria this MCE used for pharmacies are the first 10 characters of the 

pharmacy name and the ZIP Code, or the first 10 characters of the 

pharmacy address and the ZIP Code. Comparisons between two databases 
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 10

based on nonunique identifiers, such as names or portions of addresses, 

will likely produce “false positive” matches. For example, common 

names, such as John Smith, are likely to appear in both databases even if 

the records associated with the name John Smith in each database 

reference different individuals. Therefore, the comparison between the 

two databases will yield a match, but the match will be incorrect—a “false

positive.” Officials from this MCE stated that each month, that staff must 

manually review approximately 100 matches based on names or addresses. 

Despite the additional steps necessary to confirm whether matches are 

false positives, this MCE was still obligated to confirm that no excluded 

pharmacies were enrolled in its network. 

The MCEs for all four networks in which we identified excluded providers 

reported that they have removed the providers from their networks. 

All 12 MCEs and all 10 States reviewed had safeguards 

to identify excluded providers; the specific safeguards 

varied among MCEs and States

All selected MCEs and the Medicaid agencies in 10 States had safeguards 

to prevent excluded providers from enrolling in their provider networks. 

In our review of the contracts between States and MCEs, we found that all 

contracts reiterated the prohibition on enrolling or using excluded 

providers in federally funded health care programs; however, the contracts 

did not specify how the MCEs should identify excluded providers to avoid 

enrolling them.

MCE safeguards. The safeguard most commonly used by the selected 

MCEs to prevent excluded providers from enrolling in their networks was 

checking the LEIE. Eleven of the twelve selected MCEs checked the 

LEIE.17 Other databases that the 12 selected MCEs used to identify 

excluded providers included the EPLS, the MED, the NPDB, and the State 

sanctions or licensure databases. MCE officials indicated that these 

databases are checked at providers’ initial enrollment and rechecked at 

varying frequencies ranging from monthly to every 3 years. Tables 2 and 

3 show how many of the selected MCEs check each database, and how 

frequently these MCEs recheck each database for providers enrolled in 

their networks. We did not identify any relationship between the 

databases checked, or the frequency at which they were checked, and the 

presence of excluded providers in a particular MCE’s network. 

17 The one MCE that did not check the LEIE provided only inpatient hospital services and enrolled only 

hospitals in its provider network. Rather than have its staff check the exclusion status of each enrolled hospital, 

the MCE required that every enrolled hospital be accredited by the State hospital association. One of the 

requirements for accreditation was not being excluded.
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 11

Table 2: Number of MCEs Checking Databases at Initial Enrollment

LEIE EPLS MED NPDB/ 

HIPDB

State 

Sanctions or 

Licensure 

Database

Checked 14 6 5 7 8 

Not checked 1 8 10 7 7 

No response 0* 1 0 1 0 

Source: OIG interviews with selected MCEs, 2009. 

*Note: The columns add up to a total of 15, rather than 12 MCEs. This is because the MCE in Washington was 

separated into four regional plans, each with slightly varying safeguards in use.

Table 3: Frequency of MCEs Checking Databases After Initial Enrollment

LEIE EPLS MED NPDB/

HIPDB

State 

Sanctions or 

Licensure 

Database

Monthly 9 4 4 1 4 

Yearly 2 0 0 0 0 

Every 3 years 3 2 1 4 3 

Upon receipt of 

updates*

0 0 0 2 1 

Never 1 8 10 7 7 

Source: OIG interviews with selected MCEs, 2009.

*Note: The NPDB and HIPDB offer a service to subscribers that supplies information on particular individuals as it is 

entered into the database. Two MCEs took advantage of these services to receive in real time any information entered 

into these databases on all of their enrolled providers. One State updated its State sanctions list in the same way, 

sending out updates to subscribers as they occurred.

State safeguards. Six of the ten States that contracted with the selected 

MCEs required that providers seeking enrollment in MCE networks first 

enroll in the State’s fee-for-service Medicaid program.18 The checks that 

these six States conducted on providers enrolling in the fee-for-service 

program were similar to those that MCEs conducted on providers 

enrolling in their networks. In effect, providers in MCE networks in these 

18 Two minor variations in this requirement were found among the six States. In one State, approximately 

1 percent of providers enrolled in the MCE were not also enrolled as fee-for-service providers. In another State, 

the only provider type that the MCE was allowed to enroll was community mental health centers (CMHCs). 

This State required CMHCs to undergo an extensive State licensing process, rather than requiring them to enroll 

in the fee-for-service Medicaid program.
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 12

six States underwent two complete checks, one conducted by the State and 

one conducted by the MCE. Two other States maintained a State database 

that combined several sources of exclusion information (e.g., LEIE, MED, 

State sanctions list) and made these databases available to their contracted 

MCEs. In the two remaining States, which contracted with MCEs to 

provide transportation services, each provider of transportation services 

was required to undergo a check for any exclusions and an extensive 

background check. 
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 13

RECOMMENDATIONS

Our review identified 11 excluded providers in the networks of 4 of the 

12 MCEs that were included in this study. Although Medicaid and other 

Federally funded health care programs are prohibited from paying for any 

items or services furnished, ordered, or prescribed by an excluded 

provider, 2 MCEs paid a total of $40,306 to 4 of these 11 providers. 

Although all 12 MCEs had safeguards to prevent excluded providers from 

enrolling in their networks, various factors—such as gaps in the MCEs’ 

provider credentialing processes—led to their inclusion in the networks. 

We recognize that the number of excluded providers that we identified is 

small. Further, we note that CMS issued State Medicaid Director letters in 

2000, 2008, and 2009 reminding States of their obligation to ensure that 

no excluded providers receive Medicaid payments. 

To ensure that no excluded providers receive Federal health care funds 

through Medicaid managed care contracts, we recommend that CMS: 

Periodically remind States of their obligation to ensure that no 

excluded providers receive Medicaid payments

To fulfill this recommendation, CMS could develop a State Medicaid 

Director letter as it has done in the past. The letter could include 

information from this report on how certain failures led to the inclusion of 

excluded providers in MCE provider networks. Such failures could 

include failure to communicate information about excluded providers 

between credentialing and enrollment staff; failure to check the exclusion 

status of all providers entering networks because of gaps in external 

organizations’ guidelines; or failure to check the exclusion status of 

providers entering networks as a result of one MCE acquiring another. 

Alternatively, CMS could include this information in the next State 

Program Integrity Review Summary report.

We are reviewing the excluded providers we identified and the MCEs in 

which they were enrolled to determine appropriate action. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

In its written comments on the report, CMS acknowledged that continuing 

review and improvement is always needed and discussed ongoing CMS 

activities. In response to the recommendation in the draft report, CMS 

stated that it “does not concur that the particular suggestions contained in 

the report are warranted.” CMS also stated that the findings did not 

indicate any systemic failings and that the cost of implementing the 
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 14

OIG-suggested actions would outweigh the benefits that would accrue 

from those actions. 

In 2009, fewer than 46,000 of the millions of U.S. health providers were 

federally excluded, yet 11 of these excluded providers found their way 

into the handful of MCE provider networks we reviewed. OIG does not 

exclude providers lightly; the 11 providers we identified were excluded 

because they were convicted of health care-related crimes. Therefore, 

payments to these providers are more serious than simple payment errors. 

Furthermore, in its 2009, 2010, and 2011 State Program Integrity Review 

Summary reports, CMS highlighted effective practices as well as 

inadequacies in States’ processes to identify excluded providers both in 

fee-for-service Medicaid and Medicaid managed care. This indicates that 

CMS is also seeking ways to identify and prevent excluded providers from 

participating in Medicaid.

In the draft report, we recommended that CMS develop processes to allow 

MCEs to efficiently check their entire provider networks to prevent 

excluded providers from enrolling or remaining in their networks. We 

revised the recommendation and the suggested actions to implement it 

based on CMS comments. 

We ask that in its final management decision, CMS indicate whether it 

concurs with our revised recommendation and suggested actions, and what 

steps, if any, it will take to implement the recommendation.

The full text of CMS’s comments can be found in Appendix B. 
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 15

APPENDIX A

Table A-1: Selected Medicaid Managed Care Entities

State Program Name Name of Managed 

Care Entity

Type of 

Managed Care Covered Services

Social 

Security Act 

Operating 

Authority 

Number of 

Enrollees in 

2008

Alabama Partnership Hospital 

Program

Partnership Hospital 

Program

prepaid inpatient 

health plan inpatient hospital 1915(a) 484,288

California Two-Plan Model 

Program

Health Net 

Community 

Solutions, Inc.-

TPMP 

managed care 

organization comprehensive 1915(b), 1932(a) 528,037

California Two-Plan Model 

Program

LA Care Health 

Plan 

managed care 

organization comprehensive 1915(b), 1932(a) 741,817

Georgia

Non-Emergency 

Transportation 

Brokerage Program

Non-Emergency 

Transportation 

Brokerage Program

prepaid 

ambulatory 

health plan

nonemergency 

transportation 1902(a)(70) 1,167,887

New York Partnership Plan - 

Family Health Plus

NYS Catholic 

Health Plan 

managed care 

organization comprehensive 1115 270,393

Ohio Full-Risk Managed Care 

Program CareSource managed care organization comprehensive 1932(a) 607,118

Oklahoma SoonerRide Logisticare, Inc.

prepaid 

ambulatory 

health plan

nonemergency 

transportation 1902(a)(70) 510,768

Oregon Oregon Health Plan Plus CareOregon, Inc. managed care 

organization comprehensive 1115 107,294

Tennessee TennCare II Americhoice managed care 

organization comprehensive 1115 525,185

Tennessee TennCare II

First Health 

Services 

Corporation

pharmacy benefit 

manager prescription drugs 1115 1,207,136

Texas STAR Amerigroup managed care 

organization comprehensive 1915(b) 333,423

Washington Integrated Mental Health 

Services

Regional Support 

Network 

prepaid inpatient 

health plan mental health 1915(b) 858,331

 Total: 6,134,541

Source: 2008 National Summary of State Medicaid Managed Care Programs; 2008 Medicaid Managed Care Enrollment Report. 
APPENDIX B 

Agency Comments 

...v_ . 

"" '<0, 

( DEPARTMENT OF HEALTH" HUMAN SERVICES Cente", for Medicare & Medicaid Services 

-.,"Sz\...o. Administrator 

Washington, DC 20201 

SEP 0 8 2011 DATE: 

TO: 	 Daniel R. Levinson 


Inspector General 


FROM: 	 Donald M, Berwick, M,D. 


Administrator 


SUBJECT: 	 Office ofInspector General (OIG) Draft Report: Excluded Providers in Medicaid 

Managed Care Entities (OEI-07-09-00630) 

TIle Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to comment 

on this subject OIG draft report, The purpose of the report was to determine the extent to which 

selected--(l) Medicaid managed care entities (MCEs) enrolled OIG-excluded individuals and 

entities in their provider networks in 2009; and (2) Medicaid MCEs and States have safeguards 

in place to prevent excluded individuals and entities from enrolling in Medicaid managed care 

provider networks, For 12 selected MCEs, the 010 matched OIG exclusions data and MCE 

provider network data to identify excluded providers, and then requested each MCE to provide 

information on payments made to those excluded providers. The 010 also interviewed MCE and 

State Medicaid staff, and reviewed contracts between MCEs and States to identify the safeguards 

which prevented excluded providers from enrolling in Medicaid programs, In total, 10 States 

were reviewed. 

The OIG's report found that four of the twelve MCEs reviewed had 11 total excluded providers 

enrolled in their provider networks. Seven did not bill and the remaining four ofthese 11 

excluded providers were paid a total of $40,306, The OIG report also found that all 12 MCEs 

and all 10 States reviewed had safeguards in place to identify excluded providers, although the 

specific safeguards varied among MCEs and States, 

OIG Recommendation 

The OIG recommended that CMS should work with the States to develop processes that allow 

MCEs to efficiently check their entire provider networks to prevent excluded providers from 

enrolling or remaining in their networks, 

The OIG also made the following suggestions as to how CMS could implement this 

recommendation: 

• 	 CMS could encourage States to make the Medicare Exclusion Database (MED) available 

directly or indirectly (through States) to Medicaid MCEs, or by encouraging States to 

check MCE provider network data against the MED. The unique identifiers available in 

the MED could reduce errors associated with name-based matches necessitated by the 

OEI-O?-09-00630 Excluded Providers in Medicaid Managed Care Entities 16 
 

OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 17

Agency Comments (Continued)
OEI-07-09-00630 Excluded Providers in Medicaid Managed Care Entities 18

ACKNOWLEDGMENTS

This report was prepared under the direction of Brian T. Pattison, Regional 

Inspector General for Evaluation and Inspections in the Kansas City 

regional office, and Deborah K. Walden, Deputy Regional Inspector 

General.

Michala Walker served as the team leader for this study. Other principal 

Office of Evaluation and Inspections staff from the Kansas City regional 

office who contributed to the report include Michael Barrett and 

Rae Hutchison; central office staff who contributed include Kevin Manley 

and Kevin Farber.
 

Office of Inspector General

http://oig.hhs.gov

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is 

to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the

health and welfare of beneficiaries served by those programs. This statutory mission is carried out through 

a nationwide network of audits, investigations, and inspections conducted by the following operating 

components:

Office of Audit Services

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with 

its own audit resources or by overseeing audit work done by others. Audits examine the performance of 

HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are 

intended to provide independent assessments of HHS programs and operations. These assessments help 

reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS.

Office of Evaluation and Inspections

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, 

and the public with timely, useful, and reliable information on significant issues. These evaluations focus 

on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of 

departmental programs. To promote impact, OEI reports also present practical recommendations for 

improving program operations. 

Office of Investigations

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and 

misconduct related to HHS programs, operations, and beneficiaries. With investigators working in all 

50 States and the District of Columbia, OI utilizes its resources by actively coordinating with the 

Department of Justice and other Federal, State, and local law enforcement authorities. The investigative 

efforts of OI often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties.

Office of Counsel to the Inspector General

The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 

advice and opinions on HHS programs and operations and providing all legal support for OIG’s internal 

operations. OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS 

programs, including False Claims Act, program exclusion, and civil monetary penalty cases. In 

connection with these cases, OCIG also negotiates and monitors corporate integrity agreements. OCIG 

renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement 

authorities.