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 

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 

1 
Page 2 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

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 individual’s 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).
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Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

at OIG’s 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.
Page 4 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

providers from their Medicaid programs.11 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 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 OIG’s 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.
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Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

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.
Page 6 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

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.
Page 7 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

Table 2: Occupations of 16 Excluded Individuals Identified

Occupation Employer Provider 

Type 

Number of Excluded 

Individuals

Patient Contact 

Level*

Registered Nurse/Licensed Practical 

Nurse

Nursing Facility 4 Direct patient care

Hospital 1 Direct patient care

Personal Care Attendant/Certified 

Nurse Aide Home Health Agency 3** Direct patient care

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 individual’s 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.
Page 8 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

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 individual’s 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 individual’s 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 individual’s 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.
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Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

one sampled provider explained that the human resources director at the time of the 

excluded individual’s 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 

Integrity and Protection Data Bank 2.2%

*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. 
Page 10 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

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 employee’s 

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.
Page 11 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

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 exclusions—they 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 check—and to require their network providers to check—OIG’s 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.
Page 12 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

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.
Page 13 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

Appendix A: Social Security Act Authorities Under Which the 16 Individuals 

Employed by Sampled Providers Were Excluded

Occupation Social Security Act Authority Number of Excluded 

Individuals

Registered Nurse/Licensed 

Practical Nurse

1128(b)(4) License Revocation/Suspension/Surrender 3 

1128(a)(2) Patient Abuse/Neglect Convictions 1 

1128(a)(1) Program-Related Convictions 1 

Personal Care 

Attendant/Certified Nurse 

Aide

1128(b)(4) License Revocation/Suspension/Surrender 3 

1128(a)(1) Program-Related Convictions 1 

Nurse Supervisor

1128(b)(4) License Revocation/Suspension/Surrender 1 

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.
Page 14 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

Appendix B: Point Estimates, Sample Sizes, and Confidence Intervals

Estimate Description Sample Size Point Estimate 95-Percent Confidence 

Interval

Percentage of providers that indicated they used the List of 

Excluded Individuals and Entities to check employees’ 

exclusion status

467 78.1% 69.7%–85.1% 

Percentage of providers that indicated they used the 

Excluded Parties List System to check employees’ exclusion 

status

467 51.2% 42.0%–60.4% 

Percentage of providers that indicated they used the State 

sanctions and licensure databases to check employees’ 

exclusion status

467 44.4% 35.4%–53.7% 

Percentage of providers that indicated they used the 

Medicare Exclusions Database to check employees’ 

exclusion status

467 32.4% 24.2%–41.5% 

Percentage of providers that indicated they used the National 

Practitioner Data Bank or Healthcare Integrity and Protection 

Data Bank to check employees’ exclusion status

467 2.2% 0.6%–5.9% 

Percentage of providers that check employees’ exclusion 

status at hire plus doing any periodic check 467 77.8% 69.4%–84.8% 

Percentage of providers that check employees’ exclusion 

status at hire plus doing monthly check 467 41.1% 32.3%–50.4% 

Percentage of providers that check employees’ exclusion 

status at hire plus doing a quarterly check 467 6.0% 2.5%–11.8% 

Percentage of providers that check employees’ exclusion 

status at hire plus doing an annual check 467 18.1% 11.8%–26.1% 

Percentage of providers that check employees’ exclusion 

status at hire plus checking at a frequency other than 

monthly, quarterly, or yearly

467 15.4% 9.5%–23.0% 

Percentage of providers that check employees’ exclusion 

status at hire only 467 8.6% 4.3%–15.0% 

Percentage of providers that check employees’ exclusion 

status periodically only 467 6.8% 3.0%–12.8% 

Percentage of providers that check employees’ exclusion 

status monthly only 467 0.9% 0.04%–4.4% 

Percentage of providers that check employees’ exclusion 

status quarterly only 467 1.7% 0.2%–5.9% 

Percentage of providers that check employees’ exclusion 

status annually only 467 3.3% 0.9%–8.4% 

Percentage of providers that check employees’ exclusion 

status only at a frequency other than monthly, quarterly, or 

yearly

467 0.9% 0.03%–4.5% 

Percentage of providers that do not check the exclusion 

status of their employees 467 6.8% 3.0%–12.8% 

Percentage of providers that require employees to sign an 

affidavit or attestation regarding their exclusion status 467 41.7% 32.8%–50.9% 

Percentage of providers that identified the costs and resource 

burdens of conducting exclusions checks as challenges 467 54.9% 45.6%–63.9% 

Percentage of providers that identified lack of knowledge as 

the reason they do not check employees’ exclusion status 467 4.2% 1.4%–9.5% 

continued on next page
Page 15 – Marilyn Tavenner

Excluded Individuals Employed By Medicaid Managed Care Providers (OEI-07-09-00632) 

Appendix B: Point Estimates, Sample Sizes, and Confidence Intervals (Continued)

Estimate Description Sample Size Point Estimate 95-Percent Confidence 

Interval

Percentage of providers that identified lack of knowledge and 

lack of resources as the reason they do not check employees’ 

exclusion status

467 0.8% 0.02%–4.6% 

Percentage of providers that did not identify a reason why 

they do not check employees’ exclusion status 467 1.7% 0.2%–5.9% 

Source: Office of Inspector General analysis of provider surveys, 2012.