`[Federal Register Volume 89, Number 231 (Monday, December 2, 2024)]
[Proposed Rules]
[Pages 95143-95167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26804]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Parts 1000 and 1001

RIN 0936-AA12


Health Care Programs: Fraud and Abuse; Revisions to the Office of 
Inspector General's Exclusion Authorities

AGENCY: Office of Inspector General (OIG), Department of Health and 
Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule proposes to amend the regulations relating 
to exclusion authorities under the authority of the Office of Inspector 
General (OIG) of the Department of Health and Human Services (HHS or 
the Department). The proposed rule would codify changes made by the 
Medicaid Services Investment and Accountability Act of 2019 (MSIAA), 
that added exclusion authorities related to misclassification and false 
information about outpatient drugs. The proposed rule would also update 
and clarify OIG's procedures for excluding individuals and entities 
from participation in the Federal health care programs, including the 
factors that will be considered in determining the length of 
exclusions, the provisions governing notices of exclusions, and certain 
provisions related to reinstatement into the programs.

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DATES: To ensure consideration, public comments must be received no 
later than 5 p.m. eastern time on January 31, 2025.

ADDRESSES: In commenting, please refer to file code OIG-2401-P. Because 
of staff and resource limitations, we cannot accept comments by fax 
transmission. You may submit comments in one of two ways (no 
duplicates, please):
    1. Electronically. You may submit comments electronically at 
https://www.regulations.gov. Follow the ``Submit a comment'' 
instructions and refer to file code OIG-2401-P.
    2. By regular, express, or overnight mail. You may send written 
comments to the following address: OIG, Regulatory Affairs, HHS, 
Attention: OIG-2401-P, Room 5267, Cohen Building, 330 Independence 
Avenue SW, Washington, DC 20201. Please allow sufficient time for 
mailed comments to be received before the close of the comment period.
    For information on viewing public comments, please see the 
SUPPLEMENTARY INFORMATION section.
    Docket: Go to the Federal eRulemaking Portal at https://www.regulations.gov for access to the rulemaking docket, including any 
background documents and the plain-language summary of the proposed 
rule of not more than 100 words in length required by the Providing 
Accountability Through Transparency Act of 2023.

FOR FURTHER INFORMATION CONTACT: David Fuchs, Deputy Branch Chief, 
Office of Counsel to the Inspector General, at (202) 763-4750.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period as soon as possible 
after they have been received on the following website: https://www.regulations.gov.

I. Executive Summary

A. Purpose and Need for Regulatory Action

    MSIAA expanded OIG's exclusion authority to protect the Federal 
health care programs from fraud and abuse by allowing OIG to exclude 
certain individuals and entities that knowingly misclassify a covered 
outpatient drug, knowingly fail to correct such misclassification, or 
knowingly provide false information related to drug pricing, drug 
product information, or data related to drug pricing or drug product 
information. OIG proposes to update its regulations to codify the 
changes made by MSIAA in the regulations. At the same time, OIG 
proposes to amend other sections of the exclusion regulations to ensure 
consistency with statutory authority, decrease administrative burdens, 
enhance transparency, and improve the efficiency and effectiveness of 
government. The proposed amendments include factors that will be 
considered in determining the lengths of exclusions, the processes 
governing notices of exclusions, and certain provisions related to 
reinstatement into the programs, as well as clarifying changes and 
updates to the regulations.

B. Legal Authority

    The legal authority for this regulatory action is found in: 42 
U.S.C. 1302; 1320a-7; 1395u(j); 1395u(k); 1395y(e); and 1395hh.

II. Summary of Major Provisions

    We propose changes to the exclusion regulations at 42 CFR parts 
1000 and 1001 to codify an authority under MSIAA, update processes, and 
make clarifying and technical changes to existing regulations. 
Specifically, section 6(d) of MSIAA amended section 1128(b) of the 
Social Security Act (the Act) to add an exclusion authority for certain 
conduct related to the misclassification of outpatient drugs, and 
knowingly providing false information related to drug pricing, drug 
product information, or data related to drug pricing or drug product 
information.
    We propose clarifying changes to aggravating and mitigating factors 
that are used to determine periods of exclusion under section 1128 of 
the Act. We propose to simplify the mitigating factor relating to 
cooperation and to consolidate certain aggravating factors relating to 
other criminal, civil, and administrative sanctions into a single 
factor. We propose to modify the exclusion authority under section 
1128(b)(12) of the Act, for failure to grant immediate access, to 
eliminate a requirement for OIG or a State Medicaid Fraud Control Unit 
(MFCU) to demonstrate that the requested material is about to be 
altered or destroyed in order to obtain access to the material at the 
time the request is made. We propose to modify OIG's obligations with 
respect to beneficiaries' access to physician services in imposing 
exclusions under section 1128(b)(14) of the Act in accordance with the 
Act. We propose to modify the regulatory language to align the 
regulations with certain, current OIG practices for exclusions imposed 
under sections 1128(a) and (b) of the Act and for waivers. We propose 
certain changes to the definitions to remove duplication. We propose to 
modify the circumstances under which early reinstatement is available 
for individuals and entities excluded under section 1128(b)(4) of the 
Act to permit individuals who lost their health care licenses for 
reasons related to patient abuse and neglect to apply for early 
reinstatement in limited circumstances.

III. Costs and Benefits

    There are no significant costs associated with the proposed 
regulatory revisions that would impose any mandates on State, local, or 
Tribal governments or the private sector.

IV. Background

A. Exclusion Authority

    The exclusion authorities found in section 1128 of the Act are 
intended to protect the Federal health care programs and their 
beneficiaries from untrustworthy individuals and entities whose 
behavior has demonstrated that those individuals and entities pose a 
risk to program beneficiaries or to the integrity of these programs. 
These authorities encompass both mandatory exclusions (section 1128(a) 
of the Act) and permissive exclusions (section 1128(b) of the Act). The 
Secretary's authority under section 1128 of the Act has been delegated 
to OIG. See 53 FR 12993 (Apr. 20, 1988).
    The mandatory exclusion authorities require OIG to exclude from 
program participation any individual or entity convicted of an offense 
that is: related to items or services delivered under Medicare and 
Medicaid; related to patient abuse or neglect; or a felony related to 
health care delivery, governmental health care programs, or controlled 
substances. Mandatory exclusions must be imposed for a minimum 5-year 
period. The permissive authorities do not require the imposition of an 
exclusion and may either be: (1) ``derivative'' exclusions that are 
based on actions previously taken by a court, other law enforcement, or 
regulatory agencies; or (2) ``non-derivative'' exclusions that are 
based on OIG-initiated determinations of misconduct, e.g., poor quality 
care or submission of false claims for Medicare or Medicaid payment. 
With certain exceptions, there are no specified minimum periods of 
exclusion under these permissive authorities.
    Over the years, several statutory and regulatory provisions have 
amended or

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further clarified OIG's exclusion authorities. For example, the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) expanded 
OIG's authorities to add several exclusion authorities (sections 
1128(a)(3), (a)(4), and (b)(15)) and increase minimum or benchmark 
periods of exclusion for certain permissive exclusions. The Balanced 
Budget Act (BBA) of 1997 further amended OIG's exclusion authorities 
by: (1) extending the scope of an OIG exclusion beyond Medicare and 
State health care programs to all Federal health care programs; (2) 
establishing permanent exclusions for persons convicted of three or 
more health care-related crimes and 10-year exclusions for persons 
convicted of two health care-related crimes; and (3) expanding the 
scope of exclusions under section 1128(b)(8) of the Act.
    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) amended OIG's authority to waive mandatory exclusions. In 
2010, the Patient Protection and Affordable Care Act, Public Law 111-
148, 124 Stat. 119 (2010), as amended by the Health Care and Education 
Reconciliation Act of 2010, Public Law 111-152, 124 Stat. 1029 (2010) 
(ACA), broadened OIG's waiver authority to permit the administrator of 
a Federal health care program to request a waiver if the administrator 
determines that exclusion would impose a hardship on beneficiaries of 
that program. In addition, the ACA expanded OIG's exclusion authority 
in several ways, including by establishing a new permissive exclusion 
authority under section 1128(b)(16) of the Act. On January 17, 2017, 
OIG published a final rule addressing new and revised exclusion 
authorities in accordance with the ACA and the MMA, as well as 
technical, policy, and clarifying changes to 42 CFR parts 1000, 1001, 
1002, and 1006.

B. Changes Made by MSIAA

    MSIAA expanded OIG's authority to exclude certain individuals and 
entities from participation in the Federal health care programs under 
section 1128 of the Act. Section 6(d) of MSIAA established a new 
permissive exclusion authority applicable to any manufacturer, or 
officer, director, agent, or managing employee of such manufacturer, 
that knowingly misclassifies a covered outpatient drug, knowingly fails 
to correct such misclassification, or knowingly provides false 
information related to drug pricing, drug product information, or data 
related to drug pricing or drug product information. The proposed rule 
would codify this statutory authority within the existing regulatory 
framework and address how OIG will set the length of exclusions imposed 
under that authority.

C. Proposed Policy Changes and Clarifying Changes

    The proposed rule would revise the section governing exclusions 
under section 1128(b)(14) of the Act based on an individual's default 
on a health education loan or scholarship obligation. The section 
currently requires OIG to take into account access of beneficiaries to 
physician services for which payment may be made under Medicare, 
Medicaid, or other Federal health care programs in determining whether 
to impose an exclusion. We propose to align the regulation with section 
1128(b)(14) of the Act by limiting OIG's obligations under this section 
to take into account access of beneficiaries to only Medicare and 
Medicaid physician services. By aligning the regulation with the 
statutory authority and removing the requirement for OIG to take into 
account beneficiary access to physician services under Federal health 
care programs other than Medicare and Medicaid, we hope to allow for 
more efficient imposition of exclusions under this section.
    We propose clarifying changes to aggravating and mitigating factors 
that are used to determine periods of exclusion under section 1128 of 
the Act. We propose to simplify the mitigating factor relating to 
cooperation and to combine certain overlapping factors relating to 
prior civil, criminal, and administrative sanctions into a single 
factor. We propose to revise the regulation that permits OIG to exclude 
individuals and entities who fail to grant OIG or a State MFCU 
immediate access to certain records, to eliminate the requirement that 
OIG or a MFCU demonstrate that the requested materials are about to be 
altered or destroyed in order to obtain access to the materials at the 
time the request is made, instead of within 24 hours of the request. We 
propose to make technical changes to the regulations governing 
exclusions under section 1128 of the Act and for waivers. We propose to 
modify the circumstances under which early reinstatement is available 
for individuals and entities excluded under section 1128(b)(4) of the 
Act.
    The proposed rule would also modify the sections governing notice 
to the public and other agencies regarding exclusions, notice regarding 
approval of reinstatement requests, and notice regarding denial of 
reinstatement requests. These proposed changes would modernize notice 
to the public and other agencies and more clearly outline OIG's process 
for appeals of denials of reinstatement requests.
    Finally, the proposed rule would also include clarifying changes 
and updates to the exclusion regulations, including plain language 
changes to definitions, phrasing, and verbiage ensuring higher 
readability and comprehension for the public. Additionally, the 
proposed rule proposes to modernize pronoun references.

V. Provisions of the Proposed Rule

A. Changes to Part 1000 (Definitions)

    We propose to move the definitions of ``agent,'' ``indirect 
ownership interest,'' ``ownership interest,'' and ``patient'' from 
Sec.  1001.2 to Sec.  1000.10 (General definitions), because these 
terms are used not only in part 1001 but also in other parts of 
subchapter B. We propose to modify ``indirect ownership interest'' to 
correct certain language. The current language states that ```Indirect 
ownership interest' includes an ownership interest through any other 
entities that ultimately have an ownership interest in the entity in 
issue.'' We propose to modify this language to clarify that the 
indirect ownership interest could be in one entity or through multiple 
entities. We also propose a technical edit changing ``in issue'' to 
``at issue.'' We propose to modify the definition of ``ownership 
interest'' to correct certain language. The current language states 
that an ownership interest includes any interest in any mortgage, deed, 
trust or note, or other obligation secured in whole or in part by the 
assets of the entity. We propose to replace the phrase ``deed, trust or 
note, or other obligation'' with ``deed of trust, note, or other 
obligation.'' The reference to ``deed of trust'' appears in the 
definition of ``ownership or control interest'' at Sec.  1001.2 and in 
section 1124 of the Act, and we believe that ``deed, trust or note'' 
was a typographical error in the regulatory definition because a ``deed 
of trust'' is an obligation similar to a mortgage or note.
    We also propose to modify the definition of ``patient'' to change 
the reference to ``Medicare, Medicaid and any other Federal health care 
program'' to ``any Federal health care program'' because ``Federal 
health care program'' is a statutorily defined term that includes (and 
is broader than) Medicare and State health care programs. See 42 U.S.C. 
1320a-7b(f). Section 1320a-7b(f) of U.S. Code title 42 and Sec.  
1000.10 define ``Federal health care program'' as

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``(1) any plan or program that provides health benefits, whether 
directly, through insurance, or otherwise, which is funded directly, in 
whole or in part, by the United States Government (other than the 
health insurance program under chapter 89 of title 5); or (2) any State 
health care program, as defined as defined in section 1128(h).''
    Lastly, we propose to add a regulatory definition of ``knowingly'' 
to Sec.  1000.10 because the term is used in the new exclusion 
authority added by MSIAA. We propose the same definition of 
``knowingly'' that appears in Sec.  1003.110, applicable to OIG's civil 
monetary penalty authorities in section 1128A of the Social Security 
Act (Act). By adding the definition to Sec.  1000.10, the definition 
will apply to the regulations interpreting both the exclusion statute 
(section 1128 of the Act) and the OIG's civil monetary penalty 
authorities (section 1128A of the Act). The proposed language is as 
follows: ``Knowingly means that a person, with respect to an act, has 
actual knowledge of the act, acts in deliberate ignorance of the act, 
or acts in reckless disregard of the act, and no proof of specific 
intent to defraud is required.'' The definition mirrors the definition 
used in the False Claims Act, and is the most widely used knowledge 
standard for civil health care fraud.

B. Changes to Part 1001

References to Medicare, Medicaid, and State Health Care Programs. 
Title, Sections 1001.1, 1001.2, 1001.101, 1001.102, 1001.201, 1001.301, 
1001.401, 1001.701, 1001.1301, 1001.1401, 1001.1901, 1001.3002, 
1001.3005
    We propose to change the title of part 1001 from ``Medicare and 
State health care programs'' to ``The Federal health care programs'' 
because the statutory basis for many of the OIG authorities in part 
1001 derives from section 1128 of the Act, which references ``Federal 
health care program,'' a defined term that includes (and is broader 
than) Medicare and State health care programs, as described above. 
Similarly, we propose removing references to Medicare and Medicaid in 
variations of the phrase ``Medicare, Medicaid and all other Federal 
health care programs'' throughout part 1001, because the statutorily 
defined term ``Federal health care program'' encompasses Medicare and 
Medicaid. We are proposing to remove the references to Medicare and 
Medicaid in the following sections: 1001.1(a), 1001.101(b), 
1001.401(c)(2)(ii), 1001.701(d)(2)(iv), 1001.1301(b)(2)(iii), 
1001.1401(b)(1), 1001.1401(b)(4); 1001.1901(a), 1001.1901(b)(1), 
1001.1901(c)(3), and 1001.1901(c)(5)(i), 1001.3002(b)(3), and 
1001.3005(a). We also propose corresponding technical changes to the 
phrases in those sections to account for the removal of the references 
to Medicare and Medicaid. Neither the removal of the references to 
Medicare and Medicaid, nor the technical conforming changes, are meant 
to change the meaning of the phrases to which the changes are made. 
Finally, we propose to modernize the pronouns throughout part 1001 and 
make corresponding grammatical edits.
Section 1001.2 Definitions
    We propose deleting the definition of ``Controlled substance'' from 
1001.2 because the relevant regulations at Sec. Sec.  1001.101(d) and 
1001.401 already indicate that the term ``controlled substance'' is 
being used as defined in Federal or State law, so the definition of 
``Controlled substance'' in Sec.  1001.2 is unnecessary. We also 
propose to move certain definitions from Sec.  1001.2 to Sec.  1000.10 
and modify them as described above.
Section 1001.101 Basis for Liability
    In Sec.  1001.101(c) and (d), we propose to remove the date 
limitation of August 21, 1996. The date limitation was included because 
when HIPAA amended section 1128 of the Act to add new exclusion 
authorities in sections 1128(a)(3) and (a)(4) of the Act, it specified 
that only convictions after August 21, 1996 (the date of HIPAA's 
enactment) would be subject to the exclusion authorities in those 
subsections. We are proposing to delete the date limitation in the 
corresponding regulatory authorities in Sec.  1001.101(c) and (d) 
because it is now obsolete. We believe that this change will not impact 
any future exclusions because virtually all criminal offenses before 
August 21, 1996, are now time-barred from prosecution.
    Section 1001.101(c)(2) states ``with respect to any act or omission 
in a health care program (other than Medicare and a State health care 
program). . . .'' We propose to make a technical change from the word 
``and'' to the word ``or'' in the parenthetical for grammatical 
accuracy. Similar language appears in Sec.  1001.201(a)(1)(ii). We 
propose the same technical change for that section for grammatical 
accuracy.
Aggravating Factors
    When OIG imposes an exclusion under section 1128(a), the minimum 
period of the exclusion is required by statute to be at least 5 years. 
However, under the regulations the length of an exclusion may be 
extended beyond the 5-year minimum period if certain aggravating 
factors, as defined in the regulations, are present. OIG exclusions 
under certain permissive authorities in section 1128(b) are for a 
period of 3 years but may be lengthened if certain aggravating factors 
(again, as defined in the regulations) are present. This section 
discusses proposed changes to these aggravating factors.
Financial Loss
    The financial loss aggravating factor at Sec.  1001.102(b)(1) 
currently reads as follows: ``The acts resulting in the conviction, or 
similar acts, caused, or were intended to cause, a financial loss to a 
government agency or program or to one or more other entities of 
$50,000 or more. (The entire amount of financial loss to such 
government agencies or programs or to other entities, including any 
amounts resulting from similar acts not adjudicated, will be considered 
regardless of whether full or partial restitution has been made).'' A 
similar aggravating factor appears in Sec. Sec.  1001.201 and 1001.301. 
We believe that the language of this factor should be consistent in 
each place it appears to avoid any question about whether court 
decisions interpreting it under one section should apply to its 
application under other sections. Therefore, we propose two technical 
changes to Sec.  1001.102(b)(1) to match the language of this factor as 
it appears in Sec. Sec.  1001.201(b)(2)(i) and 1001.301(b)(2)(viii): to 
move the phrase ``of $50,000 or more'' to after ``a financial loss,'' 
and to delete the phrase in the parenthetical ``to such government 
agencies or programs or to other agencies'' because it is duplicative 
of language outside the parenthetical. In Sec. Sec.  1001.201(b)(2)(i) 
and 1001.301(b)(2)(viii), we propose to delete the phrase ``or had a 
significant financial impact on program beneficiaries or other 
individuals'' because we propose adding this concept to a separate 
aggravating factor at Sec. Sec.  1001.201(b)(2)(iii) and 
1001.301(b)(2)(ii) as described in the next paragraph.
Impact on Beneficiaries and Other Individuals
    Section 1001.102(b)(3), applicable to mandatory exclusions, 
includes as an aggravating factor whether the acts that resulted in the 
conviction, or similar acts, had a significant adverse physical, 
mental, or financial impact on one or more program beneficiaries or 
other individuals. A similar aggravating factor applies to certain 
permissive exclusions under Sec. Sec.  1001.201 and 1001.301, but

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those sections do not reference ``financial'' impact. In Sec. Sec.  
1001.201(b)(2)(iii) and 1001.301(b)(2)(ii), we propose to add ``or 
financial'' to the aggravating factor relating to impact on program 
beneficiaries and other individuals. We believe it is appropriate to 
consider all impacts on beneficiaries under the same aggravating 
factor. This change would make this aggravating factor consistent with 
a similar factor applicable to mandatory exclusions under Sec.  
1001.102(b)(3) and would move the analysis of financial impact on 
beneficiaries from the aggravating factor relating to financial loss 
(discussed above) to the aggravating factor relating to impact on 
beneficiaries.
    In Sec.  1001.301(b)(2)(ii), the aggravating factor is applied to 
convictions related to obstruction of an investigation or audit under 
section 1128(b)(2) of the Act. We are proposing language changes to 
this factor because we believe it is important to apply similar factors 
consistently in all applicable exclusions. Consistent language ensures 
that judicial interpretations of certain language will be applicable 
wherever the language appears, and that the public can reasonably 
expect OIG to apply the factors consistently. Therefore, we propose to 
replace the words ``interference or obstruction'' with ``acts that 
resulted in the conviction.'' When referring to the conduct leading to 
a conviction, other sections of the regulation use the word ``acts,'' 
and interference or obstruction are the ``acts'' at issue in the 
exclusion authority related to convictions for obstruction.
    For the same reason, in Sec.  1001.401(c)(2)(ii), which applies 
this aggravating factor to misdemeanor convictions relating to 
controlled substances, we propose to reorder the words ``mental, 
physical or financial impact'' to ``physical, mental, or financial 
impact'' for consistency with the language as it appears in this factor 
in other sections of the regulation. Neither of these modifications are 
intended to change the substance of this aggravating factor in either 
Sec.  1001.301 or Sec.  1001.401; instead, these changes are intended 
to simplify the regulations by using consistent language across various 
sections where the same meaning is intended.
Convictions Involving Patient Abuse and Neglect
    Section 1001.102(b) includes the following as an aggravating 
factor: ``In convictions involving patient abuse or neglect, the action 
that resulted in the conviction was premeditated, was part of a 
continuing pattern of behavior, or consisted of non-consensual sexual 
acts.'' See Sec.  1001.102(b)(4). We propose a technical change to 
change ``action'' to ``acts'' for consistency with Sec.  1001.102(b)(1) 
through (3). We propose additional conforming and technical changes to 
Sec.  1001.102(b)(4) to account for the grammatical change from 
``action'' to ``acts'' so that the new language would read as follows: 
``In convictions involving patient abuse or neglect, the acts that 
resulted in the conviction were premeditated, were part of a continuing 
pattern of behavior, or consisted of non-consensual sexual acts.'' 
These changes to Sec.  1001.102(b)(4) are not meant to change the 
meaning of the phrases to which the changes are made.
Criminal, Civil, and Administrative Sanctions
    We propose to modify the aggravating factors relating to criminal, 
civil, and administrative sanctions. For mandatory exclusions, the 
regulations contain four separate factors that can be overlapping: 
``The convicted individual or entity has a prior criminal, civil or 
administrative sanction record'' (Sec.  1001.102(b)(6)); ``The 
individual or entity has previously been convicted of a criminal 
offense involving the same or similar circumstances'' (Sec.  
1001.102(b)(7)); ``The individual or entity has been convicted of other 
offenses besides those that formed the basis for the exclusion'' (Sec.  
1001.102(b)(8)); and ``The individual or entity has been the subject of 
any other adverse action by any Federal, State or local government 
agency or board if the adverse action is based on the same set of 
circumstances that serves as the basis for the imposition of the 
exclusion'' (Sec.  1001.102(b)(9)). We propose to modify these factors 
to clarify how OIG would consider other civil, criminal, or 
administrative actions involving the excluded person for purposes of 
setting the period of exclusion.
    First, we propose to modify Sec.  1001.102(b)(6) to replace the 
phrase ``a prior'' with ``other documented instances'' and replace 
``sanction record'' with ``wrongdoing.'' The proposed revised language 
would read as follows: ``The individual or entity has other documented 
instances of criminal, civil, or administrative wrongdoing.'' This 
proposed language is intended to encompass any documented instances of 
other criminal, civil, or administrative wrongdoing, including 
convictions that occurred before, at the same time as, or after the 
conviction forming the basis for exclusion. OIG may place greater 
emphasis on this aggravating factor in determining the appropriate 
period of exclusion if multiple documented instances exist (e.g., an 
individual or entity has a prior conviction, the individual or entity 
was found liable under the False Claims Act, or a licensing authority 
imposed a sanction on the individual's or entity's license to provide 
health care).
    Second, we propose to remove Sec.  1001.102(b)(7) and (8) because 
they are duplicative of proposed Sec.  1001.102(b)(6). Both a previous 
conviction of a criminal offense involving the same or similar 
circumstances (Sec.  1001.102(b)(7)) and a conviction for other 
offenses besides those that formed the basis for the exclusion (Sec.  
1001.102(b)(8)) would be included in the proposed aggravating factor 
for other documented instances of criminal, civil, or administrative 
wrongdoing in Sec.  1001.102(b)(6).
    Third, we propose to remove the aggravating factor relating to 
``any other adverse action'' in Sec.  1001.102(b)(9) because it would 
be unnecessary with the new proposed language in Sec.  1001.102(b)(6). 
Adverse actions by Federal, State, or local government agencies and 
boards would be included in other documented instances of 
administrative wrongdoing under proposed Sec.  1001.102(b)(6).
    For permissive exclusions, the regulations contain three separate 
aggravating factors relating to civil, criminal, and administrative 
sanctions that can be overlapping: (1) ``Whether the individual or 
entity has a documented history of criminal, civil, or administrative 
wrongdoing;'' (2) ``Whether the individual or entity has been convicted 
of other offenses besides those that formed the basis for the 
exclusion;'' and (3) ``Whether the individual or entity has been the 
subject of any other adverse action by any Federal, State, or local 
government agency or board if the adverse action is based on the same 
set of circumstances that serves as the basis for the imposition of the 
exclusion.'' See, e.g., Sec.  1001.201(b)(2)(v) through (vii). One or 
more of these three aggravating factors, with some language variations 
(as addressed below) also appear in Sec. Sec.  1001.301, 1001.401, 
1001.701, 1001.801, 1001.901, 1001.951, 1001.1101, 1001.1201, 
1001.1301, 1001.1552, 1001.1601, and 1001.1701. We intend the proposed 
changes described below to clarify how OIG would consider other civil, 
criminal, and administrative sanctions involving an excluded person for 
purposes of setting the length of exclusion.
    First, we propose to modify Sec. Sec.  1001.201(b)(2)(v), 
1001.301(b)(2)(v),

[[Page 95148]]

1001.401(c)(2)(iv), 1001.701(d)(2)(iii), 1001.801(c)(2)(iv), 
1001.901(b)(3), 1001.951(b)(1)(iii), 1001.1101(b)(3), 1001.1201(b)(4), 
1001.1301(b)(2)(iv), 1001.1401(b)(5), 1001.1552(d)(3), 
1001.1601(b)(1)(iv), and 1001.1701(c)(1)(v) to make the first of the 
three aggravating factors referenced above consistent in each section, 
as ``The individual or entity has other documented instances of 
criminal, civil, or administrative wrongdoing.'' The proposed language 
is intended to encompass any documented instances of other criminal, 
civil, or administrative wrongdoing, including convictions that 
occurred before, at the same time as, or after the conviction forming 
the basis for exclusion. OIG may place greater emphasis on this 
aggravating factor in determining the appropriate period of exclusion 
if multiple documented instances exist (e.g., an individual or entity 
has a prior conviction, the individual or entity was previously found 
liable under the False Claims Act, or a licensing authority imposed a 
sanction on the individual's or the entity's license to provide health 
care).
    Several of the permissive exclusion authority sections (Sec. Sec.  
1001.901, 1001.951, 1001.1101, 1001.1201, 1001.1301, 1001.1401, 
1001.1601, and 1001.1701) include a parenthetical stating that ``the 
lack of any prior record is to be considered neutral.'' In these 
sections, we propose to replace ``lack'' with ``absence'' to increase 
readability and ``prior record'' with ``such instances'' for 
consistency within the factor. In Sec.  1001.1401(b)(5), the proposed 
language would use ``hospital'' instead of ``individual or entity,'' as 
that section applies to hospitals only. In Sec. Sec.  
1001.1601(b)(1)(iv) and 1001.1701(c)(1)(v), the proposed language would 
use ``physician'' instead of ``individual or entity,'' as those 
sections apply to physicians only. The change from ``lack'' to 
``absence'' is not meant to change the meaning of the phrase to which 
the change is made. Lastly, in Sec. Sec.  1001.201(b)(2)(v), 
1001.301(b)(2)(v), 1001.401(c)(2)(iv), 1001.701(d)(2)(iii), and 
1001.801(c)(2)(iv), the proposed language would remove the word 
``whether'' at the beginning of this factor, as the word is extraneous. 
This technical change is not meant to change the meaning of the phrases 
to which the changes are made. In Sec.  1001.801(c)(2)(iv), which 
currently reads, ``Whether the individual or entity has a documented 
history of criminal, civil or administrative wrongdoing,'' we propose 
to remove the words ``Whether the individual or'' because this 
authority only applies to entities.
    Second, we propose to remove the second aggravating factor 
discussed above (whether the individual or entity has been convicted of 
other offenses besides those that formed the basis for the exclusion) 
found in Sec. Sec.  1001.201(b)(2)(vi), 1001.301(b)(2)(vi), and 
1001.401(c)(2)(v) as duplicative of the proposed aggravating factor in 
Sec. Sec.  1001.201(b)(2)(v), 1001.301(b)(2)(v), and 
1001.401(c)(2)(iv), described in the preceding paragraph. A conviction 
for other offenses besides those that formed the basis for the 
exclusion would be included in the proposed aggravating factor for 
other documented instances of criminal, civil, or administrative 
wrongdoing.
    We also propose to remove the aggravating factor relating to ``any 
other adverse action'' in Sec. Sec.  1001.201(b)(2)(vii), 
1001.301(b)(2)(vii), 1001.401(c)(2)(vi), 1001.701(d)(2)(v), 
1001.801(c)(2)(v), 1001.901(b)(4), and 1001.951(b)(iv) because it would 
be unnecessary. Adverse actions by Federal, State, or local government 
agencies and boards would be included in other documented instances of 
administrative wrongdoing under the proposed changes to Sec. Sec.  
1001.201(b)(2)(v), 1001.301(b)(2)(v), 1001.401(c)(2)(iv), 
1001.701(d)(2)(iii), 1001.801(c)(2)(iv), 1001.901(b)(3), 
1001.951(b)(1)(iii), 1001.1101(b)(3), 1001.1201(b)(4), 
1001.1301(b)(2)(iv), 1001.1552(d)(3), 1001.1601(b)(1)(iv), and 
1001.1701(c)(1)(v). We propose technical changes renumbering Sec.  
1001.901(b)(5) to Sec.  1001.901(b)(4) and technical changes to the 
other sections to account for the deletions described above.
Effect on Civil and Administrative Investigations
    The exclusion authority in section 1128(b)(2) of the Act and in 
Sec.  1001.301, in part, allows OIG to exclude for convictions for 
obstruction of or interference with investigations related to the use 
of funds received from the Federal health care programs. We propose to 
remove the aggravating factors at Sec.  1001.301(b)(2)(i) (the 
interference or obstruction caused the expenditure of significant 
additional time and resources) and Sec.  1001.301(b)(2)(iii) (the 
interference or obstruction also affected a civil or administrative 
investigation). We propose removing Sec.  1001.301(b)(2)(i) because in 
our experience the subjectivity of the language makes it challenging to 
apply consistently. We propose removing Sec.  1001.301(b)(2)(iii) 
because it is OIG's position that this exclusion authority already 
includes administrative and civil investigations in the scope of the 
term ``investigations.'' We are concerned that including a separate 
aggravating factor at Sec.  1001.301(b)(2)(iii) where the interference 
or obstruction affected a civil or administrative investigation could 
be misconstrued as suggesting that the exclusion authority does not 
include civil and administrative investigations. Also, the application 
of this factor in matters where the obstruction or interference 
occurred in a civil or administrative investigation would be 
duplicative of the statutory basis for exclusions under section 
1128(b)(2) of the Act. To avoid confusion, we propose to remove this 
aggravating factor. Lastly, we propose to renumber the aggravating 
factors consistent with the proposed changes described above.
Nature of Violations, Length of Scheme, and Impact on Beneficiaries
    We propose to modify the aggravating factor at Sec.  
1001.701(d)(2)(i) for exclusions related to excessive claims or 
furnishing of unnecessary or substandard care. The aggravating factor 
currently reads ``the violations were serious in nature, and occurred 
over a period of one year or more.'' We propose to replace the phrase 
``violations were serious in nature, and'' with ``conduct.'' The 
severity of the conduct is considered under the impact on beneficiaries 
aggravating factor at Sec.  1001.701(d)(2)(ii) (``the violations had a 
significant adverse physical, mental or financial impact on program 
beneficiaries or other individuals'') and does not also need to be 
separately considered under the length of scheme factor at Sec.  
1001.701(d)(2)(i). We also propose to modify the aggravating factor at 
Sec.  1001.701(d)(2)(ii), by replacing the word ``violations'' with 
``conduct.''
    Finally, we propose to modify the aggravating factor at Sec.  
1001.701(d)(2)(iv), which currently reads, ``The violation resulted in 
financial loss to Medicare, Medicaid, or any other Federal health care 
program of $15,000 or more'' to change ``violation'' to ``conduct,'' to 
increase the amount of financial loss from $15,000 to $50,000, and to 
change ``Medicare, Medicaid, or any other Federal health care program'' 
to ``any Federal health care program'' as described above.
    The use of the word ``conduct'' in this section reflects that Sec.  
1001.701 contemplates behavior that may not be easily characterized as 
a set of identifiable violations or acts, such as the provision of 
health care that, over time or in one instance, may be of a

[[Page 95149]]

quality that fails to meet professionally recognized standards of 
health care. Also, the change in the financial loss amount makes this 
section consistent with Sec. Sec.  1001.102(b)(1), 1001.201(b)(2)(i), 
and 1001.301(b)(2)(viii) (proposed to become Sec.  1001.301(b)(2)(i)) 
and reflects that the passage of time and inflation have increased the 
average amount of financial loss to the Federal health care programs in 
fraud schemes.
Serious Adverse Effect
    We propose technical changes to Sec.  1001.801(c)(2)(iii), for 
exclusions relating to the failure of health maintenance organizations 
to furnish medically necessary care. For Sec.  1001.801(c)(2)(iii), 
which currently reads, ``The entity's failure to provide a necessary 
item or service that had or could have had a serious adverse effect,'' 
we propose to remove ``that'' after ``service'' as an unnecessary word 
that causes the language to be confusing and grammatically incorrect 
(and therefore difficult to apply). The revised language would read: 
``The entity's failure to provide a necessary item or service had or 
could have had a serious adverse effect.''
Mitigating Factors
    When OIG is determining the length of exclusion for a mandatory 
exclusion with a minimum exclusion period of 5 years, if any of the 
aggravating factors described in the regulations are present and result 
in a period of exclusion longer than 5 years, OIG may consider the 
mitigating factors specified in the regulations as a basis for reducing 
the period of exclusion to no less than 5 years. For exclusions imposed 
under the permissive authorities with a baseline period of 3 years 
(Sec. Sec.  1001.201, 1001.301, and 1001.401) the presence of any of 
the mitigating factors specified in the regulations may provide a basis 
for shortening the period of exclusion. Proposed changes to some of 
these mitigating factors are described below.
    We propose to remove Sec. Sec.  1001.102(c)(1) and 
1001.201(b)(3)(i), which are mitigating factors for situations in which 
a person was convicted of three or fewer misdemeanors and caused less 
than $5,000 of loss. First, in our experience, this factor is very 
rarely present in mandatory exclusion cases that present aggravating 
factors warranting an exclusion period longer than the minimum period 
of 5 years. Second, we question whether it is appropriate to shorten an 
exclusion for conduct involving patient harm, a criminal scheme that 
extended beyond 1 year, an individual or entity with a record of 
additional sanctions, or conduct that warranted incarceration, simply 
because the person was convicted of three or fewer misdemeanors. Third, 
in the case of permissive exclusions under Sec.  1001.201 we believe 
this factor should be considered by OIG in determining whether a 
permissive exclusion should be imposed, but not whether to reduce the 
length of exclusion.
Reduced Culpability
    Sections 1001.102(c)(2), 1001.201(b)(3)(ii), and 1001.301(b)(3)(i) 
describe a mitigating factor that considers whether the record in the 
criminal proceedings, including sentencing documents, demonstrates that 
the court determined that the individual had a mental, emotional, or 
physical condition before or during the commission of the offense that 
reduced the individual's culpability.
    We propose to revise Sec. Sec.  1001.102(c)(2), 1001.201(b)(3)(ii), 
and 1001.301(b)(3)(i) to remove the phrase ``including sentencing 
documents'' because those documents are clearly part of the record in 
the criminal proceedings. We also propose to delete the phrase 
``mental, emotional or physical'' prior to ``condition'' to allow OIG 
to consider any condition that a court determines to have reduced an 
individual's culpability. We also propose to renumber the remaining 
paragraphs accordingly.
Addition of Mitigating Factor to Sec.  1001.401
    In Sec.  1001.401(c)(3), we propose to add a mitigating factor 
relating to whether a court determined that the excluded individual had 
a condition that reduced their culpability for the underlying criminal 
offense. Section 1001.401 permits OIG to exclude individuals or 
entities convicted of misdemeanors related to controlled substances, 
while Sec.  1001.101(d) mandates OIG exclude individuals and entities 
for felonies related to controlled substances. The mandatory authority 
permits consideration of a mitigating factor relating to whether a 
court determined that the excluded individual had a condition that 
reduced their culpability for the underlying criminal offense 
(currently Sec.  1001.102(c)(2)). We propose adding the same factor to 
Sec.  1001.401 because we believe it is appropriate to consider the 
same mitigating circumstances under the permissive authority and the 
mandatory authority.
Cooperation
    Sections 1001.102(c)(3), 1001.201(b)(3)(iii), 1001.301(b)(3)(ii), 
and 1001.401(c)(3) include a mitigating factor that reads as follows: 
``The individual's or entity's cooperation with Federal or State 
officials resulted in--(A) Others being convicted or excluded from 
Medicare, Medicaid, and all other Federal health care programs, (B) 
Additional cases being investigated or reports being issued by the 
appropriate law enforcement agency identifying program vulnerabilities 
or weaknesses, or (C) The imposition of a civil money penalty against 
others.'' We propose to revise Sec. Sec.  1001.102(c)(3), 
1001.201(b)(3)(iii), 1001.301(b)(3)(ii), and 1001.401(c)(3) to allow 
the mitigating factor of cooperation to be demonstrated based on the 
record in the criminal proceedings or a written statement by a 
government official that demonstrates that the individual's or entity's 
cooperation resulted in other individuals or entities being excluded, 
indicted, or otherwise charged, convicted, or investigated. Under the 
proposed language, the application of the cooperation mitigating factor 
would be based on documentation provided by an official involved in the 
underlying criminal proceedings rather than OIG's later independent 
assessment of the criminal proceedings. In OIG's experience, it is not 
always possible to obtain court records relating to cooperation because 
they may be sealed or otherwise unavailable at the time the exclusion 
is processed. In addition, the proposed language would broaden the 
first criteria for cooperation (i.e., the cooperation resulted in 
others being convicted or excluded) to include circumstances in which 
others have been indicted or otherwise charged or investigated. In 
OIG's experience, subjects have not relied on reports being issued by 
law enforcement agencies identifying program vulnerabilities or 
weaknesses, or civil monetary penalties being imposed against other 
individuals or entities as a basis to demonstrate cooperation, so we 
are proposing to remove those criteria.
Alternative Sources of Health Care Items and Services Mitigating Factor
    We propose to delete Sec. Sec.  1001.201(b)(3)(iv) and 
1001.301(b)(3)(iii), a mitigating factor applicable to exclusions 
related to misdemeanor convictions for health care fraud and 
convictions for obstruction. The factor allows OIG to consider whether 
alternative sources of the type of health care items or services 
furnished by the individual or entity are not available. We propose to 
remove this factor from these two sections because we believe this 
factor should be considered by OIG in determining

[[Page 95150]]

whether a permissive exclusion should be imposed and whether a waiver 
is appropriate but does not relate to the length of exclusion. 
Therefore, we propose removing this mitigating factor.
Few Violations Over a Short Period of Time Mitigating Factor
    We propose to modify Sec.  1001.701(d)(3), which currently reads: 
``Only the following factor may be considered mitigating and a basis 
for reducing the period of exclusion: Whether there were few violations 
and they occurred over a short period of time,'' to read as follows: 
``Only the following factor may be considered mitigating and a basis 
for reducing the period of exclusion: Whether there were few 
occurrences of the conduct, and the conduct occurred over a short 
period of time.'' This change makes this section consistent with the 
changes from ``violations'' to ``conduct'' in Sec.  1001.701(d)(2) 
discussed above.
Other Changes to Sec.  1001.102 (Length of Exclusion)
    Section 1001.102(d) describes the requirement, added by HIPAA, that 
OIG impose exclusions for at least 10 years or permanently in certain 
situations involving multiple criminal convictions. We propose to 
modify Sec.  1001.102(d) to remove the reference to August 5, 1997, in 
the flush language, as unnecessary because virtually all criminal 
offenses before August 5, 1997, are now time-barred from prosecution.
    We propose a technical modification to Sec.  1001.102(d)(1) and (2) 
to replace ``effected'' with ``imposed'' for consistency with Sec.  
1001.102(a), which references exclusions being imposed. The revision is 
not intended to change the meaning of Sec.  1001.102(d)(1) and (2). In 
Sec.  1001.102(d)(1), we propose to revise the parenthetical language 
(which allows OIG to lengthen exclusions beyond 10 years if aggravating 
and mitigating factors are present) to remove the reference to 
mitigating factors because only aggravating factors can be used to 
impose a period of more than 10 years.
Section 1001.401 Conviction Relating to Controlled Substances
    We propose removing Sec.  1001.401(b), which states ``the 
definition of controlled substance will be the definition that applies 
to the law forming the basis for the conviction,'' because it is 
unnecessary. This definition is already incorporated into Sec.  
1001.401(a) by the phrase ``as defined under Federal or State law.'' In 
other words, the definition of controlled substance will be based on 
the Federal or State law under which the individual or entity is 
convicted. We also propose corresponding technical changes renumbering 
Sec.  1001.401(c) to Sec.  1001.401(b).
Section 1001.501 Exclusions Based on the Loss or Suspension of a Health 
Care License
    We propose removing the aggravating factors outlined in Sec.  
1001.501(b)(2), which permit OIG to lengthen periods of exclusion based 
on the loss of the individual's or entity's health care license, and 
the mitigating factors outlined in Sec.  1001.501(b)(3), which could be 
considered by OIG if aggravating factors are applied. Because 
exclusions under section 1128(b)(4) of the Act are derivative of a 
licensing board action, OIG generally imposes exclusions under this 
section for the same period of time as that of the licensing board's 
action. As a result, an individual is generally eligible for 
reinstatement once they regain the health care license on which the 
exclusion is based. Our proposed removal of these aggravating and 
mitigating factors would make the regulations consistent with OIG's 
general practice of imposing exclusions under this section that are the 
same length as the licensing board actions. We propose corresponding 
technical changes by renumbering Sec.  1001.501(b)(4) to Sec.  
1001.501(b)(2) and modifying the flush language at Sec.  1001.501(b)(1) 
to remove language referring to Sec.  1001.501(b)(2).
    We are also proposing adding the word ``surrendered'' to Sec.  
1001.501(b)(1) so that this section addresses all the bases upon which 
an exclusion may be imposed under this section, which includes when an 
individual's or entity's license is revoked, suspended, surrendered, or 
otherwise lost. See section 1128(b)(4)(B) of the Act.
    We also propose changes to Sec.  1001.501(c). In 2017, OIG 
published a Final Rule implementing a process that allows individuals 
and entities excluded under section 1128(b)(4) of the Act to request 
reinstatement before regaining the license that was lost and on which 
the exclusion is based (referred to as ``early reinstatement'') under 
two sets of circumstances. 82 FR 4100, 4105 (Jan. 12, 2017). We propose 
modifications to both sets of circumstances.
    First, under Sec.  1001.501(c)(1), an individual or entity excluded 
under Sec.  1001.501 can apply for reinstatement if, after fully and 
accurately disclosing the circumstances surrounding the original 
license action that formed the basis for the exclusion, the individual 
or entity obtained a health care license in another State or a 
different health care license in the same State, or was allowed to 
retain a health care license in another State or a different health 
care license in the same State. We discuss proposed changes to this 
section below.
    Second, under Sec.  1001.501(c)(2), a person excluded under this 
section could request early reinstatement if they did not have a valid 
license to provide health care of any kind, based on OIG's 
consideration of several factors outlined in the regulation. One of 
these factors is the length of time the person has been excluded. The 
regulation states that OIG will apply a presumption against early 
reinstatement if the individual or entity has been excluded for less 
than 3 years and, if the revocation or suspension on which the 
exclusion was based was for a set period of longer than 3 years, the 
presumption against reinstatement would be coterminous with the period 
set by the licensing board.
    We propose modifying Sec.  1001.501(c)(2)(i) to state that, rather 
than applying a presumption against early reinstatement for persons who 
are excluded less than 3 years, OIG will not consider a request for 
early reinstatement submitted by an individual or entity if such 
individual or entity has been excluded for less than 3 years. We think 
this change is appropriate because the statute provides a 3-year 
baseline period in certain other permissive exclusion authorities 
(Sec. Sec.  1001.201, 1001.301, and 1001.401). The proposal would 
further modify the language in the second clause of the second sentence 
of Sec.  1001.501(c)(2)(i). This clause of Sec.  1001.501(c)(2)(i) 
states that if the action on which the exclusion is based is for a set 
period longer than 3 years, OIG will apply a presumption against early 
reinstatement ``coterminous with the period set by the licensing 
board.'' We propose to modify this language to state that when the 
action underlying the exclusion is for a set period longer than 3 
years, OIG will not consider a request for early reinstatement at any 
time before the expiration of the period set by the licensing board. We 
believe this change is appropriate because the period of exclusion 
should be at least as long as the period of the underlying action.
    At Sec.  1001.501(c)(3), the early reinstatement regulation 
includes a bar to early reinstatement for individuals excluded under 
this section whose license revocation or suspension was for reasons 
related to patient abuse or neglect. We propose to modify this 
prohibition. In OIG's experience, the bar has the unintended 
consequence of

[[Page 95151]]

creating a permanent period of exclusion for certain individuals and 
entities who have been excluded under Sec.  1001.501 due to a license 
revocation or suspension related to patient abuse or neglect, unless 
that individual or entity has regained the original license. This de 
facto permanent bar to reinstatement creates an imbalance between 
mandatory and permissive exclusion because individuals and entities 
that have been convicted of an offense related to the neglect or abuse 
of a patient and excluded under section 1128(a)(2) of the Act are 
eligible to apply for reinstatement at the end of their period of 
exclusion, which may be the statutory minimum period of 5 years. OIG 
recognizes that the loss of a professional license for issues related 
to patient abuse or neglect is significant and the circumstances of the 
loss of such license in those instances should be taken into 
consideration in determining whether early reinstatement should be 
granted. Therefore, we propose to modify Sec.  1001.501(c)(1)(i) and 
(ii) such that, in reviewing requests for early reinstatement, OIG will 
consider the circumstances that formed the basis for the exclusion, 
including whether such circumstances were related to patient abuse or 
neglect. In addition, we propose to modify this section to require 
that, in the case of a license revocation or suspension for reasons 
related to patient abuse or neglect, OIG will not consider a request 
for early reinstatement until the individual or entity has been 
excluded for at least 5 years for parity with those excluded for the 
statutory minimum period of 5 years for a conviction related to the 
neglect or abuse of a patient.
    We also propose several clarifying changes throughout Sec.  
1001.501(c). These changes are not intended to change the meaning of 
Sec.  1001.501 but are intended to make the language clearer based upon 
our experience implementing this section since 2017. We propose to add 
references to ``entity'' every time the word ``individual'' is used in 
Sec.  1001.501 to clarify that, consistent with section 1128(b)(4) of 
the Act, entities as well as individuals are subject to exclusion under 
this section. In Sec.  1001.501(c)(1)(iii), we propose replacing 
``Evidence that'' with ``Documentation from'' to clarify that OIG 
expects documentation from the second licensing authority and not 
evidence from a proceeding with that authority. We also propose adding 
``indicating that it'' after ``second licensing authority'' to clarify 
that the documentation must indicate that the licensing authority knew 
of the circumstances surrounding the action that formed the basis for 
the exclusion. In Sec.  1001.501(c)(1)(iv), we propose removing 
``satisfactorily'' and adding ``to OIG's satisfaction'' after ``has 
demonstrated'' to clarify that whether the individual or entity has 
resolved any underlying problem is in the opinion of OIG and not the 
excluded party. We propose a nearly identical change in Sec.  
1001.501(c)(2)(iii) for the same reason.
Section 1001.601 Exclusion or Suspension Under a Federal or State 
Health Care Program
    We propose a technical change to Sec.  1001.601(a)(1)(ii) to offset 
the phrase ``for reasons bearing on the individual's or entity's 
professional competence, professional performance or financial 
integrity,'' as it applies to both circumstances under Sec.  
1001.601(a)(1). As currently written, the phrase could be read to 
modify only Sec.  1001.601(a)(1)(ii), referring to actions by State 
health care programs, but the statute clearly requires that this clause 
apply to all exclusions under section 1128(b)(5) of the Act.
    We propose revising Sec.  1001.601(a)(2) by replacing the phrase 
``is intended to cover'' with ``means'' to clarify that ``otherwise 
sanctioned'' is limited to the definition provided (and does not 
include anything else). We also propose adding the phrase ``or 
otherwise sanctioned'' to Sec.  1001.601(b)(1) for consistency with 
Sec.  1001.601(a)(1) and section 1128(b)(5) of the Act, and changing 
the word ``from'' to ``by'' for grammatical accuracy.
    We propose removing the aggravating and mitigating factors outlined 
in Sec.  1001.601(b)(2) and (3), which permit OIG to lengthen periods 
of exclusion based on an individual's or entity's exclusion, 
suspension, or other sanction by a Federal or State health care 
program, so that all exclusions under this section would be coterminous 
with the period of time that the individual or entity is excluded, 
suspended, or otherwise sanctioned by the applicable Federal or State 
health care program. Because exclusions under section 1128(b)(5) of the 
Act are derivative of a Federal or State health care program action, 
OIG generally imposes exclusions under this section for the same period 
of time as the agency's action. As a result, individuals and entities 
are generally eligible to apply for reinstatement once the individual 
or entity is allowed to resume participation in the Federal or State 
health care program under which the individual or entity was previously 
suspended, excluded, or sanctioned. Our proposed removal of these 
aggravating and mitigating factors would make the regulations 
consistent with OIG's general practice under this section and clarifies 
our intention. Due to the removal of Sec.  1001.601(b)(2) and (3), we 
propose a technical change renumbering Sec.  1001.601(b)(4) to Sec.  
1001.601(b)(2).
Section 1001.901 False or Improper Claims
    In Sec.  1001.901(b), we propose to change ``will'' to ``may'' to 
reflect OIG's discretion to consider only the factors that are 
appropriate according to the facts and circumstances of each case and 
to reflect that not every factor will be present in every case.
Section 1001.951 Fraud and Kickbacks and Other Prohibited Activities
    We propose several changes to Sec.  1001.951 to align the factors 
with those found in the proposed revisions to Sec.  1001.901. These two 
sections should align because both authorities are based on section 
1128(b)(7) of the Act and require OIG to affirmatively prove fraud, 
kickbacks, or other prohibited activities. Because neither authority is 
derivative of other actions taken by adjudicative bodies, aligning the 
factors for determining length of exclusions under Sec.  1001.951 with 
the factors under Sec.  1001.901 would create parity and provide OIG 
discretion to consider relevant facts and circumstances under both 
authorities that are not derivative of the actions of other courts or 
adjudicative bodies, as is appropriate for derivative exclusions.
    Specifically, to align Sec. Sec.  1001.951 and 1001.901, we are 
proposing a series of revisions and technical changes, which 
collectively will result in both authorities having the same factors 
for determining length of exclusion, as follows. We propose to remove 
the numbering for Sec.  1001.951(b)(1) to make it flush language and to 
revise the language to mirror the proposed language in proposed Sec.  
1001.901(b) by changing ``will'' to ``may.'' We propose to modify the 
numbering of the factors to change the factor at Sec.  
1001.951(b)(1)(i) to Sec.  1001.951(b)(1) and to modify the language to 
mirror Sec.  1001.901(b)(1). The proposed language would read: ``The 
nature and circumstances surrounding the actions that are the basis for 
liability, including the period of time over which the acts occurred, 
the number of acts, whether there is evidence of a pattern and the 
amount claimed.''
    We propose to delete the factor at Sec.  1001.951(b)(1)(ii), which 
is not a factor in Sec.  1001.901(b). We propose to add a factor at new 
Sec.  1001.951(b)(2), ``the

[[Page 95152]]

degree of culpability,'' which appears at Sec.  1001.901(b)(2). We 
propose to change the numbering of Sec.  1001.951(b)(1)(iii) (related 
to other documented instances of wrongdoing) to Sec.  1001.951(b)(3) 
and modify its language consistent with proposed Sec.  1001.901(b)(3) 
and the other places this language appears in part 1001 as described 
above. We propose to add new Sec.  1001.951(b)(4), ``Other matters as 
justice may require,'' consistent with the proposed Sec.  
1001.901(b)(4). We further propose to remove the factors at Sec.  
1001.951(b)(1)(iv) and (v) and remove the mitigating factors at Sec.  
1001.951(b)(2) to align Sec.  1001.951 with Sec.  1001.901. Removal of 
mitigating factors under this section is appropriate because the 
factors proposed for Sec.  1001.951 allow OIG to consider all the 
relevant facts and circumstances, aggravating and mitigating, in 
setting lengths of exclusion under this section.
Section 1001.1301 Failure To Grant Immediate Access
    This section provides OIG with the authority to exclude individuals 
and entities that fail to grant immediate access to, among others, OIG 
or a State MFCU. Section 1001.1301(a)(2) currently defines a ``failure 
to grant immediate access'' for purposes of paragraphs (a)(1)(i) and 
(ii) of this section (applying to requests for immediate access by the 
Secretary or a State survey agency) as ``the failure to grant access at 
the time of a reasonable request or to provide a compelling reason why 
access may not be granted.'' The regulation does not explain what 
circumstance would constitute ``a compelling reason.''
    We propose to revise the definition of ``failure to grant immediate 
access'' in Sec.  1001.1301(a)(2) to specify what would constitute ``a 
compelling reason,'' namely, that the requested material does not exist 
or is not at the location where the request is presented. The proposed 
language is consistent with OIG's general practice in evaluating 
immediate access requests.
    Section 1001.1301(a)(3) provides a separate definition of ``failure 
to grant immediate access'' for purposes of paragraphs (a)(1)(iii) and 
(iv) of the section (applying to requests for immediate access by OIG 
and State MFCUs) as ``(i) The failure to produce or make available for 
inspection and copying the requested material upon reasonable request, 
or to provide a compelling reason why they cannot be produced, within 
24 hours of such request, except when the OIG or State Medicaid Fraud 
Control Unit (MFCU) reasonably believes that the requested material is 
about to be altered or destroyed, or (ii) When the OIG or MFCU has 
reason to believe that the requested material is about to be altered or 
destroyed, the failure to provide access to the requested material at 
the time the request is made.'' We propose to revise this section so 
that the definition of ``failure to grant immediate access'' for 
purposes of Sec.  1001.1301(a)(1)(iii) and (iv) is consistent with the 
proposed definition of ``failure to grant immediate access'' for 
purposes of Sec.  1001.1301(a)(1)(i) and (ii). The impact of this 
change would be that all immediate access requests will require 
production of materials at the time the request is made unless the 
records do not exist or are in a different location and would eliminate 
the analysis of whether records are about to be altered or destroyed. 
We believe this change is appropriate because it is consistent with the 
common meaning of ``immediate'' as requiring something instantly or 
without delay, and it removes the burden from the requesting agency to 
determine whether records may be altered or destroyed in the 
intervening 24 hours, which may be impossible to know.
Section 1001.1501 Default of Health Education Loan or Scholarship 
Obligations
    Section 1128(b)(14) of the Act, which authorizes OIG to exclude 
individuals who default on repayments of health education loan or 
scholarship obligations, or the obligations of any loan repayment 
program, requires OIG to take into account ``access of beneficiaries to 
physician services for which payment may be made under title XVIII or 
XIX.'' \1\ Section 1001.1501(a)(3) of the regulations expands this 
requirement to access to physicians' services for which payment may be 
made under Medicare, Medicaid, or other Federal health care programs, 
expanding OIG's obligations beyond Medicare and Medicaid. As a result, 
we propose modifying Sec.  1001.1501(a)(3) to limit the requirement in 
this section to the Medicare and Medicaid programs, consistent with 
section 1128(b)(14) of the Act. We propose a technical modification to 
Sec.  1001.1501(a)(3) to replace ``physicians' services'' with 
``physician services'' for consistency with section 1128(b)(14) of the 
Act. The revision is not intended to change the meaning of Sec.  
1001.1501(a)(3).
---------------------------------------------------------------------------

    \1\ Section 1128(b)(14) has been used by OIG to exclude 
borrowers that have defaulted on loans from the Health Education 
Assistance Loan (HEAL) Program. The HEAL program is a program of 
Federal insurance of educational loans that were made to graduate 
students in the fields of medicine, osteopathic medicine, dentistry, 
veterinary medicine, optometry, podiatric medicine, pharmacy, public 
health, chiropractic, health administration, and clinical 
psychology. See 34 CFR 681.1. Authorization to fund new HEAL loans 
expired September 30, 1998. 82 FR 53374 (Nov. 15, 2017). A list of 
borrowers currently in default can be found at 86 FR 54950 (Oct. 5, 
2021).
---------------------------------------------------------------------------

    Next, Sec.  1001.1501(b) indicates that an individual excluded 
under this section will remain excluded until OIG receives notice that 
the individual has cured the payment default that provided the basis 
for the exclusion, at which time OIG notifies the individual that the 
individual is eligible to apply for reinstatement. However, it has been 
OIG's longstanding practice to allow individuals excluded under this 
section to participate in the Federal health care programs prior to 
their health education loan or scholarship obligation being completely 
repaid if such individual has entered into a repayment agreement with 
the administrator of the health education loan, scholarship, or loan 
repayment program following an initial payment default. We propose 
modifying Sec.  1001.1501(b) so that an individual who has entered into 
such repayment agreements would be eligible to obtain a ``stay'' of 
their exclusion for as long as the individual remains in compliance 
with the terms of the agreement. While this ``stay'' is in place, the 
individual would be eligible to participate in the Federal health care 
programs. However, if OIG receives notice from the administrator of the 
health education loan, scholarship, or loan repayment program that the 
individual is no longer in compliance with the repayment agreement, the 
``stay'' would be lifted and the exclusion would be given full effect. 
This proposed change would make the regulations consistent with OIG's 
current practice.
Section 1001.1551 Exclusion of Individuals With Ownership or Control 
Interest in Sanctioned Entities
    We propose modifying Sec.  1001.1551(b)(2) to change ``Medicare, 
Medicaid and all other Federal health care programs'' to ``Medicare or 
a State health care program'' and to remove the phrase ``terminated 
or'' for consistency with the language of section 1128(b)(15), which 
does not reference all Federal health care programs or use the word 
``terminated.''
    We also propose modifying Sec.  1001.1551(c)(1) to clarify that the 
length of the individual's term of exclusion will be the same as that 
of the sanctioned entity, regardless of whether the individual 
terminates their relationship with the sanctioned entity after they 
have been excluded. For example, if Entity A is excluded by OIG

[[Page 95153]]

for a period of 5 years and Person A (who has an ownership interest in 
Entity A) is excluded by OIG under section 1128(b)(15) of the Act 6 
months later, the term of Person A's exclusion will be for 5 years, 
starting from the effective date of Person A's exclusion. Also, Person 
A will remain excluded for the entire 5-year term even if Person A 
divests their ownership interest in Entity A at any point during the 5-
year term of Person A's exclusion. It would be inequitable for an 
individual with knowledge of the conduct that resulted in an entity 
being excluded by OIG and who had an ownership interest in the entity 
at the time the conduct occurred to be able to avoid exclusion by 
divesting their interest after the entity's term of exclusion is 
imposed.
Section 1001.1553 Establishment of a New Permissive Exclusion Authority
    Section 6(d) of MSIAA granted a new permissive exclusion authority 
to the Secretary under Section 1128(b) of the Act. Under the newly 
enacted section 1128(b)(17) of the Act, the Secretary may exclude any 
manufacturer or an officer, director, agent, or managing employee of 
such manufacturer that knowingly misclassifies a covered outpatient 
drug under an agreement under section 1927 of the Act, knowingly fails 
to correct such misclassification, or knowingly provides false 
information related to drug pricing, drug product information, or data 
related to drug pricing or drug product information. Accordingly, we 
propose adding a new Sec.  1001.1553 entitled ``Knowingly 
misclassifying covered outpatient drugs.'' Under this proposal, OIG 
would have the authority to exclude any manufacturer (as defined in 
section 1927 of the Act) or an officer, director, agent, or managing 
employee of such manufacturer that knowingly misclassifies a covered 
outpatient drug, knowingly fails to correct such misclassification, or 
knowingly provides false information to HHS related to drug pricing, 
drug product information, or data related to drug pricing or drug 
product information. This exclusion authority applies to covered 
outpatient drugs supplied by manufacturers under agreements under 
section 1927 of the Act in effect on or after April 18, 2019. The 
definitions proposed for Sec.  1000.10 would apply to the terms 
``agent,'' ``managing employee,'' and ``knowingly.''
    Under this proposal, we would determine the length of exclusion 
based on five factors consistent with OIG's other non-derivative 
exclusion authorities in Sec. Sec.  1001.901 and 1001.951: the nature 
and circumstances surrounding the actions that are the basis for 
liability, including the period of time over which the acts occurred, 
the number of acts, whether there is evidence of a pattern, and the 
amount claimed; the degree of culpability; whether the entity has other 
documented instances of criminal, civil, or administrative wrongdoing; 
or other matters as justice may require. Because this authority 
requires OIG to prove that the manufacturer knowingly misclassified a 
drug or made false statements and is not derivative of actions taken by 
other adjudicative bodies, we believe it is appropriate to apply the 
same factors to this authority that apply to Sec. Sec.  1001.901 and 
1001.951, which are also non-derivative authorities.
Section 1001.1801 Waivers of Exclusions
    We propose deleting the cross-reference to the statutory definition 
of Federal health care program in Sec.  1001.1801(a) as unnecessary 
because the term ``Federal health care program'' is defined in Sec.  
1000.10. We also propose revising Sec.  1001.1801(d), which currently 
states that ``if the basis for the waiver ceases to exist, the waiver 
will be rescinded, and the individual or entity will be excluded for 
the period remaining on the exclusion, measured from the time the 
exclusion would have been imposed if the waiver had not been granted,'' 
to state: ``If the basis for the waiver ceases to exist, the waiver 
will be rescinded.'' The existing reference to ``the time the exclusion 
would have been imposed if the waiver had not been granted'' implies 
that the waiver stops the exclusion from being imposed; however, 
exclusions typically are imposed prior to a waiver being put in place. 
We do not intend for the proposal to change the current meaning of the 
original provision, which is: If the basis for a waiver ceases to 
exist, the waiver will be rescinded, and the existing exclusion will 
then be in effect.
Section 1001.1901 Scope and Effect of Exclusion
    At the end of Sec.  1001.1901(a), we propose to correct a cross-
reference to the definition of ``Federal health care programs'' from 
Sec.  1001.2 to Sec.  1000.10 because the definition does not appear in 
Sec.  1001.2. We also propose inserting the phrase ``Federal health 
care'' prior to the word ``program'' and ``programs'' in Sec.  
1001.1901(b)(2) and (4), respectively, for clarity. Finally, we propose 
deleting the parenthetical in Sec.  1001.1901(c)(3)(iii) because it 
refers to an exemption that was limited to the period between October 
2, 1998, and October 4, 1999, and therefore is no longer applicable. 
None of the proposed changes to Sec.  1001.1901 are intended to change 
the meaning of the provisions of that section.
Section 1001.2001 Notice of Intent To Exclude
    Under the current regulatory text in this section, OIG is only 
required to issue a notice of intent to exclude with respect to 
mandatory exclusions under section 1128(a) of the Act if the proposed 
period of exclusion is for longer than 5 years. We propose modifying 
Sec.  1001.2001(a) to provide that OIG will issue a notice of intent to 
exclude for all mandatory and permissive exclusions, of any length, 
that are proposed under subpart B or C of part 1001. The notice of 
intent to exclude affords individuals and entities the opportunity to 
provide OIG with information related to the proposed exclusion before 
it goes into effect and, in our experience, the process allows OIG to 
impose exclusions after considering as much relevant information as 
possible. We therefore believe it should apply to all exclusions under 
subparts B and C of part 1001.
    We also propose modifying this section to indicate that a notice of 
intent to exclude will be deemed to have been received 7 days after the 
date of the notice (instead of 5 days, as currently specified), based 
on changes in service standards and expected delivery times for First-
Class Mail.
Sections 1001.2004 Through 1001.2006 Notice to State Agencies, State 
Licensing Agencies, and Others Regarding Exclusion
    We propose to clarify that the notice to State Medicaid program 
agencies, State licensing authorities, and others required by 
Sec. Sec.  1001.2004, 1001.2005, and 1001.2006 is made by OIG, not by 
HHS. In Sec.  1001.2005(a), we propose to remove the words ``from 
participation'' and the parenthetical ``(or directed to be excluded),'' 
and to reword the sentence so that this section now reads as follows: 
``OIG will promptly notify the appropriate State(s) or local agencies 
or authorities having responsibility for the licensing or certification 
of an excluded individual or entity of the facts and circumstances of 
the exclusion.'' These changes are not intended to change the meaning 
of this section.
    Section 1001.2006 currently provides that OIG will give notice of 
an exclusion and the effective date to the public, beneficiaries, and 
as appropriate to various agencies and entities specified in the 
regulation including: (1) any entity in which the excluded individual

[[Page 95154]]

is known to be serving as an employee, administrator, or operator, or 
in which the individual is serving in any other capacity and is 
receiving payment for providing services; (2) medical societies and 
other professional organizations; and (3) other Federal agencies or 
organizations, as appropriate. However, many of these notifications are 
not required by the statute and it is impractical for OIG to provide 
individual notice of each exclusion imposed by OIG to all the entities 
listed in Sec.  1001.2006. Furthermore, OIG has made exclusion 
information available online since at least 1999. As a result, we 
propose to modify Sec.  1001.2006(a) by stating that OIG will give 
notice of exclusions to the public, beneficiaries, and others via 
monthly online updates to the List of Excluded Individuals/Entities 
(commonly referred to as ``the LEIE''), which reflects OIG's 
longstanding practice.
Section 1001.2007 Appeal of Exclusions
    We propose a few technical changes in Sec.  1001.2007. First, in 
Sec.  1001.2007(a)(1)(i) we propose to change the word ``sanction'' to 
``exclusion'' for consistency with other parts of this section and 
because the only relevant actions under this section are exclusions. 
Second, we propose to replace the word ``should'' with ``shall'' in 
Sec.  1001.2007(a)(3) to reflect that certain information must be 
included in the request for a hearing. For example, Sec.  1005.2(d) 
requires a request for a hearing to contain certain information, and 
Sec.  1005.2(e)(4) requires dismissal of a hearing request that fails 
to raise any issues which may be properly addressed in a hearing. 
Third, in Sec.  1001.2007(b), we propose to add ``the'' before ``notice 
of exclusion'' and delete ``such'' before ``a hearing.'' Finally, in 
Sec.  1001.2007(d) we propose to change ``Government'' to 
``government.'' These changes are not intended to change the meaning of 
this section.
Sections 1001.3001 Through 1001.3002 Timing and Method of Request and 
Basis for Reinstatement
    We propose making changes to Sec. Sec.  1001.3001(a)(1) and 
1001.3002(b)(5) to replace references to ``program provider number'' 
with ``Federal health care program provider number'' for clarity.
Section 1001.3003 Approval of Request for Reinstatement
    We propose changes to Sec.  1001.3003 to track the statutory 
language in section 1128(g) of the Act, which requires that notice of 
reinstatement be provided to each appropriate State agency 
administering or supervising the administration of each State health 
care program and requires notice to the Attorney General in the case of 
exclusions under section 1128(a) of the Act to which section 304(a)(95) 
of the Controlled Substances Act may apply. We also are proposing to 
revise this section to state that OIG will notify the public and others 
through posting of reinstatement information on OIG's website. We are 
proposing to limit the direct notice requirements for reinstatements to 
reduce the burden on OIG and to reflect OIG's longstanding practice of 
providing general notice of all reinstatements through the posting of a 
monthly reinstatement file on OIG's public website. Lastly, we are 
proposing to modify Sec.  1001.3003(b) to clarify that a reinstatement 
by OIG does not require any other Federal health care program to 
reinstate such individual or entity into that program if the program 
has taken an action against the individual or entity under its own 
authority. This proposal is intended to clarify the language of this 
section and is not intended to change the substance of the provision. 
The current language, which states that a reinstatement by OIG has no 
effect if a Federal health care program has imposed a longer period of 
exclusion under its own authorities, is imprecise and confusing because 
a reinstatement by OIG has effect independent of the actions of 
individual Federal health care programs.
Section 1001.3004 Denial of Request for Reinstatement
    We propose several changes to Sec.  1001.3004 to better reflect 
OIG's current processes regarding denial of reinstatement appeal 
requests and to clarify for the public the process by which an 
individual or entity may appeal the denial of their request for 
reinstatement. We propose to modify Sec.  1001.3004(a) to reflect a 
three-step process when a request for reinstatement is denied. First, 
OIG would send a written notice to the individual or entity notifying 
them that their request for reinstatement has been denied and the basis 
for the denial. Second, the individual or entity would then have 30 
days from the date of the notice of the reinstatement denial to submit 
a written request to appeal the denial. Third, once the individual or 
entity has submitted a written appeal request, the individual would 
have 30 days from the date of the written request for appeal to submit: 
(1) any written argument or additional evidence the individual or 
entity has regarding the basis for the denial of reinstatement 
identified in the denial notice, or (2) a written request to present 
oral argument or any additional evidence to an OIG official. The 
proposed language would provide requesters with an additional 30 days 
to submit the documentary evidence or the request for oral argument 
allowed under Sec.  1001.3004(a).
    We also propose to clarify Sec.  1001.3004(b) to indicate that OIG 
will only issue a decision regarding a reinstatement denial if a 
written argument or additional evidence are submitted to OIG or any 
oral argument or additional evidence are presented to an OIG official. 
The current language may incorrectly suggest that a decision might be 
issued at the end of the 30-day appeal period even if no written or 
oral argument and additional evidence are submitted or presented 
regarding the denial of the request for reinstatement.
Section 1001.3005 Withdrawal of Exclusion for Reversed or Vacated 
Decisions
    We propose a technical change to clarify Sec.  1001.3005(b) by 
deleting the words ``CMS and other'' before Federal health care 
programs (because the Centers for Medicare & Medicaid Services (CMS) is 
not itself a Federal health care program but the agency that 
administers Medicare and Medicaid). Finally, we propose to change the 
word ``exclusion'' to ``action'' in Sec.  1001.3004(d) to reflect the 
fact that all other Federal health care programs do not use the term 
``exclusion.''

VI. Regulatory Impact Statement

    We have examined the impacts of this rulemaking as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), Executive Order 14094 entitled ``Modernizing 
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act 
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the 
Social Security Act, section 202 of the Unfunded Mandates Reform Act of 
1995 (March 22, 1995; Pub. L. 104-4), and Executive Order 13132 on 
Federalism (August 4, 1999).

Executive Order Nos. 12866 13563, and 14094

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and

[[Page 95155]]

equity). The Executive Order 14094 entitled ``Modernizing Regulatory 
Review'' (hereinafter, the Modernizing E.O.) amends section 3(f)(1) of 
Executive Order 12866 (Regulatory Planning and Review). A Regulatory 
Impact Analysis (RIA) must be prepared for significant rules with 
significant effects ($200 million or more in any 1 year).
    Based on our estimates, OMB's Office of Information and Regulatory 
Affairs (OIRA) has determined this rulemaking is not significant per 
section 3(f)(1) as measured by the $200 million or more in any given 
year. This is not a major rule as defined at 5 U.S.C. 804(2); it is not 
economically significant because it does not reach that economic 
threshold 1 year.
    This proposed rule is designed to propose implementation of one, 
new statutory provision consisting of a new exclusion authority. It is 
also designed to clarify existing regulatory requirements. The vast 
majority of providers and the Federal health care programs would be 
minimally, if at all, impacted by these proposed revisions.
    The proposed changes to the exclusion regulations would have little 
economic impact. On average per year, OIG excludes approximately 3,000 
individuals and entities, defends 100 appeals of exclusions, and hears 
2 reinstatement denial appeals. Historically, one waiver of exclusion 
has been requested and granted in any given year. Thus, we believe that 
any aggregate economic effect of the proposed modifications would be 
minimal and the likely aggregate economic effect of these proposed 
modifications to the regulations would be significantly less than the 
monetary thresholds under Executive Order 12866, as amended by 
Executive Order 14094, and 5 U.S.C. 804(2).

Regulatory Flexibility Act

    The RFA and the Small Business Regulatory Enforcement and Fairness 
Act of 1996, which amended the RFA, require agencies to analyze options 
for regulatory relief of small businesses. For purposes of the RFA, 
small entities include small businesses, nonprofit organizations, and 
government agencies. Providers are considered small entities by having 
revenues of less than $8.0 million to $41.5 million in any 1 year. For 
purposes of the RFA, most physicians and suppliers are considered small 
entities.
    The aggregate economic impact of the exclusion provisions on small 
entities would be minimal. The rulemaking directly impacts small 
entities that may be excluded by clarifying how OIG determines 
exclusion lengths, waivers, reinstatement, and affirmative exclusion. 
It also codifies exclusion authorities added to section 1128 of the Act 
by MSIAA, adding clarity for members of the health care community 
regarding the scope of OIG's actions. Because the rulemaking adds 
transparency to OIG's process and implements exclusion authorities 
designed to protect the Federal health care programs and their 
beneficiaries from untrustworthy individuals and entities, we believe 
any resulting impact will be positive for the health care community. In 
summary, this notice of proposed rulemaking will not have a significant 
impact on the operations of a substantial number of small providers and 
a regulatory flexibility analysis is not required for this rulemaking.

Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (UMRA) generally requires 
that each agency conduct a cost-benefit analysis, identify and consider 
a reasonable number of regulatory alternatives, and select the least 
costly, most cost-effective, or least burdensome alternative that 
achieves the objectives of the rule before promulgating any proposed or 
final rule that includes a Federal mandate that may result in 
expenditures of more than $100 million (adjusted for inflation) in at 
least one year by State, local, and Tribal governments, or by the 
private sector. Each agency must also seek input from State, local, and 
Tribal governments. The current threshold after adjustment for 
inflation using the Implicit Price Deflator for the Gross Domestic 
Product is $183 million, reported in 2023 dollars. This proposed rule, 
if finalized, would not result in an unfunded mandate in any year that 
meets or exceeds this amount.

Executive Order 13132

    Executive Order 13132, Federalism, establishes certain requirements 
that an agency must meet when it promulgates a rule that imposes 
substantial direct requirements or costs on State and local 
governments, preempts State law, or otherwise has federalism 
implications. In reviewing this rulemaking under the threshold criteria 
of Executive Order 13132, we have determined that this proposed rule 
would not significantly affect the rights, roles, or responsibilities 
of State or local governments.

VII. Paperwork Reduction Act

    These proposed changes impose no new information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

List of Subjects in 42 CFR Parts 1000 and 1001

    Administrative practice and procedure, Fraud, Grant programs--
health, Health facilities, Health professions, Maternal and child 
health, Medicaid, Medicare.

    For the reasons stated in the preamble, OIG proposes to amend 42 
CFR parts 1000 and 1001 as set forth below:

PART 1000--INTRODUCTION; GENERAL DEFINITIONS

0
1. The authority citation to part 1000 continues to read as follows:

    Authority:  42 U.S.C. 1320 and 1395hh.

0
2. Revise and republish Sec.  1000.10 to read as follows:


Sec.  1000.10  General definitions.

    In this chapter, unless the context indicates otherwise--
    Act means the Social Security Act, and titles referred to are 
titles of that Act.
    Administrator means the Administrator, Centers for Medicare & 
Medicaid Services (CMS), formerly the Health Care Financing 
Administration (HCFA).
    Agent means any person who has express or implied authority to 
obligate or act on behalf of an entity.
    ALJ means an Administrative Law Judge.
    Beneficiary means any individual eligible to have benefits paid to 
the beneficiary, or on the beneficiary's behalf, under Medicare or any 
State health care program.
    CFR stands for Code of Federal Regulations.
    CMS stands for Centers for Medicare & Medicaid Services, formerly 
the Health Care Financing Administration (HCFA).
    Department means the Department of Health and Human Services (HHS), 
formerly the Department of Health, Education, and Welfare.
    Directly, as used in the definition of ``furnished'' in this 
section, means the provision or supply of items and services by 
individuals or entities (including items and services provided or 
supplied by them but manufactured, ordered, or prescribed by another 
individual or entity) who request or receive payment from Medicare, 
Medicaid, or other Federal health care programs.
    ESRD stands for end-stage renal disease.

[[Page 95156]]

    Exclusion means that items and services furnished, ordered, or 
prescribed by a specified individual or entity will not be reimbursed 
under Medicare, Medicaid, or any other Federal health care programs 
until the individual or entity is reinstated by OIG.
    Federal health care program means any plan or program that provides 
health benefits, whether directly, through insurance, or otherwise, 
which is funded directly, in whole or in part, by the United States 
Government (other than the Federal Employees Health Benefits Program), 
or any State health care program as defined in this section.
    FR stands for Federal Register.
    Furnished refers to items or services provided or supplied, 
directly or indirectly, by any individual or entity.
    HHS stands for the Department of Health and Human Services.
    HHA stands for home health agency.
    HMO stands for health maintenance organization.
    ICF stands for intermediate care facility.
    Indirect ownership interest includes an ownership interest through 
any other entity or entities that ultimately have an ownership interest 
in the entity at issue. (For example, an individual has a 10-percent 
ownership interest in the entity at issue if they have a 20-percent 
ownership interest in a corporation that wholly owns a subsidiary that 
is a 50-percent owner of the entity at issue.)
    Indirectly, as used in the definition of ``furnished'' in this 
section, means the provision or supply of items and services 
manufactured, distributed, supplied, or otherwise provided by 
individuals or entities that do not directly request or receive payment 
from Medicare, Medicaid, or other Federal health care programs, but 
that provide items and services to providers, practitioners, or 
suppliers who request or receive payment from these programs for such 
items or services.
    Inspector General means the Inspector General for the Department of 
Health and Human Services.
    Knowingly means that a person, with respect to an act, has actual 
knowledge of the act, acts in deliberate ignorance of the act, or acts 
in reckless disregard of the act, and no proof of specific intent to 
defraud is required.
    Managing employee means an individual (including a general manager, 
business manager, administrator, or director) who exercises operational 
or managerial control over the entity or part thereof or directly or 
indirectly conducts the day-to-day operations of the entity or part 
thereof.
    Medicaid means medical assistance provided under a State plan 
approved under Title XIX of the Act.
    Medicare means the health insurance program for the aged and 
disabled under Title XVIII of the Act.
    OIG means the Office of Inspector General within HHS.
    Ownership interest means an interest in:
    (1) The capital, the stock, or the profits of the entity; or
    (2) Any mortgage, deed of trust, note, or other obligation secured 
in whole or in part by the property or assets of the entity.
    Patient means any individual who is receiving health care items or 
services, including any item or service provided to meet their 
physical, mental, or emotional needs or well-being (including a 
resident receiving care in a facility as described in part 483 of this 
chapter), whether or not reimbursed under any Federal health care 
program and regardless of the location in which such item or service is 
provided.
    QIO means a quality improvement organization as that term is used 
in section 1152 of the Act (42 U.S.C. 1320c-1) and its implementing 
regulations.
    Secretary means the Secretary of the Department or the Secretary's 
designees.
    SNF stands for skilled nursing facility.
    Social Security benefits means monthly cash benefits payable under 
section 202 or 223 of the Act.
    SSA stands for Social Security Administration.
    State includes the 50 States, the District of Columbia, Puerto 
Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana 
Islands, and the Trust Territory of the Pacific Islands.
    State health care program means:
    (1) A State plan approved under title XIX of the Act (Medicaid);
    (2) Any program receiving funds under title V of the Act or from an 
allotment to a State under such title (Maternal and Child Health 
Services Block Grant program);
    (3) Any program receiving funds under subtitle A of title XX of the 
Act or from any allotment to a State under such subtitle (Block Grants 
to States for Social Services); or
    (4) A State child health plan approved under title XXI (Children's 
Health Insurance Program).
    United States means the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, 
and the Northern Mariana Islands.
    U.S.C. stands for United States Code.

PART 1001--PROGRAM INTEGRITY--THE FEDERAL HEALTH CARE PROGRAMS

0
3. The authority citation to part 1001 continues to read as follows:

    Authority:  42 U.S.C. 1302; 1320a-7; 1320a-7b; 1395u(j); 
1395u(k); 1395w-104(e)(6), 1395y(d); 1395y(e); 1395cc(b)(2)(D), (E), 
and (F); 1395hh; 1842(j)(1)(D)(iv), 1842(k)(1), and sec. 2455, Pub. 
L. 103-355, 108 Stat. 3327 (31 U.S.C. 6101 note).

0
4. Revise the heading to part 1001 as set forth above.
0
5. Revise and republish subpart A, consisting of Sec. Sec.  1001.1 and 
1001.2 to read as follows:

Subpart A--General Provisions


Sec.  1001.1  Scope and purpose.

    (a) The regulations in this part specify certain bases upon which 
individuals and entities may, or in some cases must, be excluded from 
participation in all Federal health care programs. They also state the 
effect of exclusion, the factors that will be considered in determining 
the length of any exclusion, the provisions governing notices of 
exclusions, and the process by which an excluded individual or entity 
may seek reinstatement into the programs.
    (b) The regulations in this part are applicable to and binding on 
the Office of Inspector General (OIG) in imposing and proposing 
exclusions, as well as to Administrative Law Judges (ALJs), the 
Departmental Appeals Board, and Federal courts in reviewing the 
imposition of exclusions by OIG (and, where applicable, in imposing 
exclusions proposed by OIG).


Sec.  1001.2  Definitions.

    For purposes of this part:
    Convicted means that--
    (1) A judgment of conviction has been entered against an individual 
or entity by a Federal, State, or local court, regardless of whether:
    (i) There is a post-trial motion or an appeal pending; or
    (ii) The judgment of conviction or other record relating to the 
criminal conduct has been expunged or otherwise removed;
    (2) A Federal, State, or local court has made a finding of guilt 
against an individual or entity;
    (3) A Federal, State, or local court has accepted a plea of guilty 
or nolo contendere by an individual or entity; or
    (4) An individual or entity has entered into participation in a 
first offender, deferred adjudication, or other program or arrangement 
where judgment of conviction has been withheld.

[[Page 95157]]

    HHS means Department of Health and Human Services.
    Immediate family member means a person's husband or wife; natural 
or adoptive parent; child or sibling; stepparent, stepchild, 
stepbrother, or stepsister; father-, mother-, daughter-, son-, brother-
, or sister-in-law; grandparent or grandchild; or spouse of a 
grandparent or grandchild.
    Incarceration means imprisonment or any type of confinement with or 
without supervised release, including, but not limited to, community 
confinement, house arrest, and home detention.
    Member of household means, with respect to a person, any individual 
with whom the person is sharing a common abode as part of a single-
family unit, including domestic employees and others who live together 
as a family unit. A roomer or boarder is not considered a member of a 
household.
    Ownership or control interest means, with respect to an entity, a 
person who:
    (1) Has a direct or an indirect ownership interest (or any 
combination thereof) of 5 percent or more in the entity;
    (2) Is the owner of a whole or part interest in any mortgage, deed 
of trust, note, or other obligation secured (in whole or in part) by 
the entity or any of the property assets thereof, if such interest is 
equal to or exceeds 5 percent of the total property and assets of the 
entity;
    (3) Is an officer or a director of the entity;
    (4) Is a partner in the entity if the entity is organized as a 
partnership;
    (5) Is an agent of the entity; or
    (6) Is a managing employee of the entity.
    Professionally recognized standards of health care are statewide or 
national standards of care, whether in writing or not, that 
professional peers of the individual or entity whose provision of care 
is an issue, recognize as applying to those peers practicing or 
providing care within a State. When the Department has declared a 
treatment modality not to be safe and effective, practitioners who 
employ such a treatment modality will be deemed not to meet 
professionally recognized standards of health care. This definition 
will not be construed to mean that all other treatments meet 
professionally recognized standards.
    Sole community physician means a physician who is the only 
physician who provides primary care services to Federal or State health 
care program beneficiaries within a defined service area.
    Sole source of essential specialized services in the community 
means that an individual or entity--
    (1) Is the only practitioner, supplier, or provider furnishing 
specialized services in an area designated by the Health Resources 
Services Administration as a health professional shortage area for that 
medical specialty, as listed in 42 CFR part 5, appendices B through F;
    (2) Is a sole community hospital, as defined in Sec.  412.92 of 
this title; or
    (3) Is the only source of specialized services in a reasonably 
defined service area where services by a non-specialist could not be 
substituted for the source without jeopardizing the health or safety of 
beneficiaries.
    State Medicaid Fraud Control Unit means a unit certified by the 
Secretary as meeting the criteria of 42 U.S.C. 1396b(q) and Sec.  
1002.305 of this chapter.
0
6. Revise and republish subpart B, consisting of Sec. Sec.  1001.101 
and 1001.102, to read as follows:

Subpart B--Mandatory Exclusions


Sec.  1001.101  Basis for liability.

    OIG will exclude any individual or entity that--
    (a) Has been convicted of a criminal offense related to the 
delivery of an item or service under Medicare or a State health care 
program, including the performance of management or administrative 
services relating to the delivery of items or services under any such 
program;
    (b) Has been convicted, under Federal or State law, of a criminal 
offense related to the neglect or abuse of a patient, in connection 
with the delivery of a health care item or service, including any 
offense that OIG concludes entailed, or resulted in, neglect or abuse 
of patients (the delivery of a health care item or service includes the 
provision of any item or service to an individual to meet the 
individual's physical, mental, or emotional needs or well-being, 
whether or not reimbursed under a Federal health care program);
    (c) Has been convicted, under Federal or State law, of a felony 
relating to fraud, theft, embezzlement, breach of fiduciary 
responsibility, or other financial misconduct--
    (1) In connection with the delivery of a health care item or 
service, including the performance of management or administrative 
services relating to the delivery of such items or services; or
    (2) With respect to any act or omission in a health care program 
(other than Medicare or a State health care program) operated or 
financed in whole or in part by any Federal, State, or local government 
agency; or
    (d) Has been convicted, under Federal or State law, of a felony 
relating to the unlawful manufacture, distribution, prescription, or 
dispensing of a controlled substance, as defined under Federal or State 
law. This applies to any individual or entity that--
    (1) Is, or has ever been, a health care practitioner, provider, or 
supplier, or furnished or furnishes items or services;
    (2) Holds, or has held, a direct or an indirect ownership or 
control interest in an entity that furnished or furnishes items or 
services or is, or has ever been, an officer, director, agent, or 
managing employee of such an entity; or
    (3) Is, or has ever been, employed in any capacity in the health 
care industry.


Sec.  1001.102  Length of exclusion.

    (a) No exclusion imposed in accordance with Sec.  1001.101 will be 
for less than 5 years.
    (b) Any of the following factors may be considered to be 
aggravating and a basis for lengthening the period of exclusion--
    (1) The acts resulting in the conviction, or similar acts, caused, 
or were intended to cause, a financial loss of $50,000 or more to a 
government agency or program or to one or more other entities. (The 
entire amount of financial loss, including any amounts resulting from 
similar acts not adjudicated, will be considered regardless of whether 
full or partial restitution has been made.);
    (2) The acts that resulted in the conviction, or similar acts, were 
committed over a period of 1 year or more;
    (3) The acts that resulted in the conviction, or similar acts, had 
a significant adverse physical, mental, or financial impact on one or 
more program beneficiaries or other individuals;
    (4) In convictions involving patient abuse or neglect, the acts 
that resulted in the conviction were premeditated, part of a continuing 
pattern of behavior, or consisted of non-consensual sexual acts;
    (5) The sentence imposed by the court included incarceration; or
    (6) The convicted individual or entity has other documented 
instances of criminal, civil, or administrative wrongdoing.
    (c) Only if any of the aggravating factors set forth in paragraph 
(b) of this section justifies an exclusion longer than 5 years, may 
mitigating factors be considered as a basis for reducing the period of 
exclusion to no less than 5 years. Only the following factors may be 
considered mitigating--
    (1) The record in the criminal proceedings demonstrates that the 
court

[[Page 95158]]

determined that the individual had a condition before or during the 
commission of the offense that reduced the individual's culpability; or
    (2) The record in the criminal proceedings or a written statement 
by a government official demonstrates that the individual's or entity's 
cooperation with Federal or State officials resulted in other 
individuals or entities being excluded, indicted, or otherwise charged, 
convicted, or investigated.
    (d) In the case of an exclusion under this subpart, an exclusion 
will be--
    (1) For not less than 10 years if the individual has been convicted 
on one previous occasion of one or more offenses for which an exclusion 
may be imposed under section 1128(a) of the Act. (The aggravating 
factors in paragraph (b) of this section can be used to impose a period 
of time in excess of the 10-year minimum.); or
    (2) Permanent if the individual has been convicted on two or more 
previous occasions of one or more offenses for which an exclusion may 
be imposed under section 1128(a) of the Act.

Subpart C--Permissive Exclusions

0
7. Revise and republish Sec. Sec.  1001.201 through 1001.951 to read as 
follows:

Sec.
1001.201 Conviction relating to program or health care fraud.
1001.301 Conviction relating to obstruction of an investigation or 
audit.
1001.401 Conviction relating to controlled substances.
1001.501 License revocation or suspension.
1001.601 Exclusion or suspension under a Federal or State health 
care program.
1001.701 Excessive claims or furnishing of unnecessary or 
substandard items and services.
1001.801 Failure of HMOs and CMPs to furnish medically necessary 
items and services.
1001.901 False or improper claims.
1001.951 Fraud and kickbacks and other prohibited activities.
* * * * *


Sec.  1001.201  Conviction relating to program or health care fraud.

    (a) Circumstance for exclusion. OIG may exclude an individual or 
entity convicted under Federal or State law of--
    (1) A misdemeanor relating to fraud, theft, embezzlement, breach of 
fiduciary responsibility, or other financial misconduct--
    (i) In connection with the delivery of any health care item or 
service, including the performance of management or administrative 
services relating to the delivery of such items or services; or
    (ii) With respect to any act or omission in a health care program, 
other than Medicare or a State health care program, operated or 
financed in whole or in part by any Federal, State, or local government 
agency; or
    (2) Fraud, theft, embezzlement, breach of fiduciary responsibility, 
or other financial misconduct with respect to any act or omission in a 
program, other than a health care program, operated or financed in 
whole or in part by any Federal, State, or local government agency.
    (b) Length of exclusion. (1) An exclusion imposed in accordance 
with this section will be for a period of 3 years unless aggravating or 
mitigating factors listed in paragraphs (b)(2) and (3) of this section 
form a basis for lengthening or shortening that period.
    (2) Any of the following factors may be considered to be 
aggravating and a basis for lengthening the period of exclusion--
    (i) The acts resulting in the conviction, or similar acts, caused 
or reasonably could have been expected to cause a financial loss of 
$50,000 or more to a government agency or program or to one or more 
other entities. (The entire amount of financial loss will be 
considered, including any amounts resulting from similar acts not 
adjudicated, regardless of whether full or partial restitution has been 
made.);
    (ii) The acts that resulted in the conviction, or similar acts, 
were committed over a period of 1 year or more;
    (iii) The acts that resulted in the conviction, or similar acts, 
had a significant adverse physical, mental, or financial impact on one 
or more program beneficiaries or other individuals;
    (iv) The sentence imposed by the court included incarceration; or
    (v) The individual or entity has other documented instances of 
criminal, civil, or administrative wrongdoing.
    (3) Only the following factors may be considered as mitigating and 
a basis for reducing the period of exclusion--
    (i) The record in the criminal proceedings demonstrates that the 
court determined that the individual had a condition, before or during 
the commission of the offense, that reduced the individual's 
culpability; or
    (ii) The record in the criminal proceedings or a written statement 
by a government official demonstrates that the individual's or entity's 
cooperation with Federal or State officials resulted in other 
individuals or entities being excluded, indicted, or otherwise charged, 
convicted, or investigated.


Sec.  1001.301  Conviction relating to obstruction of an investigation 
or audit.

    (a) Circumstance for exclusion. OIG may exclude an individual or 
entity that has been convicted, under Federal or State law, in 
connection with the interference with or obstruction of any 
investigation or audit related to--
    (1) Any offense described in Sec.  1001.101 or Sec.  1001.201; or
    (2) The use of funds received, directly or indirectly, from any 
Federal health care program.
    (b) Length of exclusion. (1) An exclusion imposed in accordance 
with this section will be for a period of 3 years, unless aggravating 
or mitigating factors listed in paragraphs (b)(2) and (3) of this 
section form the basis for lengthening or shortening that period.
    (2) Any of the following factors may be considered to be 
aggravating and a basis for lengthening the period of exclusion--
    (i) The acts resulting in the conviction, or similar acts, caused, 
or reasonably could have been expected to cause a financial loss of 
$50,000 or more to a government agency or program or to one or more 
other entities. (The entire amount of financial loss will be 
considered, including any amounts resulting from similar acts not 
adjudicated, regardless of whether full or partial restitution has been 
made.);
    (ii) The acts that resulted in the conviction had a significant 
adverse physical, mental, or financial impact on one or more program 
beneficiaries or other individuals;
    (iii) The sentence imposed by the court included incarceration;
    (iv) The individual or entity has other documented instances of 
criminal, civil, or administrative wrongdoing.
    (3) Only the following factors may be considered as mitigating and 
a basis for reducing the period of exclusion--
    (i) The record of the criminal proceedings demonstrates that the 
court determined that the individual had a condition, before or during 
the commission of the offense, that reduced the individual's 
culpability; or
    (ii) The record in the criminal proceedings or a written statement 
by a government official demonstrates that the individual's or entity's 
cooperation with Federal or State officials resulted in other 
individuals or entities being excluded, indicted, or otherwise charged, 
convicted, or investigated.


Sec.  1001.401  Conviction relating to controlled substances.

    (a) Circumstance for exclusion. OIG may exclude an individual or 
entity convicted under Federal or State law of a misdemeanor relating 
to the unlawful

[[Page 95159]]

manufacture, distribution, prescription, or dispensing of a controlled 
substance, as defined under Federal or State law. This section applies 
to any individual or entity that--
    (1) Is, or has ever been, a health care practitioner, provider, or 
supplier, or furnished or furnishes items or services;
    (2) Holds, or held, a direct or indirect ownership or control 
interest in an entity that furnished or furnishes items or services or 
is or has ever been an officer, director, agent, or managing employee 
of such an entity; or
    (3) Is, or has ever been, employed in any capacity in the health 
care industry.
    (b) Length of exclusion. (1) An exclusion imposed in accordance 
with this section will be for a period of 3 years, unless aggravating 
or mitigating factors listed in paragraphs (c)(2) and (3) of this 
section form a basis for lengthening or shortening that period.
    (2) Any of the following factors may be considered to be 
aggravating and to be a basis for lengthening the period of exclusion--
    (i) The acts that resulted in the conviction or similar acts were 
committed over a period of 1 year or more;
    (ii) The acts that resulted in the conviction or similar acts had a 
significant adverse physical, mental, or financial impact on program 
beneficiaries or other individuals or a Federal health care program;
    (iii) The sentence imposed by the court included incarceration; or
    (iv) The individual or entity has other documented instances of 
criminal, civil, or administrative wrongdoing.
    (3) Only the following factors may be considered to be mitigating 
and to be a basis for shortening the period of exclusion--
    (i) The record of the criminal proceedings demonstrates that the 
court determined that the individual had a condition, before or during 
the commission of the offense, that reduced the individual's 
culpability; or
    (ii) The record in the criminal proceedings or a written statement 
by a government official demonstrates that the individual's or entity's 
cooperation with Federal or State officials resulted in other 
individuals or entities being excluded, indicted, or otherwise charged, 
convicted, or investigated.


Sec.  1001.501  License revocation or suspension.

    (a) Circumstance for exclusion. OIG may exclude an individual or 
entity that has--
    (1) Had a license to provide health care revoked or suspended by 
any State licensing authority, or has otherwise lost such a license 
(including the right to apply for or renew such a license), for reasons 
bearing on the individual's or entity's professional competence, 
professional performance, or financial integrity; or
    (2) Has surrendered such a license while a formal disciplinary 
proceeding concerning the individual's or entity's professional 
competence, professional performance, or financial integrity was 
pending before a State licensing authority.
    (b) Length of exclusion. (1) An exclusion imposed in accordance 
with this section will not be for a period of time less than the period 
during which an individual's or entity's license is revoked, suspended, 
or otherwise not in effect as a result of, or in connection with, a 
State licensing agency action.
    (2) When an individual or entity has been excluded under this 
section, OIG will consider a request for reinstatement in accordance 
with Sec.  1001.3001 if:
    (i) The individual or entity obtains the license in the State where 
the license was originally revoked, suspended, surrendered, or 
otherwise lost; or
    (ii) The individual meets the conditions for early reinstatement 
set forth in paragraph (c) of this section.
    (c) Consideration of early reinstatement. (1) If an individual or 
entity that is excluded in accordance with this section fully and 
accurately discloses the circumstances surrounding the action that 
formed the basis for the exclusion to a licensing authority of a 
different State or to a different licensing authority in the same State 
and that licensing authority grants the individual or entity a new 
health care license or has decided to take no adverse action as to a 
currently held health care license, OIG will consider a request for 
early reinstatement. OIG will consider the following factors in 
determining whether a request for early reinstatement under this 
paragraph (c)(1) will be granted:
    (i) The circumstances that formed the basis for the exclusion, 
including whether the circumstances were related to patient abuse or 
neglect;
    (ii) Whether the second licensing authority is in a State that is 
not the individual's or entity's primary place of practice;
    (iii) Documentation from the second licensing authority indicating 
that it was aware of the circumstances surrounding the action that 
formed the basis for the exclusion;
    (iv) Whether the individual or entity has demonstrated that the 
individual or entity has satisfactorily resolved any underlying problem 
that caused or contributed to the basis for the initial licensing 
action;
    (v) The benefits to the Federal health care programs and program 
beneficiaries of early reinstatement;
    (vi) The risks to the Federal health care programs and program 
beneficiaries of early reinstatement;
    (vii) Any additional or pending license actions in any State;
    (viii) Any ongoing investigations involving the individual or 
entity; and
    (ix) All the factors set forth in Sec.  1001.3002(b).
    (2) If an exclusion has been imposed under this section and the 
individual or entity does not have a valid health care license of any 
kind in any State, that individual or entity may request OIG to 
consider whether the individual or entity may be eligible for early 
reinstatement. OIG will consider the following factors in determining 
whether a request for early reinstatement under this paragraph (c)(2) 
will be granted:
    (i) The length of time the individual or entity has been excluded. 
OIG will not consider a request for early reinstatement under paragraph 
(c)(2) of this section if the individual or entity has been excluded 
for less than 3 years; however, if the action on which the exclusion is 
based was for a set period longer than 3 years, OIG will not consider a 
request for early reinstatement at any time prior to the expiration of 
the period set by the licensing board;
    (ii) The circumstances that formed the basis for the exclusion, 
including whether the circumstances were related to patient abuse or 
neglect;
    (iii) Whether the individual or entity has demonstrated that the 
individual or entity has satisfactorily resolved any underlying problem 
that caused or contributed to the basis for the initial licensing 
action;
    (iv) The benefits to the Federal health care programs and program 
beneficiaries of early reinstatement;
    (v) The risks to the Federal health care programs and program 
beneficiaries of early reinstatement;
    (vi) Any additional or pending license actions in any State;
    (vii) Any ongoing investigations involving the individual or 
entity; and
    (viii) All the factors set forth in Sec.  1001.3002(b).
    (3) Notwithstanding paragraphs (c)(1) and (2) of this section, if 
an individual's or entity's license revocation or suspension was for 
reasons related to patient abuse or neglect, OIG will not consider an 
application for early reinstatement if the individual or entity has 
been excluded for less than 5 years.

[[Page 95160]]

    (4) Except for Sec.  1001.3002(a)(1)(i), all provisions of subpart 
F (Sec. Sec.  1001.3001 through 1001.3005) apply to early 
reinstatements under this section.


Sec.  1001.601  Exclusion or suspension under a Federal or State health 
care program.

    (a) Circumstance for exclusion. (1) OIG may exclude an individual 
or entity suspended or excluded from participation, or otherwise 
sanctioned, under--
    (i) Any Federal program involving the provision of health care; or
    (ii) A State health care program, for reasons bearing on the 
individual's or entity's professional competence, professional 
performance, or financial integrity.
    (2) The term ``or otherwise sanctioned'' in paragraph (a)(1) of 
this section means all actions that limit the ability of a person to 
participate in the program at issue regardless of what such an action 
is called, and includes situations where an individual or entity 
voluntarily withdraws from a program to avoid a formal sanction.
    (b) Length of exclusion. (1) An exclusion imposed in accordance 
with this section will not be for a period of time less than the period 
during which the individual or entity is excluded or suspended, or 
otherwise sanctioned, from a Federal or State health care program.
    (2) If the individual or entity is eligible to apply for 
reinstatement in accordance with Sec.  1001.3001, and the sole reason 
why the State or Federal health care program denied reinstatement to 
that program is the existing exclusion imposed by OIG as a result of 
the original State or Federal health care program action, OIG will 
consider a request for reinstatement.


Sec.  1001.701  Excessive claims or furnishing of unnecessary or 
substandard items and services.

    (a) Circumstance for exclusion. OIG may exclude an individual or 
entity that has--
    (1) Submitted, or caused to be submitted, bills or requests for 
payments under Medicare or any of the State health care programs 
containing charges or costs for items or services furnished that are 
substantially in excess of such individual's or entity's usual charges 
or costs for such items or services; or
    (2) Furnished, or caused to be furnished, to patients (whether or 
not covered by Medicare or any of the State health care programs) any 
items or services substantially in excess of the patient's needs, or of 
a quality that fails to meet professionally recognized standards of 
health care.
    (b) Sources. OIG's determination under paragraph (a)(2) of this 
section--that the items or services furnished were excessive or of 
unacceptable quality--will be made on the basis of information, 
including sanction reports, from the following sources:
    (1) The QIO for the area served by the individual or entity;
    (2) State or local licensing or certification authorities;
    (3) Fiscal agents or contractors, or private insurance companies;
    (4) State or local professional societies; or
    (5) Any other sources deemed appropriate by OIG.
    (c) Exceptions. An individual or entity will not be excluded for--
    (1) Submitting, or causing to be submitted, bills or requests for 
payment that contain charges or costs substantially in excess of usual 
charges or costs when such charges or costs are due to unusual 
circumstances or medical complications requiring additional time, 
effort, expense or other good cause; or
    (2) Furnishing, or causing to be furnished, items or services in 
excess of the needs of patients, when the items or services were 
ordered by a physician or other authorized individual, and the 
individual or entity furnishing the items or services was not in a 
position to determine medical necessity or to refuse to comply with the 
order of the physician or other authorized individual.
    (d) Length of exclusion. (1) An exclusion imposed in accordance 
with this section will be for a period of 3 years, unless aggravating 
or mitigating factors set forth in paragraphs (d)(2) and (3) of this 
section form a basis for lengthening or shortening the period. In no 
case may the period be shorter than 1 year for any exclusion taken in 
accordance with paragraph (a)(2) of this section.
    (2) Any of the following factors may be considered aggravating and 
a basis for lengthening the period of exclusion--
    (i) The conduct occurred over a period of 1 year or more;
    (ii) The conduct had a significant adverse physical, mental, or 
financial impact on program beneficiaries or other individuals;
    (iii) The individual or entity has other documented instances of 
criminal, civil, or administrative wrongdoing; or
    (iv) The conduct resulted in financial loss to any Federal health 
care program of $50,000 or more.
    (3) Only the following factor may be considered mitigating and a 
basis for reducing the period of exclusion: Whether there were few 
occurrences of the conduct, and the conduct occurred over a short 
period of time.


Sec.  1001.801  Failure of HMOs and CMPs to furnish medically necessary 
items and services.

    (a) Circumstances for exclusion. OIG may exclude an entity--
    (1) That is a--
    (i) Health maintenance organization (HMO), as defined in section 
1903(m) of the Act, providing items or services under a State Medicaid 
Plan;
    (ii) Primary care case management system providing services, in 
accordance with a waiver approved under section 1915(b)(1) of the Act; 
or
    (iii) HMO or competitive medical plan (CMP) providing items or 
services in accordance with a risk-sharing contract under section 1876 
of the Act;
    (2) That has failed substantially to provide medically necessary 
items and services that are required under a plan, waiver or contract 
described in paragraph (a)(1) of this section to be provided to 
individuals covered by such plan, waiver or contract; and
    (3) Where such failure has adversely affected or has a substantial 
likelihood of adversely affecting covered individuals.
    (b) Sources. OIG's determination under paragraph (a)(2) of this 
section--that the medically necessary items and services required under 
law or contract were not provided--will be made on the basis of 
information, including sanction reports, from the following sources:
    (1) The QIO or other quality assurance organization under contract 
with a State Medicaid plan for the area served by the HMO or 
competitive medical plan;
    (2) State or local licensing or certification authorities;
    (3) Fiscal agents or contractors, or private insurance companies;
    (4) State or local professional societies;
    (5) CMS's HMO compliance office; or
    (6) Any other sources deemed appropriate by OIG.
    (c) Length of exclusion. (1) An exclusion imposed in accordance 
with this section will be for a period of 3 years, unless aggravating 
or mitigating factors set forth in paragraphs (c)(2) and (3) of this 
section form a basis for lengthening or shortening the period.
    (2) Any of the following factors may be considered aggravating and 
a basis for lengthening the period of exclusion--
    (i) The entity failed to provide a large number or a variety of 
items or services;
    (ii) The failures occurred over a lengthy period of time;

[[Page 95161]]

    (iii) The entity's failure to provide a necessary item or service 
had or could have had a serious adverse effect; or
    (iv) The entity has other documented instances of criminal, civil, 
or administrative wrongdoing.
    (3) Only the following factors may be considered as mitigating and 
a basis for reducing the period of exclusion--
    (i) There were few violations and they occurred over a short period 
of time; or
    (ii) The entity took corrective action upon learning of 
impermissible activities by an employee or contractor.


Sec.  1001.901  False or improper claims.

    (a) Circumstance for exclusion. OIG may exclude any individual or 
entity that it determines has committed an act described in section 
1128A of the Act. The imposition of a civil money penalty or assessment 
is not a prerequisite for an exclusion under this section.
    (b) Length of exclusion. In determining the length of an exclusion 
imposed in accordance with this section, OIG will consider the 
following factors--
    (1) The nature and circumstances surrounding the actions that are 
the basis for liability, including the period of time over which the 
acts occurred, the number of acts, whether there is evidence of a 
pattern, and the amount claimed;
    (2) The degree of culpability;
    (3) Whether the individual or entity has other documented instances 
of criminal, civil, or administrative wrongdoing (the absence of any 
such instances is to be considered neutral); or
    (4) Other matters as justice may require.
    (c) Limitations. OIG may not impose an exclusion under this section 
more than 10 years after the date when an act which is described in 
section 1128A of the Act occurred.


Sec.  1001.951  Fraud and kickbacks and other prohibited activities.

    (a) Circumstance for exclusion. (1) Except as provided for in 
paragraph (a)(2)(ii) of this section, OIG may exclude any individual or 
entity that it determines has committed an act described in section 
1128B(b) of the Act.
    (2) With respect to acts described in section 1128B of the Act, 
OIG--
    (i) May exclude any individual or entity that it determines has 
knowingly and willfully solicited, received, offered or paid any 
remuneration in the manner and for the purposes described therein, 
irrespective of whether the individual or entity may be able to prove 
that the remuneration was also intended for some other purpose; and
    (ii) Will not exclude any individual or entity if that individual 
or entity can prove that the remuneration that is the subject of the 
exclusion is exempted from serving as the basis for an exclusion.
    (b) Length of exclusion. In determining the length of an exclusion 
imposed in accordance with this section, OIG may consider the following 
factors--
    (1) The nature and circumstances surrounding the actions that are 
the basis for liability, including the period of time over which the 
acts occurred, the number of acts, whether there is evidence of a 
pattern and the amount claimed;
    (2) The degree of culpability;
    (3) Whether the individual or entity has other documented instances 
of criminal, civil, or administrative wrongdoing (the absence of any 
such instances is to be considered neutral); or
    (4) Other matters as justice may require.
    (c) Limitations. OIG may not impose an exclusion under this section 
more than 10 years after the date when an act which is described in 
section 1128B(b) of the Act occurred.
0
8. Revise and republish Sec. Sec.  1001.1101 through 1001.1552 to read 
as follows:

Sec.
* * * * *
1001.1101 Failure to disclose certain information.
1001.1201 Failure to provide payment information.
1001.1301 Failure to grant immediate access.
1001.1401 Violations of Prospective Payment System corrective 
action.
1001.1501 Default of health education loan or scholarship 
obligations.
1001.1551 Exclusion of individuals with ownership or control 
interest in sanctioned entities.
1001.1552 Making false statements or misrepresentation of material 
facts.


Sec.  1001.1101  Failure to disclose certain information.

    (a) Circumstance for exclusion. OIG may exclude any entity that did 
not fully and accurately, or completely, make disclosures as required 
by section 1124, 1124A or 1126 of the Act, and by part 455, subpart B 
and part 420, subpart C of this title.
    (b) Length of exclusion. The following factors will be considered 
in determining the length of an exclusion under this section--
    (1) The number of instances where full and accurate, or complete, 
disclosure was not made;
    (2) The significance of the undisclosed information;
    (3) Whether the individual or entity has other documented instances 
of criminal, civil, or administrative wrongdoing (the absence of such 
instances is to be considered neutral);
    (4) Any other facts that bear on the nature or seriousness of the 
conduct; and
    (5) The extent to which the entity knew that the disclosures made 
were not full or accurate.


Sec.  1001.1201  Failure to provide payment information.

    (a) Circumstance for exclusion. OIG may exclude any individual or 
entity that furnishes, orders, refers for furnishing, or certifies the 
need for items or services for which payment may be made under Medicare 
or any of the State health care programs and that--
    (1) Fails to provide such information as is necessary to determine 
whether such payments are or were due and the amounts thereof; or
    (2) Has refused to permit such examination and duplication of its 
records as may be necessary to verify such information.
    (b) Length of exclusion. The following factors will be considered 
in determining the length of an exclusion under this section--
    (1) The number of instances where information was not provided;
    (2) The circumstances under which such information was not 
provided;
    (3) The amount of the payments at issue; and
    (4) Whether the individual or entity has other documented instances 
of criminal, civil, or administrative wrongdoing (the absence of such 
instances is to be considered neutral).


Sec.  1001.1301  Failure to grant immediate access.

    (a) Circumstance for exclusion. (1) OIG may exclude any individual 
or entity that fails to grant immediate access upon reasonable request 
to--
    (i) The Secretary, a State survey agency or other authorized entity 
for the purpose of determining, in accordance with section 1864(a) of 
the Act, whether--
    (A) An institution is a hospital or skilled nursing facility;
    (B) An agency is a home health agency;
    (C) An agency is a hospice program;
    (D) A facility is a rural health clinic as defined in section 
1861(aa)(2) of the Act, or a comprehensive outpatient rehabilitation 
facility as defined in section 1861(cc)(2) of the Act;
    (E) A laboratory is meeting the requirements of section 1861(s) 
(15) and (16) of the Act, and section 353(f) of the Public Health 
Service Act;
    (F) A clinic, rehabilitation agency or public health agency is 
meeting the

[[Page 95162]]

requirements of section 1861(p)(4) (A) or (B) of the Act;
    (G) An ambulatory surgical center is meeting the standards 
specified under section 1832(a)(2)(F)(i) of the Act;
    (H) A portable x ray unit is meeting the requirements of section 
1861(s)(3) of the Act;
    (I) A screening mammography service is meeting the requirements of 
section 1834(c)(3) of the Act;
    (J) An end-stage renal disease facility is meeting the requirements 
of section 1881(b) of the Act;
    (K) A physical therapist in independent practice is meeting the 
requirements of section 1861(p) of the Act;
    (L) An occupational therapist in independent practice is meeting 
the requirements of section 1861(g) of the Act;
    (M) An organ procurement organization meets the requirements of 
section 1138(b) of the Act; or
    (N) A rural primary care hospital meets the requirements of section 
1820(i)(2) of the Act;
    (ii) The Secretary, a State survey agency or other authorized 
entity to perform the reviews and surveys required under State plans in 
accordance with sections 1902(a)(26) (relating to inpatient mental 
hospital services), 1902(a)(31) (relating to intermediate care 
facilities for individuals with intellectual disabilities), 1919(g) 
(relating to nursing facilities), 1929(i) (relating to providers of 
home and community care and community care settings), 1902(a)(33), and 
1903(g) of the Act;
    (iii) OIG for reviewing records, documents, and other material or 
data in any medium (including electronically stored information and any 
tangible thing) necessary to OIG's statutory functions; or
    (iv) A State Medicaid fraud control unit (MFCU) for the purpose of 
conducting its activities.
    (2) For purposes of paragraphs (a)(1)(i) and (ii) of this section--
    (i) Failure to grant immediate access means the failure to grant 
access at the time of a reasonable request unless the requested 
material does not exist or is not at the location where the request is 
presented.
    (ii) Reasonable request means a written request made by a properly 
identified agent of the Secretary, of a State survey agency, or of 
another authorized entity, during hours that the facility, agency or 
institution is open for business.
    (iii) The request will include a statement of the authority for the 
request, the rights of the entity in responding to the request, the 
definitions of reasonable request and failure to grant immediate 
access, and the penalties for failure to comply, including when the 
exclusion will take effect.
    (3) For purposes of paragraphs (a)(1)(iii) and (iv) of this 
section--
    (i) Failure to grant immediate access means the failure to produce 
or make available for inspection and copying the requested material at 
the time of a reasonable request unless the requested material does not 
exist or is not at the location where the request is presented.
    (ii) Reasonable request means a written request, signed by a 
designated representative of OIG or a MFCU and made by a properly 
identified agent of OIG or a MFCU during reasonable business hours, 
where there is information to suggest that the person has violated 
statutory or regulatory requirements under titles V, XI, XVIII, XIX, or 
XX of the Act.
    (iii) The request will include a statement of the authority for the 
request, the person's rights in responding to the request, the 
definitions of reasonable request and failure to grant immediate 
access, and the effective date, length, and scope and effect of the 
exclusion that would be imposed for failure to comply with the request, 
and the earliest date that a request for reinstatement would be 
considered.
    (4) Nothing in this section shall in any way limit access otherwise 
authorized under State or Federal law.
    (b) Length of exclusion. (1) An exclusion of an individual under 
this section may be for a period equal to the sum of:
    (i) The length of the period during which the immediate access was 
not granted; and
    (ii) An additional period of up to 90 days.
    (2) The exclusion of an entity may be for a longer period than the 
period in which immediate access was not granted based on consideration 
of the following factors--
    (i) The impact of the failure to grant the requested immediate 
access on Medicare or any of the State health care programs, 
beneficiaries, or the public;
    (ii) The circumstances under which such access was refused;
    (iii) The impact of the exclusion on any Federal health care 
program, beneficiaries, or the public; and
    (iv) Whether the entity has other documented instances of criminal, 
civil, or administrative wrongdoing (the absence of any such instances 
is to be considered neutral).
    (3) For purposes of paragraphs (b)(1) and (2) of this section, the 
length of the period in which immediate access was not granted will be 
measured from the time the request is made, or from the time by which 
access was required to be granted, whichever is later.
    (c) The exclusion will be effective as of the date immediate access 
was not granted.


Sec.  1001.1401  Violations of Prospective Payment System corrective 
action.

    (a) Circumstance for exclusion. OIG may exclude any hospital that 
CMS determines has failed substantially to comply with a corrective 
action plan required by CMS under section 1886(f)(2)(B) of the Act.
    (b) Length of exclusion. The following factors will be considered 
in determining the length of exclusion under this section--
    (1) The impact of the hospital's failure to comply on any Federal 
health care program, program beneficiaries, or other individuals;
    (2) The circumstances under which the failure occurred;
    (3) The nature of the failure to comply;
    (4) The impact of the exclusion on any Federal health care program, 
beneficiaries, or the public; and
    (5) Whether the hospital has other documented instances of 
criminal, civil, or administrative wrongdoing (the absence of any such 
instances is to be considered neutral).


Sec.  1001.1501  Default of health education loan or scholarship 
obligations.

    (a) Circumstance for exclusion. (1) Except as provided in paragraph 
(a)(4) of this section, OIG may exclude any individual that the 
administrator of the health education loan, scholarship, or loan 
repayment program determines is in default on repayments of scholarship 
obligations or loans, or the obligations of any loan repayment program, 
in connection with health professions education made or secured in 
whole or in part by the Secretary.
    (2) Before imposing an exclusion in accordance with paragraph 
(a)(1) of this section, OIG must determine that the administrator of 
the health education loan, scholarship, or loan repayment program has 
taken all reasonable administrative steps to secure repayment of the 
loans or obligations. When an individual has been offered a Medicare 
offset arrangement as required by section 1892 of the Act, OIG will 
find that all reasonable steps have been taken.
    (3) OIG will take into account access of beneficiaries to physician 
services for

[[Page 95163]]

which payment may be made under the Medicare and Medicaid programs in 
determining whether to impose an exclusion.
    (4) OIG will not exclude a physician who is the sole community 
physician or the sole source of essential specialized services in a 
community if a State requests that the physician not be excluded.
    (b) Length of exclusion. The individual will be excluded until the 
administrator of the health education loan, scholarship, or loan 
repayment program notifies OIG that the individual has entered into an 
agreement with the administrator of the health education loan, 
scholarship, or loan repayment program to cure the default or that 
there is no longer an outstanding debt. If the administrator of the 
health education loan, scholarship, or loan repayment program notifies 
OIG that the individual has entered into an agreement to cure the 
default, the individual may be eligible for a stay of the effect of 
exclusion by OIG for as long as the individual remains in compliance 
with the terms of the agreement. If the administrator of the health 
education loan, scholarship, or loan repayment program notifies OIG 
that there is no longer an outstanding debt, OIG will inform the 
individual of the individual's right to apply for reinstatement.


Sec.  1001.1551  Exclusion of individuals with ownership or control 
interest in sanctioned entities.

    (a) Circumstance for exclusion. OIG may exclude any individual 
who--
    (1) Has a direct or indirect ownership or control interest in a 
sanctioned entity, and who knows or should know (as defined in section 
1128A(i)(6) of the Act) of the action constituting the basis for the 
conviction or exclusion set forth in paragraph (b) of this section; or
    (2) Is an officer or managing employee (as defined in section 
1126(b) of the Act) of such an entity.
    (b) For purposes of paragraph (a) of this section, the term 
``sanctioned entity'' means an entity that--
    (1) Has been convicted of any offense described in Sec. Sec.  
1001.101 through 1001.401; or
    (2) Has been excluded from participation in Medicare or a State 
health care program.
    (c) Length of exclusion. (1) If the entity has been excluded, the 
length of the individual's exclusion will be for the same length as 
that of the sanctioned entity, regardless of whether the individual 
terminates the relationship with the sanctioned entity.
    (2) If the entity was not excluded, the length of the individual's 
exclusion will be determined by considering the factors that would have 
been considered if the entity had been excluded.
    (3) An individual excluded under this section may apply for 
reinstatement in accordance with the procedures set forth in Sec.  
1001.3001.


Sec.  1001.1552  Making false statements or misrepresentation of 
material facts.

    (a) Circumstance for exclusion. OIG may exclude any individual or 
entity that it determines has knowingly made or caused to be made any 
false statement, omission, or misrepresentation of a material fact in 
any application, agreement, bid, or contract to participate or enroll 
as a provider of services or supplier under a Federal health care 
program, including Medicare Advantage organizations under Part C of 
Medicare, prescription drug plan sponsors under Part D of Medicare, 
Medicaid managed care organizations, and entities that apply to 
participate as providers of services or suppliers in such managed care 
organizations and such plans.
    (b) Definition of ``material.'' For purposes of this section, the 
term ``material'' means having a natural tendency to influence or be 
capable of influencing the decision to approve or deny the request to 
participate or enroll as a provider of services or supplier under a 
Federal health care program.
    (c) Sources. OIG's determination under paragraph (a) of this 
section will be made on the basis of information from the following 
sources:
    (1) CMS;
    (2) Medicaid State agencies;
    (3) Fiscal agents or contractors or private insurance companies;
    (4) Law enforcement agencies;
    (5) State or local licensing or certification authorities;
    (6) State or local professional societies; or
    (7) Any other sources deemed appropriate by OIG.
    (d) Length of exclusion. In determining the length of an exclusion 
imposed in accordance with this section, OIG will consider the 
following factors:
    (1) The nature and circumstances surrounding the false statement;
    (2) Whether and to what extent payments were requested or received 
from the Federal health care program under the application, agreement, 
bid, or contract on which the false statement, omission, or 
misrepresentation was made; and
    (3) Whether the individual or entity has other documented instances 
of criminal, civil, or administrative wrongdoing (the absence of any 
such instances is to be considered neutral).
0
9. Add Sec.  1001.1553 to read as follows:


Sec.  1001.1553  Knowingly misclassifying covered outpatient drugs.

    (a) Circumstance for exclusion. OIG may exclude any manufacturer 
(as defined in section 1927 of the Act), or officer, director, agent, 
or managing employee of such manufacturer that:
    (1) Knowingly misclassifies a covered outpatient drug;
    (2) Knowingly fails to correct such misclassification; or
    (3) Knowingly provides false information related to drug pricing, 
drug product information, or data related to drug pricing or drug 
product information.
    (b) This section applies to covered outpatient drugs supplied by 
manufacturers under agreements under section 1927 of the Act in effect 
on or after April 18, 2019.
    (c) Length of exclusion. The following factors will be considered 
in determining the length of an exclusion under this section:
    (1) The nature and circumstances surrounding the actions that are 
the basis for liability, including the period of time over which the 
acts occurred, the number of acts, and whether there is evidence of a 
pattern;
    (2) The degree of culpability;
    (3) Whether the entity has other documented instances of criminal, 
civil, or administrative wrongdoing (the absence of any such instances 
is to be considered neutral); or
    (4) Other matters as justice may require.
0
10. Revise and republish Sec. Sec.  1001.1601 and 1001.1701 to read as 
follows:


Sec.  1001.1601  Violations of the limitations on physician charges.

    (a) Circumstance for exclusion. (1) OIG may exclude a physician 
whom it determines--
    (i) Is a non-participating physician under section 1842(j) of the 
Act;
    (ii) Furnished services to a beneficiary;
    (iii) Knowingly and willfully billed--
    (A) On a repeated basis for such services actual charges in excess 
of the maximum allowable actual charge determined in accordance with 
section 1842(j)(1)(C) of the Act for the period January 1, 1987 through 
December 31, 1990; or
    (B) Individuals enrolled under part B of title XVIII of the Act 
during the statutory freeze for actual charges in excess of such 
physician's actual charges determined in accordance with section 
1842(j)(1)(A) of the Act for the period July 1, 1984, to December 31, 
1986; and

[[Page 95164]]

    (iv) Is not the sole community physician or sole source of 
essential specialized services in the community.
    (2) OIG will take into account access of beneficiaries to 
physicians' services for which Medicare payment may be made in 
determining whether to impose an exclusion.
    (b) Length of exclusion. (1) In determining the length of an 
exclusion in accordance with this section, OIG will consider the 
following factors--
    (i) The number of services for which the physician billed in excess 
of the maximum allowable charges;
    (ii) The number of beneficiaries for whom services were billed in 
excess of the maximum allowable charges;
    (iii) The amount of the charges that were in excess of the maximum 
allowable charges; and
    (iv) Whether the physician has other documented instances of 
criminal, civil, or administrative wrongdoing (the absence of any such 
instances is to be considered neutral).
    (2) The period of exclusion may not exceed 5 years.


Sec.  1001.1701  Billing for services of assistant at surgery during 
cataract operations.

    (a) Circumstance for exclusion. OIG may exclude a physician whom it 
determines--
    (1) Has knowingly and willfully presented or caused to be presented 
a claim, or billed an individual enrolled under Part B of the Medicare 
program (or the individual's representative) for:
    (i) Services of an assistant at surgery during a cataract 
operation; or
    (ii) Charges that include a charge for an assistant at surgery 
during a cataract operation;
    (2) Has not obtained prior approval for the use of such assistant 
from the appropriate Utilization and Quality Control Quality 
Improvement Organization (QIO) or Medicare carrier; and
    (3) Is not the sole community physician or sole source of essential 
specialized services in the community.
    (b) Access to services. OIG will take into account access of 
beneficiaries to physicians' services for which Medicare payment may be 
made in determining whether to impose an exclusion.
    (c) Length of exclusion. (1) In determining the length of an 
exclusion in accordance with this section, OIG will consider the 
following factors--
    (i) The number of instances for which claims were submitted or 
beneficiaries were billed for unapproved use of assistants during 
cataract operations;
    (ii) The amount of the claims or bills presented;
    (iii) The circumstances under which the claims or bills were made, 
including whether the services were medically necessary;
    (iv) Whether approval for the use of an assistant was requested 
from the QIO or carrier; and
    (v) Whether the physician has other documented instances of 
criminal, civil, or administrative wrongdoing (the absence of any such 
instances is to be considered neutral).
    (2) The period of exclusion may not exceed 5 years.

Subpart D--Waivers and Effect of Exclusion

0
11. Revise and republish Sec. Sec.  1001.1801 and 1001.1901 to read as 
follows:


Sec.  1001.1801  Waivers of exclusions.

    (a) OIG has the authority to grant or deny a request from the 
administrator of a Federal health care program that an exclusion from 
that program be waived with respect to an individual or entity, except 
that no waiver may be granted with respect to an exclusion under Sec.  
1001.101(b). The request must be in writing and from an individual 
directly responsible for administering the Federal health care program.
    (b) With respect to exclusions under Sec.  1001.101(a), (c), or 
(d), a request from a Federal health care program for a waiver of the 
exclusion will be considered only if the Federal health care program 
administrator determines that--
    (1) The individual or entity is the sole community physician or the 
sole source of essential specialized services in a community; and
    (2) The exclusion would impose a hardship on beneficiaries (as 
defined in section 1128A(i)(5) of the Act) of that program.
    (c) With respect to exclusions imposed under subpart C of this 
part, a request for waiver will only be granted if OIG determines that 
imposition of the exclusion would not be in the public interest.
    (d) If the basis for the waiver ceases to exist, the waiver will be 
rescinded.
    (e) In the event a waiver is granted, it is applicable only to the 
program(s) for which waiver is requested.
    (f) The decision to grant, deny, or rescind a request for a waiver 
is not subject to administrative or judicial review.


Sec.  1001.1901  Scope and effect of exclusion.

    (a) Scope of exclusion. Exclusions of individuals and entities 
under this title will be from all Federal health care programs, as 
defined in Sec.  1000.10 of this chapter.
    (b) Effect of exclusion on excluded individuals and entities. (1) 
Unless and until an individual or entity is reinstated into the Federal 
health care programs in accordance with subpart F of this part, no 
payment will be made by any Federal health care program for any item or 
service furnished, on or after the effective date specified in the 
notice--
    (i) By an excluded individual or entity; or
    (ii) At the medical direction or on the prescription of a physician 
or an authorized individual who is excluded when the person furnishing 
such item or service knew, or had reason to know, of the exclusion.
    (2) This section applies regardless of whether an individual or 
entity has obtained a Federal health care program provider number or 
equivalent, either as an individual or as a member of a group, prior to 
being reinstated.
    (3) An excluded individual or entity may not take assignment of an 
enrollee's claim on or after the effective date of exclusion.
    (4) An excluded individual or entity that submits, or causes to be 
submitted, claims for items or services furnished during the exclusion 
period is subject to civil money penalty liability under section 
1128A(a)(1)(D) of the Act and criminal liability under section 
1128B(a)(3) of the Act and other provisions. In addition, submitting 
claims, or causing claims to be submitted or payments to be made, for 
items or services furnished, ordered, or prescribed, including 
administrative and management services or salary, may serve as the 
basis for denying reinstatement to the Federal health care programs.
    (c) Exceptions to paragraph (b)(1) of this section. (1) If an 
enrollee of Part B of Medicare submits an otherwise payable claim for 
items or services furnished by an excluded individual or entity, or 
under the medical direction or on the prescription of an excluded 
physician or other authorized individual after the effective date of 
exclusion, CMS will pay the first claim submitted by the enrollee and 
immediately notify the enrollee of the exclusion.
    (2) CMS will not pay an enrollee for items or services furnished by 
an excluded individual or entity, or under the medical direction or on 
the prescription of an excluded physician or other authorized 
individual more than 15 days after the date on the notice to the 
enrollee, or after the effective date of the exclusion, whichever is 
later.
    (3) Unless the Secretary determines that the health and safety of

[[Page 95165]]

beneficiaries receiving services under any Federal health care program 
warrants the exclusion taking effect earlier, payment may be made under 
such program for up to 30 days after the effective date of the 
exclusion for--
    (i) Inpatient institutional services furnished to an individual who 
was admitted to an excluded institution before the date of the 
exclusion;
    (ii) Home health services and hospice care furnished to an 
individual under a plan of care established before the effective date 
of the exclusion; and
    (iii) Any health care items that are ordered by a practitioner, 
provider, or supplier from an excluded manufacturer before the 
effective date of the exclusion and delivered within 30 days of the 
effective date of such exclusion.
    (4) CMS will not pay any claims submitted by, or for items or 
services ordered or prescribed by, an excluded provider for dates of 
service 15 days or more after the notice of the provider's exclusion 
was mailed to the supplier.
    (5)(i) Notwithstanding the other provisions of this section, 
payment may be made under any Federal health care program for certain 
emergency items or services furnished by an excluded individual or 
entity, or at the medical direction or on the prescription of an 
excluded physician or other authorized individual during the period of 
exclusion. To be payable, a claim for such emergency items or services 
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 individual or 
entity eligible to furnish or order such items or services.
    (ii) Notwithstanding paragraph (c)(5)(i) of this section, no claim 
for emergency items or services will be payable if such items or 
services were provided by an excluded individual who, through an 
employment, contractual or any other arrangement, routinely provides 
emergency health care items or services.

Subpart E--Notice and Appeals

0
12. Revise and republish Sec.  1001.2001 to read as follows:


Sec.  1001.2001  Notice of intent to exclude.

    (a) Except as provided in paragraph (c) of this section, if OIG 
proposes to exclude an individual or entity in accordance with subpart 
B or C of this part, it will send written notice of its intent, the 
basis for the proposed exclusion, and the potential effect of an 
exclusion. Within 30 days of receipt of notice, which will be deemed to 
be 7 days after the date on the notice, the individual or entity may 
submit documentary evidence and written argument concerning whether the 
exclusion is warranted and any related issues.
    (b) If OIG intends to exclude an individual or entity under the 
provisions of Sec.  1001.701, Sec.  1001.801, or Sec.  1001.1552, in 
conjunction with the submission of documentary evidence and written 
argument, an individual or entity may request an opportunity to present 
oral argument to an OIG official.
    (c) Exception. If OIG intends to exclude an individual or entity 
under the provisions of Sec.  1001.901, Sec.  1001.951, Sec.  
1001.1301, Sec.  1001.1401, Sec.  1001.1601, or Sec.  1001.1701, 
paragraph (a) of this section will not apply.
    (d) If an entity has a provider agreement under section 1866 of the 
Act, and OIG proposes to terminate that agreement in accordance with 
section 1866(b)(2)(C) of the Act, the notice provided for in paragraph 
(a) of this section will so state.
0
13. Revise and republish Sec.  1001.2004 through 1001.2007 to read as 
follows:

Sec.
* * * * *
1001.2004 Notice to State agencies.
1001.2005 Notice to State licensing agencies.
1001.2006 Notice to others regarding exclusion.
1001.2007 Appeal of exclusions.


Sec.  1001.2004  Notice to State agencies.

    OIG will promptly notify each appropriate State agency 
administering or supervising the administration of each State health 
care program of:
    (a) The facts and circumstances of each exclusion; and
    (b) The period for which the State agency is being directed to 
exclude the individual or entity.


Sec.  1001.2005  Notice to State licensing agencies.

    (a) OIG will promptly notify the appropriate State(s) or local 
agencies or authorities having responsibility for the licensing or 
certification of an excluded individual or entity of the facts and 
circumstances of the exclusion.
    (b) OIG will request that appropriate investigations be made and 
sanctions invoked in accordance with applicable State law and policy, 
and will request that the State or local agency or authority keep the 
Secretary and OIG fully and currently informed with respect to any 
actions taken in response to the request.


Sec.  1001.2006  Notice to others regarding exclusion.

    (a) OIG will give notice of the exclusion and the effective date to 
the public and others via online publication of the List of Excluded 
Individuals/Entities (commonly referred to as ``the LEIE'').
    (b) In the case of an exclusion under Sec.  1001.101, if section 
304(a)(5) of the Controlled Substances Act (21 U.S.C. 824(a)(5)) 
applies, OIG will give notice to the Attorney General of the United 
States of the facts and circumstances of the exclusion and the length 
of the exclusion.


Sec.  1001.2007  Appeal of exclusions.

    (a)(1) Except as provided in Sec.  1001.2003, an individual or 
entity excluded under this part may file a request for a hearing before 
an ALJ only on the issues of whether:
    (i) The basis for the imposition of the exclusion exists; and
    (ii) The length of exclusion is unreasonable.
    (2) When OIG imposes an exclusion under subpart B of this part for 
a period of 5 years, paragraph (a)(1)(ii) of this section will not 
apply.
    (3) The request for a hearing shall contain the information set 
forth in Sec.  1005.2(d) of this chapter.
    (b) The excluded individual or entity has 60 days from the receipt 
of notice of exclusion provided for in Sec.  1001.2002 to file a 
request for a hearing.
    (c) The standard of proof at a hearing is preponderance of the 
evidence.
    (d) When the exclusion is based on the existence of a criminal 
conviction or a civil judgment imposing liability by a Federal, State, 
or local court, a determination by another government agency, or any 
other prior determination where the facts were adjudicated and a final 
decision was made, the basis for the underlying conviction, civil 
judgment, or determination is not reviewable and the individual or 
entity may not collaterally attack it either on substantive or 
procedural grounds in this appeal.
    (e) The procedures in part 1005 of this chapter will apply to the 
appeal.
0
14. Revise and republish subpart F to read as follows:

Subpart F--Reinstatement Into the Programs

Sec.
1001.3001 Timing and method of request for reinstatement.
1001.3002 Basis for reinstatement.
1001.3003 Approval of request for reinstatement.
1001.3004 Denial of request for reinstatement.

[[Page 95166]]

1001.3005 Withdrawal of exclusion for reversed or vacated decisions.

Subpart F--Reinstatement Into the Programs


Sec.  1001.3001  Timing and method of request for reinstatement.

    (a)(1) Except as provided in paragraph (a)(2) of this section or in 
Sec.  1001.501(b)(2), Sec.  1001.501(c), or Sec.  1001.601(b)(2), an 
excluded individual or entity (other than those excluded in accordance 
with Sec. Sec.  1001.1001 and 1001.1501) may submit a written request 
for reinstatement to OIG only after the date specified in the notice of 
exclusion. Obtaining a Federal health care program provider number or 
equivalent does not reinstate eligibility.
    (2) An entity excluded under Sec.  1001.1001 may apply for 
reinstatement prior to the date specified in the notice of exclusion by 
submitting a written request for reinstatement that includes 
documentation demonstrating that the standards set forth in Sec.  
1001.3002(c) have been met.
    (b) Upon receipt of a written request, OIG will require the 
requestor to furnish specific information and authorization to obtain 
information from private health insurers, peer review bodies, probation 
officers, professional associates, investigative agencies, and such 
others as may be necessary to determine whether reinstatement should be 
granted.
    (c) Failure to furnish the required information or authorization 
will result in the continuation of the exclusion.
    (d) If a period of exclusion is reduced on appeal (regardless of 
whether further appeal is pending), the individual or entity may 
request reinstatement once the reduced exclusion period expires.


Sec.  1001.3002  Basis for reinstatement.

    (a) OIG will authorize reinstatement if it determines that--
    (1) The period of exclusion has expired;
    (2) There are reasonable assurances that the types of actions that 
formed the basis for the original exclusion have not recurred and will 
not recur; and
    (3) There is no additional basis under sections 1128(a) or (b) or 
1128A of the Act for continuation of the exclusion.
    (b) In making the reinstatement determination described in 
paragraph (a) of this section, OIG will consider--
    (1) Conduct of the individual or entity occurring prior to the date 
of the notice of exclusion, if not known to OIG at the time of the 
exclusion;
    (2) Conduct of the individual or entity after the date of the 
notice of exclusion;
    (3) Whether all fines and all debts due and owing (including 
overpayments) to any Federal, State, or local government that relate to 
any Federal health care program have been paid or satisfactory 
arrangements have been made to fulfill obligations;
    (4) Whether CMS has determined that the individual or entity 
complies with, or has made satisfactory arrangements to fulfill, all 
the applicable conditions of participation or supplier conditions for 
coverage under the statutes and regulations;
    (5) Whether the individual or entity has, during the period of 
exclusion, submitted claims, or caused claims to be submitted or 
payment to be made by any Federal health care program, for items or 
services the excluded party furnished, ordered, or prescribed, 
including health care administrative services. This section applies 
regardless of whether an individual or entity has obtained a Federal 
health care program provider number or equivalent, either as an 
individual or as a member of a group, prior to being reinstated; and
    (c) If OIG determines that the criteria in paragraphs (a)(2) and 
(3) of this section have been met, an entity excluded in accordance 
with Sec.  1001.1001 will be reinstated upon a determination by OIG 
that the individual whose conviction, exclusion, or civil money penalty 
was the basis for the entity's exclusion--
    (1) Has properly reduced the individual's ownership or control 
interest in the entity below 5 percent;
    (2) Is no longer an officer, director, agent, or managing employee 
of the entity; or
    (3) Has been reinstated in accordance with paragraph (a) of this 
section or Sec.  1001.3005.
    (d) Reinstatement will not be effective until OIG grants the 
request and provides notice under Sec.  1001.3003(a). Reinstatement 
will be effective as provided in the notice.
    (e) A determination with respect to reinstatement is not appealable 
or reviewable except as provided in Sec.  1001.3004.
    (f) An ALJ may not require reinstatement of an individual or entity 
in accordance with this chapter.


Sec.  1001.3003  Approval of request for reinstatement.

    (a) If OIG grants a request for reinstatement, OIG will--
    (1) Give written notice to the excluded individual or entity 
specifying the date of reinstatement;
    (2) Notify each appropriate State agency administering or 
supervising the administration of each State health care program (and, 
in the case of an exclusion effected pursuant to Sec.  1001.101 and to 
which 21 U.S.C. 824(a)(5) may apply, the Attorney General) of the date 
of the individual's or entity's reinstatement; and
    (3) Notify the public and others through posting of reinstatement 
information on OIG's website.
    (b) An action taken by OIG under this section will not require a 
Federal health care program to reinstate the individual or entity if 
such program has imposed an action under its own authority.


Sec.  1001.3004  Denial of request for reinstatement.

    (a) If a request for reinstatement is denied, OIG will give written 
notice to the requesting individual or entity that the request for 
reinstatement has been denied and the basis for the denial. Within 30 
days of the date on the notice, the excluded individual or entity may 
submit a written request to appeal the denial of the individual's or 
entity's reinstatement. The individual or entity will have 30 days from 
the date of the written request to appeal to submit:
    (1) Any written argument or additional evidence the individual or 
entity has regarding the basis for the denial of reinstatement; or
    (2) A written request to present oral argument or any additional 
evidence to an OIG official regarding the basis for the denial of 
reinstatement.
    (b) After evaluating any written argument or additional evidence 
submitted by the excluded individual or entity or any oral argument and 
additional evidence presented to an OIG official, OIG will send written 
notice either confirming the denial and indicating that a subsequent 
request for reinstatement will not be considered until at least 1 year 
after the date of denial, or approving the request consistent with the 
procedures set forth in Sec.  1001.3003(a).
    (c) The decision to deny reinstatement will not be subject to 
administrative or judicial review.


Sec.  1001.3005  Withdrawal of exclusion for reversed or vacated 
decisions.

    (a) An exclusion will be withdrawn and an individual or entity will 
be reinstated into all Federal health care programs retroactive to the 
effective date of the exclusion when such exclusion is based on--
    (1) A conviction that is reversed or vacated on appeal;
    (2) An action by another agency, such as a State agency or 
licensing board, that is reversed or vacated on appeal; or
    (3) An OIG exclusion action that is reversed or vacated at any 
stage of an individual's or entity's administrative appeal process.

[[Page 95167]]

    (b) If an individual or entity is reinstated in accordance with 
paragraph (a) of this section, the Federal health care programs will 
make payment for services covered under such programs that were 
furnished or performed during the period of exclusion.
    (c) OIG will give notice of a reinstatement under this section in 
accordance with Sec.  1001.3003(a).
    (d) An action taken by OIG under this section will not require a 
Federal health care program to reinstate the individual or entity if 
such program has imposed an exclusion under its own authority.
    (e) If an action which results in the retroactive reinstatement of 
an individual or entity is subsequently overturned, OIG may reimpose 
the exclusion for the initial period of time, less the period of time 
that was served prior to the reinstatement of the individual or entity.

Xavier Becerra,
Secretary.
[FR Doc. 2024-26804 Filed 11-29-24; 8:45 am]
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