For healthcare contracting professionals, exclusion monitoring is a critical component of regulatory administrative compliance, ensuring that hospitals and health systems do not enter into agreements with excluded individuals or entities. Failing to screen vendors, contractors, and employees against federal and state exclusion lists—such as the OIG’s List of Excluded Individuals and Entities (LEIE)and GSA’s System for Award Management (SAM)—can lead to severe financial penalties, reputational harm, and even loss of federal funding.
Exclusion monitoring must be embedded into the contracting process to ensure that healthcare organizations do not enter agreements with excluded individuals or entities. A strong CLM system helps automate these checks, reducing compliance risks and manual workload.
This guide provides best practices to help contracting professionals automate exclusion checks, minimize risk, and build safeguards into contracts to protect their organizations from costly compliance violations. Failure to comply can lead to significant fines, reputational damage, and loss of federal funding. This guide outlines the most effective strategies for robust exclusion monitoring, helping healthcare organizations mitigate risk and maintain compliance.
Effective exclusion monitoring goes beyond a one-time check during vendor onboarding. Healthcare organizations must continuously screen and monitor all contracted parties to remain compliant with Medicare, Medicaid, TRICARE, and other federal program requirements.
The OIG’s List of Excluded Individuals and Entities (LEIE) is the primary database of individuals and entities barred from participating in federally funded healthcare programs. Common reasons for exclusion include:
Since the LEIE is updated monthly, organizations must perform exclusion screenings consistently to ensure compliance. Best practices include automating searches, integrating screenings into HR workflows, and verifying potential matches using Social Security Numbers (SSNs) or dates of birth (DOBs) to avoid false positives.
The LEIE is a dynamic database, and individuals or entities may be added or removed based on administrative actions, appeals, or new convictions. Organizations that do not conduct frequent checks risk unknowingly employing excluded individuals, which can lead to severe penalties.
A CLM system should integrate exclusion checks directly into the vendor onboarding process, ensuring that screenings occur before contracts are signed. By reviewing exclusions monitoring during contract execution workflows, organizations can block non-compliant vendors before agreements are finalized.
Tip: Organizations should schedule automated searches at least monthly and document all search results for audit purposes.
While the LEIE is critical, it is not the only exclusion list that healthcare organizations should monitor. Other essential exclusion databases include:
Each state maintains its own exclusion criteria and enforcement mechanisms. A healthcare provider operating in multiple states must ensure compliance with all applicable state exclusion lists. Failing to check these lists can result in fines at both the state and federal levels.
Example: A hospital in New York unknowingly hired a vendor flagged on the state Medicaid exclusion list, resulting in a compliance violation and hefty fines. Expanding exclusion monitoring to state lists could have prevented this.
Tip: Ensure exclusion monitoring processes include all relevant federal and state databases, and update protocols regularly to reflect changing compliance requirements. CLM platforms should automate screening against multiple databases, flagging high-risk entities before contract approval. Regular re-screening throughout the contract lifecycle ensures ongoing compliance, preventing organizations from maintaining relationships with newly excluded parties.
Hiring or contracting with an excluded individual poses significant risks. Organizations may face Civil Monetary Penalties (CMPs) exceeding $130,000 per violation. Additionally, billing federal programs for services provided by excluded individuals can result in legal action, substantial fines, and reputational harm.
Case Study: A Texas long-term care facility was fined $360,000 after employing excluded individuals and billing Medicaid for their services. To avoid such penalties, compliance officers must implement a rigorous, ongoing exclusion monitoring program and establish clear protocols for addressing potential matches.
One-time exclusion screenings at hiring are insufficient. The OIG recommends ongoing monitoring since individuals may become excluded after they are hired.
Contract renewal and performance review cycles should trigger automatic re-checks for exclusions.
Healthcare organizations should adopt a continuous monitoring system that:
Tip: A best practice is to integrate exclusion monitoring into HR and vendor onboarding systems, ensuring real-time compliance checks before engagement.
CLM processes should enforce standardized contract language requiring vendors to maintain exclusion compliance and self-report any status changes. Audit logs within exclusion monitoring solutions can help compliance teams track exclusion checks and demonstrate due diligence during regulatory reviews.
To maintain compliance, organizations must regularly review their exclusion monitoring program. Best practices include:
Internal audits ensure that compliance processes are functioning as intended and can help detect issues before they escalate into major violations.
Example: A healthcare provider that conducted bi-annual internal audits discovered that a newly acquired subsidiary had inconsistent exclusion monitoring practices, allowing them to correct the issue before facing penalties.
When a potential match is found during exclusion monitoring, organizations must take immediate action. A remediation plan should include:
We recommend contract templates that include exclusion-related clauses outlining immediate corrective actions, termination rights, and indemnification provisions.
Organizations must maintain detailed records of all findings and resolutions. This documentation can be critical for demonstrating compliance during audits and legal reviews.
Tip: Establish a clear chain of responsibility for handling exclusions and ensure all actions are logged in a centralized compliance system.
OIG exclusion monitoring is more than just a regulatory requirement—it’s a crucial safeguard to protect patients and prevent fraud. By implementing these best practices, healthcare organizations can ensure compliance, minimize risk, and maintain eligibility for federal funding.
Key Takeaways
By incorporating exclusion monitoring into contract lifecycle workflow reviews, organizations can create a proactive compliance strategy that ensures vendor integrity from onboarding through contract termination. A well-structured CLM system enhances risk management by facilitating exclusion checks, tracking compliance history, and enforcing contractual safeguards.
Healthcare organizations that adopt these best practices can create a culture of compliance, protect their reputations, and ensure that they continue to provide safe, high-quality care to patients.