The Legal Foundation for Exclusion Screening
The OIG's exclusion authority stems from Sections 1128 and 1156 of the Social Security Act. When an individual or entity is excluded, no federal healthcare program payment may be made for any items or services furnished, ordered, or prescribed by that person. This applies regardless of whether the excluded individual directly billed the program.
Under 42 CFR 1001.1901, the OIG is required to maintain the LEIE database, and under the Civil Monetary Penalties Law (42 U.S.C. 1320a-7a), employers who know or should know that an excluded individual is providing services to federal program beneficiaries face penalties of up to $100,000 for each item or service furnished during the exclusion period. On top of that, the employer may be assessed treble damages (three times the amount claimed) and face exclusion from federal programs themselves.
The key phrase is "knew or should have known." By not screening, you cannot claim ignorance. The OIG has made clear through guidance and enforcement actions that healthcare providers are expected to implement reasonable screening procedures. Monthly screening has emerged as the widely accepted standard for demonstrating due diligence.
Why Monthly Screening Is the Standard
The OIG updates the LEIE database monthly, typically around the middle of each month. Because exclusions can be imposed at any time - not just at the point of hire - a one-time check during onboarding leaves potentially 11 months of exposure per year.
Several factors have cemented monthly screening as the expectation:
- OIG Special Advisory Bulletin (2013) - The OIG explicitly recommended that healthcare entities check the LEIE "on a regular and ongoing basis" and noted that monthly checks align with the database's update cycle
- CMS Managed Care Guidance - CMS requires Medicare Advantage and Part D plan sponsors to screen their networks monthly, and that expectation flows downstream to pharmacy providers
- State Medicaid Agency Requirements - Many state Medicaid programs now mandate monthly screening in their provider enrollment agreements
- Accreditation Standards - Organizations like URAC and ACHC require regular exclusion screening for accredited pharmacies
Some pharmacy owners ask whether quarterly screening is sufficient. While quarterly is certainly better than annual, it leaves gaps of up to three months where an excluded individual could be filling prescriptions billed to federal programs. Given that automated tools can perform monthly checks in minutes, there is little justification for checking less frequently.
Who Must Be Screened
Screening requirements extend beyond just pharmacists and technicians. Every individual who could influence or participate in the provision of items or services to federal healthcare program beneficiaries must be screened. This includes:
- Licensed pharmacists (staff and PIC)
- Pharmacy technicians (certified and trainees)
- Pharmacy clerks and cashiers who handle transactions
- Delivery drivers who transport prescriptions to patients
- Administrative staff involved in billing, prior authorizations, or claims processing
- Contractors and temporary staff including floater pharmacists and staffing agency personnel
- Owners and board members with direct or indirect ownership interest of 5% or more
- Vendors that provide clinical or billing-related services
A common mistake is screening only licensed staff. The OIG has made clear that exclusion screening applies to all individuals involved in the healthcare delivery chain, not just those with clinical licenses.
The Screening Process: Step by Step
Step 1 - Identify Your Screening Universe
Create a comprehensive list of every individual and entity that must be screened. This includes all employees, contractors, vendors, and owners. Maintain this list as a living document - update it whenever someone is hired, terminated, or when contractor relationships change.
Step 2 - Check the OIG LEIE Database
The LEIE is available at oig.hhs.gov/exclusions. You can search individually by name or download the entire database for batch processing. When screening, you need the individual's full legal name and date of birth at minimum. The database also allows searching by Social Security Number for more precise matching.
Step 3 - Check the SAM.gov Exclusion Database
The System for Award Management (SAM.gov) maintains a separate exclusion list that includes entities debarred, suspended, or excluded by various federal agencies - not just HHS. Under 2 CFR Part 180, pharmacies should check SAM.gov in addition to the LEIE. Some exclusions appear in SAM that do not appear in the LEIE, and vice versa.
Step 4 - Check State Medicaid Exclusion Lists
Most states maintain their own Medicaid exclusion lists separate from the federal LEIE. These are sometimes called "state-only" exclusions and may not appear in the OIG database. Check your state Medicaid agency's website for their exclusion list and any state-specific screening requirements.
Step 5 - Document Everything
For each screening cycle, document the date of the search, the databases checked, who was screened, and the results. Maintain a log showing that every individual was screened against every required database. Even when no matches are found, you need documentation proving the screening occurred.
Handling Potential Matches
When a potential match is found during screening, do not panic - but do act immediately. The LEIE contains common names, and false positives happen. Here is the protocol:
Verify the match. Compare all available identifiers - full legal name, date of birth, Social Security Number, state of residence, and NPI. A name match alone is not sufficient to confirm exclusion. Contact the OIG hotline at 1-800-HHS-TIPS or check the OIG's online verification tool if you need to confirm a match.
If the match is confirmed, you must immediately remove the excluded individual from any involvement in federal healthcare program services. This does not necessarily mean immediate termination, but it does mean they cannot fill prescriptions, process claims, deliver medications, or perform any function connected to federal program beneficiaries. Consult with legal counsel about employment decisions.
Report the situation internally to your compliance officer and, if applicable, to any Plan Sponsors or PBMs you contract with. Some contracts require notification within specific timeframes.
Assess the exposure period. Determine how long the excluded individual was providing services while excluded. If claims were submitted during that period, you may need to report the overpayment to the relevant program and arrange repayment. Under the 60-Day Rule (42 U.S.C. 1320a-7k(d)), identified overpayments must be reported and returned within 60 days.
Document your response thoroughly, including the discovery date, verification steps, actions taken, and any overpayment calculations.
Building an Exclusion Screening Policy
Your written exclusion screening policy should include:
- Scope - Who gets screened (all employees, contractors, vendors, owners)
- Frequency - Monthly, aligned with LEIE update schedule
- Databases - OIG LEIE, SAM.gov, and applicable state exclusion lists
- Pre-employment screening - Check before hiring, not after
- Process - Step-by-step screening and documentation procedures
- Match protocol - Specific steps to follow when a potential match is found
- Responsible party - Who performs the screening and maintains records
- Record retention - How long screening records are kept (minimum 10 years recommended, aligned with federal record retention requirements)
- Attestation - Annual staff attestation confirming they have not been excluded or sanctioned
Reinstatement: When an Exclusion Ends
Exclusion from federal healthcare programs is not always permanent. Individuals excluded under permissive authority (Section 1128(b)) may apply for reinstatement after the minimum exclusion period expires - typically a minimum of five years for mandatory exclusions under Section 1128(a). However, reinstatement is not automatic. The individual must submit a written request to the OIG, and the OIG will evaluate whether the basis for the exclusion has been resolved.
Until the OIG issues an official reinstatement notice, the individual remains excluded regardless of whether the minimum period has passed. This is a critical point for pharmacy employers: do not assume that a previously excluded individual is safe to employ based solely on the passage of time. Verify reinstatement through the LEIE database and request a copy of the OIG's reinstatement letter before allowing the individual to participate in any federal healthcare program services. If you identify a reinstatement during screening, document the reinstatement date and maintain the reinstatement letter in the individual's compliance file.
Common Pitfalls to Avoid
Screening only at hire. This is the most dangerous mistake. Monthly screening is the standard, and a single annual check creates unacceptable exposure.
Forgetting contract staff. Floater pharmacists, temp technicians, and staffing agency personnel must be screened. Do not assume the staffing agency handles this - verify it in writing or screen them yourself.
Not checking SAM.gov. The LEIE and SAM databases are separate. Checking only one leaves gaps in your compliance program.
Ignoring state exclusion lists. State Medicaid exclusions may not appear in federal databases. If your pharmacy participates in Medicaid, check your state's list.
Poor documentation. If you screen but do not document it, you cannot prove you screened. Maintain detailed logs with dates, names, databases checked, and results.
No policy or procedure. Ad hoc screening without a written policy signals to auditors that compliance is not a priority. Document your screening program in a formal policy.
Failing to act on matches. Discovering a match means nothing if you do not follow through with verification, removal, and reporting. The worst outcome is a documented match with no corresponding action - it proves you knew and did nothing.
For a broader view of how exclusion screening fits into your overall compliance framework, see our Complete Pharmacy Compliance Checklist. Understanding exclusion screening is also closely tied to FWA training requirements, since employing excluded individuals is itself a form of program fraud.
