Excluded Individual Owning A Company – Why Worry?


The OIG provides the following guidance on ownership of an entity by en excluded individual: Special Advisory Bulletin.

Excluded persons are prohibited from furnishing administrative and management services that are payable by the Federal health care programs. This prohibition applies even if the administrative and management services are not separately billable. 

  • For example, an excluded individual may not serve in an executive or leadership role (e.g., chief executive officer, chief financial officer, general counsel, director of health information management, director of human resources, physician practice office manager, etc.) at a provider that furnishes items or services payable by Federal health care programs. 

Also, an excluded individual may not provide other types of administrative and management services, such as:

  • health information technology services and support
  • strategic planning, billing and accounting
  • staff training
  • and human resources (unless wholly unrelated to Federal health care programs).

Although an OIG exclusion does not directly prohibit the excluded person from owning a provider that participates in Federal health care programs, there are several risks to such ownership. OIG may exclude the provider if certain circumstances regarding the ownership are present.

Although this authority to exclude is not mandatory and OIG exercises it at its discretion, any provider owned in part (5% or more) by an excluded person is potentially subject to exclusion. In addition, an excluded individual may be subject to CMPL liability if he or she has an ownership or control interest in a provider participating in Medicare or State health care programs or if he or she is an officer or a managing employee of such an entity.

Further, the provider may not seek Federal health care program payment for any services, including the administrative and management services described above, furnished by the excluded owner. As a practical matter, this means that an excluded person may own a provider, but may not provide any items or services, including administrative and management services, that are payable by Federal health care programs. If an excluded owner does, for example, participate in billing activities or management of the business, both the owner and the provider will risk CMPL liability. 

See section 1128(b)(8) of the Act.
See section 1128A(a)(4) of the Act; 42 CFR § 1003.102(a)(12)


Ownership by an excluded person of an entity conducting business with your company can result in discretionary CMPL. 

Use the analogy provided in the above Advisory Bulletin with regard to Staffing companies. The OIG recommended that companies audit the staffing company to ensure they are conducting monthly monitoring of nurses or staff placed at the third party. Thus you should not soley rely on the fact that the staffing company said it conducts these searches.

At the very least, you should require spot check audits to ensure HP is conducting exclusion monitoring on its employees involved in Sutter work, including management. 

Written By: Michael Rosen, ProviderTrust Co-Founder

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