The OIG monthly exclusion screening requirement, explained (42 CFR §1001.1901)

Providers that bill Medicare or Medicaid should screen employees, contractors, and vendors against the OIG's List of Excluded Individuals and Entities (LEIE) every month. The monthly cadence comes from OIG's May 2013 Special Advisory Bulletin and CMS guidance to state Medicaid agencies — not from the text of 42 CFR §1001.1901 itself, which establishes the payment prohibition that makes screening necessary. Many state Medicaid programs have gone further and made monthly screening an explicit condition of participation.

What 42 CFR Part 1001 actually establishes

42 CFR Part 1001 implements the HHS Office of Inspector General's exclusion authority under section 1128 of the Social Security Act (42 U.S.C. §1320a-7). It spells out who can be excluded from federal health care programs — mandatorily for convictions involving program fraud, patient abuse, or felony drug offenses, and permissively for a longer list of misconduct — and for how long.

Within that part, §1001.1901, “Scope and effect of exclusion,” is the section compliance officers cite most. It defines the payment prohibition: once an exclusion takes effect, no payment will be made by Medicare (including Medicare Advantage and Part D), Medicaid, or any other federal health care program for any item or service furnished, ordered, or prescribed by the excluded individual or entity, until the person is formally reinstated. There is only a narrow exception for certain emergency items and services.

Read that carefully: the prohibition attaches to the items and services, not just to the excluded person's paycheck. If an excluded nurse furnishes care that ends up on your Medicaid claim — even indirectly, through a bundled rate, cost report, or capitated payment — that claim is not payable. That is what creates the employer's exposure, and it is why screening exists.

Where the “monthly” cadence actually comes from

Three documents, layered over about four years, produced the monthly standard the industry follows today.

1. CMS State Medicaid Director Letter #09-001 (January 2009)

In SMDL #09-001, CMS reminded state Medicaid agencies that federal financial participation is not available for items or services furnished or ordered by excluded persons, and advised states to direct their enrolled providers to screen employees and contractors against the LEIE monthly. This letter is guidance to states, not a regulation binding providers directly — but many states translated it into provider bulletins and enrollment agreement terms that do bind.

2. 42 CFR §455.436 (2011)

In the 2011 provider screening rule, CMS adopted 42 CFR §455.436, which requires state Medicaid agencies themselves to check federal exclusion databases monthly for enrolled providers and for persons with ownership or control interests. In the rule's preamble, CMS clarified that this section does not itself force providers to screen their own employees monthly — but recommended that states make it a requirement, and many did.

3. OIG's Updated Special Advisory Bulletin (May 8, 2013)

The definitive federal statement is OIG's Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs. OIG is candid that no statute or regulation requires providers to check the LEIE at all. But it then explains the practical logic: OIG updates the LEIE monthly, so screening each month “best minimizes” potential overpayment and civil monetary penalty liability. Because liability accrues per item or service from the moment an exclusion takes effect, every month you don't screen is a month of claims you can't defend.

The penalty exposure, stated precisely

If a provider employs or contracts with a person it knows or should know is excluded, and that person furnishes items or services payable by a federal health care program, the provider faces liability under 42 U.S.C. §1320a-7a (section 1128A of the Act):

• Civil monetary penalties of up to $10,000 (statutory base) for each item or service furnished by the excluded person for which federal payment was sought. CMP amounts are inflation-adjusted annually; under the current HHS adjustment table (45 CFR §102.3, as updated by the January 2026 annual adjustment), the maximum for employing or contracting with an excluded individual is $25,595 per item or service.
• Assessments of up to three times the amount claimed for each item or service.
• Program exclusion of the provider itself — the sanction that ends participation in Medicare and Medicaid.
• Overpayment liability: independent of penalties, amounts paid for the excluded person's items or services are overpayments that must be refunded.

The “should know” standard is what makes the LEIE a de facto obligation. OIG has published the list and told providers how often it changes; an employer that never checks it has a hard time arguing it exercised reasonable diligence. The arithmetic is unforgiving because penalties stack per claim line — an excluded home health aide whose visits appear on months of Medicaid claims can generate six-figure exposure from a single missed name.

Who must be screened

OIG's test in the 2013 Bulletin is functional, not title-based: review each job category or contract and ask whether the items or services involved are payable, directly or indirectly, in whole or in part, by a federal health care program. If yes, screen everyone in that category. In practice that means:

• W-2 employees, clinical and non-clinical — billing, coding, and administrative staff included, since their work supports claims;
• Contractors and their employees where the risk is greatest: staffing-agency nurses, contracted physician groups, therapy contractors, third-party billing and coding companies;
• Vendors whose goods or services feed into federally reimbursed care;
• Volunteers and owners with a role in payable items or services.

You may rely on a contractor's own screening, but OIG recommends validating it — and the CMP liability stays with you either way. For a step-by-step walkthrough of running the checks, see our guide on how to screen employees against the OIG exclusion list, or run a name now with our free LEIE check.

What documentation an auditor expects

Screening you can't prove might as well not have happened. OIG's Bulletin specifically advises keeping documentation of each name search — such as a screenshot of the results — and of how potential matches were resolved. A defensible file shows:

1. A dated record of every monthly run, tied to the LEIE version in effect that month;
2. The full roster searched, including former names and aliases (the LEIE lists the name OIG knew at exclusion);
3. How each potential match was cleared — SSN or EIN verification through OIG's online database, or NPI comparison;
4. Pre-hire screening records for every new employee and contractor;
5. Consistency: no gap months. A missing March is the first thing an auditor asks about.

This is the part manual spreadsheet screening tends to fail. ExclusionWatch generates a timestamped, audit-ready report for every monthly run automatically — you can see exactly what that looks like in our sample report.

State-by-state variation

Federal guidance sets the floor; states set the terms of Medicaid participation. Several dozen states maintain their own Medicaid exclusion or sanction lists in addition to the LEIE, and many require enrolled providers — by regulation, provider bulletin, or enrollment agreement — to screen both lists monthly. Requirements differ on which lists, which personnel, and what documentation must be retained, so check your own state's rules. We maintain a survey in our guide to state Medicaid exclusion lists.

Frequently asked questions

Is monthly OIG screening actually required by federal law?

Not by a statute or regulation that binds providers directly — OIG says so itself in the 2013 Bulletin. But OIG guidance recommends monthly screening, CMS told states to require it of Medicaid providers, and many states have. Combined with per-claim penalty exposure under the “should know” standard, monthly screening is the operative compliance standard even where no single rule commands it.

Why monthly rather than quarterly or annually?

Because OIG republishes the LEIE monthly, adding newly excluded individuals each cycle (the list currently carries roughly 80,000 active exclusions). Screening less often leaves a window in which a current employee becomes excluded and keeps furnishing billable services — and every item or service in that window is potential CMP and overpayment liability.

We screened everyone at hire. Isn't that enough?

No. Pre-hire screening only proves the person wasn't excluded on their start date. Exclusions are imposed continuously — often for conduct at a prior employer — so someone hired clean can appear on next month's LEIE. That is exactly the gap monthly rescreening of your full roster closes.

What should we do if we discover we've employed an excluded person?

Act quickly: remove the person from any role touching federally payable items or services, quantify the affected claims, and talk to health care counsel about repayment and OIG's Self-Disclosure Protocol, which generally produces better outcomes than waiting to be found. Document when and how you discovered the issue — your screening records are your best evidence of good faith.

Is the LEIE the same as SAM.gov or my state's exclusion list?

No. The LEIE is OIG's list of persons excluded from federal health care programs, and the primary screening source under the 2013 Bulletin. SAM.gov covers government-wide debarments, and state lists cover state-level sanctions; some employers must screen those too, depending on state rules and payer contracts. Start with the LEIE — it is where the CMP exposure lives — and layer the others per your state's requirements.