Compliance at Every Level: Understanding Federal and State Medicaid Exclusions List Screening

Medicaid was originally signed into law by the Social Security Act alongside Medicare, and it functioned as a way to provide health coverage for low-income families.

Every state approaches Medicaid in a different way.

When it comes to Medicaid funding, the government has controls on what groups and organizations are allowed access to federal healthcare money. If you run a medical institution, part of maintaining legal compliance is following the state Medicaid exclusion lists set out by both the federal government and the individual states. 

The vast majority of the states in the U.S. have their own specific Medicaid exclusions, and businesses must effectively follow all of them in order to adhere to general Medicaid regulations. 

Medical professionals focus their efforts on delivering quality patient care and often don’t think about law. That’s why a dedicated compliance team with a denied party screening program is a necessary component of running a medical business in the modern day. 

Given that non-compliance can result in serious sanctions and penalties, it makes sense why ensuring compliance is taken seriously in this field. Let’s talk about exclusion screening and how it relates to state Medicaid programs. 

How Trade Exclusions Work in State Medicaid 

In 2019 alone, improper payments for Medicaid totaled $57.36 billion. In response, Medicaid is now preventing certain entities from receiving program payments to avoid fraud. 

The U.S. government legally bans domestic companies from doing business with certain individuals and entities deemed risky, fraudulent, or potentially abusive. Because these exclusions are a threat to public health and national security, it makes sense for healthcare organizations to avoid working with them. 

When most people think of legal exclusions, they usually think of international trade regulations like the List of Excluded Individuals and Entities maintained by the Office of the Inspector General and the decrees laid out by the Office of Foreign Assets Control. These examples issue lists of excluded parties that domestic companies must avoid. 

But it’s just as important to note how exclusion lists impact the healthcare industry, specifically in the context of federal and state Medicaid payment programs. Any products and services provided by companies and individuals on the denied party lists are not eligible for government payment with regards to: 

Violations of Medicaid exclusions can result in expulsion from the Medicaid program, fines for false claims, and even criminal charges in some cases. That’s why screening all your connections⁠—such as suppliers, contractors, and employees⁠—against state Medicaid exclusion and other lists matters so much in the healthcare space. 

Best Exclusion Screening Practices and Strategies For a Medicaid Compliance Program 

On a federal level, exclusions can be found through databases kept by the Office of Inspector General, such as the List of Excluded Individuals and Entities mentioned previously. But denied party screening needs to look beyond that and take into account the demands of individual states as well. 

State Medicaid Regulations 

Every state approaches Medicaid in a different way. There are multiple separate excluded party lists to keep track of, each of which may have different types of data formats to screen. 

And while states are supposed to report to the federal Office of Inspector General about changes to their lists, many are slow to do so, resulting in a non-exhaustive LEIE that businesses can’t rely entirely on. 

You are expected to follow all exclusions, so check with each individual state about its specific lists, the entities on them, and any unique requirements for screening. New Jersey, for instance, has extra requirements for checking with both the Division of Consumer Affairs and the Department of Health and Senior Services. 

Medicare Advantage 

When Medicare insurance plans deliver health benefits through a private insurance agency, then the funding goes through Medicare Advantage. This program has unique screening requirements as well with regards to restricted parties. 

In addition to the LEIE, you need to screen for the CMS Preclusion List hosted by the Centers for Medicare & Medicaid Services agency if you are a Medicare Part C or Part D Plan Sponsor. 

Software-Based Compliance 

Most management teams know at this point that compliance is a complicated topic given the vast number of exclusion lists and compliance policies they have to follow from a variety of government agencies and states. 

What software offers primarily is the ability to monitor your connections on an ongoing basis through automation. Since exclusion databases get updated seemingly at random and without warning, this benefit allows you to work with the most up-to-date information at all times. 

The federal LEIE of the Office of Inspector General, for instance, usually updates sometime in the middle of the month. State Medicaid lists can change at entirely different times as well. 

Get On Top of State Medicaid Exclusion List Screening with Descartes 

Restricted party screening is designed to prevent Medicaid payments to risky or fraudulent parties. In addition to the federal List of Excluded Individuals and Entities, you must also consider the exclusion databases written by individual states. 

But how do you ensure that you don’t miss any exclusions during your screening? And how do you get the job done efficiently without compromising on accuracy? Automation through a technology-powered compliance program is the answer to achieving regulatory compliance in a complicated legal landscape, especially with how stringent the requirements are for the healthcare industry. 

Descartes has been specializing in denied party screening for many of the world’s most notable organizations. Every year our experience extends to over 700 million screenings with 100 million compliance filings in total. Talk with our experts if compliance with state Medicaid programs matters to you. 

For more comprehensive information about effective compliance in the healthcare industry, download our white paper or visit our Resource Center.