Guide
What Are Civil Monetary Penalties for Excluded Parties?
By Keelstar Team · Updated June 1, 2026
The short answer
Under federal law, healthcare organizations that employ or contract with excluded parties and bill federal programs can face civil monetary penalties of up to tens of thousands of dollars per item or service, plus program exclusion and repayments. Penalties apply per violation and per day in some cases. Continuous OIG and state screening with dated evidence is the primary operational defense.
The legal baseline
The OIG has authority to exclude individuals and entities from federal healthcare programs. The Social Security Act prohibits payment for items or services furnished by excluded parties. When a provider knowingly employs or contracts with an excluded person, OIG can impose civil monetary penalties and assessments.
How penalties accumulate
CMP exposure is often calculated per claim, per day of employment, or per service — not as a one-time fine. A billing specialist excluded but still processing Medicare claims for six months can generate substantial per-item liability. News releases on OIG enforcement routinely cite five- and six-figure settlements for excluded-employee situations.
Beyond fines — program risk
CMPs are not the only consequence. Organizations may face mandatory repayments, corporate integrity agreements, loss of billing privileges, and reputational damage with payers. For small practices, a single enforcement action can threaten viability.
Knowingly vs neglect
Enforcement considers whether the organization knew or should have known about the exclusion. 'We forgot to check' is not a defense that eliminates exposure — especially when payers and CMS expect monthly screening. Dated screening logs demonstrate reasonable diligence; absence of logs suggests neglect.
Vendor and staffing agency scenarios
Using an excluded billing company, home health agency, or staffing firm creates similar exposure if their staff touch federal claims on your behalf. Contractual indemnities help but do not replace your screening obligation — payers hold the billing provider responsible.
What compliance programs should do
Written policy, hire and vendor gates, monthly or quarterly re-screening, documented match resolution, and immediate remediation when a hit is confirmed. The cost of automated screening is trivial compared to a single CMP matter.
Frequently asked questions
- Can we bill if an excluded employee only does non-clinical work?
- If the excluded individual furnishes items or services — directly or indirectly — connected to federal program claims, exposure exists. Legal should assess role scope; many organizations prohibit any federal-program-tied work for excluded individuals.
Related guides
Put this into a monitored workflow
Exclusion Monitor handles this continuously — with reminders and an audit trail.