How crucial do you reckon compliance is in the realm of healthcare? Compliance isn't merely a legal mandate, it's also a linchpin for trust and reputation. So if you're operating as a healthcare provider or institution, it's essential for you to understand the risks and potential fallout of breaching industry rules and regulations. Indeed, one of the most severe repercussions is facing exclusion or sanctions from federal or state agencies.

Did you know, according to the Office of Inspector General (OIG) over 90,000 individuals and entities find themselves on the List of Excluded Individuals/Entities (LEIE), which is refreshed every month? The OIG can exclude individuals and entities from federally funded healthcare programs for reasons such as fraud, patient abuse, violations related to controlled substances, or license revocation.

Additionally, other state and federal agencies like the General Services Administration (GSA), the Drug Enforcement Administration (DEA), the Office of Foreign Assets Control (OFAC), and state Medicaid programs maintain their individual exclusion lists.

Exclusion Versus Sanction: What's the Difference?

Exclusions and sanctions are penalties placed on individuals or entities implicated in fraud, abuse, or misconduct concerning healthcare programs. These penalties can bar you from participating in Medicare, Medicaid, or other federal or state-funded healthcare programs. This implies that payments or reimbursements for your services, products, or prescriptions will be blocked. Furthermore, you may face civil or criminal charges, fines, lawsuits, and damage to your reputation and credibility.

As a healthcare provider or organization, it's your duty to ensure that neither you nor your employees, contractors, vendors, and affiliates are excluded or sanctioned by any of these agencies. Failure to do so can lead to severe repercussions like:

  • Loss of revenue and reimbursement
  • CMPs of $10,000 for each item or service provided by the excluded entity or individual.
  • False Claims Act liability of up to three times the amount claimed plus $5,500 to $11,000 per claim filed.
  • Criminal prosecution and imprisonment
  • Loss of professional license and accreditation
  • Loss of contracts and business opportunities
  • Loss of trust and reputation among patients, peers, and regulators

To circumvent these scenarios, it's necessary to enforce effective compliance measures that aid in preventing, detecting, and correcting any exclusion or sanction issues. One of the most effective ways to do this is through credentialing software.

Exploring the Types and Sources of Exclusions and Sanctions

Exclusions and sanctions are penalties that are imposed on individuals or entities that have violated the rules and regulations governing healthcare programs. However, all exclusions and sanctions are not created equal. Depending on the nature and severity of the violation, healthcare providers and organizations may face different types of exclusions and sanctions.


An exclusion is a penalty that prevents an individual or entity from participating in any federal or state-funded healthcare program, such as Medicare, Medicaid, or State Children’s Health Insurance Program (SCHIP). An exclusion means that the individual or entity cannot receive any payment or reimbursement for their services, products, or prescriptions from these programs. An exclusion also means that the individual or entity cannot work for or contract with any other individual or entity that participates in these programs.

There are two main types of exclusions: mandatory and permissive.

Mandatory exclusions

Mandatory exclusions are required by law and are imposed by the Office of Inspector General (OIG) for certain types of criminal offenses. These include:

  • Medicare or Medicaid fraud, as well as any other offenses related to the delivery of items or services under Medicare, Medicaid, SCHIP, or other state healthcare programs
  • Patient abuse or neglect
  • Felony convictions for other healthcare-related fraud, theft, or other financial misconduct
  • Felony convictions relating to unlawful manufacture, distribution, prescription, or dispensing of controlled substances

Mandatory exclusions have a minimum duration of five years but can be longer depending on the circumstances of the case.

Permissive exclusions

Permissive exclusions are discretionary and are imposed by the OIG for a variety of reasons that may indicate a risk to patient safety or program integrity. These include:

  • Misdemeanor convictions related to health care fraud other than Medicare or Medicaid fraud, or misdemeanor convictions relating to controlled substances
  • Suspension, revocation, or surrender of a license to provide health care for reasons bearing on professional competence, professional performance, or financial integrity
  • Provision of unnecessary or substandard services
  • Submission of false or fraudulent claims to a federal health care program
  • Engaging in unlawful kickback arrangements
  • Defaulting on health education loans or scholarship obligations
  • Controlling a sanctioned entity as an owner, officer, or managing employee

Permissive exclusions have no minimum duration and can range from a few months to indefinite.


A sanction is a penalty that restricts, suspends, revokes, or voluntarily surrenders an individual’s or entity’s license to provide health care. It can be imposed by a federal or state agency, such as the OIG, the Centers for Medicare & Medicaid Services (CMS), the Drug Enforcement Administration (DEA), the Food and Drug Administration (FDA), the General Services Administration (GSA), the Office of Foreign Assets Control (OFAC), state Medicaid programs, state licensing boards, etc for various reasons, such as:

  • Fraudulent activity related to Medicare, Medicaid, SCHIP, or other state or federal healthcare programs
  • Convictions of producing or distributing controlled substances
  • Violations of the Anti-Kickback Statute or the Stark Law
  • Non-compliance with quality standards or reporting requirements
  • Failure to repay overpayments or correct billing errors
  • Failure to screen employees, contractors, vendors, and affiliates against exclusion lists

A sanction can lead to an exclusion by the OIG or a state Medicaid program if the violation is serious enough to warrant such a penalty.


The first step in avoiding sanctions is knowing where to source the relevant data. These sources include:

  • The OIG’s List of Excluded Individuals/Entities (LEIE)
  • The System for Award Management (SAM)
  • State Medicaid Exclusion Lists (SMELs)
  • State Licensing Boards (SLBs)

However, these sources may not provide a comprehensive view of all potential sanctions. To ensure that you're checking all relevant databases, it's recommended that you use credentialing software that can access multiple data sources and provide accurate and current information.

The Importance and Role of Credentialing Software: Features and Advantages

In the healthcare sector, maintaining compliance, safeguarding revenues, and protecting reputation can hinge significantly on successful credential management. Exclusions and sanctions can pose severe threats, and managing these threats necessitates robust compliance measures. These measures should encompass the rigorous verification and continual monitoring of the credentials and statuses of your employees, contractors, vendors, and affiliates. One effective method to achieve this is by utilizing credentialing software.

Credentialing software is a practical tool designed to optimize the management of the credentialing process. It offers numerous benefits that enhance operational efficiency and compliance. Below are some key advantages offered by credentialing software:

Enhanced Compliance: The software assists in maintaining compliance with federal and state laws, regulations, accreditation standards, and payer requirements. It aids in preventing engagement with individuals or entities that are excluded or sanctioned and promptly alerts them to any changes or updates in their status. Furthermore, it can help maintain the necessary documentation and records needed for audits and inspections.

Mitigated Risks: The software can reduce your risk exposure and liability associated with exclusion and sanction violations. It can help avoid civil monetary penalties, false claims liability, criminal prosecution, license revocation, contract losses, and reputation damage. Moreover, it safeguards patient safety and satisfaction by ensuring they receive care from qualified, competent providers.

Increased Efficiency: Credentialing software can streamline and automate the credentialing process, thereby saving time and resources. Minimizing manual tasks and human errors, reduces delays, errors, or omissions. It can access real-time data from multiple sources, conduct regular screenings against exclusion lists, provide alerts for any changes or updates, and generate reports and documentation needed for audits and inspections.

How Credentialing Software Works

Credentialing software functions by offering a centralized platform that can access diverse data sources and carry out multiple tasks associated with credentialing. It operates as follows:

  • Data Collection: The software gathers data from a variety of sources, such as licensing boards, certification boards, education institutions (primary sources), the OIG's List of Excluded Individuals/Entities (LEIE), SAM, state Medicaid programs (secondary sources), National Practitioner Data Bank (third-party source), internal human resources records, and external payer sources.
  • Data Verification: The software ensures the accuracy and validity of collected data. It checks for any discrepancies or gaps and verifies the identity and credentials of the individuals or entities being credentialed.
  • Data Monitoring: The software monitors the collected and verified data for any changes or updates. Regular and ongoing screening against exclusion lists is performed to ensure none of the credentialed individuals or entities are excluded or sanctioned by any federal or state agency. It also keeps track of the expiration dates of licenses and certifications, prompting renewal before expiry.
  • Data Reporting: The software can report the collected, verified, and monitored data for diverse purposes. It can generate reports and documentation for audits and inspections by federal or state agencies, accreditation bodies, and payers. Additionally, it can provide analytics and insights on credentialing process performance, outcomes, and trends.

Key Features and Functionalities of Credentialing Software

Credentialing software offers a variety of capabilities and characteristics that can make the credentialing process more effective and efficient. Some essential attributes and capabilities of credentialing software include:

  • Automated Verification: Credentialing software has the ability to automate the screening process, accessing various data sources and conducting frequent checks against exclusion lists. It can also automate the verification process by validating data obtained from primary sources.
  • Instant Notifications: The software offers real-time alerts and notifications for any changes or updates in the status of the individuals or entities being credentialed. It can also issue reminders for the expiration of licenses, certifications, accreditations, etc.
  • Detailed Reporting: Credentialing software offers extensive reporting and documentation for audits and inspections conducted by federal or state agencies, accreditation bodies, payers, etc. It also provides analytics and insights on the performance, outcomes, and trends of the credentialing process.
  • Cloud-based System: Credentialing software can be cloud-based, storing data on the cloud rather than on local servers. This feature offers several benefits such as improved visibility, greater accessibility (particularly for remote or distributed teams), enhanced security (due to advanced encryption and backup systems offered by cloud providers), and lower costs (as cloud providers charge based on usage rather than fixed fees).
  • User-friendly Interface: Credentialing software often features an easy-to-use interface that is simple to navigate. The dashboard displays key information at a glance (like status updates), and the menu allows users to access different functions (like screening) with just a few clicks.
  • Adjustable Settings: The software offers customizable settings that allow users to adapt the credentialing process to their specific needs. For instance, users can set their own screening frequency or criteria based on their risk tolerance level.

Best Practices and Tips for Using Credentialing Software

Credentialing software can provide you with many benefits and features that can help you avoid exclusions and sanctions effectively and efficiently. However, to make the most of credentialing software, you need to follow some best practices and tips that can help you optimize your credentialing process and ensure your compliance performance. Here are some of the best practices and tips for using credentialing software:

Choose the right credentialing software for your needs, budget, and goals

Not all credentialing software is created equal. There are different types that cater to different needs, budgets, and goals. To choose the right credentialing software for your needs, budget, and goals, you need to consider several factors, such as:

  • The size and scope of your organization: How many providers do you have? How many locations do you operate in? How many payers do you work with? How complex is your credentialing process?
  • The features and functionalities of the credentialing software: What are the essential features and functionalities that you need? What are the nice-to-have features and functionalities that you want? How user-friendly is the credentialing software? How customizable is the credentialing software?
  • The cost and value of the credentialing software: How much does the credentialing software cost? What are the pricing options and models? What are the hidden fees or charges? What is the return on investment of the credentialing software?
  • The support and service of the credentialing software: How reliable is the credentialing software? How secure is the credentialing software? How often is the credentialing software updated? How responsive is customer support? How helpful is the training and documentation?

To compare and evaluate different credentialing software options, you can use online resources such as Capterra, which provides user reviews, ratings, features lists, pricing information, etc. You can also request demos or trials from credentialing software vendors to test their products before making a decision.

Screen regularly and thoroughly

One of the most important best practices for using credentialing software is to screen your employees, contractors, vendors, and affiliates regularly and thoroughly against exclusion lists.

Screening regularly means that you should check your staff’s status against exclusion lists at least monthly (or more frequently if required by law or contract) to ensure that none of them have been excluded or sanctioned by any federal or state agency. Screening thoroughly means that you should check your staff’s status against multiple sources of data (such as OIG LEIE, SAM, state Medicaid programs, state licensing boards, etc.) to ensure that you have complete and accurate information.

Credentialing software can help you automate and simplify the screening process by accessing multiple sources of data and performing regular and ongoing checks against exclusion lists. Also, it can alert you of any changes or updates in your staff’s status and provide you with documentation and evidence for audits and inspections.

Don’t rely on outdated or incomplete data sources

Outdated or incomplete data sources can lead to false negatives (missing an exclusion or sanction) or false positives (flagging a non-excluded or non-sanctioned individual or entity) that can compromise your compliance performance.

Some state Medicaid programs update their exclusion lists quarterly or annually instead of monthly, and some state licensing boards do not report disciplinary actions or sanctions to the National Practitioner Data Bank (NPDB).

Credentialing software helps avoid relying on outdated or incomplete data sources by providing real-time data from multiple sources that are updated regularly.

FAQ About How to Avoid Exclusions and Sanctions with Credentialing Software

What is credentialing software?

Credentialing software is a specialized tool that assists healthcare providers and organizations in verifying and monitoring their employees' credentials and licenses to ensure compliance with federal and state regulations.

Why is credentialing software important?

Credentialing software is important because it helps healthcare providers and organizations avoid exclusions and sanctions that may result from hiring or contracting with individuals or entities that are banned from participating in federal or state healthcare programs. Exclusions and sanctions can have serious financial and reputational consequences for healthcare providers and organizations.

How often should I screen for exclusions and sanctions?

You should screen for exclusions and sanctions at least monthly or more frequently depending on your risk level. You should also screen before hiring or contracting with any new individual or entity.

What are some sources of exclusions and sanctions data?

Some sources of exclusions and sanctions data include: The Office of Inspector General’s List of Excluded Individuals/Entities (LEIE), The System for Award Management (SAM), State Medicaid exclusion lists, State licensing boards, other federal or state agencies or databases

How can I find the best credentialing software for my needs?

You can find the best credentialing software for your needs by considering factors such as the size and scope of your organization, the type and number of credentials you need to verify, the frequency and depth of screening you need to perform, the budget you have available, the features and functionalities you require

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