Healthcare Sanction Checks: What They Are and Why They Matter

Every employee, vendor, and volunteer who enters your organization presents a potential threat to your patients, reputation, and bottom line. But how can leaders efficiently and effectively evaluate every entity they deal with—and ensure they are not putting themselves in danger?

The answer is through healthcare sanction checks. While by no means a fail-safe against misbehavior, sanction checks help you avoid working with entities that feature on official exclusion lists. This not only makes them a compliance necessity, but a clear ethical priority for organizations that value patient safety, care quality, and ethical conduct. 

This article provides a complete overview of the topic, explaining: 

• What healthcare sanction checks are
• How sanction checks work
• Why you should follow best practices to make your checks as exhaustive and frequent as possible

Healthcare Sanction Checks 101

What Are Sanction Checks?

Healthcare sanction checks (also known as sanction screening) assess whether an individual or organization features on exclusion lists, such as the OIG’s LEIE or the GSA’s SAM list. While they are part of a larger set of background checks, sanction screening is important enough to be considered a core compliance process in its own right.

Why Are Sanction Checks So Important?

Exclusion lists exist to protect patients from dangerous individuals, maintain consistent quality across all federally-funded healthcare organizations, and prevent fraud and abuse. It is an ethical imperative for healthcare organizations to avoid working with these individuals, but it is also a key compliance requirement.

The failure to complete adequate sanction checks can lead to:

• Financial Penalties: Working with entities on an exclusion list can lead to civil monetary penalties (CMPs), with a single violation leading to five-figure fines.
• Lost Revenue: From exclusion from Medicare programs (due to working with entities on the OIG’s LEIE) to loss of federal contracts (through violation of the GSA’s SAM list), incomplete sanction checks can lead to a large volume of lost revenue.
• Reputational Damage: Organizations that work with excluded individuals often suffer significant and lasting reputational harm and may struggle to acquire new patients or hire new employees.

What is the Compliance Context for Sanction Checks?

Healthcare organizations are subject to numerous exclusion lists, each run by different regulatory bodies. As a result, the compliance context for each list varies slightly, with the distinct risks and penalties associated with non-compliance.  

Healthcare organizations must be aware of several lists, including:

• OIG List of Excluded Individuals and Entities (LEIE): Maintained by the HHS Office of Inspector General; identifies individuals and entities excluded from federally funded healthcare programs like Medicare and Medicaid due to fraud, abuse, or other misconduct.
• System for Award Management (SAM) Exclusions List: Managed by the GSA; consolidates federal debarment and suspension records, which is important because excluded parties cannot participate in federal contracts or procurement programs.
• State Medicaid Exclusion Lists: Each state Medicaid agency maintains its own exclusion list; providers must check these to ensure compliance with state-level program integrity rules.
• DEA Controlled Substances Act Registrant Database: Tracks individuals or organizations whose DEA registration to handle controlled substances has been revoked or suspended, critical for compliance in prescribing and dispensing.
• OFAC Specially Designated Nationals (SDN) List: Issued by the Treasury Department; includes sanctioned individuals and entities barred from U.S. financial and business transactions, which is important for avoiding federal penalties.

Getting Healthcare Sanction Checks Right: Challenges and Best Practices

How Sanction Checks Work

The basic principle of all sanction checks is the same:

• Your compliance team types an individual or vendor’s name into the exclusion list’s online database
• If the name is a “hit” (i.e., it appears in the database), they then assess whether the entity is an actual match
• Steps are taken to ensure that an excluded entity is not brought into the organization

This process appears straightforward, which explains why the Department of Health and Human Services Office of Inspector General (OIG), the Centers for Medicare & Medicaid Services (CMS), and state Medicaid agencies all call for increased sanction checking. But for many organizations, sanction checks are deceptively difficult.

The most common problems include false positives, resource shortages, and scaling screening to meet the volume of lists to which healthcare organizations are subject. However, an unappreciated problem with sanction screening is running unnecessary checks.

Medical Sanctions Check: When Does it Go Wrong?

The most common cause of unnecessary sanction screenings is a lack of clear policy about who is eligible for checks. For example, some organizations check referring physicians who are not on staff and do not have any other established relationship at the hospital.  

In many cases, hospitals will receive referrals from physicians outside the area or who have never referred a patient before. These situations often involve retiree patients who spend much of their time wintering in warmer areas who are referred by a local physician to the patient’s home area hospital.  

Because they are not known to the recipient, there is little identifiable data on file for that physician to confirm a potential “hit.” However, should the check result in a “hit” against the List of Excluded Individuals and Entities (LEIE), payments related to that referral are questioned.

Best Practices to Avoid Unnecessary Medical Sanction Screening

The takeaway message is clear: screening referrals from physicians unknown to the hospital is not a good practice. Neither the OIG nor CMS requires such checking; organizations should avoid them and develop a policy establishing who should and should not be screened.  

Such a policy could state that any and all individuals and entities that contractually provide medical-related products or services shall be screened. This would have the effect of filtering out those that do not meet that criteria and eliminating many of the referring physicians, as well as vendors and contractors that are not relevant to health care. 

Improve Your Sanction Screening Policies with Compliance Resource Center

While the policies we discuss here are a useful way to reduce unnecessary sanction screening, they are by no means the only method you need. Instead, organizations require comprehensive measures to avoid losing money – and Compliance Resource Center can help.  

Our Sanction Screening software grants you fast, easy access to all searchable federal and state databases – ensuring you minimize errors and take timely action. 

Want to learn more? Contact Shelby Cole at [email protected].

Subscribe to blog