Frequently Asked Questions: Sanction Screening

Sanction screening refers to searches against government sanction or exclusion databases to determine whether individuals and businesses that a healthcare organization employs or engages (i.e., employees, contractors, Board members, or vendors) are excluded from participating in federally funded healthcare programs. It also identifies individuals and businesses that have been sanctioned by a government agency, which may impact their eligibility to participate in federal healthcare programs. 

Sanction screening in healthcare is critical for compliance with federal and state laws and for protecting patients and financial integrity. Failure to conduct proper screening can result in civil monetary penalties (CMPs), violation of the False Claims Act, denied claims, and reputational damage. 

Healthcare organizations that hire or contract with excluded individuals or entities risk violating: 

• The Social Security Act (§1128 & §1156) – Prohibits payment for services furnished by excluded individuals or entities under Medicare, Medicaid, and other federal healthcare programs. 
• False Claims Act (FCA) – Prohibits submitting claims for services provided by excluded individuals, with violations resulting in substantial fines. 

Monthly screening is an essential compliance practice to avoid legal and financial risks while ensuring patient safety by preventing unqualified or unethical individuals and businesses from delivering care. 

Sanction screening in healthcare offers several key benefits: 

1. Regulatory Compliance – Ensures adherence to HHS OIG, CMS and state Medicaid requirements, avoiding penalties and legal action.
2. Financial Protection – Enables organizations from hiring excluded individuals and submitting improper claims, reducing the risk of fines and revenue loss
3. Patient Safety – Helps ensure that healthcare professionals providing care meet regulatory standards and do not have a history of misconduct that may put patient safety at risk.
4. Reputation Management – Avoids public scandals and damage to the organization’s credibility by ensuring compliance with exclusion regulations.
5. Operational Efficiency – Automated screening tools streamline the process, ensuring efficient and accurate compliance.

Effective sanction screening is essential to prevent organizations from hiring or engaging with excluded individuals and businesses, ensuring compliance with federal and state healthcare regulations. A strong screening process integrates automated tools that regularly check relevant exclusion lists, minimizing the risk of noncompliance. To maintain accuracy and efficiency, organizations should implement clear policies, conduct regular audits, and provide staff training to enable systematic and thorough screening. By embedding sanction screening into monthly workflows and continuously improving the process, healthcare organizations can protect themselves from legal, financial, and reputational risks while maintaining the integrity of federally funded healthcare programs.

Sanction screening is a process used by organizations, especially in the healthcare industry, to identify individuals, groups, or entities who appear on designated sanction lists. These lists are issued by federal and state agencies to ensure compliance with regulations. Screening involves comparing names or identifiers against these lists to identify potential matches. 

If an individual or entity is found on a sanction list, organizations are required to avoid engaging with them and, if applicable, terminate any existing relationship to comply with legal and regulatory obligations. Failure to do so can result in significant penalties, including fines and reputational damage. 

At its core, sanction screening is an ongoing process that requires regular monitoring to stay compliant. During this process, new or current employees are compared against sanction lists manually or automatically. If a match is found, identity verification takes place to ensure the results are accurate. Then, the organization can take appropriate action against the employee, business, or vendor in order to remain compliant.

Identity verification helps ensure accuracy and precision in matching individuals or entities against exclusion lists. Proper identity verification safeguards against false positives or mismatches, minimizing the risk of misidentifying individuals or entities as sanctioned when they are not. 

To find the right sanction screening software for your organization, prioritize comprehensive coverage of exclusion lists, user-friendly interfaces, and customization options. Look for providers with good support, training, and regular updates to meet your organization’s unique needs.

In the healthcare industry, sanction lists of those not permitted to participate in programs financed by government authorities are issued by government agencies and regulatory bodies. Key issuers include:  

• OIG LEIE
• State Medicaid Exclusion Listings
• General Services Administration System Database for Award Management (Debarments)
• FDA Debarment List
• Office of Foreign Assets Control (OFAC)
• Drug Enforcement Agency (DEA) Administrative Action List
• CMS Preclusion List 

An OIG exclusion is a sanction imposed by the Department of Health and Human Services (HHS) Office of Inspector General (OIG), which bans individuals and entities from participating in federally funded healthcare programs, including Medicare and Medicaid. Exclusions are issued for various reasons, such as convictions for Medicare or Medicaid fraud or other violations related to healthcare. 
 
Those who are excluded cannot receive payment for any items or services they furnish, order, or prescribe under federal healthcare programs. This restriction applies to all federally funded healthcare programs, whether the funding is provided directly by the government or channeled through other entities—with the exception of the Federal Employees Health Benefits Plan, which is not subject to these exclusion rules
 
To ensure compliance and avoid civil monetary penalties (CMP), healthcare organizations should routinely check the OIG’s List of Excluded Individuals/Entities (LEIE) to verify that new hires, contractors, and current employees are not excluded.

The OIG has the discretion to exclude individuals and entities on a number of grounds, including (but not limited to): 

• Misdemeanor convictions related to healthcare fraud other than Medicare or a state health program
• Fraud in a program (other than a healthcare program) funded by any federal, state, or local government agency
• Misdemeanor convictions relating to the unlawful manufacture, distribution, prescription, or dispensing of controlled substances
• Suspension, revocation, or surrender of a license to provide healthcare 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 healthcare 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

The OIG is required by law to exclude from participation in all federal healthcare programs individuals and entities convicted of the following types of criminal offenses:  

• 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 

The List of Excluded Individuals and Entities (LEIE) provides information to the healthcare industry, patients, and the public regarding individuals and entities currently excluded by HHS OIG from participation in Medicare, Medicaid, and other federal healthcare programs.

The U.S. Food and Drug Administration (FDA) maintains a list of persons and individuals who are debarred, meaning they are effectively forbidden from working in the drug industry. The FDA adds an individual to the FDA Debarment List when the person has been convicted of a crime relating to a drug product. For certain serious violations of the FD&C Act, the FDA may debar or disqualify an individual or company.

Debarment and disqualification prohibit the person or organization from engaging in the type of activity in which the violation occurred. For example, a pharmaceutical manufacturer convicted of falsifying drug trial data may be debarred from submitting new drug applications. Similarly, a healthcare provider found guilty of distributing unapproved or counterfeit medications could be prohibited from participating in activities involving FDA-regulated drug products.

The Drug Enforcement Administration (DEA) is among those federal agencies that maintain a list of excluded individuals and entities for violating laws related to drugs, pharmaceuticals, and other controlled substances that medical businesses inevitably deal with day-to-day. Most of those included on this list are physicians and pharmacies who violated the law governing these substances.

An OFAC search is a process used to determine whether an individual or entity appears on watchlists maintained by the Office of Foreign Assets Control (OFAC), a division of the U.S. Department of the Treasury. OFAC administers and enforces economic and trade sanctions targeting foreign governments, regimes, individuals, and entities involved in harmful activities such as terrorism, narcotics trafficking, weapons proliferation, and other threats to U.S. national security, foreign policy, or the economy. 

Sanctions imposed by OFAC can include freezing the assets of individuals or entities, prohibiting transactions, or implementing trade embargoes. For example, OFAC’s Specially Designated Nationals (SDN) List includes individuals and entities whose assets are blocked and with whom U.S. persons are generally prohibited from conducting business. 

In the context of background checks, an OFAC search identifies whether a candidate, vendor, or business partner is on any of OFAC’s sanction lists. This is a critical step for organizations to ensure compliance with U.S. laws, avoid significant penalties, and protect against reputational harm. Non-compliance with OFAC sanctions, even unintentionally, can lead to severe financial penalties and legal consequences.