Credentialing Manager’s Guide to the $5 Million Question: What Happens When Excluded Providers Slip Through Screening

You run sanction screenings. You check the OIG exclusion list. You follow the process your organization has in place. But here’s the question that keeps credentialing managers up at night: What if someone still slips through?

The excluded provider screening consequences healthcare organizations face are not hypothetical. They’re measured in millions of dollars, lost Medicare participation, and careers derailed by preventable gaps. And with the JCAHO 2025 mandate now requiring monthly credential re-verification, the margin for error just got a lot thinner.

This guide breaks down exactly what happens when an excluded provider makes it past your screening process–and what you can do to make sure it doesn’t.

What Does “Excluded Provider” Actually Mean?

Before we talk consequences, let’s get clear on the basics.

An excluded provider is any individual or entity that has been barred from participating in federal healthcare programs. These programs include Medicare, Medicaid, TRICARE, and others funded by the federal government.

Exclusion lists are maintained by several agencies:

• OIG LEIE (List of Excluded Individuals/Entities) — The Office of Inspector General’s primary exclusion database
• SAM (System for Award Management) — Federal-wide debarment and exclusion records
• OFAC (Office of Foreign Assets Control) — Sanctions related to national security and foreign policy
• State Medicaid exclusion lists — Each state maintains its own list of excluded providers

When someone appears on any of these lists, your organization cannot bill federal healthcare programs for any items or services that person provided, ordered, or prescribed. Period.

The problem? People get added to these lists all the time. And if your screening cadence has gaps–or your matching process generates so many false positives that your team can’t keep up–excluded individuals can slip through undetected for months.

The Real Cost of Missed Exclusions

Let’s talk numbers. The consequences of employing or contracting with an excluded provider are severe and stack up fast.

Civil Monetary Penalties

The OIG can impose Civil Monetary Penalties (CMPs) of up to $100,000 for each item or service provided by an excluded individual. That’s not per provider. That’s per claim line.

A single excluded physician seeing 20 patients a day could generate hundreds of thousands of dollars in penalty exposure within weeks. Over months of undetected employment, the total can reach into the millions.

Treble Damages Under the False Claims Act

Billing federal programs for services rendered by an excluded provider can trigger liability under the False Claims Act. This means your organization may owe three times the amount of the fraudulent claims, plus additional penalties per false claim submitted.

The False Claims Act doesn’t require intent to defraud. If your organization should have known that a provider was excluded–because you failed to screen or screened inadequately–that can be enough. For a deeper look at how the Department of Justice evaluates compliance programs, see this analysis of the DOJ Corporate Enforcement Policy.

Program Exclusion

In the worst cases, the OIG can exclude the organization itself from federal healthcare programs. For hospitals and health systems that depend on Medicare and Medicaid reimbursement, this is an existential threat.

Reputational Damage

OIG enforcement actions are public. Settlement agreements are published. Media covers large penalties. The reputational harm from an exclusion screening failure can erode patient trust, damage physician recruitment, and strain payer relationships for years.

Why Traditional Screening Processes Fall Short

If the penalties are this severe, why do organizations still miss excluded providers? The answer usually comes down to three problems.

1. Screening Frequency Gaps

Many organizations screen at the point of hire and then again on a monthly or quarterly cycle. But exclusions can be added to federal and state lists at any time. A provider excluded on the second day of the month won’t be caught until the next screening cycle–potentially weeks or months later.

The JCAHO 2025 monthly monitoring mandate is a direct response to this problem. Accreditation now requires continuous or monthly re-verification of credentials, including sanction status. Organizations still running quarterly or semi-annual checks are already out of compliance with the new standard.

2. False Positive Overload

Here’s the dirty secret of sanction screening: most platforms generate a staggering number of false positives. Industry-wide, false positive rates can exceed 90%.

That means for every real match, your credentialing team may be sifting through nine or more false alerts. When your team is drowning in noise, real matches get overlooked. Fatigue sets in. Corners get cut. And that’s when excluded providers slip through.

3. Fragmented Data Sources

OIG LEIE is just one list. SAM is another. OFAC is another. Then there are 50 state Medicaid exclusion lists, each with its own format, update schedule, and search interface. Manually checking every relevant database for every provider on every screening cycle is a massive operational burden.

Most organizations know they should be checking all these sources. Many aren’t–at least not consistently.

What JCAHO 2025 Changes for Credentialing Managers

The Joint Commission’s 2025 standards represent a significant shift for credentialing and medical staff services. The new monthly monitoring requirement means organizations must verify credentials–including sanction and exclusion status–at least every 30 days.

This isn’t a suggestion. It’s a condition of accreditation.

For credentialing managers, this means:

• Monthly screening cycles are now the minimum, not the gold standard
• Primary source verification (PSV) must be documented and audit-ready
• Continuous monitoring is the direction the industry is heading, even if monthly is the current floor
• Manual processes won’t scale–organizations with hundreds or thousands of providers need automated, reliable screening

If your current process involves spreadsheets, manual list checks, or quarterly batch runs, the JCAHO 2025 mandate is your signal to modernize.

How to Close the Gaps in Your Excluded Provider Screening

Reducing your exposure to excluded provider screening consequences in healthcare starts with addressing the three problems above: frequency, accuracy, and coverage.

Screen Continuously, Not Periodically

The goal is to catch exclusions as close to the date they’re published as possible. Continuous or high-frequency automated screening eliminates the window of exposure that periodic checks leave open.

Look for screening solutions that can process large batches efficiently. For context, well-designed systems can process hundreds of names in one to two hours, with smaller batches completing in under an hour.

Demand Precision Matching

False positive rates matter more than most credentialing managers realize. A screening tool that reduces false positives from 90%+ to 20-30% doesn’t just save time–it fundamentally changes your team’s ability to act on real matches.

When your team isn’t buried in false alerts, they can investigate genuine hits quickly and thoroughly. That’s the difference between catching an excluded provider on day one and discovering the problem during an audit.

Cover All Relevant Lists

Your screening process should check OIG LEIE, SAM, OFAC, and all applicable state Medicaid exclusion lists in a single automated workflow. If you’re relying on staff to manually check multiple databases, you’re introducing human error into a process where mistakes cost millions.

Build an Audit Trail

Documentation is your defense. Every screening run, every result, every resolution of a flagged match should be recorded with timestamps and responsible parties. When regulators or accreditors ask how you verified a provider’s eligibility, you need to show them–not tell them.

This principle of maintaining an immutable trail of evidence applies across your entire compliance program, not just credentialing. Organizations that build audit readiness into daily operations spend far less time scrambling when reviews happen. The same discipline that makes case management effective applies here: centralized records, clear workflows, and nothing falling through the cracks.

The Financial Guarantee Question

Given the stakes, some credentialing managers are asking a new question: What if my screening vendor misses someone? Who’s liable?

Most screening vendors answer that question with disclaimers and limitation-of-liability clauses. The financial risk stays with you.

That’s why financial guarantees are becoming a differentiator in this space. Ethico’s EcoCheck sanction screening, for example, backs its results with a $5 Million ActionCheck Guarantee. If an excluded provider is missed due to a screening failure, the guarantee provides financial protection.

This isn’t a marketing gimmick. It’s a reflection of confidence in the underlying screening methodology–a proprietary precision algorithm that reduces false positives to that 20-30% range while screening against all major federal and state exclusion lists.

For credentialing managers who carry the weight of organizational compliance on their shoulders, that kind of backing changes the risk equation.

Connecting Credentialing to Your Broader Compliance Program

Excluded provider screening doesn’t exist in a vacuum. It’s one component of a broader Ethics & Compliance program that should work together.

Consider how credentialing connects to:

• Conflict of interest disclosures — Physician financial relationships that could signal exclusion risk
• Ethics reporting — Tips about providers who may be practicing under false credentials
• Case management — Investigating and documenting credentialing concerns when they arise
• Risk assessments — Identifying which departments or facilities have the highest credentialing risk exposure

Organizations that treat credentialing as an isolated function miss the connections that a unified compliance program reveals. A speak-up culture where employees feel safe reporting concerns–where 75% of callers identify themselves–is more likely to surface credentialing red flags before they become enforcement actions.

Key Takeaways

• The penalties are enormous. Up to $100,000 per claim, treble damages under the False Claims Act, and potential program exclusion.
• JCAHO 2025 raises the bar. Monthly credential re-verification is now required for accreditation.
• False positives are the hidden threat. When your team is overwhelmed by noise, real exclusions get missed.
• Precision and frequency matter most. Automated, high-accuracy screening against all relevant lists is the standard your organization needs.
• Financial guarantees shift risk. Ask your screening vendor who pays when a match is missed.
• Credentialing connects to everything. Integrate screening into your broader E&C program for maximum protection.

Frequently Asked Questions

How often should healthcare organizations screen for excluded providers?

At minimum, monthly–this is now required under JCAHO 2025 accreditation standards. However, continuous or high-frequency automated screening provides the strongest protection by minimizing the window between an exclusion being published and your organization detecting it.

What federal lists should be included in excluded provider screening?

A comprehensive screening process should cover the OIG LEIE, SAM, OFAC, and all applicable state Medicaid exclusion lists. Checking only the OIG list leaves significant gaps, as providers can be excluded at the state level or appear on other federal sanction lists.

Can an organization be penalized if it didn’t know a provider was excluded?

Yes. Under the False Claims Act, liability can attach if an organization should have known about an exclusion. Inadequate screening processes–or screening too infrequently–can be treated as constructive knowledge. Ignorance is not a defense when reasonable screening would have caught the exclusion.

What is the JCAHO 2025 monthly monitoring mandate?

The Joint Commission’s 2025 standards require healthcare organizations to perform monthly re-verification of provider credentials, including sanction and exclusion status. This replaces less frequent verification cycles and reflects the industry’s move toward continuous monitoring.

How do false positives in sanction screening create compliance risk?

When a screening tool generates excessive false positives (industry rates exceed 90%), credentialing teams spend most of their time clearing false alerts. This leads to alert fatigue, slower investigation of genuine matches, and a higher likelihood that a real excluded provider is overlooked. Reducing false positives to 20-30% dramatically improves a team’s ability to act on real threats.

Wondering how your current screening process stacks up against JCAHO 2025 requirements? Ethico’s EcoCheck sanction screening combines precision matching, continuous monitoring, and a $5 Million ActionCheck Guarantee to help credentialing teams close the gaps that put organizations at risk. Learn more about how EcoCheck works.