On October 14, 2026, U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy, Jr., published a notice (the “Publication”) in the Federal Register formalizing the delegation to the administrator of the Centers for Medicare & Medicaid Services (CMS) of the power to exclude individuals and entities, including providers, from participation in federally funded health care programs—effective immediately.
The Publication follows the Secretary’s July 21, 2026, announcement that he would be giving CMS permissive exclusion authority under section 1128(b) of the Social Security Act—which was, until now, within the exclusive domain of the HHS Office of Inspector General (HHS-OIG) (see Epstein Becker Green’s previous blog post here). The July announcement was made during an HHS press conference covered by C-SPAN.
Although the Publication purports to “reduc[e] redundancy” by “align[ing] investigative and enforcement responsibilities within a single operating division,” it does not clarify the extent and scope of the delegated authority, how it could be exercised jointly with HHS-OIG, and what impact it has on False Claims Act (FCA) cases.
What We Know
Force Multiplier. As a practical matter, the Publication states that CMS will “investigate, identify, and develop the evidentiary basis underpinning permissive exclusion determinations” within a single operating division, “exercised in accordance with CMS applicable policies, procedures, guidelines, and regulations.” This has been described by HHS as a “force multiplier” in combination with HHS-OIG’s exclusion authority.
No Hearings or Regulations. Under the Publication, CMS will not have independent authority to conduct hearings and issue regulations. Since section 1128(f)(1) guarantees excluded individuals and entities “reasonable notice and opportunity for a hearing,” the delegation of exclusion authority, without the authority for a hearing, may implicate the Fifth Amendment’s Due Process Clause.
Redelegation. The Publication states that permissive exclusion authority may be redelegated, subject to CMS review.
What We Don’t Know
Section 1128(b)(7). HHS-OIG typically negotiates settlement releases of section 1128(b)(7) allowing permissive exclusions in cases of fraud or kickbacks. It remains unclear whether and how CMS will coordinate with HHS-OIG on corporate integrity agreements—and whether both agencies must agree, which could lead to blocks and/or delays.
Due Process. It remains unclear what specific due process would exist to challenge an exclusion instituted by CMS. Will this incorporate exiting OIG processes and protocols?
Potential Challenges. As we noted in our previous post, while section 1128 of the Social Security Act commands the Secretary to exclude certain individuals and providers, it also expressly contemplates that such activity occurs through HHS-OIG. As such authority is exercised, we may see challenges from providers.
Takeaways
As CMS’s new exclusion authority continues to develop, we note that the consequences of exclusion are substantial: Those excluded can receive no payment from federal health care programs for any items or services they furnish, order, or prescribe. They cannot bill or be paid by Medicare, Medicaid, the Children’s Health Insurance Program, or any federal program, which effectively prevents them from working in health care.
Yet despite that authority, there is still little guidance. As challenges develop, providers should:
- demand clarification with regard to CMS’s role in any FCA settlement discussions;
- monitor for guidance, and don’t assume pre-July 21 settlement precedents still apply;
- if subject to CMS revocation (i.e., ending Medicare billing), treat this as a potential precursor to exclusion; and
- for FCA cases, consider seeking an explicit CMS non-involvement clause.
The bottom line is that, heading into 2027, health care providers face an ever-more aggressive enforcement landscape with less predictability. Assuming that CMS’s newfound exclusion authority remains unchallenged—which is unlikely—the agency will now be even more focused on potential health care fraud as it interacts with providers and suppliers in federal health care programs. We will keep you posted.
Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this post.
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The Health Law Advisor blog is currently edited by Emily Chi Fogler.
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