CMS Granted “Force Multiplier” Exclusion Power as Revocation Volumes Explode
On July 21, 2026, the Department of Health and Human Services (“HHS”) held a press conference to announce federal actions aimed at curbing fraud and abuse in the Medicare and Medicaid programs.[i] Among the initiatives announced was the delegation of exclusion power to CMS by HHS Secretary Kennedy and an announcement that CMS has revoked 1,413 providers and suppliers in the first quarter of 2026, a 40% surge from previous years and the largest quarterly increase on record.
What is Exclusion?
The Federal exclusion laws authorize HHS to exclude individuals and entities from participating in Federally funded health care programs, notably Medicare and Medicaid, for various types of misconduct.[ii] Historically, the HHS OIG had the sole authority to exclude individuals and entities. However, on July 21, 2026, HHS Secretary Kennedy expanded exclusion authority to authorize the Centers for Medicare and Medicaid Services (“CMS”) to also utilize the exclusion laws.
Exclusions can be mandatory, wherein the OIG and now CMS, are required by law to exclude individuals and entities, and permissive, giving the OIG and now CMS the discretion to exclude individuals and entities.
Mandatory exclusions are imposed for the following conduct:
- Medicare or Medicaid fraud as well as any other offenses
- Patient abuse or neglect
- Felony convictions for other health care-related fraud, theft, or other financial misconduct;
- and felony convictions relating to unlawful manufacture, distribution, prescription, or dispensing of controlled substances[iii]
Mandatory exclusions can be imposed for the following conduct:
- Misdemeanor convictions related to health care fraud other than Medicare or a State health program
- Fraud in a program (other than a health care 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 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;
- Unlawful kickback arrangements
- Defaulting on health education loans or scholarship obligations
- Controlling a sanctioned entity as an owner, officer, or managing employee[iv]
What is Revocation?
CMS has the power to revoke the Medicare billing privileges of a provider or supplier currently enrolled in Medicare.[v] Providers can be revoked for the following reasons:
- Noncompliance with enrollment requirements or in the enrollment application
- Exclusion from any Federal healthcare program or debarment from any other Federal procurement or nonprocurement activity
- Certain felony crimes
- Providing false or misleading information on an enrollment application[vi]
Why Should Providers and Suppliers be Concerned?
Simply put, an exclusion or a revocation will result in a provider or supplier’s loss of the right to participate in Federally funded health care programs, notably Medicare and Medicaid. Excluded individuals and entities lose not only their right to submit claims for services to the Federally funded health care programs, they also cannot furnish administrative or management services to or within a healthcare entity (e.g., cannot be a CEO, CFO, general counsel, directors/management, etc.).[vii]
The draconian effects of exclusion led HHS to state that the delegation of exclusion authority to CMS “is going to be a force multiplier” which will “create additional momentum” to exclude additional bad actors.[viii] CMS also announced its dramatic increased use of revocation powers – in the first quarter of 2026, CMS revoked 1,413 providers and suppliers, resulting in a 40% surge from previous years.[ix]
What Should Providers and Suppliers Do Now?
If a healthcare provider or supplier has not fully developed a robust compliance program, now is the time. The OIG has extensive compliance resources to examine as a starting point.[x] The key is knowing exactly what CMS expects as far as requirements for enrollment and the provision of healthcare services and then monitoring / auditing each aspect for compliance. As the expansion of exclusion authority and revocation activities reflects, noncompliance can quickly lead to being kicked out of Federal healthcare programs.
If you need assistance with navigating long-term care or post-acute care issues, please reach out to Maynard Nexsen for assistance.
[i] C-Span coverage of July 21, 2026 news conference with video at HHS Secy. Kennedy, Dr. Oz, and Others News Conference on Combating Fraud | Video | C-SPAN.org
[ii] The Effect of Exclusion From Participation in Federal Health Care Programs - 2013 | Office of Inspector General | Government Oversight | U.S. Department of Health and Human Services
[iii] Background Information & Exclusion Authorities | Office of Inspector General | Government Oversight | U.S. Department of Health and Human Services
[iv] Id.
[v] 42 C.F.R. § 424.535.
[vi] Id.
[vii] The Effect of Exclusion From Participation in Federal Health Care Programs - 2013 | Office of Inspector General | Government Oversight | U.S. Department of Health and Human Services
[viii] C-Span coverage of July 21, 2026 news conference with video at HHS Secy. Kennedy, Dr. Oz, and Others News Conference on Combating Fraud | Video | C-SPAN.org
[ix] Id.
[x] Compliance | Office of Inspector General | Government Oversight | U.S. Department of Health and Human Services
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