On October 14, 2026, HHS published a notice delegating to the CMS Administrator the Secretary’s authority to impose permissive exclusions under section 1128(b) of the Social Security Act. The delegation is effective immediately and preserves the existing delegation to HHS’s Office of Inspector General. The notice also ratifies prior actions taken under the delegated authority.

The delegation gives CMS a more direct role in excluding individuals and entities from federal health care programs for certain misconduct. Exclusion generally bars federal health care program payment for items and services furnished by an excluded individual or entity, including under Medicare Advantage and Part D, and can expose entities that arrange or contract with excluded persons to civil monetary penalties. CMS now has authority to exclude based on misdemeanor healthcare fraud convictions and, in some cases, exclusions may take effect before an appeal. Exclusion authority is a broader enforcement and compliance tool that CMS’s historical payment suspensions, overpayment recoveries, or Medicaid provider enrollment denials and revocations. The notice explains that the change is intended to align investigative and enforcement responsibilities, reduce redundancy, and improve program integrity outcomes. Unlike HHS-OIG, CMS does not have the authority to conduct hearings or issue regulations on exclusions and those authorities remain solely in HHS-OIG’s bailiwick.

It is not yet clear how CMS and HHS-OIG will coordinate their exclusion authority, including how they will allocate cases and address overlapping or inconsistent determinations. Medicare Advantage organizations, Part D sponsors, Medicaid managed care plans, and providers may want to confirm their existing provider, vendor, and downstream-entity screening and contracting processes can accommodate CMS’s expanded role. 

Groom’s Health Services practice will continue to monitor developments related to CMS’s exercise of its exclusion authority and any subsequent guidance from CMS and OIG.

Read the Federal Register notice here (91 FR 65219).