CMS Gains Direct Permissive Exclusion Authority as Data-Driven Enforcement Expands
Suggested actions for Compliance Officers
CMS has gained a more direct enforcement tool against fraud, waste, and abuse. Effective October 14, 2026, the Secretary of Health and Human Services delegated to the Centers for Medicare & Medicaid Services (CMS) Administrator the Secretary’s permissive exclusion authorities under section 1128(b) of the Social Security Act. The change allows CMS to investigate potential grounds for exclusion, develop supporting evidence, and make permissive exclusion determinations.
With the newly delegated permissive exclusion authority, the agency has a more direct path for excluding providers and entities from Medicare, Medicaid, and other federal health care programs when statutory grounds are established. This development may increase the speed and frequency of provider exclusions and related administrative actions. It also complements the agency’s broader program-integrity efforts, including the Medicaid Fraud War Room, federal-state coordination, and advanced analytics designed to identify high-risk providers and stop questionable payments before funds leave the program.
CMS is also using artificial intelligence and machine learning to identify indicators such as potential upcoding, billing for services not provided, and unusual geographic or utilization patterns. Together, these authorities and technologies reflect a shift from the traditional “pay-and-chase” model toward earlier detection and prevention. They may also support more consistent coordination of high-risk cases among CMS, states, contractors, and law enforcement.
For compliance officers, the central message is that enforcement is becoming faster, more coordinated, and increasingly data driven. Organizations should: (a) strengthen billing and coding controls; (b) investigate anomalies promptly; (c) verify that exclusion-screening processes are effective; (d) document the clinical, coding, and compliance rationale for high-risk claims; and (e) use internal analytics to identify the same patterns likely to attract regulatory scrutiny.
Proactive reviews of coding, enrollment data, geographic outliers, and unusually high utilization can reveal weaknesses before they develop into government investigations. As CMS expands both its enforcement authority and its analytical capabilities, a well-documented and operationally effective compliance program will become an increasingly important line of defense.
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