CMS now has the power to remove physicians and facilities from federal healthcare programs.
HHS Secretary Robert F. Kennedy Jr. delegated permissive exclusion authority to the CMS administrator, effective immediately, according to a notice published in the Federal Register Oct. 14. That authority has sat with the HHS Office of Inspector General since 1988.
The delegation lands three months after CMS proposed new grounds to deny or revoke Medicare enrollment for physicians, ASCs and other providers. Here are eight things ASC leaders should know:
1. What CMS can do now. The delegation covers the HHS secretary’s permissive exclusion authority under Section 1128(b) of the Social Security Act. It allows CMS to exclude individual providers and entities from federal healthcare programs, including Medicare and Medicaid. For surgery centers, that reaches both the facility and the physicians and clinicians who practice there.
2. The grounds that map to ASC risk areas. Grounds for exclusion include billing substantially excessive charges or furnishing unnecessary services, kickbacks, false statements on enrollment applications, license revocations or suspensions, and certain misdemeanor convictions related to healthcare fraud or controlled substances. Several track closely with areas ASCs already watch: medical necessity and utilization, physician ownership and referral arrangements, enrollment paperwork, and controlled substance handling.
3. The inspector general keeps its power. The delegation does not diminish the inspector general’s exclusion authority. That leaves two federal bodies able to pursue permissive exclusions rather than one.
4. CMS’ new power has limits. CMS cannot hold hearings or issue regulations under the delegation. Mr. Kennedy retains the authority to issue regulations and submit reports to Congress. CMS must also exercise the authority consistent with existing HHS policies, procedures, guidelines and regulations.
5. CMS can hand the authority down. The CMS administrator can redelegate the authority, but any redelegations or edits must be reviewed by a division within CMS’ Office of Human Capital.
6. It builds on CMS’ proposed enrollment crackdown. In July, CMS proposed new authority to deny or revoke Medicare enrollment as part of the CY 2027 home health proposed rule, with program integrity provisions that would apply to all provider and supplier types, including ASCs. One proposed ground would allow action against providers in a limited geographic area with an excessive concentration of other providers, a standard based on market density rather than an individual ASC’s billing or compliance record. The proposal would also add certain misdemeanor convictions from the past 10 years, including those related to sexual assault or financial misconduct, and make revocations retroactive to the date a provider first fell out of compliance, which could allow CMS to recoup payments received in good faith.
CMS Administrator Mehmet Oz, MD, said at the time that the changes would give the agency “stronger tools to protect Medicare beneficiaries and taxpayer dollars from fraud, waste and abuse.”
7. Enforcement volume is already high. The DOJ’s 2026 National Health Care Fraud Takedown in June charged 455 defendants, including 90 physicians, nurses and other licensed medical professionals, in schemes involving more than $6.5 billion in alleged false claims. CMS suspended 1,079 providers and revoked billing privileges for 1,403 as part of the effort, and more than 1,400 providers were excluded.
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