Overview
- HHS Secretary Robert F. Kennedy, Jr. formally delegated permissive exclusion authority under Section 1128(b) to the CMS administrator, a move published in the Federal Register that took effect immediately on October 14, 2026.
- Under the delegation CMS can investigate, identify, and build evidence to exclude providers and entities from Medicare and Medicaid but it cannot hold independent hearings or issue regulations and may redelegate the authority inside the agency.
- Legal analysts warn the change could raise Fifth Amendment due process questions because Section 1128 guarantees excluded parties a hearing yet the new delegation gives CMS exclusion power without explicit hearing authority.
- The delegation creates practical uncertainty for providers and life sciences companies that settle False Claims Act cases because CMS has never been a signatory to corporate integrity agreements and it is unclear who will monitor compliance or how parallel demands from CMS and HHS OIG will be resolved.
- Observers say the next steps to watch are formal guidance from CMS and HHS OIG, early enforcement decisions that show how the agencies will coordinate, and likely litigation or administrative challenges that test the delegation and due process limits; HHS OIG has held exclusive permissive exclusion power since 1988.