CMS Increases Scrutiny of Owners through Medicare Provider Enrollment Process

The Centers for Medicare & Medicaid Services (CMS) issued a final rule on September 5, 2019, intended to address program integrity and vulnerability issues. The Office of the Inspector General (OIG) testified before Congress in 2011 that fraud schemes relied on the use of networks of affiliations among fraudulent owners, allowing bad actors to disguise their true ownership by use of nominee owners to bill Medicare fraudulently, close down, take over another company, and repeat the process in another location. Currently providers and suppliers can be denied, revoked, or terminated from participating in Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP), but absent a felony conviction, exclusion, or debarment, the owners of these provider entities will often remain as direct or indirect participants in these programs. The new rule is intended prevent bad actors from circumventing Medicare requirements by using elaborate, inter-provider relationships, or through name and identity changes. Additionally, CMS will have authority to deny or revoke a provider’s or supplier’s Medicare enrollment in certain specified circumstances. These new enforcement authorities will work hand-in-hand with current change of ownership requirements to give CMS greater authority to deny or revoke enrollment.

The major provisions of the rule include the following:

Affiliation Disclosure

The new rule will require that Medicare, Medicaid, and CHIP providers and suppliers disclose any current or previous direct or indirect affiliation with a provider or supplier that:

Has uncollected debt;
Has been or is subject to a payment suspension under a federal health care program;
Has been or is excluded by the Office of Inspector General (OIG) from Medicare, Medicaid, or CHIP; or
Has had its Medicare, Medicaid, or CHIP billing privileges denied or revoked.

These disclosable events will allow CMS to deny enrollment if the affiliation poses an undue risk of fraud, waste, or abuse.

Revocation Authority

CMS will have the authority to deny or revoke a provider or supplier’s Medicare enrollment if it is determined that the provider or supplier’s enrollment is currently revoked under a different name, numerical identifier, or business identity, and the reenrollment bar period has not expired. Of particular note, revocation may apply to all of a provider or supplier’s practice locations, regardless of whether they are part of the same enrollment, if the provider or supplier knowingly billed for services performed at or furnished items from a location that it knew or reasonably should have known did not comply with Medicare enrollment requirements.

Physicians or eligible professionals may also face revocation of Medicare enrollment if they have shown an abusive pattern or practice of ordering, certifying, referring, or prescribing Medicare Part A or B services, items, or drugs, or otherwise fail to meet Medicare requirements.

A provider or supplier’s enrollment may also be revoked if the provider or supplier has an existing debt that CMS has referred to the United States Department of the Treasury, including Medicare, Medicaid, or CHIP overpayments for which CMS or the state has sent notice of the debt to the affiliated provider or supplier, civil money penalties, and assessments.

Finally, a provider’s or supplier’s enrollment application may be denied if (1) the provider or supplier is currently terminated, suspended, or otherwise barred from participation in a state Medicaid program or any other federal healthcare program, or (2) the provider or supplier’s license is currently revoked or suspended in any state.

Increase in the Enrollment Bar

Previously the maximum enrollment bar was 3 years. The new rule increases that bar to 10 years, with some exceptions. Also, a provider or supplier may be prohibited from enrolling in the Medicare program for up to 3 years if its application is denied due to submission of false or misleading information, or omission of information from its application for enrollment. A provider or supplier whose participation is revoked from Medicare for a second time may now be barred from reentering the program for up to 20 years.

CMS expects to reap substantial savings due to these new enforcement authorities. New revocation authorities are expected to result in a 10-years savings of $4.16 billion, and new reenrollment and reapplication bar provisions are expected to result in a 10-years savings of $1.79 billion. Providers and suppliers may expect to assume some cost for compliance with the new rule, mainly associated with information collection.

The final rule with comment period is effective on November 4, 2019, and is available here.