New Medicare Supplier Enrollment Rules Include Stiff Penalties

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By Peter W. Thomas, JD, and Leela Baggett, JD

The Centers for Medicare & Medicaid Services (CMS) recently implemented a final rule significantly strengthening its authority to deny, revoke, and terminate providers' and suppliers' enrollment under Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) if the provider or supplier is affiliated with an individual or entity that possesses an undue risk of fraud, waste, or abuse. Effective November 4, 2019, the final rule requires providers and suppliers who are initially enrolling or revalidating to disclose certain affiliations with other providers and suppliers. The failure of the provider or supplier to fully disclose the information may result in denial, termination, and revocation of enrollment.

KNOW THE RULES!

The final rule makes it clear that affiliating with reputable individuals and entities, and hiring or subcontracting with individuals and entities with no history of fraud and abuse, is absolutely critical if an O&P practitioner wants to stay in business. Providers and suppliers should take exceptional care to ensure and confirm that affiliated providers and suppliers, including employees, independent contractors, subcontractors, and joint venture candidates, among others, have no record that might trigger this new CMS authority, or they may find themselves barred from participation in the Medicare, Medicaid, and CHIP programs.

Disclosure of Affiliations

Required Disclosure
The final rule requires providers and suppliers who are initially enrolling or revalidating enrollment in Medicare, Medicaid, or CHIP to disclose affiliations that they or any of their owning or managing employees or organizations have or had (within the previous five years) with a currently or formerly enrolled Medicare, Medicaid, or CHIP provider or supplier that has a disclosable event. For each reported affiliation, the provider or supplier must disclose (1) general identifying information about the affiliated provider or supplier; (2) the reason for disclosing the affiliated provider or supplier; (3) specific data regarding the affiliation relationship; and (4) if the affiliation ended, the reason for the termination.

Definition of an Affiliation and Disclosable Event
An affiliation is defined as:

1.   At least a 5 percent ownership interest that an individual or entity has in another organization

2.   A partnership interest that an individual or entity has in another organization

3.   An interest in which an individual or entity exercises operational or managerial control over, or conducts, the day-to-day operations of another organization, either under contract or through some other arrangement, regardless of whether the managing individual or entity is a W-2 employee of the organization

4.   An interest in which an individual is acting as an officer or director of a corporation

5.   For Medicare only, a reassignment relationship under 42 C.F.R. §424.80

6.   For Medicaid and CHIP only, a payment assignment relationship under 42 C.F.R. § 447.10(g)

A disclosable event occurs when the provider or supplier:

1.   Currently has an uncollected debt to Medicare, Medicaid, or CHIP

2.   Has been or is subject to a payment suspension under a federal health care program

3.   Has been or is excluded by the Office of Inspector General from participation in Medicare, Medicaid, or CHIP

4.  Has had its Medicare, Medicaid, or CHIP enrollment denied, revoked, or terminated. This includes situations where the affiliated provider or supplier voluntarily terminated its Medicare, Medicaid, or CHIP enrollment to avoid a potential revocation or termination.

Implementation of the Disclosure Requirement
CMS will phase-in this disclosure requirement for the Medicare program. Initially, providers and suppliers will only be required to report their disclosable affiliations upon request from CMS. CMS will request such disclosures when it determines that the initially enrolling or revalidating provider or supplier may have such affiliation. After CMS updates Form CMS-855 applications to collect this data, all providers and suppliers must disclose a qualifying affiliation upon initial enrollment or revalidation. However, a provider or supplier is not required to report affiliation data in that portion of the Form CMS-855 application that collects affiliation information if the same data is being reported in the "owning or managing control" section of Form CMS-855. 

With regard to Medicaid and CHIP, each state, in consultation with CMS, must select one of two options to implement the disclosure requirement. Under the first option, all providers that are not enrolled in Medicare but are initially enrolling or revalidating enrollment in Medicaid or CHIP must disclose qualifying affiliations. Under the second option, such providers must disclose qualifying affiliations only upon request by the state. The state will request such disclosures when it determines that the provider may have at least one such affiliation.

Denial, Termination, or Revocation Based on Disclosable Affiliation

The final rule authorizes the denial, termination, and revocation of a provider's or supplier's enrollment in Medicare, Medicaid, or CHIP, as applicable, if CMS (or for purposes of Medicaid and CHIP, the state in consultation with CMS) determines that the providers' or supplier's affiliation poses an undue risk of fraud, waste, or abuse. This may occur even if the provider or supplier has not yet reported or is not required at that time to report the affiliation. Moreover, the failure of the provider or supplier to fully disclose such information when the provider or supplier knew or should reasonably have known of this information may result in denial, termination, and revocation of a provider's or supplier's enrollment in Medicare, Medicaid, or CHIP.

In determining whether a disclosed affiliation poses an undue risk of fraud, waste, or abuse, CMS (or the state in consultation with CMS) will consider the duration of the affiliation, the degree and extent of the affiliation, whether the affiliation still exists, the reason for the termination of the affiliation and how long ago it ended, and any other evidence deemed relevant to its determination. CMS (or the state in consultation with CMS) will also consider the type of disclosable event; when the disclosable event occurred or was imposed; whether the affiliation existed when the disclosable event occurred or was imposed; certain information regarding an applicable uncollected debt; and the reason for the disclosable event if a denial, revocation, termination, exclusion, or payment suspension is involved.

Medicare Enrollment

Expanded Authority to Deny or Revoke Medicare Enrollment
The final rule provides CMS with additional authority to deny or revoke the Medicare enrollment of providers or suppliers under certain circumstances. Specifically, CMS may:

  • Revoke a durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier's enrollment if the DMEPOS supplier fails to submit to CMS any change in its enrollment application information within 30 days of the change
  • Revoke enrollment for billing for services performed at, or items provided from, a location that the provider or supplier knew or should reasonably have known did not comply with the Medicare enrollment requirements
  • Deny or revoke enrollment if the provider or supplier is currently revoked under a different name, numerical identifier, or business identity, and the applicable reenrollment bar period has not expired
  • Revoke enrollment if the provider or supplier has an existing debt that CMS appropriately refers to the United States Department of Treasury 
  • Deny enrollment if the provider's or supplier's license is currently revoked or suspended in a state other than that in which the provider or supplier is enrolling
  • Deny enrollment if the provider or supplier is currently terminated, suspended, or otherwise barred from participation in a Medicaid program or any other federal healthcare program
  • Revoke enrollment if the provider or supplier is terminated, revoked, or otherwise barred from participation in a Medicaid program or any other federal health care program. However, CMS may not revoke enrollment until the provider or supplier has exhausted all applicable appeal rights.
  • Deny enrollment if the provider or supplier, or any owning or managing employee or organization of the provider or supplier, is currently under a Medicare or Medicaid payment suspension
  • Revoke enrollment if CMS determines that the provider or supplier voluntarily terminated its Medicare enrollment to avoid a revocation that CMS would have imposed had the provider or supplier remained enrolled in Medicare. Such revocation is effective the day before the Medicare contractor receives the provider's or supplier's Form CMS-855 voluntary termination application
  • Revoke a physician's or eligible professional's enrollment if he or she has a pattern or practice of ordering, certifying, referring, or prescribing Medicare Part A or Part B services, items, or drugs that is abusive, represents a threat to the health and safety of Medicare beneficiaries, or otherwise fails to meet Medicare requirements
  • Revoke any and all of the provider's or supplier's enrollments under different names, numerical identifiers, or business identities, and under different types if the provider's or supplier's Medicare enrollment is revoked

Reenrollment and Reapplication Bar Period
The final rule also raises the maximum reenrollment bar from three to ten years. CMS may impose a reenrollment bar of up to 20 years if the provider or supplier is revoked from Medicare for the second time. CMS may also add up to three more years (even beyond the ten-year maximum reenrollment bar) if it determines that the provider or supplier is attempting to circumvent its existing reenrollment bar by enrolling in Medicare under a different name, numerical identifier, or business identity. The reenrollment bar applies to any of the provider's or supplier's current, former, or future business names, numerical identifiers, or business identities.

Under the final rule, CMS may also prohibit a prospective provider or supplier from enrolling in the Medicare program for up to three years if CMS denies its enrollment application because the provider or supplier submitted false or misleading information on or with (or omitted information from) its Medicare application.

Reactivation
CMS finalized its proposal that, to reactivate Medicare billing privileges, all deactivated providers and suppliers must recertify that their enrollment information currently on file with Medicare is correct and furnish any missing information. However, CMS may require a deactivated provider or supplier to submit a complete Form CMS-855 application as a prerequisite for reactivating its billing privileges.

Suspension of Medicare Payments
The final rule also authorized CMS and its Medicare contractors to suspend, in whole or in part, Medicare payments if the provider or supplier has been subject to a Medicaid payment suspension based on a credible allegation of fraud.

Effects of Opting Out of Medicare
Under the final rule, if a physician or practitioner opts out of Medicare, he or she may order, certify the need for, prescribe, or refer a beneficiary for Medicare-covered items, services, and drugs, as long as (1) the physician or practitioner is not paid, directly or indirectly, for such services (except as provided in 42 C.F.R. § 405.440 concerning emergency and urgent care services); (2) the physician's or practitioner's Medicare enrollment is not revoked; and (3) the physician or practitioner has not been excluded under certain Medicare exclusion statutes. 

However, if the physician or practitioner is excluded under certain Medicare exclusion statutes or the physician's or practitioner's Medicare enrollment is revoked, the physician or practitioner who opts out of Medicare may not order, prescribe, or certify the need for Medicare-covered items, services, and drugs, with limited exception.

Surety Bonds Policy Not Adopted
CMS decided not to adopt a policy that would authorize it to reject an enrolling or enrolled DMEPOS supplier's new or existing surety bond if the surety that issued the bond failed to make a required payment to CMS. This proposed policy would have allowed CMS to reject any and all surety bonds provided by the surety to enrolling or enrolled DMEPOS suppliers, not just the surety bond on which the surety refused to make payment to CMS. In determining whether to reject the bond, CMS proposed to consider the following factors:

  • The total number of instances in which the surety has failed to pay CMS
  • The total amount of money that the surety has failed to pay
  • The reason for the surety's failure to pay
  • The percentage of instances in which the surety has failed to pay
  • The total number of Medicare-enrolled DMEPOS suppliers that received surety bonds from the surety
  • Any other information that CMS considers relevant to its determination

If CMS were to reject the surety bond, the DMEPOS supplier would have had to secure a bond from a new surety in order to enroll in or maintain its enrollment in Medicare. After receiving opposition in comments to this proposal, CMS decided not to adopt it.

This final rule significantly stiffens penalties and raises the risk that legitimate, well-regarded providers and suppliers who may not be as attentive as they should be may be ensnared in violating this new regulation. Despite the existence of long-standing appeal rights available to providers and suppliers (i.e., reconsideration, Administrative Law Judge (ALJ) appeal, and Departmental Appeals Board review), a revocation decision is considered "discretionary" and, therefore, an ALJ cannot substitute his or her judgment for that of CMS in determining whether the revocation was appropriate. Hence, ALJs may only determine whether CMS possessed the authority to revoke the provider's or supplier's Medicare enrollment. The bottom line is that these new sanctions appear to be landmines that unaware or inattentive providers and suppliers may be subject to if they are not diligent.

Peter W. Thomas, JD, is a principal with the Powers Law Firm, Washington DC.

Leela Baggett, JD, is an associate in the Powers Law Firm's Health Care Practice Group.

Powers represents the National Association for the Advancement of Orthotics and Prosthetics and the Orthotic & Prosthetic Alliance.