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Bad Apple rule updated by CMS


The Centers for Medicare and Medicaid Services recently issued a final rule that updates requirements and strengthens program integrity efforts.

The Centers for Medicare and Medicaid Services (CMS) recently issued a final rule that updates requirements for providers wishing to enroll in the Medicare program. The updates, effective February 3, 2015, are the latest in a longstanding effort by CMS to strengthen Medicare program integrity efforts.

Enrollment is a critical gateway to billing the Medicare program and, as such, is carefully scrutinized by CMS to ensure only legitimate providers enroll. The final rule makes several key changes impacting enrollment:

  • Redefining “enrollment” to clarify a distinction between enrollment for the purpose of obtaining Medicare billing privileges and enrollment solely for the purpose of ordering or certifying items or services for beneficiaries;

  • Extending circumstances under which CMS may deny enrollment based on unpaid Medicare debts, giving CMS authority to examine total debts owed to Medicare, not solely overpayments, and to consider whether an individual owner or provider had a prior relationship with an entity that owed a debt or had its enrollment voluntarily or involuntarily terminated;

  • Expanding circumstances under which felony convictions can serve as a basis for CMS denying or revoking a Medicare provider’s enrollment;

  • Permitting CMS to revoke privileges from providers engaging in a “pattern or practice” of submitting improper claims, based on:
  • Percentage of submitted claims denied;

  • Reason(s) for claim denials;

  • Whether provider has history of final adverse actions;

  • Length of time over which pattern or practice has continued;

  • How long provider was enrolled in Medicare program;

  • Other information regarding provider’s circumstances that CMS deems relevant.

  • Narrowing time period during which any provider other than a home health agency may submit post-revocation claims (from 27 months to 60 days);

  • Limiting “backbilling” by ambulance suppliers;

  • Fixing effective date of enrollment bar, to begin 30 days after CMS or a CMS contractor mails a notice of revocation;

  • Limiting circumstances under which a provider may submit a corrective action plan, to cases where providers are determined not to be in compliance with enrollment requirements.

These changes underscore the importance of creating and fostering a “culture of compliance” within healthcare, and encourage providers to conduct business with potential program integrity risks and consequences squarely in mind. Some key takeaways that payers, and providers in their networks, may find helpful include:

With whom are you doing business? As CMS reminds us, “[I]t is ultimately the hiring provider or supplier’s responsibility” to check backgrounds of any individuals or entities with which the organization is doing business.

Keep your eyes on the contractors. Pay close attention to this newly-strengthened billing revocation authority, because CMS and its contractors may use it with increased frequency as a tool in their program integrity arsenal. CMS’s ability to revoke a provider’s billing privileges is tantamount to payment exclusion and comes with administrative appeal rights that, for most providers, afford too few protections that are not available when needed most. Moreover, the combination of strong billing revocation authority and a potential 10-year look-back period for overpayments under the federal False Claims Act signals a critical need to take a cautious approach to assessing potential risks within organizations. In February 2012, CMS published a proposed rule regarding reporting and returning of overpayments; if it is ultimately finalized, it could create retroactive liabilities and is inconsistent with government and industry practice regarding document retention, Medicare’s longstanding “reopening” provisions for adjudicated claims, and even underpayment liability look-back provisions.

George B. Breen is a member ofand Amy Lerman is an associate at Epstein Becker Green’s Health Care and Life Sciences Practice. 

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