CMS Is Adding to Its Enforcement Toolbox


A well-equipped toolbox can be an asset when it comes to demolishing an outdated room in your home in order to allow for a better, newly-improved room to take shape. However, if you use the wrong tool in the wrong manner, home renovation disaster can ensue---think a large hole in the wall when all you were trying to accomplish was the removal of a tiny shelf. Not speaking from personal experience, I promise...

Similarly, when it comes to oversight of federal healthcare programs, the right administrative tool and remedy can be an asset to the federal government in eliminating fraud and abuse within the Medicare program in order to allow for a more profitable and effective federal healthcare program to take shape. However, when the Centers for Medicare & Medicaid Services ("CMS") uses a tool in the wrong manner or without appropriate discretion, disaster can ensue---think quality providers departing the Medicare program.

Pursuant to a new rule, entitled Program Integrity Enhancements to the Provider Enrollment Process, CMS is adding to its collection of tools to help in combatting fraud and abuse within the healthcare industry. If used appropriately, the recently-adopted new rule is designed to keep "bad actors" out of the Medicare program and stop fraud and abuse before it occurs. "Now, for the first time, we have tools to stop criminals before they can steal from taxpayers. This is CMS hardening the target for criminals and locking the door to the vault. If you're a bad actor you can never get into the program, and you can't steal from us" said CMS Administrator Seema Verma.

Under the new rule, CMS will be able to identify individuals and entities that pose a fraud and abuse risk solely based on "affiliations" with other entities that have been sanctioned by CMS. CMS can then take steps to prevent such identified individuals and entities from participating in the Medicare program. At the request of CMS, enrolling providers will disclose any current or previous "affiliation" with an organization that has uncollected debt (regardless of amount and regardless of appeal status), experienced a payment suspension, been excluded, or had its billing privileges denied or rescinded (regardless of the basis). As used within the new rule, "affiliation" would include, among other things, an individual with 5% or greater indirect or direct ownership interest, officer, director, individual with operational or managerial control, or any reassignment relationship.

By way of example, under the new rule, if an entity is initially enrolling in Medicare and one of the owners identified on the initial 855 enrollment application was listed in the CMS database as being "affiliated" with a Medicare enrolled entity that has previously experienced a payment suspension (regardless of the basis or the duration), CMS can deny the enrollment application on this basis alone.

There have been a number of concerns with this new rule expressed by the provider community, as the new rule gives a tremendous amount of discretion to CMS without much notice or remedy to the provider. Take, for example, the scenario described above. Under the new rule, an owner with a five percent minority interest in an entity who has had its payments suspended (an approach frequently used by CMS), due to no action or oversight by the minority owner (or even unbeknownst to the minority owner), could cause a secondary entity in which the owner also has a five percent minority interest to be denied enrollment in the Medicare program. Consequently, in light of this new tool, Medicare providers and suppliers need to carefully and thoroughly examine any individual with whom it has an "affiliation" relationship.

The new rule takes effect on November 4, 2019. Time will tell if CMS is using this new tool in an appropriate manner or actually creating a renovation disaster.

Kelli Fleming is a Partner at Burr & Forman LLP practicing exclusively in the firm's healthcare industry group.


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