A new rule regarding Medicare provider enrollment allows CMS to revoke healthcare providers or suppliers’ Medicare enrollment if they are affiliated with targeted “bad actors”.

As part of the CMS’ “Program Integrity Enhancements to the Provider Enrollment Process” going into effect Nov. 4, its new “affiliations” provision allows authorities to bar individuals and organizations that “pose an undue risk of fraud, waste or abuse based on their relationships with other sanctioned entities.”

“Affiliations” are defined in the CMS rule as:

  • A 5 percent or greater direct or indirect ownership interest that an individual or entity has in another organization.
  • A general or limited partnership interest (regardless of the percentage) that an individual or entity has in another organization.
  • An interest in which an individual or entity exercises operational or managerial control over, or directly or indirectly conducts, the day-to-day operations of another organization (including, for purposes of § 424.519 only, sole proprietorships), either under contract or through some other arrangement, regardless of whether or not the managing individual or entity is a W–2 employee of the organization.
  • An interest in which an individual is acting as an officer or director of a corporation.
  • Any reassignment relationship under § 424.80.

Medicare, Medicaid and CHIP providers will have to disclose any current or previous affiliation with an organization that has uncollected debt, has had a payment suspension under a federal healthcare program, has been excluded from those programs, or has had billing privileges denied or rescinded.

In addition, the CMS will be able to revoke or deny Medicare enrollment if providers or suppliers attempt to get back into the program under a different name, bill for services from non-compliant locations, exhibit a fraudulent or wasteful pattern of ordering services or drugs, or have an outstanding debt to the CMS from an overpayment that was referred to the Treasury Department. The agency may also prohibit an organization from participating in the Medicare for up to 3 years if they falsify their enrollment application.

The CMS said the new rule facilitates a more proactive approach to enforcement.

“For too many years, we have played an expensive and inefficient game of ‘whack-a-mole’ with criminals—going after them one at a time—as they steal from our programs. These fraudsters temporarily disappear into complex, hard-to-track webs of criminal entities, and then re-emerge under different corporate names. These criminals engage in the same behaviors again and again,” CMS Administrator Seema Verma said in prepared remarks. “Now, for the first time, we have tools to stop criminals before they can steal from taxpayers.”

The new rule will cost providers and suppliers $937,500 in each of the first three years of implementation to gather all their affiliation documentation, the agency estimates. The new revocation guidelines will lead to approximately 2,600 new withdrawals a year, netting an estimated $4.16 billion over a 10-year period, the CMS said. The agency could also save up to $4.48 billion over 10 years with the new reapplication provisions.

Healthcare fraud has been the most active sector of the U.S. Department of Justice’s overall fraud enforcement. Healthcare fraud and abuse cases have spiked since 2010, exceeding 400 cases a year, according to federal data. The government recouped close to $22.8 billion over that span.

According to the new rule, “For now, providers and suppliers will not be required to disclose affiliations under § 424.519 unless CMS, after performing the research and analysis described earlier and determining that the provider or supplier may have at least one affiliation that includes any of the four disclosable events, specifically requests it to do so. We believe this will ease the burden on the provider community because CMS, rather than the provider or supplier, will be responsible for reviewing whether the disclosure requirement applies to the provider or supplier. However, should CMS find, that it does apply, the provider or supplier in question must then report any and all affiliations that come within the scope of § 424.519, not merely the one(s) on which CMS made its determination. This could require the provider or supplier to conduct research to determine whether additional disclosable affiliations exist, which would then need to be reported to CMS.”

However, once CMS updates its Form CMS-855 applications to include an affiliation disclosure section, a provider or supplier that may have at least one affiliation involving a disclosable event, as identified by CMS, will be required to report any and all affiliations upon initial enrollment or revalidation. So it will be important for all providers and suppliers to begin investigating whether there are any disclosable affiliations by anyone affiliated with their organization.

In Summary: Here Are Five Key Things To Know:

1. Effective Nov. 4, the final rule outlines new authorities for CMS. The agency can now identify healthcare providers and suppliers who may be at risk of committing fraud based on their relationships with other organizations who have been sanctioned for fraud.

2. Under the final rule, an organization enrolled in the federal Medicare and Medicaid programs can be denied participation in Medicare if its owner or a managing employee is affiliated with another previously sanctioned organization. If the organization is already enrolled and such a relationship is identified, it could lose its Medicare and Medicaid billing privileges.

3. CMS will also revoke or deny Medicare enrollment to a provider or supplier who reenters the program under a different name, bills for services from noncompliant locations, shows questionable ordering or certifying patterns of services and drugs, or owes CMS reimbursement for overpayments.

4. If a provider submits false claims or includes misleading information in its enrollment application, CMS can now bar the provider from enrolling in Medicare or Medicaid for up to three years.

5. In addition, CMS can now block providers and suppliers who are revoked from reentering the Medicare program for up to a decade. If a provider is revoked from the program a second time, CMS can bar the provider from participating in the programs for up to 20 years.

This new rule places far reaching burden on organizations and providers participating in the Medicare program. Anyone submitting a provider enrollment application or revalidation after the effective date of this new rule has the burden of knowing and reporting any prior affiliation of the enrolling/revalidating provider.