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COVID-19 Outbreak Update – Two Recent Updates From CMS Affecting Relief From Quality Reporting Requirements, And New Targeted Plan For Healthcare Facility Inspections Including Provider-Self Assessment Tool For Infection Control

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Covid-19 outbreak(March 25, 2020): As our clients and all members of the health care community are acutely aware, the challenges raised by the Coronavirus /  COVID-19 outbreak are critical and widespread.  Because of these challenges, the Centers for Medicare and Medicaid Services (CMS) and other principal operating components of the United States Department of Health and Human Services (HHS) are issuing frequent guidance to our community.

Additionally, Congress is currently working on the third and large piece of legislation to address both the health care and economic impact of this outbreak.  Over the last two weeks, our attorneys have posted a variety of helpful articles on our Firm’s website that are directly responsive to these activities.  This article provides an update to two pieces of guidance that the CMS recently issued.

I.     COVID-19 Outbreak Relief From Certain Quality Reporting Requirements for Clinicians, Providers, Hospitals and Facilities:

On Sunday, March 22, in response to the COVID-19 outbreak, CMS announced that it was granting exceptions from reporting requirement and extensions for clinicians and providers participating in Medicare quality reporting programs with respect to upcoming measure reporting and data submissions for these programs.  The Press Release states that “[s]pecifically CMS is implementing … extreme and uncontrollable circumstances policy exceptions and extensions for upcoming measure reporting and data submission deadlines for the following CMS programs:”

COVID-19 Outbreak


The Press Release further states:

  1. Submission of data for those programs with submission deadlines in April and May 2020 will be optional based on the facility’s choice to report; and
  2. CMS will not use data reflecting services provided from January 1, 2020 through June 30, 2020 in calculations for the Medicare quality reporting and value-based purchasing programs.

The Press Release indicates that these actions are being undertaken to reduce data collection and reporting burdens on providers while they are responding to the COVID-19 outbreak pandemic and also because data furnished during this period my not be reflective or certain performance measures during this time, and as a result “seeks to hold organizations harmless for not submitting data during this period.”

The entirety of the Press Release can be found at https://www.cms.gov/newsroom/press-releases/cms-announces-relief-clinicians-providers-hospitals-and-facilities-participating-quality-reporting.             

II.     New Targeted Plan for Health Facility Inspections:

A.  CMS guidance on a short-term re-focusing of the inspection process.

As a result of the recent COVID-19 outbreak, CMS has recognized the increasing stress of the workload being placed on front line clinicians as they care for patients and residents.  This is especially true for nursing facilities which face unique and critical challenges in caring for their patients, and where the shortage of supplies of personal protective gear, while true throughout many sectors of the health care system, is especially acute in these facilities.  Therefore, on Monday, March 23, CMS released guidance that streamlines the survey process for these and facilities and other providers.

The guidance states that as of the date of publication, according to the Centers for Disease Control and Prevention (CDC), 147 nursing facilities across 27 states have at least one resident diagnosed positive as a result of the COVID-19 outbreak.  CMS will be reviewing data as it comes in from the CDC, using that information to identify areas where the virus is likely to strike next and will be targeting inspections accordingly.

B.  Overall general framework of the process.

The guidance stresses three action areas:

  1. CMS will continue responsiveness to immediate jeopardy situations;
  2. CMS will work with the CDC to identify areas of risk of COVID-19 outbreak spread to ensure that providers are compliant with federal infection control requirements; and
  3. the guidance contains two tools/protocols which inspectors will use for infection control during this period, and that CMS strongly encourages providers to use as a voluntary self-assessment tool to review their own compliance with federal infection control requirements – one for nursing facilities and one for hospitals and continuing care.

C.  Specific actions.

During the next three weeks “only,” federal inspections will be prioritized as follows:

*Complaint inspections. These will be conducted for complaints and facility-reported incidents at the immediate jeopardy level, including allegations such as physical or sexual abuse, neglect, or other conditions that are at the IJ level.  Inspectors will use a streamlined Infection Control review tool regardless of the IJ allegation.

*Targeted Infection Control Inspections.  Federal and state inspectors will be conducting targeted infection control inspections for providers identified by CMS in collaboration with the CDC using a streamlined review checklist.  The guidance states that providers will receive immediate feedback to enable them to address shortcomings.

*Self-Assessment.  The guidance includes an infection control checklist to allow for self-assessments in this area.

Additionally, the guidance states that:

*Standard inspections of nursing homes, hospitals, home health agencies, intermediate care facilities for individuals with intellectual disabilities, and hospices and revisit inspections not associated with Immediate Jeopardy will not be conducted.

*CMS will prioritize IJ investigations over recertification surveys for CLIA laboratories.

*Absent IJ, CMS will utilize enforcement discretion.

*Initial inspections will be conducted with current guidance and prioritization.

During this period, CMS has also delayed certain enforcement activities as set forth in the quoted section from the CMS guidance document, below:

“ 4.a. For pending enforcement cycles during the prioritization period where the provider is currently not in substantial compliance or has not had a revisit survey to verify substantial compliance, and a per day civil money penalty (CMP), or DPNA (for nursing homes) or SPNA (for HHAs) was imposed for noncompliance that occurred prior to the prioritization date of surveys: These remedies will be suspended (stopped) as of the start of the survey prioritization date. In other words, the CMP will stop accruing and the DPNA/SPNA will end as of the suspension date. Additionally, CMS will not impose any new remedies to address noncompliance that occurred prior to the start of the survey prioritization period. NOTE: This does not apply to unremoved IJs. Enforcement actions will proceed as usual per the SOM for unremoved IJ deficiencies. CMS will issue guidance on how to reconcile these actions in the next few weeks.

b. For pending enforcement cycles during the prioritization period where the provider is currently not in substantial compliance or has not had a revisit survey to verify substantial compliance, and for pending enforcement cycles with new noncompliance cited after the issuance of this memo, and a per day CMP, or DPNA (for nursing homes) or SPNA (for HHAs) was imposed for IJ level noncompliance (where the IJ has not been removed): Surveyors will follow normal policies and procedures for removing the IJ. CMS will also follow normal policies and procedures for imposing enforcement remedies for remediating the noncompliance. For example, for noncompliance cited at the IJ level, that has not been removed at the time of the survey exit, the CMS Office will impose an enforcement remedy (e.g., CMP, 23 day termination), and the state surveyors will conduct a revisit survey. On the revisit survey, surveyors will either verify substantial compliance, or cite noncompliance at a lower level if warranted.

i. If the IJ noncompliance is reduced and cited at level 3 (LTC) or condition level (non-LTC), an onsite revisit survey will not be conducted during the prioritization period, and these cases will be held. CMS will issue guidance on how to impose enforcement and verify compliance with these in the next few weeks (see 2.c. [elsewhere in the full CMS guidance document]).

ii. If the IJ noncompliance is reduced and cited at level 2 (LTC) or standard level (non-LTC), facilities and survey agencies would verify compliance through normal procedures through a desk review (see 2.d. [elsewhere in the CMS guidance document]). However, CMS should not impose remedies during the prioritization period for any noncompliance that was identified before or after the start of the survey prioritization period, unless the noncompliance is an unremoved IJ.

c. The three-month mandatory DPNA and six-month mandatory termination (nursing homes) for not being in substantial compliance (for nursing homes and HHAs) will not take place, and be deferred for an evaluation at a later date. However, enforcement actions related to IJ remain and continue under normal procedures.

d. If CMS has previously imposed an alternative sanction (e.g., SPNA, CMP) on a HHA for noncompliance identified prior to the suspension, the six-month mandatory termination will not take place, and be deferred for an evaluation at a later date.

e. For existing CLIA enforcement cases where a civil money penalty (CMP) per day of non-compliance was imposed, accrual of CMP will stop as of the survey COVID-19 suspension date. CMS will issue guidance on how to reconcile these actions in the next few weeks. Other CLIA enforcement actions that have been initiated will be handled on a case-by-case basis with consultation DCLIQ managers and staff.

Due to its breadth, we have provided the following links to CMS guidance:

*Fact Sheet:  https://www.cms.gov/newsroom/fact-sheets/kirkland-washington- update-and-survey-prioritization-fact-sheet

*Full Guidance Document, including Infection Control Self-Assessment Tools: https://www.cms.gov/files/document/qso-20-20-allpdf.pdf-0

D. Other activity involving state Medicaid programs.

Additionally, on March 24, CMS granted 11 states’ Medicaid requests for 1135 waivers that allow greater flexibility in the administration of their programs.  We expect to provide a more detailed discussion of this event shortly; however, in the interim, we strongly suggest that all health care entities participating in the Medicaid program check with the states in which they operate to determine whether those states have received such a waiver, and if so, review the waiver to determine any impact that it might have on them.  As we all know, as the full scope of the COVID-19 outbreak develops, both Federal and State regulators will be actively monitoring the adverse impact that this national emergency is having on health care providers and suppliers.

III.     Conclusion — Responding to the COVID-19 Outbreak:

As a final remark, we wish to emphasize our awareness that the COVID-19 outbreak is a highly stressful situation that changes almost minute by minute.  We also wish to emphasize that as a society, we are all in this together and that we will get through this.  Right now, we need to do everything in our power to protect our residents, patents, and staff (and our loved ones and selves).  At Liles Parker, we will do our utmost to help you in this process by keeping you up to date of major developments and are available to respond to your inquiries during this period.

Michael Cook is a Partner and Co-chair for the Health Care Group at Liles Parker PLLC.  He has more than 40 years representing virtually every form of health care entity in a wide variety of matters across this country, currently is a member of the Board that oversees Virginia’s Medicaid program by appointment of the Governor, has advised a number of candidates for public office at both the state and national levels on health care issues, and has served on health care transition teams for several Governors.  Anyone with questions on the issues discussed in this paper should feel free to contact Michael.  He can be reached at either (202) 298-8750 (office) or (202) 361-2508 (cell) or mcook@lilesparker.com.

COVID-19 SBA Loan Support May be Available for Qualified Health Care Providers

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A COVID-19 SBA Loan May be Available for Your Health Care Practice.(March 25, 2020):  The Small Business Administration (SBA) offers loans to small businesses through community lenders.  The SBA acts as guarantor for these loans. In addition to the traditional lending, the SBA is also authorized to offer disaster assistance to businesses, renters, and homeowners who are located in regions with “declared disasters.”[1]  Small businesses impacted by Coronavirus (COVID-19) are eligible to apply for Disaster Loan Assistance from the SBA.[2]  As of January 31, 2020, individual states and the District of Columbia have been declared disaster areas.[3] These Economic Injury Disaster Loans (Disaster Loans or COVID-19 SBA loans) may be used by businesses to pay “fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.”[4]  The SBA may offer up to $2 million in Disaster Loan assistance with repayment options up to 30 years at an interest rate of no more than 3.75% for small businesses without credit available elsewhere.[5] If a business is a major source of employment, then SBA may waive the $2 million statutory limit.[6]

How can you apply for COVID-19 SBA loan?  The SBA utilizes a three-step process to administer disaster loans (such as those related to COVID-19 losses).  First, an applicant must submit an application for a Disaster Loan.  The SBA encourages online applications, but paper forms are available.[7] Second, the SBA will review the applicant’s credit and eligibility.  Third, the SBA will prepare and send loan closing documents and make an initial disbursement.  The initial disbursement for economic injuries is $25,000.[8]

Small businesses must complete several forms and provide the following information to apply for a Disaster Loan / COVID-19 SBA Loan [9]:

  • A Disaster Loan Application (SBA Form 5) must be filed.

  • A Tax Information Authorization (IRS Form 4506T) must be completed and signed by each applicant, each person owning 20 percent or more of the business, each general partner or managing member, and, any owner who has greater than 50 percent ownership in an affiliate business.

    • Affiliates include, but are not limited to, business parents, subsidiaries, and / or other businesses with common ownership or management.
  • The applicant must provide complete copies (including all schedules) of the business’s most recent Federal income tax return. An explanation may be submitted if a copy of the income tax return is not available.

  • A Personal Financial Statement (SBA Form 413) must be completed, signed, and dated by: (1) the applicant, (2) each principal owning 20% or more of the applicant business, and (3) each general partner or managing member.

Each form requires detailed information and it is critical to accurately complete the forms to avoid delays in processing or requests for additional information. Liles Parker attorneys are available to assist health care providers with the SBA Disaster Loan application process and to answer any other concerns in response to this National Emergency and your possible eligibility for a COVID-19 SBA loan.  For a free consultation, call Ashley Morgan at (202) 298-8750 or toll-free at 1 (800) 475-1906.

[An updated article dated March 26, 2020, titled “Small Business Administration Releases Express Bridge Loan Pilot Program for COVID-19” is available at this link.]

Ashley Morgan is a Senior Associate at the health law firm, Liles Parker, PLLC.  Ms. Morgan represents health care providers and suppliers around the country in a wide variety of regulatory matters.  These include but are not limited to Medicare revocation, suspension and deactivation actions, prepayment reviews, postpayment claims audits, and State Board licensure matters.  Ms. Morgan is also assisting health care providers and suppliers adversely affected by COVID-19 with the completion and submission of SBA business loans.  For a free consultation regarding your needs, please give Ms. Morgan a call.  She can be reached at (202) 298-8750 or toll-free at 1 (800) 475-1906.

[1] Disaster Assistance, Small Business Administration, https://www.sba.gov/funding-programs/disaster-assistance (last accessed Mar. 25, 2020).

[2] Economic Injury Disaster Loans, Small Business Administration, https://disasterloan.sba.gov/ela/Information/EIDLLoans (last accessed Mar. 25, 2020).

[3] A list of Declared Disasters is available on the SBA website. Current Declared Disasters, Small Business Administration, https://disasterloan.sba.gov/ela/Declarations (last accessed Mar. 25, 2020).

[4] SBA to Provide Disaster Assistance Loans for Small Businesses Impacted by Coronavirus (COVID-19), Release No. 20-24, Small Business Administration, Mar. 12, 2020, https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-provide-disaster-assistance-loans-small-businesses-impacted-coronavirus-covid-19 (last accessed Mar. 25, 2020).

[5] The interest rate for non-profits is 2.75%. Id.

[6] U.S. Small Business Administration Fact Sheet – Economic Injury Disaster Loans – Texas Declaration #16381: Incident: Coronavirus (COVID-19), Small Business Administration, available at: https://disasterloan.sba.gov/ela/Declarations/DeclarationDetails?declNumber=6064043&direct=false (last accessed Mar. 25, 2020).

[7] The online application portal for disaster loans, where you can also access paper applications is available here.

[8] Three Step Process: Disaster Loans, Small Business Administration, https://www.sba.gov/sites/default/files/files/Three_Step_Process_SBA_Disaster_Loans.pdf (last accessed Mar. 25, 2020).

[9] The SBA Schedule of Liabilities form (SBA Form 2202) may be used to identify all fixed debts to assist applicants in completing these forms.

 

Coronavirus Update – HHS & CMS Guidance, Directives and Waivers with Respect to Telemedicine, Provider Enrollment Regulations, Claim Appeals, the Suspension of Non-Emergency Survey Inspections, Nursing Homes, Home Health Agencies, Dialysis Facilities and DME Suppliers.

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UPDATED (March 17, 2020): CMS just announced a waiver of certain telehealth coverage requirements so that Medicare beneficiaries can receive a wider range of services from their doctors without having to travel to a healthcare facility. The article below has been updated to address these key takeaways.

(March 16, 2020): On March 13, 2020, President Trump declared a National Emergency[1] related to the current Coronavirus / COVID-19 outbreak. The declaration gives Secretary Alex Azar of the US Department of Health & Human Services (HHS) the power to waive certain Federal requirements in Medicare, Medicaid and CHIP in order to address the outbreak. The President’s declaration was preceded by Secretary Azar’s determination on January 31, 2020[2] that a public health emergency exists.  Since these pronouncements, Liles Parker attorneys have received numerous calls asking for clarification on these waivers and other guidance from HHS and the Centers for Medicare and Medicaid Services (CMS).  Our clients have also asked that we provide a listing of useful links and other available resources.

As a result of President Trump’s declaration of a national emergency, HHS now has broad authority to make temporary adjustments including:

  1. Applying flexibilities that are already available under normal business rules;
  2. Waiver or modification of policy or procedural norms by the Administrator of the Center for Medicare and Medicaid Services (CMS) under his or her authority; and
  3. Waiver or modification of certain Medicare requirements pursuant to waiver authority under § 1135 of the Social Security Act.

As of March 16, 2020, CMS has issued the following guidance, directives and waivers, specifically with regard to the coronavirus outbreak. We recommend providers carefully review the HHS, CMS and/or CDC guidance specific to each service, discipline or facility type for complete details.

I.   Impact of the Coronavirus on Telehealth / Telemedicine Regulations:

The Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020[3] signed by President Trump on March 6, 2020 included a specific provision addressing Medicare coverage and telehealth services. HB 6074 grants certain powers to the Secretary of Health and Human Services to waive some of the telehealth coverage requirements under the Medicare program. Unfortunately, the new law requires Secretary Azar to issue a waiver addressing any temporary changes to current Medicare telehealth coverage requirements. As of the publication of this article, a waiver has not been released, although CMS Administrator Seema Verma indicated during her remarks on March 13, 2020,[4] that more information would be forthcoming very soon. H.B. 6074 permits Secretary Azar to relax telehealth coverage requirements for all services CMS has approved to be provided via telemedicine as follows:

  • To relax the originating site requirements to include patient homes;
  • To waive the rural HPSA/non-MSA county geographic location requirement so that patients in any geographic location can receive covered telemedicine services; and,
  • To permit phone only telehealth services so long as the phone used has audio and video capabilities (i.e., most smartphones).

The law imposes certain restrictions, even under a waiver from Secretary Azar. Importantly, the relaxed coverage requirements would only extend to services provided by a physician or practitioner (or another physician or practitioner in that provider’s group practice) to an established patient, meaning an individual the provider has seen during the 3-year period before a telehealth service is furnished. We will update this article when a specific waiver is issued.

UPDATE (3/17/2020): CMS just announced a waiver of certain telehealth coverage requirements so that Medicare beneficiaries can receive a wider range of services from their doctors without having to travel to a healthcare facility. Here are the key takeaways from this important announcement:

  • Effective for services starting March 6, 2020 and for the duration of the COVID-19 Public Health Emergency, Medicare will make payment for Medicare telehealth services furnished to patients in broader circumstances.
  • These visits are considered the same as in-person visits and are paid at the same rate as regular, in-person visits.
  • Starting March 6, 2020 and for the duration of the COVID-19 Public Health Emergency, Medicare will make payment for professional services furnished to beneficiaries in all areas of the country in all settings.
  • While they must generally travel to or be located in certain types of originating sites such as a physician’s office, skilled nursing facility or hospital for the visit, effective for services starting March 6, 2020 and for the duration of the COVID-19 Public Health Emergency, Medicare will make payment for Medicare telehealth services furnished to beneficiaries in any healthcare facility and in their home.
  • The Medicare coinsurance and deductible would generally apply to these services. However, the HHS Office of Inspector General (OIG) is providing flexibility for healthcare providers to reduce or waive cost-sharing for telehealth visits paid by federal healthcare programs.
  • To the extent the 1135 waiver requires an established relationship, HHS will not conduct audits to ensure that such a prior relationship existed for claims submitted during this public health emergency.
  • HHS’ Office of Civil Rights will exercise enforcement discretion and waive penalties for HIPAA violations against health care providers that serve patients in good faith through everyday communications technologies, such as FaceTime or Skype, during the COVID-19 nationwide public health emergency.[18]

Note that the waiver does not restrict coverage to patients with coronavirus or symptoms of coronavirus. Any service that a provider can safely deliver via telemedicine and is on CMS’ list of approved telemedicine services[19] will be permitted under the new waiver. This waiver of Medicare program and HIPAA requirements will last for the duration of the COVID-19 Public Health Emergency. We do recommend that you check with your State licensing board to verify state requirements for telemedicine if you are unfamiliar with what is permitted in your state. Liles Parker has advised numerous clients with regard to telemedicine services.

In the meantime, CMS has reminded providers of the following options to provide covered non-face to face services to Medicare patients:

  • Medicare pays for “virtual check-ins” for patients to connect with their doctors without going to the doctor’s office. These brief, virtual check-in services are for patients with an established relationship with a physician or certain practitioners where the communication is not related to a medical visit within the previous 7 days and does not lead to a medical visit within the next 24 hours (or soonest appointment available). The patient must verbally consent to using virtual check-ins and the consent must be documented in the medical record prior to the patient using the service. The Medicare coinsurance and deductible would apply to these services. Doctors and certain practitioners may bill for these virtual check-in services furnished through several communication technology modalities, such as telephone (HCPCS code G2012) or captured video or image (HCPCS code G2010).
  • Medicare also pays for patients to communicate with their doctors without going to the doctor’s office using online patient portals. The individual communications, like the virtual check ins, must be initiated by the patient; however, practitioners may educate beneficiaries on the availability of this kind of service prior to patient initiation. The communications can occur over a 7-day period. The services may be billed using CPT codes 99421-99423 and HCPCS codes G2061-G206, as applicable. The Medicare coinsurance and deductible would apply to these services.
  • In addition, Medicare beneficiaries living in rural areas may use telehealth technology to have full visits with their physicians. The patient must be present at an approved telehealth originating site and must receive services using a real-time audio and video communication system at the site to communicate with a remotely located doctor or certain other types of practitioners. Medicare pays for many medical visits through this telehealth benefit. The Medicare coinsurance and deductible would apply to these services. For additional information on this benefit, please see CMS’s Telehealth resource page [5] for additional details and requirements.
  • Medicare Advantage Plans were given the authority to expand their telehealth coverage through enhanced benefit packages last year, but coverage still varies from plan to plan. CMS also issued a waiver on March 10, 2020 permitting (but not requiring) Medicare Advantage Plans to expand access to certain telehealth services. We recommend checking with the plans with which you contract for specific details or contact Liles Parker for assistance.
  • Many State Medicaid programs already cover telehealth/telemedicine services provided to patients in their homes. Liles Parker can assist in determining what your State Medicaid program covers.

II.   Impact of the Coronavirus on Medicare Provider Enrollment Regulations:

CMS has issued a blanket waiver related to provider enrollment requirements[6] to do the following:

  • Establish a toll-free hotline for non-certified Part B suppliers, physicians and nonphysician; practitioners to enroll and receive temporary Medicare billing privileges;
  • Waive the following screening requirements:
    • Application Fee – 42 C.F.R § 424.514
    • Criminal background checks associated with FCBC – 42 C.F.R § 424.518
    • Site visits – 42 C.F.R § 424.517
  • Postpone all revalidation actions;
  • Allow licensed providers to render services outside of their state of enrollment; and,
  • Expedite any pending or new applications from providers.

Liles Parker provides assistance to all types of providers seeking to enroll in the Medicare program.

III.   Impact of the Coronavirus on Medicare Claim Appeals:

CMS has issued a blanket waiver applicable to fee-for-service Medicare, Medicare Advantage and Medicare Part D claim appeals.[7]  The blanket waiver provides for the following relief:

  • Extensions to file an appeal
  • Waiving timeliness for requests for additional information to adjudicate the appeal;
  • Processing the appeal even with incomplete Appointment of Representation forms but communicating only to the beneficiary;
  • Processing requests for appeal that don’t meet the required elements using information that is available.
  • Utilizing all flexibilities available in the appeal process as if good cause requirements are satisfied.

IV.   Suspension of Non-Emergency Survey Inspections Due to Coronavirus:

On March 4, 2020, CMS issued a Memorandum[8] advising that it is temporarily suspending non-emergency survey inspections, allowing providers to focus on the most current serious health and safety threats, like infectious diseases and abuse. Specifically, survey activity is limited to the following (in Priority Order):

  • All immediate jeopardy complaints (cases that represents a situation in which entity noncompliance has placed the health and safety of recipients in its care at risk for serious injury, serious harm, serious impairment or death or harm) and allegations of abuse and neglect;
  • Complaints alleging infection control concerns, including facilities with potential COVID-19 or other respiratory illnesses;
  • Statutorily required recertification surveys (Nursing Home, Home Health, Hospice, and ICF/IID facilities);
  • Any re-visits necessary to resolve current enforcement actions;
  • Initial certifications;
  • Surveys of facilities/hospitals that have a history of infection control deficiencies at the immediate jeopardy level in the last three years;
  • Surveys of facilities/hospitals/dialysis centers that have a history of infection control deficiencies at lower levels than immediate jeopardy.

CMS is maintaining a website[9] with consolidated guidance to surveyors related to coronavirus and infection control in hospitals, nursing homes, hospices, home health, and dialysis facilities.

V.   Nursing Homes:

CMS issued a revised Memorandum[10] on March 13, 2020 with specific guidance to nursing homes, including:

  • Directing nursing homes to temporarily restrict all visitors and nonessential personnel with a few exceptions such as end-of-life situations, and to cancel all communal dining and group activities.
  • Screening their staff and outside healthcare providers using CDC guidelines for restricting access to health care workers.
  • Notifying their local health department if a resident is suspected of having COVID-19. Facilities that can follow the infection prevention and control practices recommended by CDC may or may not need to transfer the patient, depending on the severity of the patient’s symptoms. If a resident must be transferred to a hospital, careful coordination with EMS and the receiving facility must be performed, including placing a facemask on the patient during transfer.
  • Accepting patients diagnosed with COVID-19 and still under Transmission-Based Precautions for COVID-19 as long as the facility can follow CDC guidance;
  • Accepting patients who are not diagnosed with COVID-19 from hospitals or other locations where a case of COVID-19 was/is present; and,
  • Obligations to maintain appropriate PPE and alcohol-based hand rub supply levels, while assuring facilities they will not be cited by surveyors so long as they can demonstrate they are having difficulty obtaining the supplies for reasons outside their control. Nursing homes are advised to contact with their local and state public health agency to notify them of any shortage, follow national guidelines for optimizing their current supply, and identify the next best option to care for their residents.

CMS also exercised its authority to waive certain coverage requirements for skilled nursing services on March 13, 2020, including the following:

  • CMS is waiving the 3-day prior hospitalization for coverage of a skilled nursing facility (SNF) stay for those people who need to be transferred as a result of the coronavirus emergency. In addition, for certain beneficiaries who recently exhausted their SNF benefits, it authorizes renewed SNF coverage without first having to start a new benefit period.
  • Second, CMS is waiving 42 CFR 483.20 to provide relief to SNFs on the timeframe requirements for Minimum Data Set assessments and transmission.

VI.   Home Health Agencies:

CMS has issued a blanket waiver[11] to provide relief to home health agencies (HHAs) on the timeframes related to OASIS Transmission. The waiver also allows Medicare Administrative Contractors to extend the auto-cancellation date of Requests for Anticipated Payment (RAPs) during emergencies. Please consult with your home health MAC for specific guidance.

Additionally, on March 10, 2020, CMS issued guidance [12] on addressing potential and confirmed COVID-19 cases and mitigating transmission including screening, treatment, and transfer to higher level care (when appropriate).

VII.   Hospitals:

On March 4, 2020, CMS issued guidance[13] regarding infection control and prevention related to COVID-19 cases.  In addition, CMS has issued blanket waivers applicable to hospitals[14] addressing a number of issues.[17] Some of the most significant include:

  • CMS is waiving the requirements that Critical Access Hospitals limit the number of beds to 25, and that the length of stay be limited to 96 hours.
  • CMS is waiving requirements to allow acute care hospitals to house acute care inpatients in excluded distinct part units, where the distinct part unit’s beds are appropriate for acute care inpatient.
  • CMS is waiving to allow acute care hospitals with excluded distinct part inpatient psychiatric units that, as a result of a disaster or emergency, need to relocate inpatients from the excluded distinct part psychiatric unit to an acute care bed and unit.
  • CMS is waiving requirements to allow acute care hospitals with excluded distinct part inpatient Rehabilitation units that, as a result of a disaster or emergency, need to relocate inpatients from the excluded distinct part rehabilitation unit to an acute care bed and unit.

VIII.   Coronavirus Related Waivers Issued by CMS to DME Suppliers:

A blanket waiver[15] has been issued by CMS as of March 13, 2020 to address lost, destroyed, irreparably damaged or otherwise unusable Durable Medical Equipment (DME).  DME Medicare Administrative Contractors (MACs) will have the flexibility to waive replacement requirements such that the face-to-face requirement, a new physician’s order, and new medical necessity documentation are not required. Suppliers must still include a narrative description on the claim explaining the reason why the equipment must be replaced and are reminded to maintain documentation indicating that the DMEPOS was lost, destroyed, irreparably damaged or otherwise rendered unusable or unavailable as a result of the emergency. Please check your DME MAC website for more information or contact Liles Parker for assistance.

IX.   Dialysis Facilities:

On March 10, 2020, CMS issued guidance[16] addressing potential and confirmed COVID-19 cases and mitigating transmission including screening, treatment, and transfer to higher level care (when appropriate).

X.   Conclusion:

Liles Parker attorneys and staff are closely monitoring HHS, CMS and CDC guidance and will update this article as new information becomes available. Please contact us with questions or for assistance with your response to this unprecedented National Emergency.

Jennifer Papapanagiotou is a Partner at Liles Parker, Attorneys & Clients at Law.  She has decades of experience representing health care providers and suppliers around the country in connection with a wide range of regulatory actions.  Questions regarding the impact of recent coronavirus guidance on your organization?  Call Jennifer for a free consultation.  She can be reached at:  1 (800) 465-1906.

[1] Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak, Issued on March 13, 2020.  A link to the declaration can be found here.

[2] Determination that a Public Health Emergency Exists, issued by Secretary Azar on January 31, 2020.  A link to the determination can be found here.

[3] ‘‘Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020.”  H.B. 6074

[4] Emergency Declaration Press Call Remarks by CMS Administrator Seema Verma, delivered March 13, 2020.  A link to the remarks can be found here.

[1] Medicare Telemedicine Health Care Provider Fact Sheet, dated March 17, 2020, can be found here. Frequently Asked Questions expanding on the fact sheet and giving more details on implementation can be found here.

[2] HHS’s Office of Civil Rights is maintaining a website with more information on this topic here.

[3] You can find CMS’ list of approved telemedicine services here.

[5] CMS’s telehealth resource page can be found here.  

[6] COVID-19 Emergency Declaration Health Care Providers Fact Sheet, dated March 13, 2020, can be found here. Provider enrollment waivers of certain requirements are outlined in the guidance.

[7] Ibid. Waivers to the administrative claims appeals process are outlined on page 3 of the document.

[8] Memorandum titled “Suspension of Survet Activities,” dated March 4, 2020.  A copy of the Memorandum can be found here.

[9] CMS guidance titled “Updates for State Surveyors and Accrediting Organizations” can be found here.  

[10]CMS Memorandum titled Guidance for Infection Control and Prevention of Coronavirus Disease 2019 (COVID-19) in Nursing Homes (REVISED),” can be found here.

[11] COVID-19 Emergency Declaration Health Care Providers Fact Sheet, dated March 13, 2020, can be found here.   Home health agency guidance is on page 3 of the Fact Sheet.

[12] CMS Memorandum titled Guidance for Infection Control and Prevention Concerning Coronavirus Disease 2019 (COVID-19) in Home Health Agencies (HHAs), was issued on March 10, 2020, and can be found here.

[13] CMS Memorandum titled Guidance for Infection Control and Prevention Concerning Coronavirus Disease (COVID-19): FAQs and Considerations for Patient Triage, Placement and Hospital Discharge,” dated March 4, 2020, can be found here.  

[14] COVID-19 Emergency Declaration Health Care Providers Fact Sheet, dated March 13, 2020, can be found here.   Hospital guidance is on pages 1-3 of the Fact Sheet.

[15]COVID-19 Emergency Declaration Health Care Providers Fact Sheet, dated March 13, 2020, can be found here.   DME related guidance is on page 1 of the Fact Sheet.

[16] CMS issued guidance on March 10, 2020

[17]  Medicare Telemedicine Health Care Provider Fact Sheet, dated March 17, 2020, can be found here. Frequently Asked Questions expanding on the fact sheet and giving more details on implementation can be found here. 

[18] HHS’s Office of Civil Rights is maintaining a website with more information on this topic here.

[19] You can find CMS’ list of approved telemedicine services here.

[20]

42 CFR Sec. 424.535(a) Medicare Revocation Actions — Your Medicare Billing Privileges Can be Revoked For a Host of New Reasons. Are You Facing a Medicare Revocation Action? If so, You Must Act Fast to Preserve Your Appeal Rights.

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Have Your Medicare Billing Privileges Been Revoked Under 42 CFR Sec. 424.535(a)?

(March 9, 2020):   Last September, the Centers for Medicare and Medicaid Services (CMS) published a Final Rule titled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.”  The Final Rule under 42 CFR Sec. 424.535(a), was published in order to implement sections 1866(j)(5) and 1902(kk)(3) of the Social Security Act (as amended by the Affordable Care Act).

As we discussed in earlier articles[1], the Final Rule is quite expansive. It implements a wide range of new enrollment, affiliation, revocation and denial authorities.  As a reminder, here’s an overview of the timeline we are concerned with:

  • November 4, 2019: Purported effective date of the expanded revocation bases outlined in the Final Rule. 

  • September 10, 2019: CMS published the Final Rule titled Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.” in the Federal Register. [2]  The Final Rule sets out the expanded reasons for revocation or denial of a provider’s or supplier’s billing authority.  

  • March 1, 2016: CMS published a Proposed Rule titled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.”[3] This Proposed Rule set out the enrollment revocation and denial changes CMS planned to implement in an effort to address long-standing program integrity risks that have previously been exploited in the past.

Within hours of the purported[4] effective date of the Final Rule, CMS Medicare Administrative Contractors (MACs) began issuing revocation letters to participating Medicare providers and suppliers who had been identified as slated to have their Medicare billing privileges revoked (based on one or more of the expanded revocation letters set out in the Final Rule).  This updated article focuses on one aspect of the Final Rule – the expanded Medicare billing privilege revocation authorities now exercised by CMS.

I.   Implementation of Medicare’s Expanded Billing Privilege Revocation Authorities Under 42 CFR Sec. 424.535(a):

Prior to the issuance of the Final Rule, under 42 CFR Sec. 424.535(a), CMS exercised the authority to revoke the Medicare billing privileges of a currently-enrolled provider or supplier (along with any related provider or supplier agreement) based on fourteen reasons.  Under the Final Rule, the number of reasons upon which revocation could be based grew to 22.[5]  Moreover, the scope of several of the original fourteen reasons for revocation was expanded under the Final Rule, primarily due to implementation of new requirements with respect to “Affiliations,” “Disclosable Events,” and “Uncollected Debts.”  Over the last few months, since the expanded bases for revocation have been implemented, we have seen a significant increase in the number of revocation actions being pursued by Medicare MACs around the country. Moreover, as discussed in Section III below, CMS is now typically imposing a 10-year reenrollment bar (rather than the previous 3-year reenrollment bar) when pursuing a revocation action. An overview of the expanded list of reasons upon which a provider’s Medicare billing privileges can be revoked is provided below:

1. Noncompliance. Under 42 CFR Sec. 424.535(a) (1), CMS can revoke Medicare billing privileges if it has determined that a provider or supplier isnot in compliance with its enrollment requirements(as set out in the appropriate enrollment application) AND has not submitted an appropriate plan of correction, CMS may revoke the Medicare billing privileges.

2. Provider or supplier conduct. Under 42 CFR Sec. 424.535(a) (2), CMS can revoke Medicare billing privileges if a provider, supplier or any owner, managing employee, delegated official, medical director, supervising physician or other health care personnel of the provider or supplier has been excluded from participation in a Federal health care program OR has been disbarred, suspended, otherwise excluded from participating in any other Federal procurement program. 

3. Felonies.  Under 42 CFR Sec. 424.535(a) (3), CMS can revoke Medicare billing privileges if a provider, supplier or any owner or managing employee was convicted of a Federal or State felony (within the preceding 10 years) that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries. 

4. False or misleading information. Under 42 CFR Sec. 424.535(a) (4), CMS can revoke Medicare billing privileges if a provider or supplier certified as “true” information on the enrollment application that is misleading or false. As the regulation is quick to point out, the false certification action can also lead to fines and imprisonment. 

5. On-site review. Under 42 CFR Sec. 424.535(a) (5), CMS can revoke Medicare billing privileges if when conducting an “on-site review” at the purported address of the provider or supplier, it finds that the site is no longer operational OR the on-site review shows that the provider has moved and did not update their address appropriately. In recent years, this revocation reason is typically cited when a Unified Program Integrity Contractor (UPIC) conducts an unannounced, on-site visit of a practice, home health agency, hospice or other provider, based on the location listed in PECOS.  If a provider has moved offices and has failed to update CMS Form 855B and the Provider Enrollment, Chain, and Ownership System (PECOS), the CMS contractor will recommend that a provider’s billing privileges be revoked. 

6. Grounds related to provider or supplier screening requirements. Under 42 CFR Sec. 424.535(a) (6),  CMS can revoke the Medicare billing privileges of an institutional provider[6] that fails to submit an application fee or hardship exception request with their Medicare revalidation application.

7. Misuse of billing number.  Under 42 CFR Sec. 424.535(a) (7), CMS can revoke Medicare billing privileges if a provider or supplier knowingly sells to or allows another individual or entity to use its billing number (other than in the case of a valid reassignment of benefits). 

8. Abuse of billing privileges. Under 42 CFR Sec. 424.535(a) (8), CMS can revoke the Medicare billing privileges of a provider or supplier: 

    • Submits a claim for services that have not been furnished to a specific individual on the date of service. Examples provided under 42 CFR scc. 424.535(a) (8) include situations where beneficiary is deceased, situations where the directly physician or beneficiary is not in the state or country when the serves were allegedly furnished, OR when the equipment necessary for testing is not present when the testing is said to have taken place.
    • Has a pattern or practice of submitting claims that fail to meet Medicare requirements.[7]

9. Failure to report[8]. Under 42 CFR Sec. 424.535(a) (9), can revoke the Medicare billing privileges if a provider or supplier: 

    • Failed to comply with its reporting requirements under 42 CFR Se. 516(d), such as changes in ownership or control, any other changes in enrollment within 90 days, any revocation or suspension of a Federal or State license within 30 days; OR
    • Failed to comply with its reporting requirements under 42 CFR Sec. 33(g)(2), such as changes in ownership, changes of location, changes in general supervision, and adverse legal actions must be reported to the Medicare fee-for-service contractor on the Medicare enrollment application within 30 calendar days of the change. All other changes to the enrollment application must be reported within 90 days. As a recent letter to a provider from CMS contractor Novitas Solutions stated:

 An undeliverable records request sent to the provider’s Medicare 855 correspondence address constitutes a failure to provide CMS access to documentation in violation of 42 U.S. Code Sec. 424.516(1).”  

            OR

    •  Failed to comply with its reporting requirements under 42 CFR Sec. 424.57(c)(2), such as changes in information on a provider’s application for billing privileges within 30 days of the change. 

10. Failure to document or provide CMS access to documentation. Under 42 CFR Sec. 424.535(a) (10), CMS can revoke the Medicare billing privileges if a provider or supplier has failed to comply with the documentation or CMS access requirements. Under 42 CFR Sec. 516(f), a provider or supplier is required to maintain documentation for 7 years from the date of services, AND upon the request of CMS or Medicare contractors, provide access to that documentation. 

11. Initial reserve operating funds. Under 42 CFR Sec. 424.535(a) (11), CMS can revoke the Medicare billing privileges of a home health agency if within 30 days of CMS or a Medicare contractor request, the home health agency cannot furnish supporting documentation verifying that the home health agency  meets the initial reserve operating funds requirement found in 42 CFR Sec. 489.28(a). 

12. Other program termination. Under 42 CFR Sec. 424.535(a) (12), CMS can revoke Medicare billing privileges if a provider or supplier is terminated, revoked or otherwise barred from participation in a State Medicaid program or any other Federal health care program. This represents a significant change.

13. Prescribing authority. Under 42 CFR Sec. 424.535(a) (13), CMS can revoke Medicare billing privileges if a physician or other eligible professional’s Drug Enforcement Administration (DEA) Certificate of Registration is revoked or suspended; OR a State licensing body suspends or revokes the ability of a physician or other eligible professional to prescribe drugs.

14. Improper prescribing practices. Under 42 CFR Sec. 424.535(a) (14), CMS can revoke Medicare billing privileges of a physician or other eligible professional if it determines that there has been a pattern or practice of prescribing Part B or Part D drugs that is:

    • Abusive or represents a threat to the health and safety of Medicare beneficiaries or both; OR
    • Fails to meet Medicare requirements.

15. Reserved.

16. Reserved.

17. NEW — Debt referred to the United States Department of Treasury. Under 42 CFR Sec. 424.535(a) (17), CMS can revoke Medicare billing privileges if a provider or supplier has an existing debt that CMS appropriately refers to the United States Department of Treasury.[9]

18. NEW — Revoked under different name, numerical identifier or business identity. Under 42 CFR Sec. 424.535(a) (18) CMS can revoke the Medicare billing privileges if a provider or supplier is currently revoked under a different name, numerical identifier, or business identity, and the applicable reenrollment bar period has not expired. [10]

19. NEW Affiliation that poses an undue risk. Under 42 CFR Sec. 424.535(a) (19), CMS may revoke the Medicare billing privileges if it determines that the provider or supplier has or has had an affiliation under 42 CFR Sec. 424.519 that poses an undue risk of fraud, waste, or abuse to the Medicare program.

20. NEW — Billing from a non-compliant location. Under 42 CFR Sec. 424.535(a) (20), CMS may revoke the Medicare billing privileges of a provider or supplier, even if all of the practice locations associated with a particular enrollment comply with Medicare enrollment requirements, if the provider or supplier billed for services performed at or items furnished from a location that it knew or should have known did not comply with Medicare enrollment requirements.[11]

21. NEW Abusive ordering, certifying, referring, or prescribing of Part A or B services, items or drugs. Under 42 CFR Sec. 424.535(a) (21), CMS may revoke the Medicare billing privileges if it determines that a physician or eligible professional has a pattern or practice of ordering, certifying, referring, or prescribing Medicare Part A or B services, items, or drugs that are abusive, represents a threat to the health and safety of Medicare beneficiaries, or otherwise fails to meet Medicare requirements.[12]

22. NEW — Patient Harm. Under 42 CFR Sec. 424.535(a) (22), CMS may revoke the Medicare billing privileges if it determines that a physician or eligible professional has been subject to prior action from a State oversight board, Federal or State health care program, Independent Review Organization (IRO) determination(s), or any other equivalent governmental body or program that oversees, regulates, or administers the provision of health care with underlying facts reflecting improper physician or other eligible professional conduct that led to patient harm.[13]

As the above expanded list of revocation authorities reflects, CMS now has the express ability to revoke the Medicare billing privileges of a health care provider or supplier for serious violations of law (such as conviction of a felony or patient abuse).  However, it also has the authority to revoke Medicare billing privileges for conduct that may only amounts to an administrative error or mistake by a provider or supplier.  Perhaps even more troubling is the fact that the past or current “affiliations” of a provider or supplier may lead to a revocation action if CMS determines that the affiliation represents an undue risk to the Medicare program or its beneficiaries.

A hundred years ago, the U.S. Supreme Court stated in the case Rock Island Arkansas & Louisiana R. Co v. United States[14]:

Men must turn square corners when they deal with the government

That statement still rings true in today’s world.  Health care providers and suppliers are permitted to apply to participate in the Medicare and Medicaid programs.  Participation isn’t a “right.”  It is a privilege.  When you complete your enrollment paperwork, you expressly agree to comply with the terms of the Form 855 Enrollment Application.  Should you fail to comply with each of the obligations set out in that agreement, CMS reserves the right to revoke your Medicare billing privileges. Now, more than ever, it is essential that you have an effective Compliance Program in place and that you periodically review your practices to ensure that you and your staff are fully complying with applicable Medicare regulatory, statutory and legal requirements.

II.   Length of Time a Provider’s Medicare Billing Privileges May be Revoked Under 42 CFR Sec. 424.535(c):

The Final Rule significantly modified 42 CFR Sec. 424.535(c). This regulatory provision sets out the potential reenrollment bar time limits that may imposed by CMS when initiating a Medicare revocation action.  If this is the first time that a provider’s Medicare billing privileges are being revoked, the minimum reenrollment bar is 1 year, and the maximum reenrollment bar is 10 years.[15]  If CMS determines that a provider attempted to circumvent its existing reenrollment bar by enrolling in Medicare under a different name, numerical identifier or business identity,” the agency can further tack on up to 3 additional years onto the reenrollment bar it has imposed.[16] As a final point in this regard, Moreover, under if a provider or supplier is being revoked from Medicare a second time, CMS may choose to impose a reenrollment bar of up to 20 years.[17]

III.   Responding to a Medicare Revocation Action:

If you receive notice that CMS is intending to revoke your Medicare billing privileges, it is essential that you engage experienced health law counsel to represent you in the appeal process.  This is especially critical given the fact that recent revocation actions initiated by CMS have all sought to impose of reenrollment bar of 10 years, rather than the 3-year bar that was typically imposed prior to November 4, 2019.  Unfortunately, a Medicare revocation action can trigger a number of other secondary adverse actions by law enforcement, private payors and a provider’s State Medical Board. If your Medicare billing privileges are being revoked, please feel free to give us a call for a free consultation.  Liles Parker attorneys have extensive experience representing health care providers around the country in Medicare revocation actions.  We can be reached at:  1 (800) 475-1906.

42 CFR scc. 424.535(a)Robert W. Liles is a former Federal prosecutor and has more than 25 years of health law experience.  Mr. Liles and the other attorneys at Liles Parker have extensive experience representing providers and suppliers in the appeal of proposed Medicare revocation actions. Questions?  Give Robert Liles a call.  For a free consultation, he can be reached at:  1 (800) 475-1906.

[1] September 2019 article titled Medicare, Medicaid and CHIP Enrollment Revocation and Denial Authorities Have Expanded.  What Steps are You Taking to Reduce Your Level of Risk?”

and our December 2017 article titled Revocation of Your Medicare Billing Privileges.”

[2] 84 FT 47794 (September 10, 2019). https://www.govinfo.gov/content/pkg/FR-2019-09-10/pdf/2019-19208.pdf

[3] 81 FR 10720.

[4] We are in currently in the process of challenging the purported effective date of November 4, 2019.  CMS failed to provide the proper notice requirements mandated under the Congressional Review Act.  This failure thereby delays the effective date of the expanded revocation authorities.

[5] Slots have been placed in reserve for revocation reasons number 15 and 16 which would likely be assigned by CMS in the future and would presumably go through the rulemaking process.

[6] Under 42 CFR Sec. 424.502, the term “Institutional Provider” means any provider or supplier that submits a paper Medicare enrollment application using the CMS-855A, CMS-855B (not including physician and nonphysician practitioner organizations), CMS-855S, CMS-20134, or an associated Internet-based PECOS enrollment application.

[7] Under 42 CFR Sec. 424.535(a) (8), when making this determination, CMS considers:

  • The percentage of submitted claims that were denied;
  • The reasons for the denials; whether the provider has a history of final adverse actions (and the nature of these actions;
  • The length of time over which the pattern has continued; how long the provider has been enrolled in Medicare; and
  • Any other information that CMS deems relevant to its determination of whether the provider or supplier has or has not engaged in the pattern or practice identified.

[8] Under 42 CFR Sec. 424.535(a)) (9), when determining whether a revocation under this paragraph is appropriate, CMS considers the following factors:

(i) Whether the data in question was reported.

(ii) If the data was reported, how belatedly.

(iii) The materiality of the data in question.

(iv) Any other information that CMS deems relevant to its determination.

[9] Under 42 CFR Sec. 424.535(a) (17), when determining whether a revocation under this paragraph is appropriate, CMS is supposed to consider:

  • The reason(s) for the failure to fully repay the debt (to the extent this can be determined).
  • Whether the provider or supplier has attempted to repay the debt (to the extent this can be determined).
  • Whether the provider or supplier has responded to CMS’ requests for payment (to the extent this can be determined).
  • Whether the provider or supplier has any history of final adverse actions or Medicare or Medicaid payment suspensions.
  • The amount of the debt. (vi) Any other evidence that CMS deems relevant to its determination.

[10] Under 42 CFR Sec. 424.535(a) (18), when determining whether a provider or supplier is a currently revoked provider or supplier under a different name, numerical identifier, or business identity, CMS investigates the degree of commonality by considering the following factors:

  • Owning and managing employees and organizations (regardless of whether they have been disclosed on the Form CMS–855 application).
  • Geographic location.
  • Provider or supplier type.
  • Business structure.
  • Any evidence indicating that the two parties are similar or that the provider or supplier was created to circumvent the revocation or reenrollment bar.

[11]  Under 42 CFR Sec. 424.535(a) (20), when determining whether and how many of the provider’s or supplier’s enrollments, involving the non-compliant location or other locations, should be revoked, CMS considers the following factors:

  • The reason(s) for and the specific facts behind the location’s noncompliance.
  • The number of additional locations involved.
  • Whether the provider or supplier has any history of final adverse actions or Medicare or Medicaid payment suspensions.
  • The degree of risk that the location’s continuance poses to the Medicare Trust Funds.
  • The length of time that the noncompliant location was non-compliant.
  • The amount that was billed for services performed at or items furnished from the non-compliant location.
  • Any other evidence that CMS deems relevant to its determination.

[12] Under 42 CFR Sec. 424.535(a) (21), when making its determination as to whether such a pattern or practice exists, CMS considers the following factors:

(i) Whether the physician’s or eligible professional’s diagnoses support the orders, certifications, referrals or prescriptions in question.

(ii) Whether there are instances where the necessary evaluation of the patient for whom the service, item or drug was ordered, certified, referred, or prescribed could not have occurred (for example, the patient  was deceased or out of state at the time of the alleged office visit).

(iii) The number and type(s) of disciplinary actions taken against the physician or eligible professional by the licensing body or medical board for the state or states in which he or she practices, and the reason(s) for the action(s).

(iv) Whether the physician or eligible professional has any history of final adverse action (as that term is defined in Sec. 424.502).

(v) The length of time over which the pattern or practice has continued.

(vi) How long the physician or eligible professional has been enrolled in Medicare.

(vii) The number and type(s) of malpractice suits that have been filed against the physician or eligible professional related to ordering, certifying, referring or prescribing that have resulted in a final judgment against the physician or eligible professional or in which the physician or eligible professional has paid a settlement to the plaintiff(s) (to the extent this can be determined).

(viii) Whether any State Medicaid program or any other public or private health insurance program has restricted, suspended, revoked, or terminated the physician’s or eligible professional’s ability to practice medicine, and the reason(s) for any such restriction, suspension, revocation, or termination.

[13] Under 42 CFR Sec. 424.535(a) (21), when determining whether a revocation is appropriate, CMS considers the following factors:

(A) The nature of the patient harm.

(B) The nature of the physician’s or other eligible professional’s conduct.

(C) The number and type(s) of sanctions or disciplinary actions that have been imposed against the physician or other eligible professional by the State oversight board, IRO, Federal or State health care program, or any other equivalent governmental body or program that oversees, regulates, or administers the provision of health care. Such actions include, but are not limited to in scope or degree:

(1) License restriction(s) pertaining to certain procedures or practices.

(2) Required compliance appearances before State medical board members.

(3) License restriction(s) regarding the ability to treat certain types of patients (for example, cannot be alone with members of a different gender after a sexual offense charge).

(4) Administrative or monetary penalties.

(5) Formal reprimand(s).

(D) If applicable, the nature of the IRO determination(s).

(E) The number of patients impacted by the physician’s or other eligible professional’s conduct and the degree of harm thereto or impact upon.

[14] 254 U.S. 141, 143 (1920).

[15] 42 CFR Sec. 424.535(c)(1)(i).

[16] 42 CFR Sec. 424.535(c)(2)(i).

[17] 42 CFR Sec. 424.535(c)(3),

Telemedicine Audits of Evaluations by Referring Physicians are Increasing

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telemedicine(February 17, 2020):  Over the last few months, we have seen a significant increase in the number of telemedicine audits and investigations by law enforcement and program integrity contractors.  Unfortunately, most of the calls we have received have been from physicians who have inadvertently become associated with a number of improper telemedicine schemes.  The purpose of this article is to discuss several of the problematic Durable Medical Equipment (DME) telemedicine business arrangements that we have seen.  This article also reviews the possible adverse ramifications that can result if a physician, nurse practitioner or physician assistant becomes involved in one of these improper billing arrangements.

I.  Historical Overview of DME Telemedicine Audits and Enforcement Efforts:

Although telehealth services have been around in one form or another for more than a century,[1] it wasn’t until 1997 that legislation was passed that would cover certain Medicare telemedicine consultations to patients living in specific rural areas.[2] These services were later implemented as part of the 2001 Physician Fee Schedule.[3]  Since that time, the scope of Medicare telehealth services covered by the government has expanded considerably.[4]  Nevertheless, a significant number of restrictions greatly limit the care that can be provided[5] via a telecommunications system, who qualifies to provide telemedicine services,[6] and where a Medicare beneficiary must be located in order for the location to qualify as an “originating site.”[7]  A more in-depth discussion of these Medicare telemedicine restrictions can be found at this linked article.[8]

Despite the fact that coding and fee schedule guidance regarding Medicare covered telemedicine services wasn’t even published until November 2001, by March 2003 the Department of Health and Human Services (HHS), Office of Inspector General (OIG) had already found it necessary to issue a Special Fraud Alert entitled “Telemarketing By Durable Medical Equipment Suppliers.”[9]  At that time, the OIG had identified a number of DME suppliers that had utilized third-party marketing companies to make unsolicited telephone calls to Medicare beneficiaries in an effort to generate referrals.  The Social Security Act, § 1834(a)(17)(A), prohibits DME suppliers from making unsolicited calls to Medicare beneficiaries regarding the furnishing of a covered item (unless one of three narrow exceptions apply[10]).  Moreover, § 1834(a)(17)(B) bars payments to a DME supplier that knowingly submits a claim that was generated as a result of a prohibited telephone solicitation.  The OIG further noted that DME suppliers cannot use third-party marketing companies as a subterfuge to get around these unsolicited telemarketing restrictions. As the Special Fraud Alert expressly notes:

“. . . a DME supplier is responsible for verifying that marketing activities performed by third parties with whom the supplier contracts or otherwise does business do not involve prohibited activity and that information purchased from such third parties was neither obtained, nor derived, from prohibited activity. If a claim for payment is submitted for items or services generated by a prohibited solicitation, both the DME supplier and the telemarketer are potentially liable for criminal, civil, and administrative penalties for causing the filing of a false claim.” (emphasis added).

Over the next seven years, further instances of improper, and often illegal conduct by third-party marketing companies continued to be identified by the government.  In January 2010, the OIG reissued its originally March 2003 Special Fraud Alert, updating the guidance to reflect additional concerns that had been noted by law enforcement.  As the OIG’s 2010 Updated Special Fraud Alert[11] states:

“OIG has also been made aware of instances when DME suppliers, notwithstanding the clear statutory prohibition, contact Medicare beneficiaries by telephone based solely on treating physicians’ preliminary written or verbal orders prescribing DME for the beneficiaries. A physician’s preliminary written or verbal order is not a substitute for the requisite written consent of a Medicare beneficiary.”

Once again, the OIG stressed that DME suppliers may only engage in telemarketing activities to Medicare beneficiaries if one of the three exceptions under Social Security Act § 1834(a)(17)(B) have been met. Moreover, the DME suppliers cannot try to go around these restrictions by using third-party marketing companies to make unsolicited telephone contacts.

II.  Current DME Telehealth / Telemedicine Fraud Enforcement Efforts:

Telemedicine audits of physician orders for DME supplies and law enforcement investigations of the business arrangements between referring physicians, telemedicine marketing companies and DME suppliers have steadily increased.  This is due in large part to the fact that there are often multiple major risk areas at play in the provision of this type of care.  Over the last year, the government has announced the investigation and indictment of multiple large DME telemedicine cases, many of which are still ongoing.  For example:

February 2020.  District of New Jersey.  In this case, the government has alleged that the owners of two telemedicine companies agreed to solicit and receive illegal kickbacks and bribes from patient recruiters, pharmacies, brace suppliers and others in exchange for the arranging for doctors to order medically unnecessary braces for Medicare beneficiaries.  To accomplish the fraud, the government alleges that the telemedicine company owners recruited and hired health care providers to order braces for Medicare beneficiaries. Federal prosecutors also allege that the telemedicine company owners paid illegal kickbacks to health care providers to order DME supplies for Medicare beneficiaries that were medically unnecessary and / or were ineligible for Medicare reimbursement.  Once the physician orders for DME supplies were obtained, the government alleges that the telemedicine company owners transferred the orders to co-conspirator DME suppliers who then submitted in excess of $56 million in false claims to the Medicare program.

September 2019.  District of New Jersey.  In this case, a New Jersey physician pleaded guilty to his role in a $13 million telemedicine health care fraud scheme.  Notably, this was one of the 24 defendants indicted in the national take-down discussed below.  In this particular case, the New Jersey physician admitted that while working for two telemedicine companies, he wrote medically unnecessary orders for orthotic braces for Medicare beneficiaries. He further admitted that he wrote the brace orders for the telemedicine companies without speaking to the patients and that he “concealed” the fraud by stating in his documentation that he had “discussions” or “conversations” with the patients.

April 2019.  Nationwide DME Telemedicine Take-Down.  Last April, the Department of Justice announced that it had brought criminal charges against 24 individuals and 130 DME companies for their alleged participation in fraud schemes involving more than $1.2 billion in losses to insurance payors.  The fraud was widespread, and more than 80 search warrants were executed in 17 Federal judicial districts.  The 24 individual defendants include CEOs and COOs of telemedicine companies, owners of DME companies and a number of licensed medical professionals As the Press Release noted:

The defendants allegedly paid doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.  The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate in the United States and abroad.” (emphasis added).

As a review of recent cases will show, every DME telemedicine fraud case is different. Nevertheless, there are a number of common fraud tactics that are repeatedly alleged in the cases prosecuted by the government, many of which are discussed below.

III.  The Role of Physicians, Nurse Practitioners and Physician Assistants in the DME Telehealth Fraud Cycle:

Many of the physicians, nurse practitioners and physician assistants currently undergoing a telemedicine audit or a law enforcement investigation of their telehealth evaluations first decided to dabble in the world of telemedicine as a way to supplement their income.  In the cases we have handled, these individuals have typically worked full-time as a hospitalist or in another staff capacity and have then taken a side job with a telemedicine marketing company to conduct telemedicine DME evaluations of patients.  In most instances, the evaluating physician would work as an Independent Contractor and would be paid anywhere from $30 to $50 for each telemedicine patient evaluation performed.

As a quick review of the internet will confirm, even today there are multiple employment websites listing part-time opportunities for physician telemedicine work.  At first glance, it may look like a fast and easy way to make some money. When it comes to telemedicine business arrangements, the old maxim “You are Judged by the Company You Keep,” certainly holds true.  We recommend that you exercise caution and conduct an appropriate level of due diligence before you take on this type of work.  As the case summaries above reflect, if you are drawn into an improper telemedicine business arrangement, you may face administrative, civil or even criminal sanctions.  Questions to be asked include, but are not limited to:

  • How is the telemedicine marketing company generating potential beneficiary referrals?
  • How is the telemedicine marketing company paid for its services and by whom? Is the company paid by a DME supplier?
  • Is the telemedicine marketing company also involved with the promotion of laboratory services?
  • How will you be paid for the telemedicine evaluations you will be performing?
  • Will you be billing Medicare or another responsible payor directly for your services?
  • If you won’t be billing Medicare for the telemedicine evaluation, will you be assigning your rights to bill for evaluations to the telemedicine marketing company?
  • Will you be paid by a telemedicine marketing company for each evaluation that you conduct OR only for the evaluations in which you order DME supplies?
  • What safeguards are in place to prevent third-parties from using your provider number to submit claims for services that you did not render or for supplies that you did not order?
  • Have you asked qualified health care legal counsel to review the proposed Independent Contractor agreement between you and the telemedicine marketing company?
  • If you were to decide to work with the telemedicine marketing company, how would you receive patient referrals? Will a patient desiring a telemedicine consultation contact you directly or will you be given a list of patients that need to be evaluated?
  • Have you checked with your medical malpractice carrier to verify whether they will cover your telemedicine services?
  • Where are the patients you will be evaluating located?
  • Will you be personally interacting with each patient by telephone or interactive video conferencing OR is the telemedicine marketing company asking you to conduct your evaluation based on a patient recording and / or an intake sheet completed by the marketing company?
  • Has the telemedicine marketing company asked that you complete a prepopulated “script” when issuing an order?
  • If you decide to issue an order for DME supplies after conducting a telemedicine evaluation, who decides which DME supplier will be chosen to fill the prescription?
  • Are you meeting state requirements with respect to the establishment of physician-patient relationship?
  • Where will patient records of your evaluations be stored, and will you have ready access to those records for at least seven (7) years, or if longer, the length of time required by your state’s law?
  • Will you maintain a copy of the patient records yourself?

Each of these questions should be carefully considered before deciding whether to work with a telemedicine marketing company.  To the extent that potential concerns are identified, we recommend that you work with a qualified health law attorney to determine whether an issue represents a significant professional licensure, statutory or regulatory compliance risk.  If a significant risk is identified, we recommend you discuss what steps, if any, can be taken to address the risk and to better ensure that your efforts do not violate the law.

IV.  Specific Risks Faced by Referring Physicians in Telemedicine Audits:

  • Failure to Comply with Medicare’s Mandatory Claim Filing Requirements.

When representing physicians in telehealth audits and investigations, one of the first areas we discuss with our clients is how they were compensated for their efforts.  After conducting a telemedicine evaluation, did the physician bill the Medicare program directly for the Evaluation & Management (E/M) service conducted?  Although not necessarily determinative of fraud or improper conduct, this is one of the factors that Unified Program Integrity Contractors (UPICs), such as Qlarent, AdvanceMed, the CoventBridge Group, and SafeGuard Services LLC, will be examining.  It is important to keep in mind that you are listed as the referring provider on each of the orders for DME supplies that are issued as a result of the telemedicine evaluations that you have conducted.  It is relatively easy for a UPIC to pull a list of the referring providers who are listed on the claim forms submitted by DME suppliers and determine which providers did not bill for the E/M telemedicine service he or she allegedly conducted. Why does this matter?

In the absence of a bona-fide reassignment agreement, it is mandatory that you bill Medicare for the telemedicine evaluations that you are conducting. In fact, under the Social Security Act, § 1848(g)(4),[12] physicians and suppliers are required to submit claims to Medicare carriers for services furnished to Medicare beneficiaries on or after September 1, 1990.  Compliance with Medicare’s mandatory claim filing requirements are carefully monitored by Medicare Administrative Contractors (MACs).  Violations of this requirement can result in both Civil Monetary Penalties and / or exclusion from participating in the Medicare program.

The bottom line is simple.  Your failure to comply with Medicare’s mandatory claims submission requirements may very well lead to the initiation of a UPIC audit.

  • Failure to Comply with Federal and State Documentation Maintenance and Access Requirements.

One of the problems sometimes faced by physicians who have entered into an Independent Contractor business arrangement with a telemedicine marketing company is the fact that patient records are typically maintained by the telemedicine marketing company, not by the evaluating / referring physician.  When a DME claims audit is conducted by a UPIC, the program integrity contractor will also issue a request to the referring physician for a complete copy of the Medicare beneficiary’s medical records. Sample language that a UPIC may include in its letter to the referring physician may look like the following:

“The UPIC is reviewing claims associated with the beneficiaries referenced in the attached list, submitted by the DME supplier as noted, for supplies billed where you were identified as the referring physician.  We are therefore requesting the following medical documentation. . . “

Importantly, as a referring provider, you are required by regulation to maintain a copy of the medical documentation upon which your order and / or referral was based.  As required by 42 CFR § 424.516(f)(2)(i)(A):

(f) Maintaining and providing access to documentation. 

(2)(i) A physician or, when permitted, an eligible professional who orders, certifies, refers, or prescribes Part A or B services, items or drugs is required to –

(A) Maintain documentation (as described in paragraph (f)(2)(ii) of this section) for 7 years from the date of the service.

As a licensed medical professional, you should also keep in mind that your state’s Medical Practice Act invariably requires that you maintain a copy of the medical records for each of your patient.  For example, under Texas Medical Board Rule § 165.1(b)(1)[13]:

“(1) A licensed physician shall maintain adequate medical records of a patient for a minimum of seven years from the anniversary date of the date of last treatment by the physician.”

The failure to maintain copies of patients’ records has led to severe administrative sanctions.  In several recent cases we have seen, since the referring physician did not have a copy of the telemedicine evaluation notes conducted, the physician failed to submit them in response to a proper request for records from a UPIC.  When the physician failed to submit the records requested, CMS revoked the physician’s billing privileges for a period of 10 years.  The revocation action taken was based on the following:

“42 CFR § 424.535 – Revocation of enrollment in the Medicare program.

(a) Reasons for revocationCMS may revoke a currently enrolled provider or supplier’s Medicare enrollment and any corresponding provider agreement or supplier agreement for the following reasons:

. . .

(10) Failure to document or provide CMS access to documentation.

(i) The provider or supplier did not comply with the documentation or CMS access requirements specified in §424.516(f) of this subpart.

(ii) A provider or supplier that meets the revocation criteria specified in paragraph (a)(10)(i) of this section, is subject to revocation for a period of not more than 1 year for each act of noncompliance.”

To be clear, the government’s revocation of a physician’s Medicare billing privileges isn’t necessarily the end of this saga.  The failure to maintain adequate documentation and / or provide ready access to patient records when requested can lead to both a referral to a physician’s State Medical Board and, in some cases, a referral to the OIG for possible permissive exclusion action.

V.  Responding to a Telemedicine Audit or Investigation:

Every telemedicine audit by a UPIC and investigation by law enforcement is different.  If your telemedicine evaluations are being audited, it is essential that you consult with qualified health law counsel to better ensure that your case is properly handled.  Liles Parker attorneys have represented physicians, marketing companies and DME suppliers in a wide variety of telemedicine-related matters.  Give us a call for a free consultation.

Robert W. Liles Health Care AttorneyHave you received a request for telemedicine-related records?  Our experienced health law attorneys can advise you on how to best respond to a telemedicine audit and represent you throughout the complex appeal process that has been established. For a free initial consultation regarding your situation, call us at: 1 (800) 475-1906.

[1] A number of writers have argued that telehealth / telemedicine services were likely first provided by telegraph in the mid-1800’s and then in a more traditional format after the invention of the telephone in the latter part of the 19th century.

 [2] Medicare coverage of telehealth services was first passed as part of the Balanced Budget Act of 1997, Pub. L. No. 105-33, 111 Stat. 251. 199.

 [3] CMS. 2001 Physician Fee Schedule List of Telehealth Codes. Available at: https://www.govinfo.gov/content/pkg/FR-2001-11-01/html/01-27275.ht

[4] As an industry, practically everyone involved in the delivery of health care has long promoted the expansion of telehealth / telemedicine services, often pointing to improved patient access, long-term cost savings and better overall health outcomes as merely a few of the many advantages that will undoubtedly result as the use of telemedicine expands.

[5] A list of covered telehealth services payable under the Medicare Physician Fee Schedule when furnished via telehealth during Calendar Year 2020 can be found at:  https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/Telehealth-Codes

[6] 42 C.F.R. § 410.78(b)(2).

[7] 42 C.F.R. § 410.78(b)(3).

[8] While somewhat dated, this December 2018 article entitled “Audits of Telehealth Services are Increasing. Do Your Telehealth Services Meet Applicable Requirements?provides a concise overview of the Medicare telehealth coverage limitations that were in place at that time.  Since Medicare’s coverage requirements in this area are quite dynamic, we recommend that you review the current rules.

[9] A copy of the March 2003 Special Fraud Alert is available at:  https://oig.hhs.gov/fraud/docs/alertsandbulletins/Telemarketingdme.pdf

[10] Under § 1834(a)(17)(A)(i) – (iii) of the Social Security Act:

(i) The individual has given written permission to the supplier to make contact by telephone regarding the furnishing of a covered item.

(ii) The supplier has furnished a covered item to the individual and the supplier is contacting the individual only regarding the furnishing of such covered item.

(iii) If the contact is regarding the furnishing of a covered item other than a covered item already furnished to the individual, the supplier has furnished at least 1 covered item to the individual during the 15-month period preceding the date on which the supplier makes such contact.

[11] A copy of the November 2010 Special Fraud Alert is available at:

https://oig.hhs.gov/fraud/docs/alertsandbulletins/fraudalert_telemarketing.pdf

[12] https://www.ssa.gov/OP_Home/ssact/title18/1848.htm

[13] Texas Medical Board Rule § 165.1(b)(1).

Providers Should Ensure That They Are Fully Aware of All of the Collateral Consequences that May Occur When Settling with the Government

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There are a number of collateral consequences that can arise out of a settlement or plea agreement. (December 2, 2019):  Over the past several years, several clients have come to our Firm who have resolved disputes through such mechanisms as settlement agreements, criminal pleas, or consent orders, either because they specified minimal penalties or because they did not include any time in incarceration.  Later they discover that agreeing to these resolutions has resulted in collateral consequences that have far reaching consequences that they did not anticipate.

In one matter, a provider had signed a consent order before a professional board that contained a fine that was not substantial, only to later be terminated from the Medicaid program which was the sole source of that person’s practice.  In another instance, a provider had accepted a plea in a Medicare fraud case that avoided incarceration, only to discover that the he was later excluded from federal health programs and faced possible disciplinary action by the state professional board.  In each of these cases, the providers had been represented in those actions by counsel who were extremely competent in their specialty — litigation, but who did not specialize in health care and thus were unfamiliar with the special nuances of the health care statutes, rules and practices.

I. Collateral Consequences — Traps for the Unwary:

It is essential that you be aware of the possible derivative collateral consequences that may flow from settling matters that involve federal health programs, tort or insurance matters, or other government bodies.  These include such actions as:

  • Medical malpractice payments made for the benefit of a health care practitioner resulting from a written claim or judgment.
  • Certain adverse licensure actions related to professional competence or conduct .
  • Professional review actions based on reasons related to professional competence or conduct adversely affecting clinical privileges for a period longer than 30 days, or voluntary surrender or restriction of clinical privileges while under, or to avoid, an investigation.
  • Professional review actions based on reasons relating to professional competence or conduct adversely affecting membership
  • DEA administrative actions seeking to revoke a provider’s Certificate of Registration.
  • Exclusions from participation in Medicare, Medicaid, and other federal health care programs.
  • Negative actions or findings by peer review organizations or private accreditation actions.
  • A variety of adverse actions by state licensing and certification authorities.
  • A variety of law enforcement or administrative activities involving health care related actions.
  • A variety of federal licensure and certification actions.

A report that is made to the NPDB can have a number of derivative collateral consequences such as adversely affecting hospital admitting privileges, credentialing for purposes of participating in insurance or public programs, and the ability to obtain professional liability insurance or the rates that a clinician pays for such coverage.  In the initial case discussed, above, the health care practitioner who was terminated from the Medicaid program was able to have privileges and enrollment restored, but only after significant legal expense and time away from the practice that likely could have been avoided had health care counsel been involved in the earlier proceeding.

Additionally, there are a number of grounds under federal health care law that provide for mandatory or permissive exclusion from all federal health care programs including the Medicare and Medicaid programs.  Thus, any provider, practitioner, or entity that is convicted of a program related crime, patient abuse, or a felony related to health care fraud or manufacture, distribution, prescription or dispensing of a controlled substance must also be excluded from participation in federal health care programs, generally for at least five years.

Also, among the grounds for permissive exclusions are:  convictions relating to fraud in a variety of areas, including misdemeanors; obstruction of an investigation or audit; misdemeanor relating to controlled substances; license revocations – probably the most often used ground for permissive exclusion; exclusion or suspension under another federal or state health care program; and a variety of other grounds.  And, there are also a number of insurance and state-specific health care statutes that can generate consequences that would not be readily apparent without familiarity in the area.

II. The Lesson to be Learned About Collateral Consequences:

In short, anyone who operates in the health care space and who is considering entering into a voluntary resolution of a dispute that involves a governmental entity, needs to make sure that the proposed resolution won’t trigger unanticipated collateral adverse consequences. Here, as in many other aspects of participating in the health care system, an ounce of prevention is worth a pound of cure.  And, it literally can be the difference between successfully managing the consequences of an adverse event and suffering a serious and career-ending experience.

Collateral ConsequencesLiles Parker attorneys are experienced in handling these types of matters, and acutely aware of the collateral consequences that can occur from resolving what can sometimes appear to be minor disputes. Anyone having questions in this area should feel free to contact Michael Cook for a free initial consultation.  Attorney Michael Cook can be reached at (202) 298-8750 or mcook@lilesparker.com.

What is the CMS Preclusion List? What is the Difference Between an Exclusion and a Preclusion Action? How Can You Appeal a CMS Preclusion Action?

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(October 8, 2019):  On April 16th, 2018, the Department of Health & Human Services (HHS), Centers for Medicare and Medicaid Services (CMS), issued a Final Rule entitled, “Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program.” [1] This 300+ page issuance revised the Medicare Advantage program (Part C) regulations, along with the Prescription Drug Benefit program (Part D) regulations, in order to implement portions of the Comprehensive Addiction and Recovery Act (CARA).  Among its various provisions, the Final Rule also served to rescind existing regulations that required prescribers of Part D drugs and providers of Medicare Advantage services and items to enroll in Medicare Fee-for-Service in order for the Part D drug or Medicare Advantage service or item to qualify for coverage and payment.[2]  In lieu of the enrollment requirements, CMS now requires that a Part D plan sponsor reject a pharmacy claim for a Part D drug if the provider prescribing the drug is included on a “Preclusion List.” Similarly, if a health care provider or supplier is listed on the preclusion list, no services furnished (or items supplied) by that individual or entity will be covered by Medicare Advantage.  At the time, CMS estimated that these changes would reduce program costs by $34.4 million in 2019.

A year to the day after publishing the Final Rule covering the Preclusion List, CMS published a Final Rule revising the Medicare Advantage (Part C) and Prescription Drug Benefit Program (Part D) regulations[3] on April 16, 2019.  The April 2019 Final Rule made a number of revisions to the Preclusion List provisions set out in the April 2018 Final Rule.  This article examines the CMS Preclusion List in more detail and examines the impact of a provider, supplier and / or prescriber being placed on the list.

I.  What is the CMS Preclusion List?

Simply stated, the CMS preclusion list is a register of all health care providers, suppliers, and prescribers who are precluded from receiving reimbursement for Medicare Advantage items and services or Part D drugs that are provided or prescribed to Medicare beneficiaries. CMS has established the preclusion list in an effort to better ensure patient safety and to protect the integrity of the Medicare Trust Funds from the actions of providers and prescribers that have been identified as bad actors.”

CMS is responsible for maintaining the Preclusion List. The list is made available to Medicare Advantage and Part D payor plans.  If a Medicare Advantage receives a claim for a health care item or service that was furnished by a precluded party, the claim will be denied. Similarly, if a Part D payor plan receives a claim for reimbursement from a pharmacy or Medicare beneficiary that is related to a drug that was prescribed by a precluded individual, the claim will be denied.

II.  What is the Difference Between an “OIG Exclusion” and a “CMS Preclusion” Action?

While based on completely different statutes, both the exclusion and preclusion regulations are intended to protect that safety of Medicare, Medicare and Federal health care beneficiaries AND help safeguard the financial integrity of Federal and State health care programs.  What is the difference between the two programs?

  • Medicare OIG Exclusion. The OIG is responsible for administering the various mandatory and permissive exclusion authorities that have been enacted.  If a health care provider, supplier or other entity is “excluded” from participation in the Medicare or Medicaid programs, the excluded party cannot provide care or services to Medicare and / or Medicaid beneficiaries. Moreover, an excluded party cannot work for a participating provider. Nor can an excluded party serve as an agent, contractor, or vendor for a participating provider or supplier. In my opinion, the definitive analysis of the OIG’s exclusion regulations is covered in Paul Weidenfeld’s article entitled, “Federal Exclusion Regulations and Enforcement Authorities, and How Providers Can Avoid Risk with Proper Exclusion Screening.” [4]

Broadly speaking, an individual or entity is typically excluded from participation in the Medicare or Medicaid programs due to a criminal conviction, the abuse of a patient, and / or an adverse licensure sanction. In contrast with the preclusion regulations set out the updated Final Rule dated April 16, 2019,[5] the exclusion regulations were first mandated by Congress in 1977 as part of the “Medicare-Medicaid Anti-Fraud and Abuse Amendments, Public Law 95-142.”

If an individual or entity (typically a health care provider, supplier) is excluded from Medicare or Medicare, the identity of the excluded party is posted online and is publicly available on the on OIG’s “List of Excluded Individuals/Entities” (LEIE) and / or one the 41 State Medicaid exclusion databases that are currently maintained around the country. Finally, the effect of an exclusion action applies across the board. It applies to services and items covered by traditional Medicare program, Medicare Advantage (Part C), and Part D drug plans.

  • Medicare CMS Preclusion. In contrast to the Medicare exclusion authorities which are administered by the OIG, the Medicare preclusion authorities are managed by CMS.  As described in Section III below, Medicare preclusion actions are typically revocation-based or conduct / behavior-based actions that effectively bar Medicare Part C and Part D plans from making payments to any individuals or entities that have been placed on the CMS preclusion list. Unlike the 43 Federal and State exclusion databases which are publicly accessible, the CMS preclusion database is only available Medicare Advantage (Part C) and Part D payor plans have with a valid Health Plan ID been granted access to the preclusion database by CMS.

III.  How are Individuals and Entities Added to the CMS Preclusion List?

Individuals and entities added to the Preclusion List fall within two broad categories. These categories are examined in more detail below:

Category #1: Preclusion List – Revocation Based Under this category, health care providers, suppliers, and prescribers can be placed on the Preclusion List if:

    • The Medicare billing privileges of an individual or entity are currently revoked under 42 CFR §424.535; and
    • There is an active reenrollment bar in effect under 42 CFR §424.535(c); and
    • CMS has determined that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program. In making this determination, CMS is to consider the following factors:
      • The seriousness of the conduct underlying the individual’s or entity’s revocation.
      • The degree to which the individual’s or entity’s conduct could affect the integrity of the Part D or MA program.
      • Any other evidence that CMS deems relevant to its determination;

If these three revocation-related requirements have been met, CMS may place a health care provider, supplier, or prescriber on the agency’s Preclusion List.

 OR

Category #2: Preclusion List – Conduct / Behavior Based:  Under this category, health care providers, suppliers, and prescribers can be placed on the Preclusion List if:

    • The individual or entity has engaged in behavior for which CMS could have revoked the individual or entity to the extent applicable, if they had been enrolled in Medicare; and
    • CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program. In making this determination under this paragraph, CMS considers the following factors:
      • The seriousness of the conduct underlying the individual’s or entity’s revocation.
      • The degree to which the individual’s or entity’s conduct could affect the integrity of the Part D or MA program.
      • Any other evidence that CMS deems relevant to its determination.

It is also important to keep in mind that CMS significantly expanded the bases for revoking a provider’s, supplier’s. or prescriber’s Medicare billing privileges under 42 CFR § 424.535(a)   As discussed in a recent article examining the Final Rule entitled, “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process,” the revised reasons for revocation that may be asserted by the government will be effective November 4, 2019.[6]

As a final point in this regard, please note that OIG Exclusions and felony convictions will also result in an individual or entity being placed on the CMS Preclusion List.

IV.  How Will an Individual or Entity Learn of Their Inclusion on the CMS Preclusion List?

When placing an individual or entity on the Preclusion List, CMS (through one of its Medicare Administrative Contractors (MAC)) is supposed to send written notice to the party.  The MAC will send the letter to the address listed in the Provider Enrollment Chain and Ownership System (PECOS) system.  The effective date of the preclusion action, along with reason(s) an individual or entity has been added to the list is required to be included in the letter. Additionally, the notice letter is supposed to provide information advising the individual or entity of their right to appeal their inclusion on the list.[7]

CMS Preclusion List

V.  How Long Can a Provider, Supplier, or Prescriber Stay on the CMS Preclusion List?

If a provider, supplier, or prescriber exhausts their first level of administrative appeal (either due to the fact that no appeal was filed in a timely fashion[8] OR CMS denied the appellant’s request for reconsideration), CMS will add the individual or entity’s name to the Preclusion List.  Please note, if the preclusion action has been taken due to the fact that the provider, supplier, or prescriber has been excluded from participation in Federal and State programs, the individual or entity will be placed on the CMS Preclusion List effective the date of the party’s exclusion. The length of time that an individual or entity will remain actively precluded will depend on the following:

  • Length of Preclusion if Based on an Exclusion Action. If a provider, supplier, or prescriber is placed on the CMS Preclusion List due to the fact the individual or entity has been excluded from participation in Federal and State health care programs, the party will remain actively precluded for at least until the excluded party has been reinstated by the OIG.
  • Length of Preclusion if Based on a Revocation Action. If a provider, supplier, or prescriber is placed on the CMS preclusion list due to the fact that the individual or entity is currently revoked (or would have been revoked had they enrolled in the Medicare program), the individual or entity will remain actively precluded for the length of their re-enrollment bar. The length of a re-enrollment bar ranges from 1 to 3 years, depending the seriousness of the reason for revocation.
  • Length of Preclusion if Based on a Felony Conviction. If a provider, supplier, or prescriber is placed in the CMS preclusion list due to a felony conviction, the length of the preclusion will remain in effect for a 10-year period, beginning on the date of the felony conviction, unless CMS determines that a shorter time period is warranted (effective January 1, 2020).

Importantly, at the expiration of a preclusion action, a precluded party’s name is NOT totally removed from the CMS Preclusion List.  As set out in April 2019 Final Rule, once a precluded party is reinstated, the party’s name will remain on the preclusion database list, but will be annotated to reflect the fact that the provider, supplier or prescriber has been reinstated.  Once reinstated, the individual or entity may again submit claims for services and items to Medicare Advantage (Part C)) plans, and / or issue prescriptions for Part D drugs.

VI.  Can an Individual or Entity Participating in the Medicare Program “Screen” to Ensure that Precluded Parties Aren’t Hired?

Unfortunately, Medicare providers and suppliers do not have access to the CMS Preclusion List.  Only CMS approved Medicare Advantage (Part C) and Part D payor plans have with a valid Health Plan ID been granted access to the preclusion database.  As CMS notes:

“CMS makes the Preclusion List available to the Medicare Advantage (MA) plans and Part D plans. MA [Medicare Advantage] plans will deny payment for a health care item or service furnished by an individual or entity on the Preclusion List. Part D plans will reject a pharmacy claim (or deny a beneficiary request for reimbursement) for a Part D drug that is prescribed by an individual on the Preclusion List.”[9]

Under 42 CFR § 422.204(b),  a Medicare Advantage organization is required to establish and comply with a comprehensive set of written credentialing and recredentialing requirements.  The credentialing process is intended to serve as the initial set of program integrity safeguards used by Part C and Part D payor plans to prevent bad actors from enrolling in the programs.  Unfortunately, this system is imperfect at best.  More often than not, the credentialing of a newly-hired provider, supplier or prescriber is not requested by a participating health care organization prior to the organization’s employment of the newly-hired party.  Notably, it is entirely possible that an individual may have been placed on the CMS Preclusion List due to his or her improper conduct or behavior (as described in Category #2 above), yet may not have been excluded from participation in Federal health care programs by the OIG.  Therefore, even assuming that your organization properly screens its applicants against all available Federal and State exclusion lists prior to extending an offer of employment, it is still possible that you may unknowingly employ or enter a contract with a precluded individual or entity.  We strongly recommend that your organization conduct proper due diligence before employing or contracting with a provider, supplier or prescriber.  Should you inadvertently hire, or continue to employ, an individual who is precluded from providing services or items that will be billed to Medicare Advantage (Part C) plans, or issue prescriptions that will be billed to a Medicare Part D plan, those claims will be denied.

VII.  How Do You Appeal a CMS Preclusion Action?

To establish the administrative framework to appeal a CMS preclusion action, CMS revised 42 CFR § 498.3(b), adding a new provision, Section (20), which made the decision to place an individual or entity on the Preclusion List an “Initial Determination” for appeal purposes.  CMS further modified 42 CFR § 498.5, adding paragraph (n)(1).  Under 42 CFR § 498.5(n)(1):

“Any individual or entity that is dissatisfied with an initial determination or revised initial determination that they are to be included on the preclusion list (as defined in § 422.2 or § 423.100 of this chapter) may request a reconsideration in accordance with § 498.22(a).  (emphasis added).

If an individual or entity files a Request for Reconsideration and is dissatisfied with the decision, the individual or entity can seek a hearing before an Administration Law Judge (ALJ).[10]  After an ALJ renders a hearing decision, either party (CMS or the individual / entity on the Preclusion List) may request Departmental Appeals Board review.  Additionally, the individual or entity may also seek judicial review of the Department Appeals Board’s decision.[11]  For additional background information on the preclusion list, you may wish to review a recorded webinar presentation we made for the Texas Association for Home Care and Hospice.

Robert W. Liles Healthcare LawyerHave you been placed on the CMS Preclusion List? Although the CMS Preclusion List has only been in place a short time, a number of Liles Parker attorneys have already handled (or, are in the process of handling) preclusion appeal cases. Our experienced health law attorneys can advise you on how to best respond to this challenge and represent you throughout the complex appeal process that has been established. For a free initial consultation regarding your situation, call us at: 1 (800) 475-1906.

 

 

[1] 83 FR 16440 (April 16, 2018).

[2] Institutional providers and suppliers must still be enrolled in Medicare Fee-for-Services.  Additionally, as part of their credentialing requirements, some Medicare Advantage plans may require that a provider or supplier be enrolled in the Medicare Fee-for-Service program.

[3] “Medicare and Medicaid Programs; Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Programs of All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021.”  84 FR 15680.  (April 16, 2019).

[4] Part I of the article “Federal Exclusion Regulations and Enforcement Authorities, and How Provider’s Can Avoid Risk with Proper Exclusion Screening,” is in the process of being published in a series part series by the folks at Exclusion Screening.

[5] 84 FR 15680.

[6] See article entitled “Medicare, Medicaid and CHIP Enrollment Revocation and Denial Authorities Have Expanded.  What Steps are You Taking to Reduce Your Level of Risk? (September 18, 2019).

[7] An example of the letter sent to a revocation-based precluded party can be found at:

https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/MedicareProviderSupEnroll/Downloads/Preclusion_List_Model_Letter-Revoked_With_Active_Enrollment_Bar.pdf

An example of the letter sent to a conduct / behavior-based precluded party can be found at:

https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/MedicareProviderSupEnroll/Downloads/Preclusion_List_Model_Letter-Could_Have_Been_Revoked.pdf

[8] This would occur upon the expiration of the 60-day period in which a provider, supplier or prescriber has to file a reconsideration appeal to the proposed preclusion action. See 84 FR 15680, 15781.

[9] See CMS “Preclusion List Frequently Asked Questions.”  Updated 08/07/2019.

[10] 42 CFR § 498.5(n)(2).   Notably, CMS may also seek a hearing before an ALJ if it is dissatisfied with the reconsideration decision.

[11] 42 CFR § 498.5(n)(3).

Medicare, Medicaid and CHIP Enrollment Revocation and Denial Authorities Have Expanded.  What Steps are You Taking to Reduce Your Level of Risk?

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Medicare Enrollment

Big Changes to CMS Form 855 are on the Horizon

(September 18, 2019):  On September 10, 2019, the Department of Health and Human Services (HHS) and Centers for Medicare and Medicaid Services (CMS) published a Final Rule in the Federal Register entitled, “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.” Issuance of the Final Rule is necessary in order to implement sections 1866(j)(5) and 1902(kk)(3) of the Social Security Act (as amended by the Affordable Care Act), which require that providers and suppliers fully disclose information related to affiliations, uncollected debts and certain adverse actions that may impact the program integrity of the affected government health plan.  As discussed below, the impact of the Final Rule on the Medicare enrollment disclosure requirements of providers and suppliers has been significantly enhanced.  Moreover, the authority of CMS to revoke or deny the enrollment of a participating provider or supplier has been greatly expanded.  Under the Final Rule, the reporting obligations of Medicare, Medicaid, and CHIP providers and suppliers will dramatically increase when they file a new enrollment application, revalidate their enrollment, need to file a change of information, or need to notify the agency of a change in ownership .[1]  This article is intended to take a “first look” at the impact of the Final Rule on the obligations  faced by providers and suppliers. Additionally this article reviews CMS’ new revocation and denial authority, and it explores a number of the challenges that you or other providers may face, as a result.

I.  Background – Medicare Enrollment and Revalidation Program Integrity Measures:

Approximately, 54 million individuals are enrolled in the Medicare program.[2]  In order to qualify to provide care and treatment services to these beneficiaries, a health care provider or supplier must meet a number of administrative, regulatory, and statutory requirements that are meant to protect both the patient and the financial integrity of the Medicare program.  The Medicare enrollment process effectively serves as one of the agency’s primary ways to protect patients and the Medicare Trust Fund from the actions of providers and suppliers whose participation would represent a significant risk of fraud or abuse.

When enrolling in the Medicare program, an applicant provider or supplier must complete and submit an appropriate enrollment application (i.e., a Form CMS-855) to their assigned Medicare contractor.  The enrollment application can be submitted by paper or electronically through the agency’s Provider Enrollment, Chain, and Ownership System (PECOS).  Several of the previous rules promulgated by CMS to strengthen the overall effectiveness and program integrity of the enrollment process have included:

  • April 21, 2006: CMS published a Final Rule entitled “Medicare Program; Requirements for Providers and Suppliers to Establish and Maintain Medicare Enrollment.”[3] This Final Rule laid out a number of requirements that must be met by providers and suppliers in order to maintain their Medicare billing privileges.
  • February 2, 2011: CMS published a Final Rule entitled “Medicare, Medicaid, and Children’s Health Insurance Programs; Additional Screening Requirements, Application Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance Plans for Providers and Suppliers.”[4]  This Final Rule established a number of new provider enrollment screening requirements.
  • March 1, 2016: CMS published a Proposed Rule entitled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.” This Proposed Rule set out the enrollment revocation and denial changes CMS planned to implement in an effort to address long-standing program integrity risks that have previously been exploited in the past.[5]

A little more than three years after the issuance of the March 2016 Proposed Rule, CMS has now issued its much-anticipated Final Rule entitled, “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.” [6]  With the implementation of this Final Rule,  CMS will now have expanded authority to deny the enrollment and / or revalidation of a provider or supplier if it determines that an “affiliation” presents an undue risk of fraud risk or abuse.  The Final Rule will also make it much easier to revoke the enrollment of existing providers and suppliers whose continued participation in the Medicare, Medicaid, or CHIP programs is determined to represent a program integrity risk.

II.  Why Has CMS Tightened Up the Medicare Enrollment and Revalidation Process?

Despite past efforts to strengthen the Medicare provider enrollment process, existing Medicare, Medicaid, and CHIP systems haven’t been fully effective in identifying direct owners, managing employees, and close affiliates of provider and supplier applicants with a history of certain adverse  events.  As representatives of the Office of Inspector General (OIG) have testified before Congress, health care providers and suppliers engaging in wrongful billing practices have often been found to have relied on networks of affiliations with other fraudulent providers and suppliers. For example, in south Florida, law enforcement has previously found that some Medicare providers and suppliers have taken steps to hide their ownership through the use of straw owners.  The real owners (who are likely prohibited from participating or likely to be denied participation in Federal health care programs) are then free to engage in improper billing practices.[7]

The issuance of the new Final Rule requires that as part of the enrollment and revalidation process, providers and suppliers must disclose any business affiliations that may pose an undue risk of fraud, waste and / or abuse to the Medicare, Medicaid and CHIP programs. CMS will be phasing the new affiliation reporting requirements in over a period of years. First, the agency will update and issue new provider enrollment Form CMS-855 applications, and then it will require reporting of certain affiliations “upon request.”[8] At least initially, only those providers or suppliers who are asked to report affiliations on the new enrollment forms will be required to do so. CMS states in the new Final Rule that it will publish further rulemaking to expand this reporting requirement after assessing the progress of its initial phased-in approach.

Notably, CMS estimates that the new disclosure requirements and revocation authorities implemented by the Final Rule will result in approximately 2,600 new revocations each year and will save the affected government health programs an estimated $4.16 billion over the next 10 years.

III.  Reporting Affiliations:

Under the Final Rule, the “affiliations” that a provider or supplier may have to disclose upon request by CMS include the following:

The term “affiliation” is defined under 42 CFR §424.519 as meaning any of the following:

  • 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.
  • A 5 percent or greater direct or indirect ownership interest 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 42 CFR § 424.80.”

The new affiliation provisions are intended to identify individuals and entities that have an ownership interest or exercise managerial control in multiple Medicare program providers or suppliers. Both OIG and CMS have repeatedly identified situations where providers and suppliers whose Medicare billing privileges have been revoked for fraud and / or other improper conduct have managed to surreptitiously re-enter the program using a nominee owner to disguise their true ownership or through other deceptive means.  As the agency has noted, the broad definition of affiliation that has been adopted, is needed so that providers and suppliers fully disclose any prior or current relationships that could pose risks of fraud, waste or abuse to the Medicare program.  CMS has estimated that if the new affiliation provisions had been in place over the previous five years, it could have prevented $51.9 billion from being paid to 2,097 entities with affiliations with a previously-revoked individual or entity.

IV.  Disclosable Events Under 42 CFR § 424.519:

When initially enrolling or revalidating with the Medicare program, the new regulations will require that a provider or supplier disclose whether it or any of its owning or managing employees or organizations (consistent with the terms ‘‘owner’’ and ‘‘managing employee’’ as defined in 42 CFR § 424.502) has or, within the previous 5 years, has had an affiliation with a currently or formerly enrolled Medicare, Medicaid, or CHIP provider or supplier that has had any “disclosable events.”[9] Importantly, the term, “disclosable event“ is defined in the new regulation as an affiliation with a currently or formerly enrolled Medicare, Medicaid or CHIP provider or supplier that:

“(1) Currently has an uncollected debt to Medicare, Medicaid, or CHIP, regardless of – (i) The amount of the debt; (ii) Whether the debt is currently being repaid (for example, as part of a repayment plan); or (iii) Whether the debt is currently being appealed;

(2) Has been or is subject to a payment suspension under a federal health care program (as that latter term is defined in section 1128B(f) of the Act), regardless of when the payment suspension occurred or was imposed;

(3) Has been or is excluded by the OIG from participation in Medicare, Medicaid, or CHIP, regardless of whether the exclusion is currently being appealed or when the exclusion occurred or was imposed; or

(4) Has had its Medicare, Medicaid, or CHIP enrollment denied, revoked, or terminated, regardless of— (i) The reason for the denial, revocation, or termination; (ii) Whether the denial, revocation, or termination is currently being appealed; or (iii) When the denial, revocation, or termination occurred or was imposed.”

Responding to comments submitted in connection with the Proposed Rule, CMS clarified who must be reported as an owner or managing employee of a provider or supplier, and likewise, who the organization must collect information from to identify all “affiliations” and “disclosable events.” CMS commented that the following situations would (1) require disclosure of a person or organization as an owner or managing employee, and (2) require disclosure of those persons or organizations “affiliations” if there has been a disclosable event:

      • Does a “Physician Director” or “Director of Nursing” have to be reported as part of the enrollment process? Yes, if the Physician Director or the Director of Nursing fall within the definition of “managing employee”[10] under 42 CFR § 424.502, he or she would have to be reported [on the Form CMS-855 application as a managing employee]. Moreover, if the Physician Director or the Director of Nursing was previously a managing employee of another provider or supplier with a “disclosable event,” the Physician Director or Director of Nursing would have to be reported.
      • Do the members of the Board of Trustees of a tax-exempt entity have to be reported as part of the enrollment process? Yes, as set out in CMS Publication 100-08, Program Integrity Manual (PIM), Chapter 15, Section 15.5.5 (Owning and Managing Organizations) members of a Board of Trustees are considered to be Corporate Directors and must be reported on CMS Form 855.  As an aside, CMS takes the position that non-profit entities and offices would fall under the affiliation definition to the same extent as for-profit entities and officials.
      • Does an entity with a 5% or greater mortgage or security interest have to be reportedConsistent with the PIM, Chapter 15, Section 15.5.5:  “All entities with at least a 5 percent mortgage, deed of trust or other security interest in the provider must be reported in section 5. This frequently will include banks, other financial institutions, and investment firms.”
      • Does a billing agency or a collection agency have to be reported? Yes, if the billing agency or collection agency meets the definition of a managing employee (as it applied to organizations), then they would have to be reported on the CMS Form 855.
      • Does a public company that owns 5% of more of an enrolling or reenrolling company have to be reported?   CMS takes the position that public companies fall within the purview of 42 CFR §424.519.
      • Does an affiliated managing individual have to be reported in CMS Form 855 even if he or she has no responsibilities concerning payment for services? The definition of managing employee under 42 CFR §?424.502 includes all persons who directly or indirectly conduct a provider’s or supplier’s day-to-day operations. There is no requirement that these individuals must have responsibilities related to payment for services.

In short, the above individuals must be disclosed in the owner and managing employee sections of the Form CMS-855 applications (or their counterpart in PECOS), and if those owners or managing employees have affiliations that have disclosable events, then those must be reported as well. As we stated earlier, in response to the many comments and concerns submitted by providers and suppliers, for now, CMS is not requiring that providers and suppliers disclose affiliations with disclosable events under 42 CFR §?424.519 unless CMS specifically requests that they do so.[11]  Moreover, CMS does not intend to request these disclosures until it has updated CMS Form-855.  However, as CMS further noted:

“Although we will initially be implementing a more targeted approach to the disclosure requirement, we recognize that section 1866(j)(5) of the Act requires every provider and supplier (regardless of the relative risk they may pose) to disclose affiliations upon initial enrollment and revalidation. While section 1866(j)(5) of the Act does give the Secretary some discretion in applying this provision in terms of form, manner, and timing, it does not permanently exempt any provider or supplier from its applicability . . . Consequently, CMS must eventually secure affiliation data from all initially enrolling and revalidating providers.” (emphasis added).

Therefore, at this time, providers and suppliers are not required to report disclosable affiliations until CMS has an opportunity to update its Form CMS-855 applications so that this data can be collected.  Furthermore, CMS will be issuing additional sub-regulatory guidance regarding the affiliation disclosure process.  This sub-regulatory guidance is expected to set out the agency’s expectations with respect to the level of effort that is required of a provider or supplier to research and secure an owner or managing employees relevant affiliation information.

V.  When Will a Disclosed Affiliation be Found to “Pose an Undue Risk of Fraud, Waste or Abuse”?

The Final Rule makes it clear that just because an affiliation must be disclosed, does not necessarily mean that CMS will determine that an affiliation will “pose an undue risk of fraud, waste, or abuse.”[12] Before making a determination, CMS intends to carefully examine the specifics of each situation prior to deciding whether to exercise its discretion to deny an application for enrollment OR to revoke the participation of a currently enrolled provider.  When deciding whether a disclosed affiliation represents an undue risk, CMS will consider:

(1) The duration of the affiliation.
(2) Whether the affiliation still exists and, if not, how long ago it ended.
(3) The degree and extent of the affiliation.
(4) If applicable, the reason for the termination of the affiliation.
(5) Regarding the affiliated provider’s or supplier’s disclosable event, CMS will consider:

(i) The type of disclosable event.
(ii) When the disclosable event occurred or was imposed.
(iii) Whether the affiliation existed when the disclosable event occurred or was imposed.
(iv) If the disclosable event is an uncollected debt:

(A) The amount of the debt.
(B) Whether the affiliated provider or supplier is repaying the debt.
(C) To whom the debt is owed.

(v) If a denial, revocation, termination, exclusion, or payment suspension is involved, the reason for the disclosable event.

(6) Any other evidence that CMS deems relevant to its determination.

Depending on the particulars of each case, CMS may find that a disclosed affiliation does, in fact, pose an undue risk of fraud, waste, or abuse. Should this occur, CMS will deny a provider’s or supplier’s initial enrollment application under 42 CFR § 424.530(a)(13) OR revoke a currently participating provider’s or supplier’s Medicare enrollment under 42 CFR § 424.535(a)(19).

VI.  What Can Happen if a Provider or Supplier Fails to Report a Disclosable Affiliation?

When asked to do so by CMS, it will be essential that a provider or supplier ensure that any and all disclosable affiliations and other general business information is fully and completely reported.  If a provider or supplier fails to report a disclosable affiliation and “knew or should have known”[13] of the omitted information, CMS may choose to deny an applicant’s initial enrollment application (under 42 CFR § 424.530(a)(1) and, if applicable, 42 CFR § 424.530(a)(4)). Alternatively, if a currently participating provider or supplier fails to report a disclosable affiliation, CMS may choose to revoke the entity’s Medicare enrollment (under 42 CFR § 424.535(a)(1) and, if applicable, 42 CFR § 424.535(a)(4)).

VII.  What is an “Uncollected Debt”?

As set out under 42 CFR §?424.519(a)(1), if an applicant, or an applicant’s owner or managing employee is affiliated with another provider or supplier that has an “uncollected debt,” that is a disclosable event under 42 CFR §?424.502.  As previously discussed, an uncollected debt is only intended to include:

“(i) Medicare, Medicaid, or CHIP overpayments for which CMS or the state has sent notice of the debt to the affiliated provider or supplier.
(ii) Civil money penalties imposed under this title.
(iii) Assessments imposed under this title.”

(emphasis added).

Importantly, the phrase notice of the debt to the affiliated provider or supplier” does not include audit requests or routine denial letters where refunds are made through remittance advices or claims corrections.  In its response to comments from stakeholders, CMS expressly notes that “notice of the debt” would include something like a demand letter or other formal request for payment.

CMS has not established a minimum amount that would require the reporting of an uncollected debt.  Regardless of whether an alleged uncollected debt is $500 or $5 million, it would qualify as a reportable disclosable event under the Final Rule.  As CMS noted, “there could be isolated cases where a particular debt, though of a de minimis amount, presents an undue risk when all of the applicable factors are considered.”   CMS further states that even though a provider or supplier may currently be in the process of repaying a debt, the debt would still be a reportable disclosable event.

VIII.  Impact of Filing an Appeal in an Uncollected Debt or Enrollment-Related Action:

Throughout the Final Rule, multiple commenters urged CMS to view alleged debts and enrollment-related actions that are being appealed by a provider or supplier differently than those where no appeal has been filed.  After considering the points raised, CMS consistently declined to adopt such a position and has decided that even if an alleged debt is currently under appeal, the debt would still qualify as a disclosable event.  As CMS wrote:

“consistent with our obligation to protect the Medicare program and the Trust Funds, as well as with our authority under section 1866(j)(5) of the Act, we believe we should have the ability to determine whether the debt and the associated affiliation pose an undue risk regardless of whether the debt is being appealed.” (emphasis added).

Similarly, CMS held that under 42 CFR § 424.519, enrollment denial, revocation, and termination actions will still qualify as disclosable events even if they are under appeal.

IX.  Modification to the Enrollment Denial Reasons Under 42 CFR § 424.530:

As set out under 42 CFR § 424.530(a), CMS is authorized to deny a provider’s or supplier’s enrollment in the Medicare program for a number of reasons. Prior to the issuance of the Final Rule, the authorized reasons for denying enrollment in Medicare fell within the following broad categories:

(1) Noncompliance

(2) Provider or supplier conduct.

(3) Felonies

(4) False or misleading information.

(5) On-site review.

(6) Medicare debt.

(7) Payment suspension.

(8) Initial reserve operating funds.

(9) Application fee / hardship exception.

(10) Temporary moratorium.

(11) Prescribing authority.

Under the Final Rule, enrollment denials based on “Payment Suspension” (42 CFR § 424.530(a)(7)) have been expanded and may now be based on the following:

“(i) 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 as defined in §§ 405.370 through 405.372 or in § 455.23 of this chapter.

(ii) CMS may apply the provision in this paragraph (a)(7) to the provider or supplier under any of the provider’s, supplier’s, or owning or managing employee’s or organization’s current or former names, numerical identifiers, or business identities or to any of its existing enrollments.

(iii) In determining whether a denial is appropriate, CMS considers the following factors:

(A) The specific behavior in question.
(B) Whether the provider or supplier is the subject of other similar investigations.
(C) Any other information that CMS deems relevant to its determination.”

Prior to this expansion, the Payment Suspension basis for denying a provider’s or supplier’s Medicare enrollment was limited to situations where the current owner, physician, or non-physician practitioner had been placed on Medicare suspension.  CMS believed this did not allow them to deny enrollment to any provider or supplier type based on a payment suspension by the Medicare program, and did not encompass scenarios where a provider or supplier’s payments had been suspended by a state Medicaid payment but the Medicare program. Under the revised Final Rule, now all provider and supplier types can be denied enrollment if that provider or supplier is subject to a Medicare OR Medicaid payment suspension, or if the provider’s or supplier’s owners or managing employees or organizations are subject to such a suspension. Importantly, CMS will look at a provider’s or supplier’s owners and managing employee’s or organization’s current and former names, business identities and related numerical identifiers to identify any payment suspensions.

Additionally, the Final Rule has added several additional bases that may be relied on by CMS when deciding to deny a provider’s or supplier’s Medicare enrollment.  These new reasons for denial include:

(12) Revoked under different name, numerical identifier or business identity and the applicable re-enrollment bar has not expired.[14]
(13) Affiliation that poses undue risk.
(14) Other program termination or suspension.

Each of the fourteen reasons that may be relied on by CMS when denying a provider’s or supplier’s Medicare enrollment have specific requirements which must be met.  If you or your practice are denied Medicare enrollment, you should work with your legal counsel to determine whether the denial reason cited by CMS is accurate and consistent with the facts in your case.

X.  Introduction of a New “Reapplication Bar” Rule Under 42 CFR § 424.530(f):

As revised, the Medicare enrollment denial regulations now include a new “Reapplication Bar” rule.  As 42 CFR § 424.530(f) sets out, if a provider or supplier submitted false or misleading information on (or with) their Medicare enrollment application, CMS can choose to prohibit the prospective provider or supplier from enrolling in the Medicare program for up to three years.  Importantly, the scope of the reapplication bar rule set out under 42 CFR § 424.530(f)(1) and (f)(2) is quite broad:

“(1) The reapplication bar applies to the prospective provider or supplier under any of its current, former, or future names, numerical identifiers or business identities.

(2) CMS determines the bar’s length by considering the following factors:

(i) The materiality of the information in question.
(ii) Whether there is evidence to suggest that the provider or supplier purposely furnished false or misleading information or deliberately withheld information.
(iii) Whether the provider or supplier has any history of final adverse actions or Medicare or Medicaid payment suspensions.
(iv) Any other information that CMS deems relevant to its determination.

XI.  Modifications to the Medicare Enrollment Revocation Regulations Under 42 CFR § 424.535:

Prior to the issuance of the Final Rule, under 42 CFR § 424.535(a), CMS has long exercised the authority to revoke a currently-enrolled provider’s or supplier’s Medicare billing privileges (along with any related provider or supplier agreement).  Reasons for revocation have included:

  1. Noncompliance
  2. Provider or supplier conduct.
  3. Felonies
  4. False or misleading information.
  5. On-site review;
  6. Grounds related to provider or supplier screening requirements.
  7. Misuse of billing number.
  8. Abuse of billing privileges.
  9. Failure to report.
  10. Failure to document or provide CMS access to documentation.
  11. Initial reserve operating funds.
  12. Medicaid termination.
  13. Prescribing authority.
  14. Improper prescribing practices.

Under the Final Rule, the reasons for revocation under 42 CFR § 424.535(a)(9) and (a)(12) have been revised.  The revocation reason set out under 42 CFR § 424.535(a)(9) Failure to report, has been changed.  The basis for revocation has now been expanded to cover the following:

(9) Failure to report. The provider or supplier did not comply with the reporting requirements specified in § 424.516(d) or (e), § 410.33(g)(2) of this chapter, or § 424.57(c)(2). In determining whether a revocation under this paragraph (a)(9) is appropriate, CMS considers the following factors:

         (i) Whether the data in question was reported.
         (ii) If the data was reported, how belatedly.
         (iii) The materiality of the data in question.
        (iv) Any other information that CMS deems relevant to its determination.”

Similarly, the Final Rule expands the revocation basis set out under 42 CFR § 424.535(a)(12).  Rather than focus exclusively on the termination of a provider’s or supplier’s Medicaid billing privileges, under the Final Rule 42 CFR § 424.535(a)(12) the basis for revocation has been expanded to include not merely Medicaid but also adverse actions taken by any other Federal health care program.  As the regulation now reads:

“(12) Other program termination.

(i) The provider or supplier is terminated, revoked or otherwise barred from participation in a State Medicaid program or any other federal health care program. In determining whether a revocation under this paragraph (a)(12) is appropriate, CMS considers the following factors:

(A) The reason(s) for the termination or revocation.
(B) Whether the provider or supplier is currently terminated, revoked or otherwise barred from more than one program (for example, more than one State’s Medicaid program) or has been subject to any other sanctions during its participation in other programs.
(C) Any other information that CMS deems relevant to its determination.

 (ii) Medicare may not revoke unless and until a provider or supplier has exhausted all applicable appeal rights.
 (iii) CMS may apply paragraph (a)(12)(i) of this section to the provider or supplier under any of its current or former names, numerical identifiers or business identities.”

 The Final Rule has set aside slots for future bases for revocation at 42 CFR § 424.535(a)(15) and (a)(16).

Notably, a number of new bases for Medicare enrollment revocation have now been established under the Final Rule and are set out under 42 CFR § 424.535(a)(17) through (a)(20).  These new reasons for revocation include the following:

(17) Debt referred to the United States Department of Treasury. The provider or supplier has an existing debt that CMS appropriately refers to the United States Department of Treasury. In determining whether a revocation under this paragraph (a)(17) is appropriate, CMS considers the following factors:

(i) The reason(s) for the failure to fully repay the debt (to the extent this can be determined).
(ii) Whether the provider or supplier has attempted to repay the debt (to the extent this can be determined).
(iii) Whether the provider or supplier has responded to CMS’ requests for payment (to the extent this can be determined).
(iv) Whether the provider or supplier has any history of final adverse actions or Medicare or Medicaid payment suspensions.
(v) The amount of the debt. (vi) Any other evidence that CMS deems relevant to its determination.

(18) Revoked under different name, numerical identifier or business identity. 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. In determining whether a provider or supplier is a currently revoked provider or supplier under a different name, numerical identifier, or business identity, CMS investigates the degree of commonality by considering the following factors:

(i) Owning and managing employees and organizations (regardless of whether they have been disclosed on the Form CMS–855 application).
(ii) Geographic location.
(iii) Provider or supplier type.
(iv) Business structure.
(v) Any evidence indicating that the two parties are similar or that the provider or supplier was created to circumvent the revocation or reenrollment bar

(19) Affiliation that poses an undue risk. CMS determines that the provider or supplier has or has had an affiliation under § 424.519 that poses an undue risk of fraud, waste, or abuse to the Medicare program.

(20) Billing from non-compliant location. CMS may revoke a provider’s or supplier’s Medicare enrollment or enrollments, even if all of the practice locations associated with a particular enrollment comply with Medicare enrollment requirements, if the provider or supplier billed for services performed at or items furnished from a location that it knew or should have known did not comply with Medicare enrollment requirements. In determining whether and how many of the provider’s or supplier’s enrollments, involving the non-compliant location or other locations, should be revoked, CMS considers the following factors:

(i) The reason(s) for and the specific facts behind the location’s noncompliance.
(ii) The number of additional locations involved.
(iii) Whether the provider or supplier has any history of final adverse actions or Medicare or Medicaid payment suspensions.
(iv) The degree of risk that the location’s continuance poses to the Medicare Trust Funds.
(v) The length of time that the noncompliant location was non-compliant.
(vi) The amount that was billed for services performed at or items furnished from the non-compliant location.
(vii) Any other evidence that CMS deems relevant to its determination.  

(21) Abusive ordering, certifying, referring, or prescribing of Part A or B services, items or drugs. The physician or eligible professional has a pattern or practice of ordering, certifying, referring, or prescribing Medicare Part A or B services, items, or drugs that are abusive, represents a threat to the health and safety of Medicare beneficiaries, or otherwise fails to meet Medicare requirements. In making its determination as to whether such a pattern or practice exists, CMS considers the following factors:

(i) Whether the physician’s or eligible professional’s diagnoses support the orders, certifications, referrals or prescriptions in question.
(ii) Whether there are instances where the necessary evaluation of the patient for whom the service, item or drug was ordered, certified, referred, or prescribed could not have occurred (for example, the patient was deceased or out of state at the time of the alleged office visit).
(iii) The number and type(s) of disciplinary actions taken against the physician or eligible professional by the licensing body or medical board for the state or states in which he or she practices, and the reason(s) for the action(s).
(iv) Whether the physician or eligible professional has any history of final adverse actions (as that term is defined in § 424.502).
(v) The length of time over which the pattern or practice has continued.
(vi) How long the physician or eligible professional has been enrolled in Medicare.
(vii) The number and type(s) of malpractice suits that have been filed against the physician or eligible professional related to ordering, certifying, referring or prescribing that have resulted in a final judgment against the physician or eligible professional or in which the physician or eligible professional has paid a settlement to the plaintiff(s) (to the extent this can be determined).
(viii) Whether any State Medicaid program or any other public or private health insurance program has restricted, suspended, revoked, or terminated the physician’s or eligible professional’s ability to practice medicine, and the reason(s) for any such restriction, suspension, revocation, or termination.
(ix) Any other information that CMS deems relevant to its determination.

Notably, under the Final Rule, 42 CFR § 424.535(c), the regulations setting out the rules for reapplying after a provider’s or supplier’s Medicare enrollment has been revoked, have been revised and enhanced. First, the maximum reenrollment bar for a first-time revocation has been extended to 10 years. 42 CFR § 424.535(c)(1)(i). Second, if a provider or supplier attempts to “circumvent its existing reenrollment bar by enrolling in Medicare under a different name, numerical identifier or business identity,” CMS can extend that provider’s or supplier’s existing reenrollment bar by 3 additional years.   See 42 CFR § 424.535(c)(2)(i).

Moreover, under 42 CFR § 424.535(c)(3), if a provider or supplier is being revoked from Medicare a second time, CMS may choose to impose a reenrollment bar of up to 20 years.  The factors to be considered by CMS when determining the proper length of a reenrollment bar are set out under 42 CFR § 424.535(c)(3), subsections (i) through (iii).

In an effort to further prevent improper attempts to reenroll in the Medicare program, 42 CFR § 424.535(c)(4) provides a reenrollment bar applies to a provider or supplier under any of its current, former or future names, numerical identifiers or business identities.”

XII.  Impact of the Final Rule on State Medicaid and CHIP Enrollment and Disclosure Practices:

Section 1902(kk)(3) of the Act,1 as amended by section 6401(b) of the Affordable Care Act, which mandates that states require providers and suppliers to comply with the same disclosure requirements established by the Secretary under section 1866(j)(5) of the Act. In other words, the increased disclosure requirements apply to providers and suppliers enrolling or revalidating in the Medicare or Medicaid programs. It also applies to changes of information that must be reported under the Final Rule.

As the Final Rule further notes, as long as they continue to work within the broad Federal framework, States have been delegated considerable flexibility in how they administer their Medicaid and CHIP programs.  Ultimately, the enrollment requirements established by a State must be consistent with section 1902(a)(23) of the Act and implementing regulations at 42 CFR § 431.51. As the Final Rule reflects, as long as a State meets its obligations under 42 CFR § 431.51, it is free to:

“. . . [S]et reasonable standards relating to the qualifications of providers but may not restrict the right of beneficiaries to obtain services from any person or entity that is both qualified and willing to furnish such services.”

XIII. Due Diligence and Credentialing Risks When Enrolling, Revalidating or Submitting a Change of Information:

The affiliation disclosure requirements set out in the Final Rule are anticipated to be gradually implemented by CMS over the next three years.  The agency contends that such an approach will better enable the provider and supplier communities to meet their affiliation, uncollected debt and adverse event reporting obligations. Unfortunately, the Final Rule imposes yet another unfunded obligation on participating providers and suppliers.  From a practical standpoint, the implementation of the Final Rule will have an enormous impact on the credentialing process.  Federal and State payors have historically used the credentialing process as their first line of defense with respect to program integrity. The disclosure obligations set out in the Final Rule are quite comprehensive. Third-party billing companies and credentialing companies handling these submissions on behalf of their provider and supplier clients will need to diligently work to better ensure that each submission is both accurate and complete before submitting the credentialing package to a Federal or State payor.  On the payor side of the credentialing equation, professional credentialing companies, (such as CredSimple), will likely see an exponential increase in the demand for their verification and screening services.  Moreover, we fully expect to see private payors, medical centers and hospital systems adopt program integrity safeguards similar to those outlined in the Final Rule as they take steps to protect their organizations from fraud, waste, and abuse.

XIV.  Final Thoughts:

As the Final Rule details, the Affordable Care Act imposed a number of enrollment and reenrollment disclosure obligations on Medicare, Medicaid, and CHIP providers and suppliers.  These revised reporting obligations are intended to prevent bad actors from circumventing the existing safeguards that had been implemented to guard against fraud, waste, and abuse.  CMS estimates that it will take at least several years for the agency to revise the various versions of its CMS Form 855 enrollment applications and fully implement the new reporting obligations.  The true enormity of these new obligations has yet to be realized.  Affiliations, disclosable events and uncollected debts will be carefully evaluated by CMS and weighed as the agency decides whether to deny an application for enrollment or revalidation or revoke an existing provider’s or supplier’s Medicare billing privileges.

Healthcare Attorney

Jennifer Papapanagiotou,
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Robert W. Liles Healthcare Attorney

Robert W. Liles,
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Now, more than ever before, it is important for providers and suppliers to effectively conduct due diligence before hiring managerial staff, purchasing or selling an entity, appealing an alleged overpayment and / or seeking relief in bankruptcy.  As the enrollment disclosure and reporting process moves towards full implementation, it will be essential for you to fully understand your obligations under the law.  The attorneys at Liles Parker have extensive experience representing providers and suppliers in the provider enrollment, revalidation, change of information and change of ownership process.  Our team has represented healthcare providers and suppliers around the country in the appeal of Medicare termination actions, enrollment denials, and the revocation of an entity’s billing privilegesQuestions?  Give Robert Liles or Jennifer Papapanagiotou a call.  For a free consultation, we can be reached at:  1 (800) 475-1906.

[1] 42 CFR § 424.516.

[2] CMS is the single largest health care insurance payor in the country.  Approximately 90 million individuals are currently covered by Medicare, Medicaid and / or the Children’s Health Insurance Program (CHIP) programs.

[3] 71 FR 20754.

[4] 76 FR 5861.

[5] 81 FR 10720.

[6] The Final Rule is effective on November 4, 2019.

[7] 84 FR 47794, 47797.

[8] 84 FR 47794, 47803.

[9] 84 FR47794, 47802.

[10] Under 42 CFR § 424.502, the term “managing employee” means:

a general manager, business manager, administrator, director, or other individual that exercises operational or managerial control over, or who directly or indirectly conducts, the day-to-day operation of the provider or supplier, either under contract or through some other arrangement, whether or not the individual is a W-2 employee of the provider or supplier.”

[11] 84 FR 47794, 47803, 47805.  In light of the concerns raised, CMS will be adopting a “phased-in” approach to complying with the requirements under 42 CFR §?424.519(b).  Under this phased-in approach, CMS will first be revised Form CMS-855 to cover the various disclosures required under the Final Rule.  Initially, providers and suppliers will not be required to disclose affiliations under 42 CFR §?424.519(b) unless CMS asks for this information.  While this approach will initially relieve providers and suppliers of the disclosure burden, CMS notes that this is not meant to be a permanent exemption.  Ultimately, providers and suppliers will be required to report any affiliations with one or more disclosable events.

[12] 84 FR 47794, 47807.

[13] CMS acknowledges in its response to comments in the Final Rule that the additional sub-regulatory guidance is needed to further clarify the “knew or should have known” standard.  See 84 FR 47794,47811.

[14] This is similar to CMS’ new expanded authority to deny enrollment if an owner or managing employee of a provider or supplier is under a payment suspension by Medicare or a state Medicaid program. Under this new denial authority, CMS will examine the degree of commonality between the applicant and other revoked providers and suppliers, looking specifically at the owning and managing employees and organizations of the applicant and a revoked provider or supplier, the applicant and revoked provider’s or supplier’s geographic location, provider or supplier type, business structures, and “any evidence indicating the two parties are similar or that the provider or supplier was created to circumvent the revocation or reenrollment bar.” 84 FR 47794, 47823.

Genetic Testing Fraud Prosecutions are on the Rise Around the Country. Are Your Genetic Testing Practices Compliant?

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Genetic Testing(August 13, 2019):  Over the last year, a number of genetic testing fraud investigations and prosecutions have been initiated by Medicare, Medicaid and TRICARE investigators and auditors.  While the nature of the diagnostic services at issue are cutting edge, the wrongful conduct associated with these cases often involves old school fraud schemes that are easily identified and well known to law enforcement.  This article covers the origins of genetic testing and examines a number of genetic testing fraud cases that have been pursued by Federal prosecutors around the country.  In this article, we also discuss a number of the questions you should be addressing prior to engaging in the marketing, ordering or billing of genetic laboratory testing claims.

I.  Historical Background – The Discovery of DNA:

The discovery of deoxyribonucleic acid (commonly known as DNA) can be traced to the efforts of Swiss chemist Freidrich Miescher in 1869. Over the next 75 years, Miescher and others established the scientific foundation for the groundbreaking molecular work of James Watson and Francis Crick in 1952.  At that time, Watson and Crick first proposed that the DNA molecule was a double-helix structure.  Watson, Crick and their colleague, Maurice Wilkins were subsequently awarded the Nobel Prize in Physiology or Medicine in 1962 “for their discoveries concerning the molecular structure of nucleic acids and its significance for information transfer in living materials.”[1]

Over the next 20 years, scientists continued to research the nature and composition of the DNA molecule.  This ultimately led to the 1990 formation of an international scientific research effort that became known as the “Human Genome Project” (HGP).  The goal of researchers at that time was to identify and sequence more than 3.3 billion base pairs of the human genome.[2]  By 2003, an initial draft of the human genome was completed.  Over the last 16 years, refinements in mapping have continued to be made.  As of June 2019, scientists report that there are still 89 “gaps” that remain to be sequenced.[3]

II.  Practical Applications of Genetic Testing:

The successful mapping of the human genome has led to the development of literally thousands of tests that can now be used to determine whether there is any evidence of chromosomal abnormality that may be used to detect the possibility of illness or disease.  Genetic testing is now commonly used for a number diagnostic and treatment purposes, including, but not limited to the following:

  • Diagnostic Genetic Testing. Genetic testing can be used for diagnostic purposes.  For example, it can be used to verify whether an individual has a diagnosis of cystic fibrosis or other disease that can be confirmed through a search for specific genetic abnormalities.

  • Genetic Carrier Testing. If you have a family history of a specific disease that has been tied to one or more genetic defects, it may be possible to determine whether you are a carrier of this genetic abnormality.  As a carrier, this genetic mutation may be passed along to your children.

  • Predictive Genetic Testing. This type of genetic testing also examines a patient’s family history to determine whether an individual is at a higher of risk of developing certain illnesses and / or diseases.

III.  The Emergence of Direct-to-Consumer Genetic Testing:

As the testing technology improved, the costs of conducting genetic testing procedures continued to drop to the point that it became commercially viable for a number of companies to offer direct-to-consumer test kits.  These kits were heavily marketed and promoted to the public as an effective way to predict an individual’s risk of developing certain illnesses and / diseases.

Allegations of deceptive marketing practices by direct-to-consumer genetic testing companies led to an investigation of these testing companies by the Government Accountability Office (GAO) in 2006.  At that time, GAO found that a number of “egregious examples of deceptive marketing.”  For example, four of the companies examined claimed that their assessment of an individual’s DNA could be used to create personalized supplements to cure diseases.  Two of these companies further claims that their supplements could “repair damaged DNA” or even cure certain diseases.  As the GAO noted, there was no scientific basis for these claims.[4]   As a result of the GAO’s findings, in 2006 the Centers for Disease Control (CDC), in conjunction with the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) issued consumer alerts warning the public to be wary of the claims being made by many of these genetic testing companies.

IV.  Impact of GINA and the ACA on the Use of Genetic Testing:

The development and expansion of genetic testing stoked the fears of many Americans that their specific genetic makeup could be used by health insurers and employers as a screening tool to weed out individuals who may be suffering from (or have the potential to develop) costly illnesses and diseases. To address these concerns, Congress passed the Genetic Information Nondiscrimination Act of 2008 (GINA) to prohibit health insurers and employers from using genetic information when making insurance eligibility and employment decisions.

The genetic testing industry received a further boost with the enactment of the Affordable Care Act (ACA). With the passage of the ACA, insurance payors were barred from denying coverage to patients with most preexisting illnesses and conditions. This effectively opened the door for patients to readily participate in genetic testing without the fear of losing their insurance due to the presence of a preexisting illness or disease.[5]

V.   Medicare Coverage of Specific Genetic Testing Procedures:

While the direct-to-consumer market has been in place for almost 20 years, most insurance payors have yet to issue comprehensive coverage guidance on genetic testing for diagnostic and screening purposes.  In order to qualify for coverage and payment under Medicare, a specific genetic test must meet the predicate requirements set out under 42 C.F.R. § 410.32.  While the Centers for Medicare and Medicaid Services (CMS) has been fairly progressive in approving the coverage of certain genetic tests for diagnostic purposes, it has been slow to authorize the coverage of genetic screening tests. For example, CMS did not finalize coverage of Next Generation Sequencing tests (diagnostic laboratory tests administered to patients with advanced cancer), until March, 2018.[6]  Additionally, Medicare still does not pay for genetic testing in many cases.[7]  Even the common genetic tests for the BRCA1 and BRCA2 gene mutation linked to breast cancer are only covered by Medicare under certain circumstances such as a family history of breast cancer.[8]

VI.  Primary Civil and Criminal Statutes Implicated in Genetic Testing Fraud Schemes:

Depending on the specific improper genetic testing conduct alleged, a variety of civil and / or criminal statutes may be implicated.  In this section, we briefly examine the various conduct that may result in prosecution by Federal law enforcement authorities.  Examples of problematic conduct includes:

42 U.S. Code § 1320a–7a(a)(5)Beneficiary Inducement Provisions.  Under the beneficiary inducement statute, it is a violation of law to offer or provide anything of value to a beneficiary in order to influence the beneficiary to order or receive any item or service that is reimbursed by Medicare or Medicaid.  Violations of these provisions may result in the assessment of significant civil money penalties. Examples of improper beneficiary inducements include:  (1) Gift cards. Giving $100 gift cards to senior citizens covered by Medicare if they sign up to have a “free” DNA swab taken and submitted for genetic testing; (2) Other items of value. Providing a “free” health screening if a senior citizen signs-up for genetic testing and provides their Medicare information.

18 U.S.C. § 1347Health Care Fraud.  Under this statutory provision, it is a criminal violation to defraud any health care program (both governmental and private payor programs) OR to obtain payment by means of false or fraudulent pretenses, representations or promises.  As the language reflects, this health care fraud statute is extraordinarily broad and may encompass a broad range of improper actions and conduct.  Examples of cases brought under this statutory provision include:  (1) Misrepresentation of a non-covered service. In some respects, this improper practice is nothing more than another form of “billing for services not rendered.” Simply put, in the cases we have seen where this has occurred, a genetic testing laboratory was alleged to have purposely billed a non-covered genetic test under the CPT code of a covered laboratory genetic test; (2) Misrepresentation of the ordering physician. This type of billing fraud is fairly common in laboratory testing fraud cases. We have seen cases where the putative ordering physician had never heard of the patient and did not know that his provider number was being improperly used to bill Medicare for genetic tests;  (3) Medically unnecessary services. We have seen multiple cases where the prerequisite requirements to qualify for a Medicare beneficiary to have a certain genetic test performed have not been met.  Moreover, representatives of the laboratory  billing for the genetic testing services were aware that these requirements had not been met.

42 U.S.C. § 1320a-7b(b).  Anti-Kickback Statute. It is against the law to provide something of value in an effort to induce a referral that is covered by a Federal health care benefit program.  Under the Anti-Kickback Statute, transactions aimed at inducing referrals for items or services billed to federal healthcare programs are strictly prohibited.  This criminal statute is, in part, aimed at preventing the overutilization of services and the providing of unnecessary services.  When it comes to genetic testing, ordering physicians, marketing representatives and others who receive kickbacks for referring genetics testing work to a laboratory for processing and billing may be criminally prosecuted.  As a final point, it is important to keep in mind that as a result of the Affordable Care Act, violations of the Anti-Kickback Statute may also be pursued as a violation of the civil False Claims Act.As the statute provides:

“(1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

(A) in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.

(2) Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person—

(A) to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.[9]

18 U.S.C. § 220(a). Illegal Remunerations for Referrals to Recovery Homes, Clinical Treatment Facilities, and Laboratories. These statutory provisions were enacted in October 2018 as part of the Eliminating Kickbacks in Recovery Act (EKRA).”  EKRA was intended to address patient brokering and other kickback schemes by expanding liability and raising the maximum penalties for kickbacks. Under this statute, the maximum penalties for illegal remunerations paid by recovery homes, clinical treatment facilities, and laboratories in an effort to induce referrals can result in penalties of $200,000 and 20 years of imprisonment per occurrence. To date, none of the publicized prosecutions of genetic testing related kickbacks have been brought under EKRA.  Nevertheless, we anticipate that private payor kickback cases involving genetic testing claims and laboratories will become public as investigations mature and referrals are made to Federal prosecutors around the country.An offense under this provision is described as:

Offense — Except as provided in subsection (b), whoever, with respect to services covered by a health care benefit program, in or affecting interstate or foreign commerce, knowingly and willfully—

(1) solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a recovery home, clinical treatment facility, or laboratory; or

(2) pays or offers any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

          (A) to induce a referral of an individual to a recovery home, clinical treatment facility, or laboratory; or

          (B) in exchange for an individual using the services of that recovery home,  clinical treatment facility, or laboratory…”

31 U.S.C. § 3729 (a)(1)(A). Civil False Claims. Under this statutory provision, anyone who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” is liable to the U.S. Government for civil penalties.[10]  Medicare does not cover “medically unreasonable and unnecessary services” so knowingly billing Medicare for medically unnecessary genetic tests could constitute a violation of the False Claims Act. is legislation under this section.[11]  Several of the cases discussed below were brought by former employees (whistleblowers) with knowledge of the fraud.

42 U.S.C. 1395nn. Ethics in Patient Referrals Act of 1989 (Stark).  Both the initial legislation and subsequent refinements to the law and corresponding regulations are all focused on prohibiting improper physician self-referrals for certain Designated Health Services (DHS) for which Medicare would otherwise pay, to an entity with which the physician or an immediate family member has a financial relationship, unless one of the statutory or regulatory exceptions applies. Importantly, “Clinical Laboratory Services” are listed as DHS.  Under Stark, if a physician (or an immediate family member of such physician) has a financial relationship with clinical laboratory, the physician may not make a referral to the laboratory for the furnishing of services for which payment may be made under the Federal health care programs.  To date, the government has not cited violations of Stark as the basis for prosecuting one or more of the genetic testing fraud cases that have been widely publicized.  Nevertheless, the prohibitions presented under Stark should be considered since laboratory services are a recognized DHS.

VII.  Recent Genetic Testing Fraud Prosecutions:

In recent years, the U.S. Department of Justice (DOJ) has focused increasing resources on the investigation and prosecution of genetic testing related fraud and abuse.  These efforts have resulted in a genetic testing fraud prosecutions.  Some of the recent case pursued by DOJ prosecutors have included:

  • March 2018 Misrepresenting the Nature of a Genetic Test in Order to Get it Covered.  In this case, a California genetic testing company improperly billed TRICARE, FEHBP and Medicaid for services that did not qualify for coverage and payment. To get the claims paid, the company allegedly used an improper code which misrepresented the nature of the services.  To resolve violations of the civil False Claims Act, the genetic testing company agreed to pay $10,635,615.90 to TRICARE and FEHBP.  The company also paid $756,183.00 to the state Medicaid program to resolve similar allegations.
  • December 2018 Genetic Testing Kickback Case. A Vancouver, Washington toxicology and genetic testing lab was sued under the civil False Claims Act and agreed to pay $1,777,738 to settle allegation that it violated the FCA by paying kickbacks to obtain the referral Medicare and TRICARE covered tests from other local laboratories.  As the U.S. Attorney’s Office noted, Paying remuneration to medical providers or provider-owned laboratories in exchange referrals encourages providers to order medically unnecessary services.” 
  • February 2019 Medically Unnecessary Genetic Testing Case. In this case, a San Diego genetic testing company agreed to pay $1.99 million to resolve allegations that the company violated the civil False Claims Act, 31 U.S.C. §§ 3729 et seq.  The government alleged that the genetic testing company submitted claims for genetic tests that were not medically reasonable and necessary because the prostate cancer patients at issue did not have any of the specific risk factors that qualified for the testing. Notably, this case was brought by two former employees of the testing company who filed suit under the whistleblower provisions of the False Claims Act.
  • May 2019 Medically Unnecessary Genetic Testing Case. A health system in Decatur, Texas agreed to pay $431,182.96 to resolve allegations that it violated the civil False Claims Act.  According to the government, the health system submitted false claims to Medicare for payment in connection with the ordering of genetic testing panels for surgical patients that were not medically reasonable or necessary. Notably, the samples taken from surgical patients to be subjected to genetic testing were sent to a lab in Tennessee for processing.   The U.S. Attorney’s Office for the Western District of Tennessee prosecuted the case against the Texas health system.
  • May 2019.  Medically Unnecessary Genetic Testing Case.  In this case, a New Jersey laboratory sales representative pleaded guilty to one count of “Conspiracy to Commit Health Care Fraud.” The defendant obtained access to hundreds of senior citizens through his work with a non-profit organization, The Good Samaritans.  He was able to persuade these senior citizens to submit to genetic testing, despite the fact that no health care professional was involved.  Notably, the defendant reportedly used “fear-based tactics during the presentations, including suggesting the senior citizens would be vulnerable to heart attacks, stroke, cancer and suicide if they did not have the genetic testing.”  To get the genetic tests authorized, the defendant recruited health care providers off of Craigslist and paid them thousands of dollars each month to “sign their names to requisition forms authorizing testing for patients,” despite the fact that the health care providers had never examined or interacted with any of the patients.  The defendant, along with two co-conspirators were reported paid more than $100,000 in commission payments by two laboratories for whom they worked.  The defendant was sentenced to 50 months in prison and ordered to pay restitution of $434,963 and forfeiture of $66,844.
  • June 2019 Genetic Testing Kickback Case.  In this case, a Las Vegas cardiology practice agreed to settle violations of the Anti-Kickback Statute and the civil False Claims Act by agreeing to pay $2.5 million to the government. The government alleged that the cardiology practice referred patients for genetic testing in exchange for kickbacks from the testing laboratories.
  • June 2019 Genetic Testing Kickback Case.  The owner of a Tampa medical marketing company was recently prosecuted and found guilty of conspiracy to pay kickbacks and bribes.  In this case, the defendant was alleged to have paid kickbacks to medical clinics in exchange for the referral of DNA swabs that have been obtained from Medicare beneficiaries. The government further alleged that the medical clinics were directed to collect the DNA of all of their patients, regardless of medical necessity.  The defendant marketing company sent the DNA swabs to a clinical laboratory for genetic testing.  Over the course of the conspiracy, the clinical laboratory billed over $2.2 million to Medicare for genetic testing claims.  The defendant marketing company owner
  • July 2019 Improper Marketing Practices / Ordering Genetic Tests for Patients that Were Never Seen or Treated.   In this case, the Chief Medical Officer physician in Gainesville, Florida, along with two other individuals (non-physicians), have been charged with one count of “Conspiracy to Commit Health Care Fraud.”  The three individuals worked for a company that operated a network of laboratories that performed genetic testing procedures.  According to the government, the two non-physicians are alleged to have contacted a clinical laboratory in New Jersey and proposed sending ten DNA swabs for genetic tests in return for 50% of the Medicare payments received by the laboratory.  The DNA genetic tests reportedly listed the Chief Medical Officer as the “Ordering Physician.”  Moreover, the Chief Medical Officer certified that the tests were medically reasonable and necessary.  Upon investigation, the government has supposedly learned that all 10 of the patients for whom genetic testing was ordered live outside of Florida.  In order to qualify for coverage and payment, the genetic test ordered for one of the patients (who lived in Oklahoma) required that the patient have a personal history of breast cancer.  When interviewed, the patient reported that she had not had cancer and had not advised anyone to the contrary. When asked how she learned about the genetic testing opportunity, the patient reported that she submitted the DNA swab “after seeing an advertisement on Facebook that offered a $100 gift card for people interested in genetic testing.”  She further stated that the DNA swab was not taken at a medical office.  Instead, the swab was reportedly taken in a “plain old office building” by “some random guy.”  The Oklahoma patient has further alleged that she never saw or spoke with a treating physician or with the Chief Medical Officer (who was listed as the Ordering Physician) about the genetic testing.   If convicted, the defendants in this case may be sentenced to a maximum penalty of 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.

VIII.  Genetic Testing — Staying Within the Four Corners of the Law:

As Medicare, Medicaid and private payors have expanded their genetic testing coverage policies, the number of laboratories, physicians and marketing companies involved in the procurement and provision of these tests has exploded.  Regrettably, many individuals and companies have moved into the genetic testing space without fully understanding the rules and regulations that must be met before these tests can be ordered, interpreted, billed and paid by Medicare and other payors.  If your business model involves the marketing of genetic testing services, the ordering of genetic tests or the performance of genetic tests, it is essential that you conduct a comprehensive assessment of your business (and, if applicable clinical) practices to ensure that your conduct does not violate the Federal Anti-Kickback Statute, EKRA, Stark, the False Claims Act or a host of other statutory and regulatory requirements that apply to these laboratory testing claims.

If you or your company are involved in the genetic testing industry, the following questions should be considered:

  • Is your marketing company involved with the promotion of genetic testing services?
  • Are you performing marketing services as an employee or as an independent contractor of a clinical laboratory?
  • Are you a physician, nurse practitioner or physician assistant who has been approached and asked to serve as the “ordering physician” of genetic testing services?
  • Are you a physician who has been approached by a marketing company, laboratory or other third party who has offered to pay you to conduct an evaluation (for the purpose of ordering genetic testing) via telemedicine?
  • Has your medical practice been offered a fee (by a clinical laboratory or another third party) for each genetic test (DNA swab) that is taken from the patients seen in your practice?
  • Has a clinical laboratory offered to give a percentage of Medicare, Medicare or private payor revenues generated by genetic testing claims referred to the laboratory by you or your medical practice?

Each of these questions raise a number of complex regulatory questions that must be fully vetted by an experienced health lawyer before you engage is such conduct.

Robert W. Liles Healthcare AttorneyRobert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent marketing companies, physicians and laboratories around the country in connection with government audits and investigations.  We also advise parties on the regulatory requirements of their current and / or proposed business arrangement, along with the parameters and requirements of the Federal Anti-Kickback Statute and EKRA.  Are your Medicare, Medicaid or private payor genetic testing claims being audited?  We can help.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

 

[1] The Nobel Prize in Physiology or Medicine 1962. NobelPrize.org. Nobel Media AB 2019. Sun. 11 Aug 2019.
[2] https://web.ornl.gov/sci/techresources/Human_Genome/project/index.shtml.
[3] An examination of the remaining gaps in sequencing has been compiled by the Genome Reference Consortium. The Genome Reference Consortium is a coalition of international research institutes that have worked together to map and sequence the human genome.
[4] Direct-to-Consumer Genetic Tests – Misleading Test Results are Further Complicated by Deceptive Marketing and other Questionable Practices.  GAO-10-847T.  Released July 22, 2010.
[5] https://khn.org/news/safe-under-the-aca-patients-with-preexisting-conditions-now-fear-bias/
[6] https://www.cms.gov/newsroom/press-releases/cms-finalizes-coverage-next-generation-sequencing-tests-ensuring-enhanced-access-cancer-patients
[7] https://www.asco.org/practice-guidelines/cancer-care-initiatives/genetics-toolkit/genetic-testing-coverage-reimbursement
[8] Ibid.
[9] https://www.law.cornell.edu/uscode/text/42/1320a-7b
[10] The penalties for violations of the False Claims Act are currently:
Treble damages, plus $11,463 and $22,927 per false claim or statement. (These 2019 estimated amounts reflect the anticipated increase that has not yet been announced by DOJ).
[11] https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Items-and-Services-Not-Covered-Under-Medicare-Booklet-ICN906765.pdf

OIG’s Renewed Interest in Orthotic Audits and Investigations: What Your DME Company Needs to Know

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UPIC Audits of Medicare Orthotic Claims are Increasing(February 8, 2019):  A series of recent reports out of the Department of Health and Human Services (HHS), Office of Inspector General (OIG) underscore the Federal government’s renewed concerns with respect to orthotic braces, including underlying medical need for these items.  From 1994 to 2000, OIG issued half a dozen reports pertaining to orthotics audits and investigations.  However, since 2000, OIG’s focus shifted to other areas of program integrity concern (such as home health and hospice).  Between November 2018 and January 2019, however, OIG issued three reports regarding orthotic braces, highlighting that these items are on OIG’s radar once again. These three OIG reports are: “Medicare Improperly Paid Suppliers for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Provided to Beneficiaries During Inpatient Stays” (A-09-17-03035) (November 2018); “Pacific Medical’s Billing of Medicare for Orthotic Braces” (A-09-17-03027) (December 2018); and “Kelley Medical Equipment and Supply, LLC, Received Unallowable Medicare Payments for Orthotic Braces” (A-09-17-03030) (January 2019).   Over the past month, we have seen a significant uptick in the number of new orthotic audits and investigations by Medicare contractors, including Unified Program Integrity Contractors (UPICs).  The purpose of this article is to discuss a number of the program integrity issues that Durable Medical Equipment (DME) suppliers are facing in connection with UPIC audits of orthotic claims billed to Medicare. 

I.     Medicare Coverage and Payment Requirements

Medicare Part B covers Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS), including orthotic braces. To be paid by Medicare, a service or an item must be reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Orthotic braces are defined as rigid and semi-rigid devices which are used for the purpose of supporting a weak or deformed body member or restricting or eliminating motion in a diseased or injured part of the body.” Examples of orthotic braces include back, knee, and ankle-foot braces.

The DME Medicare Administrative Contractors (MAC) have developed Local Coverage Determinations (LCDs) for most covered orthotic braces (one of the most notable exceptions, however, is shoulder braces). The LCDs outline the conditions under which DME MACs will pay suppliers for those braces. For example, the LCD for back braces or “spinal orthoses” (LCD L33790) provides that: “A spinal orthosis (L0450 – L0651) is covered when it is ordered for one of the following indications:

  1. To reduce pain by restricting mobility of the trunk; or
  2. To facilitate healing following an injury to the spine or related soft tissues; or
  3. To facilitate healing following a surgical procedure on the spine or related soft tissue; or
  4. To otherwise support weak spinal muscles and/or a deformed spine.

Before submitting a claim for an orthotic brace to the DME MAC, a supplier must have on file the following:

  • Written documentation of a verbal order or a preliminary written order from the treating physician,
  • A detailed written order from the treating physician,
  • Information from the treating physician concerning the beneficiary’s diagnosis,
  • Any information required for the use of specific modifiers, and
  • Proof of delivery of the orthotic brace to the beneficiary.

The Medicare Program Integrity Manual specifically emphasizes that a supplier should obtain as much documentation from the beneficiary’s medical record as it determines necessary to assure itself that the orthotic brace meets Medicare requirements”.

II.    OIG’s Recent Reports:

In the first of OIG’s recent reports, dated November 2018, OIG found that Medicare should not have paid suppliers any of the $34 million for DMEPOS items that were provided during inpatient stays. Notably, 43% of the total overpayment identified by OIG was for prosthetics and orthotics, including braces. Separate from the $34 million figure, OIG determined that Medicare beneficiaries inappropriately paid $8.7 million in deductibles and coinsurance to the suppliers for the DMEPOS items. Generally, during an inpatient stay, Medicare should not pay a supplier for DMEPOS items provided to a Medicare beneficiary. The items are supposed to be provided directly by the inpatient facility or under arrangements between the facility and the supplier. This is because the Medicare payments made to the facilities represent payments in full for all inpatient hospital services, including DMEPOS items. OIG attributed the inappropriate payments for these supplies, in part, to inadequate Common Working File (CWF) pre-payment and post-payment edits which failed to prevent or detect the overpayments. OIG determined that if the system edits had been designed properly since 2008, Medicare could have saved $223.1 million and beneficiaries could have saved $56.3 million in deductibles and coinsurance. Based on its findings, OIG recommended in part that the Centers for Medicare & Medicaid Services (CMS) recover the $34 million and that the suppliers refund the deductible and coinsurance amounts to the Medicare beneficiaries.

OIG’s other two reports, dated December 2018 and January 2019 respectively, were quite similar to one another. OIG audited a supplier of orthotic braces in Tracy, California and a supplier of orthotic braces in Durant, Oklahoma for the same audit period, January 1, 2015 through March 31, 2017. In both cases, the overpayments identified by OIG were exclusively attributed to the failure on the part of the suppliers to establish medical need for some of the orthotic braces. In the California case, OIG determined that the supplier billed for orthotic braces that were not medically necessary for nine claims and could not provide medical records for two claims. In the Oklahoma case, OIG determined that the supplier billed for orthotic braces that were not medically necessary for 67 beneficiaries and could not provide medical records for nine beneficiaries. OIG stated verbatim with respect to both suppliers: These deficiencies occurred because [the supplier] did not always obtain sufficient information from the beneficiaries’ medical records to assure itself that the claims for orthotic braces met Medicare requirements.” An example of a medically unnecessary back brace was provided by OIG as follows:

Medicare paid [the Oklahoma supplier] $754 for providing a back brace to a 62-year-old beneficiary. According to the physician order dated March 7, 2017, the brace was prescribed for lower back pain. However, the medical records did not indicate a complaint of back pain, and there was no mention of a back brace. Rather, according to the medical records, the beneficiary saw his physician on March 2, 2017, for relief of persistent cough and chest congestion. As a result, the independent medical review contractor found that the back brace was not medically necessary.

Based on its findings, OIG recommended to both suppliers that they (1) refund the identified overpayments; (2) assess their claims outside of OIG’s audit period and refund any identified overpayments within 60 days; and (3) obtain as much information from beneficiary medical records as the suppliers deem necessary to assure themselves that claims for orthotic braces meet Medicare requirements.

III.   Our Recommendations for Suppliers of Orthotic Braces:

Given the audit and investigation activity surrounding suppliers of orthotic braces, it is important for suppliers to reassess Medicare coverage and payment requirements and their documentation practices. In particular, suppliers need to ensure they are obtaining and maintaining sufficient medical records from the ordering providers. As we have discussed in previous articles, while suppliers are not entitled to make determinations regarding medical need, they are tasked with evaluating medical records and ensuring that the records support the Medicare beneficiary’s medical need for the orthotic brace prescribed. The OIG reports make very clear that the party responsible for an overpayment is the supplier, and not the ordering provider. In order to ensure you are satisfying your documentation obligations, we recommend that you:

  1. Consult with your healthcare attorney and have them review a sample of claims. The best way to ensure that your claims are satisfying Medicare coverage and payment rules, and that you are meeting your documentation obligations, is to have a third party with strong knowledge in this area assess a sample of your claims who can then give you objective feedback and constructive recommendations.
  2. Train and retrain your staff on Medicare coverage and payment rules and supplier documentation requirements. As a business owner, you are likely relying on a team of employees to obtain and review the necessary documentation and to process the claims for the orthotic braces. You are only as strong as your weakest link, as they say. Sharing these OIG reports with your employees and setting up a team conference to discuss them would be a great start! Your healthcare attorney can likely arrange a conference agenda and guide your team through OIG’s reports, as well as effectively educate you and your employees on Medicare coverage and payment rules and supplier documentation requirements.
  3. Implement a compliance plan tailored to the scale of your business and the DME supplies you distribute so that compliance will persist in the long-term. Ultimately, regular auditing of claims and regular training of employees, as well as sound policies and procedures, are the most effective ways to ensure long-term, ongoing compliance throughout the life of your business. Medicare rules and audit activity are constantly evolving. A compliance plan is the way to stay on your game.

We anticipate ongoing UPIC audits and investigations pertaining to orthotic braces on account of OIG’s findings and concerns. Our attorneys can assist you if you have received notice from your local UPIC, or if you are interested in taking proactive steps, like developing a compliance plan or auditing your claims internally.

Lorraine Rosado Healthcare AttorneyLorraine Rosado, JD, CMCO, CMRS, Lorraine Rosado, JD is an experienced health law attorney with the firm, Liles Parker, Attorneys & Counselors at Law.  She is also a Certified Medical Compliance Officer (CMCO) and a Certified Medical Reimbursement Specialist (CMRS). Lorraine represents DME suppliers and a wide variety of other healthcare providers around the country in connection with Medicare, Medicaid and private payor audits and investigations. You can reach Lorraine at (202) 298-8750

 

 

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