Richard Cheng’s practice focuses on corporate transactions, health care operations, regulatory, compliance matters and administrative appeals. He has an extensive health care law practice, with particular concentration representing skilled nursing facilities, residential care facilities, assisted living facilities, home health agencies, community hospitals, pharmacies, therapy clinics, physician groups, hospices, regulated products providers (e.g. medicinal cannabis) and ancillary health care providers (e.g. dentist practices). Prior to joining Munsch Hardt, Richard was a partner and co-head of the health care practice group at a Texas-based corporate law firm, and a shareholder at a national law firm.
What does the inauguration of President Donald Trump mean for health care providers and suppliers, specifically enrollment and Medicare certification? The truth is, no one really knows or has a definitive answer. However, on inauguration day, Donald Trump signed an executive order to direct federal agencies to minimize the cost and burden of the Affordable Care Act (ACA) until it is repealed. While the American Health Care Act (AHCA) has been proposed, it faces great criticism from multiple health care trade associations and nothing concrete has been implemented to repeal and replace the ACA. Despite the ACA’s occasional unpopularity, the federal government credits it with combating health care fraud and abuse, recovering $4 billion to $6 billion dollars per year since 2011. Because the returns on the government’s investment to fight health care fraud and abuse is so good, it is highly unlikely those provisions will be repealed and replaced.
Earlier last year, the Centers for Medicare & Medicaid Services (CMS) proposed new enrollment regulations to significantly increase disclosure requirements for entities enrolling or revalidating enrollment with Medicare, Medicaid or CHIP. The proposed regulations also provide CMS with broader discretion to limit re-enrollment of providers and suppliers. Donald Trump’s executive order may delay these regulations from being confirmed, but CMS has taken a favorable stance to these proposed regulations and there are very few opposing comments submitted.
To appeal unfavorable enrollment decisions, health care providers are compelled to file an appeal with the Department of Health and Human Services, Departmental Appeals Board (DAB), Civil Remedies Division. It is critical for providers to fully comply with the enrollment rules and completeness is key in a Medicare enrollment applications. The legislative intent of enrollment rules were originally aimed at addressing illegitimate providers participating in health care fraud and abuse arrangements. However, the rules now are more expansive and its application penalizes legitimate providers for common oversight or inadvertent mistakes in a complex enrollment system. Many providers and suppliers today are obligated to refund monies received for legitimate services because their enrollment is retroactively revoked.
There were several cases in 2016 that exemplified the challenging climate involving enrollment revocations. One case in particular involved a home health care agency relocating its corporate office and subsequently having its enrollment revoked, along with a two-year enrollment ban. The revocation and ban was due to agency failure to notify CMS, despite notifying other government agencies regarding the move. In another case, CMS instituted an enrollment revocation and two-year enrollment ban after durable medical equipment (DME) company failed a site visit that resulted after it relocated its office, even though the DME company was advised by its Medicare Administrative Contractor (MAC) and the CMS contractor that supports the CMS electronic enrollment system the DME company could not report the change while their revalidation application was pending. Both the home health care agency and DME company filed an appeal with the DAB.
Cautions During Provider Transactions
Providers should exercise caution and diligence in transactions involving the merger with or acquisition of another health care provider. Minor or technical mistakes can lead to the revocation of a provider enrollment with minimal recourse. Whether it is a change of ownership (CHOW) or a change of information (CHOI), a buyer intending to utilize the seller’s existing Medicare provider enrollment is strongly advised to ensure the accuracy of the seller’s enrollment record. During the due diligence process, the buyer should engage in the following:
- Review and verify all seller’s enrollment information to ensure information is accurate and up-to-date. The most recently filed enrollment/revalidation application should also be reviewed.
- Conduct criminal history and OIG exclusion database checks on seller’s officers, owners and management staff.
- Get representations and warranties from the seller regarding the accuracy and regulatory compliance of the Medicare enrollment record.
- Obtain an agreement from the seller to indemnify against any losses sustained due to pre-closing regulatory or enrollment violations.
CMS and the MAC have typically accepted and processed delayed updates to the enrollment record (e.g., new board members not disclosed within the regulatory timeframe). Buyers may want to consider delaying the transaction until the seller has made any necessary corrections to its enrollment record and the MAC has processed those changes. Buyers should understand CMS and the MACs have recently revoke providers and suppliers for untimely self-reporting changes of information. Buyers should file the appropriate CMS 855 form for the transaction in a timely manner, disclosing all individuals and organizations with ownership or control, practice locations, adverse events, and/or other information required to be reported.
Overview and Conclusion
Provider enrollment and certification has been a constant evolving area, creating many challenges for providers and suppliers. Even with the Trump administration and fluctuating political environment, constant evolution and emphasis on compliance should continue. Because Medicare and Medicaid programs are so critical to providers and suppliers and the consequences of an enrollment revocation are so overwhelming, careful attention to these issues in business planning and transactions is paramount.