CMS Issues Final Rule Targeting Fraud in Federal Insurance Programs

WASHINGTON, D.C. (September 5, 2019)—The Centers for Medicare & Medicaid Services (CMS) issued a final rule that strengthens the agency’s ability to stop fraud before it happens by keeping unscrupulous providers out of federal health insurance programs. The rule has been under consideration for more than three years, according to the National Association for Home Care & Hospice (NAHC).

This action—stopping fraudsters before they get paid—marks a step forward in CMS’s longstanding fight to end “pay and chase” in federal health care fraud efforts and replace it with smart, effective and proactive measures. The action is part of the Trump Administration’s ongoing effort to safeguard taxpayer dollars and protect the core integrity of the critical Medicare and Medicaid programs that millions rely on.

The final rule, Program Integrity Enhancements to the Provider Enrollment Process (CMS-6058-FC), creates several new revocation and denial authorities to bolster CMS’s efforts to stop waste, fraud and abuse. Importantly, a new “affiliations” authority in the rule allows CMS to identify individuals and organizations that pose an undue risk of fraud, waste or abuse based on their relationships with other previously sanctioned entities. For example, a currently enrolled or newly enrolling organization that has an owner/managing employee who is “affiliated” with another previously revoked organization can be denied enrollment in Medicare, Medicaid, and CHIP or, if already enrolled, can have its enrollment revoked because of the problematic affiliation.

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

The rule also includes other authorities that will improve CMS’s fraud-fighting capabilities. Similar to the affiliations component, these authorities provide a basis for administrative action to revoke or deny, as applicable, Medicare enrollment if:

• A provider or supplier circumvents program rules by coming back into the program, or attempting to come back in, under a different name (e.g. the provider attempts to “reinvent” itself);
• A provider or supplier bills for services/items from non-compliant locations;
• A provider or supplier exhibits a pattern or practice of abusive ordering or certifying of Medicare Part A or Part B items, services or drugs; or
• A provider or supplier has an outstanding debt to CMS from an overpayment that was referred to the Treasury Department.

The new rule also gives CMS the ability to prevent applicants from enrolling in the program for up to three years if a provider or supplier is found to have submitted false or misleading information in its initial enrollment application. Furthermore, the new rule expands the reenrollment bar that prevents fraudulent or otherwise problematic providers from re-entering the Medicare program. CMS can now block providers and suppliers who are revoked from re-entering the Medicare program for up to 10 years. Previously, revoked providers could only be prevented from re-enrolling for up to three years. Additionally, if a provider or supplier is revoked from Medicare for a second time, CMS can now block that provider or supplier from re-entering the program for up to 20 years.

These new restrictions, effective Nov. 4, 2019, ensure that the only providers and suppliers that will face additional burdens are “bad actors”—those who have real and demonstrable histories of conduct and relationships that pose undue risk to taxpayers, patients and program beneficiaries, according to CMS.

When the rule was first proposed in 2016, NAHC expressed concerns that, “[t]he provider enrollment proposals are highly complicated and leave too much room for subjective application… While factors are presented that a decision-maker can consider in rendering enrollment determinations, the lack of objective standards creates a high risk of inconsistent determinations on comparable facts.” NAHC recommended that CMS establish an objective decision matrix that applies impact weights on relevant factors to determine whether a past relationship creates such a risk to Medicare that enrollment should be denied.

Other health care experts also weighed in on the final rule.

“The troubling matter here is, these are draconian penalties levied essentially on a unilateral basis even before an affected provider or supplier has noticed they may be in jeopardy of having their enrollment revoked,” said William Horton, a partner at the law firm Jones Walker, in an interview with Modern Healthcare. “Health care is already regulated in a way that gives a lot of prosecutorial and regulatory discretion to enforcement agencies, and this is adding layers to that.”

Click here to read the entire rule and public comments.