The Centers for Medicare and Medicaid Services (CMS) recently issued a final rule that provides more authority for CMS to address fraud, waste, and abuse in federal health insurance programs including Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). The new rule aims to bolster the ability of CMS to fight fraudulent or other inappropriate activity before it happens and before providers are paid. 

Known as the “Program Integrity Enhancements to the Provider Enrollment Process” (CMS-6058-FC), this final regulation, effective November 4, 2019, creates several new revocation and denial authorities to allow CMS to block providers from program participation. 

Importantly, a new affiliations authority will allow CMS to deny or revoke provider enrollment under Medicare, Medicaid, and CHIP because of affiliation with an individual or entity previously revoked or sanctioned.   

CMS provides as an 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.” 

Specifically, providers and suppliers must disclose any current or previous direct or indirect affiliation with a provider or supplier that: (1) has uncollected debt; (2) has been, or is subject to, a payment suspension under a federal health-care program; (3) has been, or is, excluded by the Office of Inspector General (OIG) from Medicare, Medicaid, or CHIP; or (4) has had its Medicare, Medicaid, or CHIP billing privileges denied or revoked.   

This provision permits the Secretary of Health and Human Services to deny enrollment based on such an affiliation when the secretary determines that the affiliation poses an undue risk of fraud, waste, or abuse.   

CMS will revise Form CMS 855 (both the paper application and the online enrollment forms through the Provider Enrollment, Chain, and Ownership System (PECOS)) to accommodate the required disclosures. These form modifications will be subject to rulemaking with a public comment period.   

CMS plans to implement a targeted approach that may be expanded through future rulemaking. For now, CMS will only require disclosure of affiliations from those providers and suppliers that have one or more affiliations, as determined by CMS, that would trigger a disclosure. Such providers and suppliers will be required to report their disclosable affiliations upon request from CMS. 

Per the final regulation, in reviewing whether a particular provider or supplier has one or more applicable affiliations, CMS will research and consider data revealed through such sources as, but not limited to: (1) PECOS and (2) other CMS databases and external non-CMS databases that could indicate behavior (such as improper billing patterns) of concern. 

After reviewing all applicable data, CMS will request the disclosure of affiliations from a provider or supplier if the provider or supplier, or any of its owning or managing employees or organizations, may currently have or, within the previous five years, have had an affiliation with a currently or formerly enrolled Medicare, Medicaid, or CHIP provider or supplier that may have one or more disclosable events. 

For purposes of this regulation, affiliation is defined as: 

  • A five percent or greater direct or indirect ownership interest that an individual or entity has in another organization. 
  • A general or limited partnership interest (regardless of the percentage) that an individual or entity has in another organization.  
  • An interest in which an individual or entity exercises operational or managerial control over, or directly or indirectly conducts, the day-to-day operations of another organization (including, for purposes of 42 CFR §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 §424.8. 
  • The regulation also includes other provisions to fight fraud. According to CMS, these new 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; 
  • 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; 
  • A provider or supplier has an outstanding debt to CMS from an overpayment that was referred to the Treasury Department; 
  • A provider or supplier is currently terminated, suspended, or otherwise barred from participation in a Medicaid program or other federal health insurance program; 
  • A provider or supplier’s license is currently revoked in a state other than that in which the provider or supplier is currently enrolling. 

Read the final rule. 

The Academy will continue to monitor the implementation of this regulation and provide updates as warranted.