New fraud prevention rule gives CMS greater discretion

Last week, the Centers for Medicare & Medicaid Services (CMS) issued a final rule focusing on new safeguards to reduce Medicare fraud. The new rule gives CMS the "ability to deny or revoke the enrollment of entities and individuals that pose a program integrity risk to Medicare."

George B. Breen--a lawyer in the Health Care and Life Sciences and Litigation practices at Epstein Becker Green in the District of Columbia, and chair of the firm's National Health Care and Life Sciences Practice Steering Committee--said he's not surprised that CMS is putting resources towards this specific area of fraud prevention, considering the tremendous focus that the government has already put towards healthcare fraud enforcement.

"It really gives CMS some additional tools to keep what it considers bad actors or potentially bad actors out of the system," Breen (pictured right) said in an interview with FierceHealthPayer: AntiFraud. "This, again, is consistent with what CMS has done recently."

Keep "bad actors" out

Specifically, CMS aims to prevent "bad actors" from matriculating back into the system by instituting changes that allow CMS to do the following:

  • Deny enrollment to providers, suppliers and owners affiliated with any entity that has unpaid Medicare debt.

  • Deny or revoke the enrollment of a provider or supplier if a managing employee has been convicted of a felony offense that CMS determines to be detrimental to Medicare beneficiaries.

  • Revoke enrollments of providers and suppliers engaging in abuse of billing privileges by demonstrating a pattern or practice of billing that do not meet Medicare requirements.

"CMS has removed nearly 25,000 providers from Medicare and the new rules help us stop bad actors from coming back in as we continue to protect our patients," Shantanu Agrawal, M.D., CMS deputy administrator and director of the Center for Program Integrity, said in a statement. "For years, some providers tried to game the system and dodge rules to get Medicare dollars; today, this final rule makes it much harder for bad actors that were removed from the program to come back in."

Major takeaways

There are two major takeaways regarding the new CMS rule, Breen said.

First, providers need to know who they are doing business with, both internally and externally. CMS can now deny or revoke Medicare enrollment based on the criminal history of managing employees. Generally, owners, providers and suppliers are conscious of the people they hire, but the rule adds an additional layer of scrutiny.

"This sends the message that it's the expectation of the government that it ought to matter who works for you," Breen said.

Second, providers will want to pay attention to the actions of CMS contractors in order to better understand how this rule will be utilized. Contractors may begin using the sanction authority with increased frequency, in addition to requesting new or additional information about Medicare claims or employee backgrounds.

"CMS uses contractors, in some respects, as its eyes and ears," Breen said. "When you're looking for reports from contractors in terms of what they are finding out there, you want to be sensitive to the notion that you may start to be asked to produce information that you've not been requested previously."

Greater discretion for CMS

The new rule offers CMS significant discretion in its consideration of any factors that might justify refusing or revoking Medicare enrollment, Breen said. For example, the language surrounding felony convictions for managing employees is vague, stating only that CMS can deny or revoke enrollment if a managing employee has been "convicted of a felony offense that CMS determines to be detrimental to Medicare beneficiaries."

Previously, that rule included specific references to felonies such as murder, rape and assault, as well as extortion, embezzlement, income tax evasion and insurance fraud. Breen said that, though those references have been removed, they are still among the felonies that CMS will focus on in addition to "detrimental" offenses.

"There has not been a further delineation of that [definition], but I think it does certainly open the door for additional felony convictions--even convictions that wouldn't, on first flush, suggest that they directly relate to the provision of healthcare services to government beneficiaries," he said.

In the same vein, the new rule lets CMS deny or revoke enrollment based on abusive billing that demonstrates "a pattern or practice of billing for services that do not meet Medicare requirements." In the final rule, CMS defines this using the following factors:

  • The percentage of submitted claims that were denied

  • The total number of claims that were denied

  • The reason(s) for the claim denials

  • Whether the provider or supplier has any history of "final adverse actions"

  • The length of time over which the pattern has continued

  • How long the provider or supplier has been enrolled in Medicare

However, CMS is not limited to these factors, Breen said.

"As someone who is concentrated on representing healthcare entities, that clearly says to me that, in a situation where an entity is being refused enrollment, there are significant opportunities to challenge that," he said. "CMS has a significant amount of discretion, so you want to put that to the test in terms of a challenge if your obligation for enrollment is rejected. But entities also need to understand that these are the factors CMS is looking at."  

Ultimately, Breen said, owners, providers and suppliers should be aware of the government's increasingly expanded focus on Medicare fraud, and of how this new rule offers CMS additional means of fraud prevention and enforcement. Read the final rule not with the notion that you suddenly have new obligations but, rather, that  there is a further assessment of what you're doing.

"You need to be sensitive to the fact that what you may have otherwise treated as a normal or routine basic request for information may in fact have a different connotation now that you have this rule," Breen said.

For more:
read the CMS statement

Related Articles:
CMS strengthens oversight of Medicare providers
False Claims Act enforcement continues in high gear
Fraud convictions, false claims settlements and the inner compass
Feds fight uphill battle in fraud crackdown

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