CMS gets new powers to go after Medicare, Medicaid fraudsters

Gavel money handcuffs fraud
A new CMS rule gives the agency new power to revoke or deny Medicare, Medicaid enrollment if a provider or supplier is affiliated with a troublesome organization. (Getty Images/alfexe)

The Trump administration issued a new rule that aims to prevent payments to Medicare and Medicaid fraudsters by boosting revocation powers and extending the time before troublesome organizations can rejoin the programs.

The Centers for Medicare & Medicaid Services said that the final rule issued Thursday marks a major turnaround from the agency’s normal approach of attempting to recoup fraudulent payments after the fact.

“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,” CMS Administrator Seema Verma said in a statement Thursday. “Now for the first time, we have tools to stop criminals before they can steal from taxpayers.”

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The rule gives CMS new powers to revoke or deny organizations from participating in Medicare, Medicaid or the Children’s Health Insurance Program.

A new “affiliations" authority lets CMS identify individuals or organizations that have a high risk of fraud, waste or abuse based on their association with previously sanctioned people or groups, a release on the new rule said.

“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,” the agency said.

RELATED: CMS launches slate of initiatives aimed at curbing fraud, waste in Medicaid

Over the last five years, nearly $52 billion has been paid to 2,097 entities that were affiliated with an individual or company that had their enrollment revoked, the final rule said. CMS estimates it could save $20.7 billion over five years through the new affiliation authority.

The definition of an affiliation includes if a supplier or provider has a 5% or greater direct or indirect ownership stake in a revoked organization, has a general or limited partnership or if an individual has operational or managerial control over day-to-day operations of the organization, according to the rule.

CMS also now has the authority to revoke or deny Medicare enrollment if a revoked provider or supplier tries to come back in under a different name. CMS can also revoke or deny enrollment if a provider or supplier bills for services or items from a non-compliant location or if they have an outstanding debt from the Treasury Department for an overpayment.

The rule also enables CMS to prevent an application from enrolling in one of the programs for up to three years if a provider or supplier submitted false or misleading information in their enrollment application.

Under the new regulations, a revoked provider could re-enroll in Medicare, Medicaid or CHIP after 10 years. This is a major increase from the previous penalty of waiting only three years. If a provider or supplier gets revoked for a second time, then it must wait two decades before it can rejoin the program.

The new authorities go into effect on Nov. 4.

Federal health programs such as Medicare and Medicaid are a plum target for fraudsters due in part to the large number of payments the federal government doles out. The Government Accountability Office has said that improper Medicaid payments, for instance, reached $37 billion in 2017.

CMS said that it has been working to combat fraud and waste. The agency cited the improper payment rate for Medicare’s fee-for-service program was 8.12%, the lowest since 2010.

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