The Centers for Medicare and Medicaid Services (CMS) recently announced the issuance of a final rule designed to prevent waste, fraud and abuse in the Medicare and Medicaid programs before they actually take place. The rule, entitled “Program Integrity Enhancements to the Provider Enrollment Process,” includes several key provisions that attempt a more proactive and less reactive approach to the fraudulent schemes and activities that seem to pervade the federal health care programs. The new rules take aim at persons and entities that have been “affiliated” with other previously revoked entities in the federal programs and enumerate several other circumstances that may prevent an organization from enrolling or remaining enrolled.

The new “affiliations” piece of the rule will attempt to utilize existing CMS data to identify people and organizations that pose a fraud risk to the federal programs based on their relationships to other entities that have already been sanctioned in the past for fraudulent behavior. If a person or entity is found to have been “affiliated” with a previously sanctioned entity, any new entity with which they come involved may be proactively denied enrollment, or if already enrolled, have its enrollment revoked, with Medicare, Medicaid or the CHIP program.

The rationale behind the “affiliations” authority was explained in a CMS statement:

“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.  “Now, for the first time, we have tools to stop criminals before they can steal from taxpayers. This is CMS hardening the target for criminals and locking the door to the vault. If you’re a bad actor you can never get into the program, and you can’t steal from it.”

Other mechanisms present in the rule, all of which become effective on November 4, 2019, tackle other activities or events that may lead CMS to revoke or deny an entity’s enrollment in one of its programs, including:

  • 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.

Depending upon the specific circumstances, revoked entities may be barred from reentering a CMS-governed program for up to 20 years, obviously a very significant penalty.

Should you have questions regarding the content of this alert, please do not hesitate to contact any of the FisherBroyles Health Care and Pharmacy Law attorneys listed below.

Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson

Anthony Calamunci, FisherBroyles Partner
Anthony Calamunci

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid

Amy Butler, FisherBroyles Partner
Amy Butler