Guilt by Affiliation: New CMS Regulations Require Provider Disclosure of Past Association with “Bad Actors”

CMS is accepting comments on the Final Rule through November 4, 2019.

The Final Rule, effective November 4, 2019, further empowers CMS to require Medicare, Medicaid, and CHIP providers and suppliers of Part A and Part B services to disclose those individuals and entities who they have directly or indirectly affiliated with that have uncollected federal health care program debts, have been subject to payment suspensions, have been excluded from federal health care programs, or have had billing privileges denied or rescinded.

The kicker is that such disclosure includes individuals and entities where the provider has a direct or indirect past affiliation, but perhaps not current, relationship. CMS has defined the term “affiliation” broadly to include:

• 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 Title 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 Title 42, CFR § 424.80.

Ultimately, the Final Rule will require providers and suppliers to dedicate even more attention and resources to CMS provider enrollment requirements. Further, expect CMS to wield its broad discretion to bar those providers and suppliers the agency believes has affiliated with bad actors that the agency determines will endanger program integrity.

I. Expanded Revocation Authority

The Final Rule expands CMS’s revocation authority for federal health care programs in the following scenarios:

• Provider “Reinvents” Itself: Deny or revoke Medicare enrollment if CMS determines that the provider or supplier is currently revoked under a different name, numerical identifier, or business identity, and the reenrollment bar period has not expired. This is to prevent barred individuals and entities from “reinventing” themselves to skirt program enrollment prohibitions.
• Non-Compliant Locations: Revoke a Medicare enrollment, including all practice locations – regardless of whether they are part of the same enrollment – if the provider or supplier billed for services performed at, or items furnished from, a location that it knows or should reasonably have known did not comply with Medicare enrollment requirements.
• Abusive Ordering or Certifying: Revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern or practice of ordering, certifying, or prescribing Medicare Part A or B services, items, or drugs that are abusive, represents a threat to the health and safety of Medicare beneficiaries, or otherwise fails to meet Medicare requirements.
• Outstanding Debt: Revoke Medicare enrollment if the provider or supplier has an existing debt from an overpayment that CMS refers to the United States Department of Treasury.

II. Additional Provisions Barring Enrollment

CMS also enhanced its gatekeeping authority to prevent applicants from enrolling or re-enrolling in federal health care programs:

• The Rule prohibits a provider or supplier from enrolling in the Medicare program for up to three years if its enrollment application was denied because the provider or supplier submitted false or misleading information on or with – or omitted information from – its application in order to gain enrollment in the Medicare program.
• The enrollment application may also be denied due to termination or suspension in other programs, particularly if: (1) the provider or supplier is currently terminated or suspended, or otherwise barred, from participating in a state Medicaid program or any other federal health care program, or (2) the provider’s or supplier’s license is currently revoked or suspended in a state other than where the provider or supplier is enrolling.
• The Rule also increases the maximum reenrollment bar from three to 10 years. 
• If the provider or supplier attempts to reenroll and is revoked for a second time, the Final Rule permits CMS to block that entity from the program for up to 20 years.

III. Conclusion

The Final Rule places additional burdens and risks on providers and suppliers, particularly entities with complex corporate structures that operate in many states and locations. They will be under particular pressure to comply with the new disclosure requirements regarding affiliations or risk denial, non-renewal, or revocation of enrollment in government health care programs.

While hospitals and other providers and suppliers typically check databases on a regular basis to determine if any of their current employees, contractors, or business partners have been excluded from or sanctioned by government health reimbursement programs, previously there had been no reason to check prior relationships and affiliations. However, the Final Rule provides for a five-year look back period for previous affiliations. The burden will be on the provider to demonstrate compliance, as the entity will be responsible for reporting the necessary information for enrollment. In light of CMS’s new authority and desire to further scrutinize program enrollment, providers and suppliers, particularly those entities with complicated enrollments, should consider performing a full review of their program enrollment and past and current affiliations.

Because CMS is accepting comments on the Final Rule until November 4, 2019, stakeholders still have an opportunity to provide information that may impact the rule before it goes into effect. The Arent Fox health group regularly advises those in the healthcare industry on submitting comments to CMS.