On March 1, 2016, the Centers for Medicare & Medicaid Services (“CMS”) quietly issued a proposed rule that would give the agency far-reaching tools in the area of program integrity enforcement. On its face, the Rule addresses enrollment and revalidation reporting requirements for Medicare, Medicaid and CHIP, but it also significantly increases its authority with regard to the denial or revocation of providers’ Medicare enrollment.

The Proposed Rule is the initial implementation of Section 6401 of the Affordable Care Act (“ACA”). This section requires providers to disclose on a Medicare enrollment any current or previous affiliations, whether direct or indirect, with any 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 excluded from Medicare, Medicaid or CHIP; or (4) has had its Medicare, Medicaid or CHIP billing privileges denied or revoked.”[1]

The purpose of the rule is to strengthen program integrity by weeding out fraud and abuse through the exclusion of providers affiliated with ‘bad actors’, many of whom had previously managed to skirt program integrity checks through name changes or the creation of complex relationships. The Proposed Rule, however, creates an incredibly high bar for practitioners and suppliers to maintain accurate, detailed and updated enrollment information to Medicare, or run the risk of revocation.

The devil, as always, is in the details. First, CMS broadly defines “Affiliation” thusly:

  • “A 5 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 indirectly conducts the day-to-day operations of another organization (including, for purposes of §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 § 424.80.”[2]

Such affiliations must be disclosed even if the affiliated provider or supplier was not enrolled in any federal health care program during the affiliation and regardless of when the disclosable event took place. For example, if an affiliation between A and B ended just shy of five years ago and Affiliate A subsequently enrolled in a federal healthcare program and was subject to a disclosable event, Affiliate B must disclose this affiliation under the Rule.

The Proposed Rule also creates a five-year look-back period for these affiliations, but the reality is that the period for which providers are liable for disclosures can be any number of years. The lookback period covers affiliations, not the events that trigger disclosures, and these may have occurred at any time. CMS helpfully provides examples to illustrate this principle:

“A supplier is submitting a … revalidation application. The supplier currently has a managerial interest in an ambulance company that was subject to a Medicare payment suspension 8 years ago. The affiliation and the payment suspension must be disclosed even though the latter was imposed outside of the five-year look-back period.”[3]

The Proposed Rule gives CMS the ability to revoke any and all of a provider’s Medicare enrollments, which may impact larger healthcare entities disproportionately since this authority would extend to revoke enrollment for all the practice locations of a provider or supplier.

The new rule also expands the maximum re-enrollment bar from three years to a full ten years, and this can be extended further if CMS suspects that the enrollee is trying to get around the current re-enrollment bar through dishonest means.

As you can see, the Proposed Rule gives CMS quite the toolbox with respect to Medicare program integrity. Should this Rule become final, practitioners and suppliers should review their enrollment and re-enrollment documentation with a fine tooth comb.