On February 2, 2011, Centers for Medicare & Medicaid Services (CMS) published a final rule in the Federal Register implementing fraud and abuse controls provided in the Affordable Care Act. The new rule includes procedures for the additional screening of providers and creates a new application fee requirement for new enrollments, new practice locations and revalidations. The rule also permits CMS to place a moratorium on the enrollment of certain types of providers and to suspend payments to providers under certain circumstances. CMS will accept comments on the rule until April 4, 2011. The rule becomes effective on March 25, 2011.

Application Fee

All providers and suppliers (except physician and non-physician practitioner organizations) are required to pay an application fee when submitting a CMS-855 form after March 25, 2011. The fees are required for new enrollment or the application for a new practice location or for revalidating a provider.

The fee for 2010 was set at $500 (of course, the fee is not required until 2011). The fee will be adjusted each year pursuant to changes in the consumer price index. Failure to submit the required fee will result in the denial of the supplier's application (unless a hardship exception has been granted) or termination of the Medicare number (if it is a revalidation application). CMS may waive the required bar to reenrollment for a one to three year period if the denial or termination is due to failure to pay the application fee.

Screening Standards

In order to establish consistent screening standards, the rule designates categories of providers and suppliers that are subject to certain screening procedures based on CMS’ assessment of fraud, waste, and abuse risk. The three levels of screening and associated risk are “limited,” “moderate” and “high.”

Screenings that are required for limited risk providers (such as pharmacies enrolling and revalidating in Part B) may require verification of any provider/supplier-specific requirements established by Medicare, license verifications, and database checks on information such as social security numbers and owners. Screenings involving moderate risk level providers (such as revalidating DME suppliers and home health agencies) may include, in addition to requirements for limited risk providers, unscheduled or unannounced site visits. Screenings of high risk level providers (such as newly enrolled home health agencies and DME suppliers) may involve, in addition to the latter, fingerprint-based criminal history record checks of law enforcement repositories.

A number of events may trigger CMS to adjust the screening level of a provider from limited or moderate to high. These include payment suspensions, OIG actions, revocation of billing privileges, exclusions from any Federal health care program, or final adverse actions against the provider. In addition, a screening adjustment may apply to provider types that are seeking enrollment after CMS lifts a temporary moratorium for that particular provider.

Moratorium on Medicare Enrollment

The rule permits CMS to establish a temporary moratorium on new enrollment / additional locations lasting six months. CMS could extend such moratorium in six-month increments with proper notice. Under a moratorium, Medicare contractors will deny enrollment applications of applicable providers or suppliers. The moratorium could affect the enrollment of new Medicare providers of a particular type or the establishment of new practice locations of a particular type in a geographic area. This moratorium would not apply to (1) changes in practice locations, (2) changes in provider information such as phone number, address or ownership (except changes in ownership of home health agencies that would require an initial enrollment), or (3) any enrollment application that has been approved by the enrollment contractor but not yet entered into PECOS (the Medicare Provider Enrollment and Chain Ownership System) when the moratorium is imposed.

A temporary moratorium may also be imposed if CMS determines significant risk potential fraud for a particular provider or supplier type or particular geographic area or both, if a state Medicaid program imposes a moratorium on particular providers or geographic areas, or upon consultation with the OIG or the Department of Justice.

Suspension, Offset and Recoupment of Medicare Payments

The rule also provides mechanisms for invoking suspension, offset, and recoupment of Medicare payments to providers. For example, suspension may occur if CMS or a Medicare contractor possesses reliable information indicating an overpayment or incorrect payments or upon recommendation from the OIG. The rule contains good cause exceptions to payment suspensions.

Medicaid Changes

The final rule also includes provisions affecting Medicaid enrollment and payments. For example, a state Medicaid agency must suspend all Medicaid payments to a provider after determining that there is a credible allegation of fraud for which an investigation is pending. In addition, Medicaid programs will be required to meet screening requirements similar to those followed by Medicare.