AHLA/HCCA Fraud and Abuse Forum (October 2013)

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1 AHLA/HCCA Fraud and Abuse Forum (October 2013) Session 103: CMS Emerging Enforcement Tools: Enrollment Revocations, Moratoria, Payment Suspensions and the Fraud Prevention System Judith A. Waltz, Foley & Lardner LLP I. OVERVIEW A. CMS Fraud Prevention Initiative /National Fraud Prevention Program 1. CMS is seeking to get away from post-pay pursuits, to preventing improper payments. As described by CMS, [r]eversing the traditional pay-and-chase approach to program integrity is the main goal of the National Fraud Prevention Program (NFPP), a long-term, sustainable approach that incorporates innovative technologies in integrated solutions Twin Pillars Approach 2 a. Automated Provider Screening System b. Fraud Prevention System 3 3. Focus on data By leveraging sophisticated analytic tools in claims processing and provider and supplier enrollment, CMS is now better able to identify fraudulent claims and ensure that the providers and suppliers who submit false claims are quickly and permanently removed from Medicare, Medicaid, and CHIP. Prevention/MedicaidIntegrityProgram/Downloads/cpiinitiatives.pdf. 4. CMS describes the NFPP as follows: The NFPP is an integral part of the CMS Fraud Prevention Initiative. The NFPP also enables CMS to proactively 1 CMS Trans. No. 1115, CR 7861 (Aug. 24, 2012). 2 CMS Medicare and Medicaid Fraud Prevention Workbook (May 2013). 3 The [National Fraud Prevention Program] strategy coordinates the two key PI [program integrity] activities, provider enrollment and benefit integrity, so that the program is stronger and more efficient than a stand-alone project. Reports/CFOReport/Downloads/2011_CMS_Financial_Report.pdf.

2 identify and respond to suspicious behavior, thus making the Agency more effective at fighting health care fraud than ever before. The NFPP focuses on two key program integrity gateways: provider enrollment and claims payment. By integrating these steps into one program, CMS can better ensure that it enrolls only qualified providers and pays only valid claims. CMS' comprehensive program integrity strategy is designed to stop fraudsters at every step of the process so CMS is now better able to: Identify and prevent bad actors from enrolling in Medicare; Identify and remove bad actors that are already in its programs; and Identify and prevent payment of fraudulent claims by responding with quick administrative action. 4 II. FRAUD PREVENTION SYSTEM (FPS) A. The FPS was implemented in July The Government Accounting Office (GAO) issued a report on the FPS in October 2012 which provided a comprehensive overview of its operations As noted in the GAO report, CMS developed the FPS, a web-based system that is operated from a contractor's data center and accessed via a secured private network, to capture data on Medicare provider and beneficiary activities. 2. The system is designed to analyze claims data and alert users when the results of analyses suggest fraudulent conduct or warrant administrative action. FPS uses rules-based models (a relatively simple mechanism of counting or identifying types of claims and comparing them to established thresholds); anomaly-detection models (comparing patterns against peers, for example); and predictive models (which use 4 MedLearn Network Learning (MLN) SE1211 (July 1, 2012). 5 CMS Has Implemented a Predictive Analytics System, but Needs to Define Measures to Determine Its Effectiveness, GAO Report (Oct. 15, 2012) see also, OIG Report A , The Department of Health and Human Services Has Implemented Predictive Analytics Technologies but Can Improve its Reporting on Related Savings and Return on Investment (September 2012); CMS Report to Congress, Fraud Prevention System: First Implementation Year

3 historical data to identify patterns associated with fraud and apply the data to current claims data) By July 2012, CMS had put in place 25 predictive analytic models. Supporting data comes from existing systems, such as the Common Working File and the Provider Enrollment Chain and Ownership System. As of the date of the GAO Report, FPS had not yet been integrated with the shared systems that process the payment of claims. 4. The FPS was mandated by the Small Business Jobs Act of 2010 (pertinent sections of which are codified at 42 U.S.C. Section 1320a-7m), which directed CMS to use predictive modeling and other analytics technologies to identify and prevent waste, fraud, and abuse in the Medicare fee-for-service program. The statute required CMS to implement a system that could analyze provider billing and beneficiary utilization patterns to identify potentially fraudulent claims before they were paid. CMS was provided with $100 million in funds for implementation. 5. CMS has directed the ZPICs to incorporate the use of FPS and to investigate leads generated by the system. CMS advised GAO that as of April 2012, approximately 10% of ZPIC investigations were initiated as a result of using FPS. CMS also told the GAO that consistent with the implementation of FPS, it had directed the ZPICs to focus on recommending and initiating administrative actions (especially the revocation of Medicare billing privileges) against providers suspected of fraud. 6. CMS reports that in its first year of implementation, the Fraud Prevention System has screened every Medicare claim since the system was implemented in a. CMS claims that flags from the system have initiated 536 new investigations, and data from the system has been used to support 511 investigations already in progress. b. CMS claims to have stopped, prevented, or identified an estimated $115 million in fraudulent payments. This comes out to an estimated $3 in savings for every $1 spent. 6 Portions of this section of the outline are taken from GAO Report Assesses CMS Fraud Prevention System, AHLA Fraud and Abuse Practice Group E-alert by Judith Waltz (Nov. 19, 2012). 7 Education/Training/CMSNationalTrainingProgram/Downloads/2013-Fraud-and-Abuse- Prevention-Workbook.pdf. 3

4 III. OTHER NEW FRAUD-FIGHTING TOOLS A. Other CMS Fraud-Fighting Tools 1. Moratoria a. CMS recently issued notice of the first moratoria imposed under the PPACA, Section 6401(a), adding new section 1866(j)(7) of the Social Security Act temporary moratoria on enrollment of ambulance suppliers and providers and home health agencies in designated geographic areas (Miami-Dade (Florida), cook (Illinois), and Harris (Texas) counties and surrounding areas), effective July 30, The moratoria are scheduled to remain in effect for 6 months, with possible extension in 6-month increments. 2. Fraud Investigation Database (FID) a centralized data entry and reporting system run out of the CMS Data Center that allows CMS to monitor fraudulent activity and payment suspensions related to Medicare and Medicaid providers. The FID was designed to capture fraud investigative data from the point when the potential for Medicare Fraud is substantiated to the final resolution of a case. The FID also tracks Medicare provider payment suspension information and Requests for Information (RFIs) from Law Enforcement Agencies. Currently, Medicare Contractors, State Medicaid Agencies, Law Enforcement Agencies, and CMS Central Office (CO) and Regional Office (RO) staff have access to the FID. Data entry occurs at Medicare Contractor and Medicaid State Agency sites Division of Data Analysis a. PEPPER (Program for Evaluating Payment Patters Electronic Report) hospital specific Medicare data statistics for discharges vulnerable to improper payments. b. FATHOM (First-look Analysis Tool for Hospital Outpatient Monitoring) provides each state with hospital-specific Medicare claims data statistics; data from prior 3 fiscals years and current fiscal year to date; identify areas having high payment errors. c. CBRs (Comparative Billing Reports) provides peer data to individual health care providers/supplier, including data-driven tables and graphs. Study topics are selected based on areas prone to improper payments Fed. Reg (July 31, 2013). 9 Systems/FID-2/Overview.html. 4

5 d. Medical Review Specialty Study Part A and Part B claims reviewed on a quarterly basis. First three topics were Inpatient Psychiatric Facility Interrupted Stays; Epidural Injections, and Place-of-Service Coding The Command Center as described by Budetti, Peter, Command Center Speeds Up Anti-Fraud Efforts, CMS Blog entry 7/31/2013 (including link to U-tube video). The new Command Center is bringing together Medicare and Medicaid officials, as well as law enforcement partners from the HHS Office of the Inspector General, the Federal Bureau of Investigation, and CMS s anti-fraud investigators. The Command Center will gather experts from all different areas clinicians, data analysts, fraud investigators, and policy experts into the same room to build and improve our sophisticated new predictive analytics that spot fraud, and to then move quickly on a lead, once potential fraud is identified. The technology also allows us to connect with field offices to track down leads in real time. The result is that investigations that used to take days and weeks can now be done in a matter of hours. And this new technology can help detect and prevent potential problems and payments. 5. Fraud & Abuse Customer Service Initiative: - a regional fraud hotline and associated investigative team in the State of Florida with well-trained, bilingual staffs[to] triage calls, as well as acknowledge receipt of complaints in writing and refer potentially fraudulent providers to the investigations team at the ZPIC. A dedicated investigative team at the ZPIC will respond within 24 hours to any calls that are considered to be appropriate (i.e., an immediate response could very likely lead to an administrative action against a fraudulent provider/supplier) One PI Data Analysis -a web-based portal that provides centralized access to multiple analytical tools and data sources, in order to fight fraud, waste and abuse in Medicare and Medicaid. CMS will also continue to test matching of Medicaid data from 11 pilot States with the historical Medicare Parts A, B, and D and provider enrollment data. 12 Spending for FY 2013 was $35.29 million Source: Strategichs.com (5 year contract for medical review awarded 2012). 11 Department Of Health and Human Services, Fiscal Year 2014 Centers for Medicare &Medicaid Services, Justification of Estimates for Appropriations Committees. 12 Id

6 IV. PROVIDER ENROLLMENT A. Background 1. Stats: CMS receives 39,000 Part A and Part B provider initial enrollment applications per month, along with 500 DME applications. 14 CMS reported in June 2013 that it had revoked the enrollment of 14,663 providers since March 2011, compared to 6,307 in According to testimony from Dr. Peter Budetti in February 2013, CMS has deactivated 136,682 enrollments. 16 In April 2012, CMS reported that 234 providers had been removed from the program during the early phase of revalidation because they were deceased, debarred or excluded or found to be in false or otherwise invalid locations. In addition, CMS reported that during 2011, HHS revoked 4,850 Medicaid providers and suppliers, and deactivated 56,733 Medicare providers and suppliers. HHS News Release, HHS, Department of Justice Highlight Obama Administration Efforts, Health Reform Tools to Combat Medicare Fraud (April 4, 2012). Peter Budetti, speaking at an AHIP conference on September 10, 2012, that since automated provider screening was implemented in December 2011, CMS has performed licensure checks on 800,000 physicians who are included in PECOS, and completed screens on 1.5 million Medicare providers and suppliers to establish a baseline. 2. Both CMS and OIG have indicated that they consider the enrollment of providers and suppliers to be a prime focus for their efforts to combat program fraud and abuse CMS Medicare and Medicaid Fraud Prevention Workbook (May 2013). 15 CMS Press Release, Medicare Urges Seniors to Join Fight Against Fraud (June 2013). 16 Testimony of Dr. P. Budetti, Budetti-Health-Fight-Waste-Fraud-Abuse pdf. 17 See e.g., FY 2011 Top Management And Performance Challenges Identified By Office of Inspector General (released 2/18/2011), which summarizes OIG s five principles that it believes should guide HHS integrity strategy for Medicare, Medicaid, and CHIP, as follows: Enrollment Scrutinize individuals and entities that seek to participate as providers and suppliers before they enroll in health care programs. Payment Establish payment methodologies that are reasonable and responsive to changes in the marketplace. Compliance Assist health care providers and suppliers in adopting practices that promote compliance with program requirements, including quality and safety standards. 6

7 3. Section 6401 of PPACA included significantly expanded authorities for increased enrollment scrutiny of new and existing providers and suppliers, and included many new obligations for both the Medicare and Medicaid programs (including required State Plan amendments). a. Statutory Enhancements: PPACA Section 6401 (1) Amended MEDICARE: Section 1866(j) of the Social Security Act (42 U.S.C. 1395cc(j)), including adding the following new provisions: (a) Enhanced screening requirements and new provisions (e.g., fingerprinting) allowed at discretion of the Secretary. (b) Enhanced oversight for new providers/suppliers, such as prepayment review for 30 days to 1 year after enrollment. (c) Disclosure requirements: providers/suppliers are required to disclose direct or indirect, current, or previous affiliation with a provider or supplier that has uncollected debt or that has been subject to a payment suspension, program exclusion, or revocation or denial of its billing privileges under a Federal health care program. (d) Temporary moratorium on enrollment of providers and suppliers or on enrollment of certain categories of providers and suppliers, at discretion of the Secretary. (e) Surety bond requirements for DME and home health providers Secretary may increase requirement based on volume of billing, and may extend the surety bond requirements to other types of providers. (f) Compliance programs to be required as a condition of enrollment with elements as specified by the Secretary after consultation with OIG. (2) Amended MEDICAID: Section 1902(a) of the Social Security Act (42 U.S.C. 1396a(a)), and included the following provider and supplier screening, oversight and reporting requirements, including: Oversight Vigilantly monitor programs for evidence of fraud, waste, and abuse. Response Respond swiftly to fraud, impose appropriate punishment to deter others, and promptly eliminate program vulnerabilities. 7

8 (a) Enhanced screening. (b) Provisional period of enhanced oversight for new providers and suppliers. (c) Disclosure requirements, as established by the Secretary under Section 1886(j)(4) of the Social Security Act (42 U.S.C. 1395ww(j)(4)). (d) Temporary moratorium on enrollment of new providers or suppliers. (e) Reporting of adverse provider actions (i.e., a requirement for compliance with the national system for reporting criminal and civil convictions, sanctions, negative licensures or other adverse actions). (f) Enrollment and NPI of ordering or referring physicians required to support claims. measures. (g) States are expressly not precluded from additional b. PPACA Implementing Provider Enrollment Regulations. (1) Medicare, Medicaid, and Children s Health Insurance Programs; Additional Screening Requirements, Application Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance Plans for Providers and Supplier (76 Fed. Reg (Feb. 2, 2011): Final Rule with Comment Period, effective date: March 25, 2011). (a) Medicare 42 C.F.R. Part 424 [Conditions for Payment] includes (not an exhaustive list): (b) Tiered screening system depending on risk of category of provider/supplier. (c) Risk category increases with history of individualized bad behavior. (d) Revalidation every 5 years (3 for DMEPOS suppliers), with initial off-cycle revalidations. (e) Medicaid 42 C.F.R. Part 455 [Program Integrity] includes (not an exhaustive list): 8

9 not required. (f) Monthly checks for excluded status recommended, (g) Site visits required for moderate to high risk categories, others discretionary. (h) Screening of all providers at least every 5 years. c. Medicare and Medicaid Programs; Changes in Provider and Supplier Enrollment, Ordering and Referring, and Documentation Requirements; and Changes in Provider Agreements (75 Fed. Reg (May 5, 2010): Final Rule with Comment Period; effective date: July 6, 2010). Additional revisions, 77 Fed. Reg (Apr. 27, 2012). (1) National Provider Identifier (NPI) must be included on all applications for Medicare enrollment and on all Medicare and Medicaid claims (42 C.F.R ). Existing Medicaid providers will add NPI at revalidation or when making changes to provider agreement, see 75 Fed. Reg. at (2) Physicians and eligible professionals who order and refer certain covered items and services for Medicare beneficiaries must be enrolled in Medicare (42 C.F.R ). (3) Physician, etc. documentation requirements on referrals to programs at high risk of waste and abuse, to DMEPOS, home health services, and other items or services (42 C.F.R (f)); revocation of billing privileges 42 C.F.R (a)(10), see 75 Fed. Reg. at d. Access to Documentation (PPACA Section 6406) (1) The Secretary may revoke enrollment, for a period of not more than one year for each act, of physicians or suppliers who fail to maintain, and upon request of the Secretary, provide access to documentation relating to written orders or requests for payment for DME, certifications for home health services, or referrals for other items or services written or ordered as specified by the Secretary. (2) OIG s permissive exclusion authority for failure to supply payment information or a refusal to permit examination of records such as may be necessary to verify such information, is amended and expanded by inserting ordering, referring for furnishing, or certifying the need for services as to those individuals or entities subject to exclusion. (The authority to exclude was previously limited to those furnishing items or services.). 9

10 B. GAO Report : Medicare Program Integrity: CMS Continues Efforts to Strengthen the Screening of Providers and Suppliers (April 2012) 1. Report was requested by Senate Finance Committee to see how CMS uses enrollment information to prevent payment of improper or potentially fraudulent claims and to assess changes since PPACA. 2. Because identifying and prosecuting providers and suppliers engaged in potentially fraudulent activity is time consuming, resource intensive, and costly, CMS has designed measures intended to prevent enrollment by entities that might attempt to defraud or abuse the Medicare program. [emphasis added] 3. Current CMS activities noted by GAO: (1) Applicants must use a unique 10 digit National Provider Identifier (NPI) number and affirm that they are not excluded from participating in another federal health program. (2) DMEPOS suppliers undergo preenrollment site visits. (3) Enrollment information must be entered into PECOS, a single, centralized, provider and supplier enrollment database that assists with data sharing across the contractors different geographic coverage areas. (4) MACs and the NSC conduct activities, such as monthly reviews of state licensing board actions, to determine if individual providers continue to meet state licensing requirements and conduct periodic checks to determine if entities continue to meet federal and state requirements for their respective provider or supplier type. 4. By end of 2012, CMS will (1) contract with FBI-approved entities to conduct fingerprint-based and criminal background checks of high-risk providers and suppliers; (2) implement additional surety bond requirements (a proposed rule likely in autumn 2012, seeking surety bonds for home health, IDTFs, and potentially outpatient rehabilitation facilities). 5. Automated Screening Contractor: At the end of 2011, CMS contracted with an automated screening contractor to assume screening responsibilities from the A/B MACs and NSC, with implementation expected by the end of March This entity will conduct screening on a national level at the time of provider/supplier enrollment and revalidation, and will conduct checks on an ongoing basis (such as licensure status checks on at least a weekly basis). This entity will provide an individualized risk score for each provider/supplier, similar to a credit risk score, with information which ultimately will be used to determine screening activities. 6. Site Visit Contractor: At the end of 2011, CMS contracted with a site visit contractor to perform nationwide physical site visits for all providers and suppliers, except DMEPOS suppliers, in the moderate- and high-risk screening categories. (NSC continues to perform site visits for DMEPOS suppliers.) This contractor will conduct both routine and rapid response visits (triggered by an alert of possibly fraudulent activity with 36-hour turnaround for contractor response). 10

11 C. National Fraud Prevention Program (See MLN SE1211 (Implementation date July 1, 2012)) CMS focus on integrating provider enrollment and claims payment strategies. CMS says it is now better able to identify bad actors from enrolling in Medicare; identify and remove bad actors already in the programs; and identify and prevent payment of fraudulent claims by responding with quick administrative action. 1. Automated Provider Screening will reduce processing time because of less manual review of the databases currently used in the verification process; on a continuing basis, contractor will monitor the veracity and accuracy of all provider and supplier enrollment data including the status of licensure, sanctions, or exclusions and adverse legal actions; assess the individual risk of each provider and supplier; and be used by CMS and Medicare contractors to verify, update, and act on relevant information found during the enrollment process and on a continual enrollment basis. 2. National Site Visit Contractor: MSM Security Services, LLC, with subcontractors Computer Evidence Specialists, LLC and Health Integrity, LLC, will conduct site visits for all providers/suppliers except DMEPOS. Will have a photo ID and letter of authorization issued and signed by CMS for provider/supplier review. D. What does CMS envision for the future? Check out the: May 2012 Provider Enrollment Innovator Contest (77 Fed. Reg (May 29, 2012)! 1. Prize of between $500,000 and $600,000; Contest Administered through a partnership with NASA 2. Elements to be addressed by Contestants included: a. Capability to Conduct Identity Verification vice versa. (1) Capability to link individuals to their organizations and (2) Capability to match on multiple variations of an individual s or organization s name to ensure that the correct entity is verified. (3) Ability to apply a range of screening rules to cross check data elements within the enrollment application. (4) Ability to apply a range of screening rules to cross check data elements against authoritative external sources for consistency. (5) Capability to establish and employ a graded screening methodology that escalates the intensity of screening for providers that are flagged as higher risk (that is, Report Card Methodology). 11

12 b. Capability to Build Provider Profiles (1) Capability to retain screening and enrollment information and results, and compare against past and future screening results. (2) Capability to create a watch list to ensure that providers that are suspected or known to be fraudulent are flagged at the time of screening. (3) Capability to track re-enrollment attempts to ensure that slight changes to provider information are not considered a new enrollment. (4) Capability to revalidate periodically to ensure that changes in provider profiles are updated on a regular basis. (5) Capability to leverage public Web sites to conduct link analysis through which provider associations could be explored, and alerts posted on similar Web sites could be considered. (6) Capability to achieve real time screening, scoring, and system outputs (queries/reports). E. Denial of Enrollment 42 C.F.R , See also: Medicare Program Integrity Manual, Chap. 15, Section Reasons for denial. CMS may deny a provider's or supplier's enrollment in the Medicare program for the following reasons: a. Compliance. The provider or supplier at any time is found not to be in compliance with the Medicare enrollment requirements described in this section or on the applicable enrollment application to the type of provider or supplier enrolling, and has not submitted a plan of corrective action as outlined in part 488 of this chapter. b. Provider or supplier conduct. A provider, supplier, an owner, managing employee, an authorized or delegated official, medical director, supervising physician, or other health care personnel furnishing Medicare reimbursable services who is required to be reported on the enrollment application, in accordance with section 1862(e)(1) of the Act, is (i) Excluded from the Medicare, Medicaid and any other Federal health care programs, as defined in of this chapter, in accordance with section 1128, 1128A, 1156, 1842, 1862, 1867 or 1892 of the Act. (ii) Debarred, suspended, or otherwise excluded from participating in any other Federal procurement or nonprocurement activity in accordance with section 2455 of the Federal Acquisition Streamlining Act (FASA). 12

13 c. Felonies. If within the 10 years preceding enrollment or revalidation of enrollment, the provider, supplier, or any owner of the provider or supplier, was convicted of a Federal or State felony offense that CMS has determined to be detrimental to the best interests of the program and its beneficiaries. CMS considers the severity of the underlying offense. (i) Offenses include (A) Felony crimes against persons, such as murder, rape, or assault, and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions. (B) Financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions. (C) Any felony that placed the Medicare program or its beneficiaries at immediate risk (such as a malpractice suit that results in a conviction of criminal neglect or misconduct). (D) Any felonies outlined in section 1128 of the Act. (ii) Denials based on felony convictions are for a period to be determined by the Secretary, but not less than 10 years from the date of conviction if the individual has been convicted on one previous occasion for one or more offenses. d. False or misleading information. The provider or supplier has submitted false or misleading information on the enrollment application to gain enrollment in the Medicare program. (Offenders may be referred to the Office of Inspector General for investigation and possible criminal, civil, or administrative sanctions.) e. On-site review. Upon on-site review or other reliable evidence, we determine that the provider or supplier is not operational, or is not meeting Medicare enrollment requirements to furnish Medicare covered items or services. Upon on-site review, CMS determines that (i) A Medicare Part A provider is no longer operational to furnish Medicare covered items or services, or the provider fails to satisfy any of the Medicare enrollment requirements. (ii) A Medicare Part B supplier is no longer operational to furnish Medicare covered items or services, or the supplier has failed to satisfy any or all of the Medicare enrollment requirements, or has failed to furnish Medicare covered items or services as required by the statute or regulations. f. Overpayment. The current owner (as defined in ), physician or nonphysician practitioner has an existing overpayment at the time of filing of an enrollment application. g. Payment suspension. The current owner (as defined in ), physician or nonphysician practitioner has been placed under a Medicare payment suspension as defined in through of this subchapter. h. Initial Reserve Operating Funds. (i) CMS or its designated Medicare contractor may deny Medicare billing privileges if, within 30 days of a CMS or Medicare contractor request, a home health agency (HHA) cannot furnish 13

14 supporting documentation which verifies that the HHA meets the initial reserve operating funds requirement found in (a) of this title. (ii) CMS may deny Medicare billing privileges upon an HHA applicant's failure to satisfy the initial reserve operating funds requirement found in 42 CFR (a). i. Application fee/hardship exception. An institutional provider's or supplier's hardship exception request is not granted, and the provider or supplier does not submit the application fee within 30 days of notification that the hardship exception request was not approved. j. Temporary moratorium. A provider or supplier submits an enrollment application for a practice location in a geographic area where CMS has imposed a temporary moratorium. F. Revocation of enrollment and billing privileges in the Medicare program (42 C.F.R , see also Medicare Program Integrity Manual, Chap. 15, Section ) 2. Reasons for revocation. CMS may revoke a currently enrolled provider or supplier's Medicare billing privileges and any corresponding provider agreement or supplier agreement for the following reasons: a. Noncompliance. The provider or supplier is determined not to be in compliance with the enrollment requirements described in this section, or in the enrollment application applicable for its provider or supplier type, and has not submitted a plan of corrective action as outlined in part 488 of this chapter. The provider or supplier may also be determined not to be in compliance if it has failed to pay any user fees as assessed under part 488 of this chapter. All providers and suppliers are granted an opportunity to correct the deficient compliance requirement before a final determination to revoke billing privileges, except for those imposed under paragraphs (a)(2), (a)(3), or (a)(5) of this section.... b. Provider or supplier conduct. The provider or supplier, or any owner, managing employee, authorized or delegated official, medical director, supervising physician, or other health care personnel of the provider or supplier is (i) Excluded from the Medicare, Medicaid, and any other Federal health care program, as defined in of this chapter, in accordance with section 1128, 1128A, 1156, 1842, 1862, 1867 or 1892 of the Act. (ii) is debarred, suspended, or otherwise excluded from participating in any other Federal procurement or nonprocurement program or activity in accordance with the FASA implementing regulations and the Department of Health and Human Services nonprocurement common rule at 45 CFR part 76. c. Felonies. The provider, supplier, or any owner of the provider or supplier, within the 10 years preceding enrollment or revalidation of 14

15 enrollment, was convicted of a Federal or State felony offense that CMS has determined to be detrimental to the best interests of the program and its beneficiaries. (i) Offenses include (A) Felony crimes against persons, such as murder, rape, assault, and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions. (B) Financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions. (C) Any felony that placed the Medicare program or its beneficiaries at immediate risk, such as a malpractice suit that results in a conviction of criminal neglect or misconduct. (D) Any felonies that would result in mandatory exclusion under section 1128(a) of the Act. (ii) Denials based on felony convictions are for a period to be determined by the Secretary, but not less than 10 years from the date of conviction if the individual has been convicted on one previous occasion for one or more offenses. d. False or misleading information. The provider or supplier certified as true misleading or false information on the enrollment application to be enrolled or maintain enrollment in the Medicare program. (Offenders may be subject to either fines or imprisonment, or both, in accordance with current law and regulations.) e. On-site review. CMS determines, upon on-site review, that the provider or supplier is no longer operational to furnish Medicare covered items or services, or is not meeting Medicare enrollment requirements under statute or regulation to supervise treatment of, or to provide Medicare covered items or services for, Medicare patients. Upon on-site review, CMS determines that (i) A Medicare Part A provider is no longer operational to furnish Medicare covered items or services, or the provider fails to satisfy any of the Medicare enrollment requirements. (ii) A Medicare Part B supplier is no longer operational to furnish Medicare covered items or services, or the supplier has failed to satisfy any or all of the Medicare enrollment requirements, or has failed to furnish Medicare covered items or services as required by the statute or regulations. f. Grounds related to provider and supplier screening requirements. (i)(a) An institutional provider does not submit an application fee or hardship exception request that meets the requirements set forth in with the Medicare revalidation application; or (B). The hardship exception is not granted and the institutional provider does not submit the applicable application form or application fee within 30 days of being notified that the hardship exception request was denied. g. Misuse of billing number. The provider or supplier knowingly sells to or allows another individual or entity to use its billing number. This does not include those providers or suppliers who enter into a valid 15

16 reassignment of benefits as specified in or a change of ownership as outlined in of this chapter. h. Abuse of billing privileges. The provider or supplier submits a claim or claims for services that could not have been furnished to a specific individual on the date of service. These instances include but are not limited to situations where the beneficiary is deceased, the directing physician or beneficiary is not in the State or country when services were furnished, or when the equipment necessary for testing is not present where the testing is said to have occurred. i. Failure to report. The provider or supplier did not comply with the reporting requirements specified in (d)(1)(ii) and (iii) of this subpart. j. Failure to document or provide CMS access to documentation. (i) The provider or supplier did not comply with the documentation or CMS access requirements specified in (f) of this subpart.... k. Initial reserve operating funds. CMS or its designated Medicare contractor may revoke the Medicare billing privileges of an HHA and the corresponding provider agreement if, within 30 days of a CMS or Medicare contractor request, the HHA cannot furnish supporting documentation verifying that the HHA meets the initial reserve operating funds requirement found in 42 C.F.R (a). l. Medicaid termination. (i) Medicaid billing privileges are terminated or revoked by a State Medicaid Agency. (ii) Medicare may not terminate unless and until a provider or supplier has exhausted all applicable appeal rights. V. PAYMENT SUSPENSIONS A. Post-PPACA: Payment Suspensions on the Basis of Investigation of a Credible Allegation of Fraud 1. Introduction. Among the most significant fraud-fighting tools provided by the PPACA is enhanced authority for the Secretary to suspend Medicare and Medicaid payments on the basis of a pending investigation of a credible allegation of fraud. A recent OIG report discussing CMS 253 Medicare suspension actions for , prior to the PPACA revisions, noted that the majority of such actions were taken because of factors suggesting fraud, and that for those actions, approximately $206 million in overpayments were identified. The Use of Payment Suspensions to Prevent Inappropriate Medicare Payments, OEI (Nov. 1, 2010). 16

17 2. Stats: CMS has reported that in conjunction with a HEAT and strike force action against a Dallas-area physician and the office manager of his medical practice, along with five owners of home health agencies, it imposed payment suspensions against 78 home health agencies in the Dallas area. HHS News Release, HHS, Department of Justice Highlight Obama Administration Efforts, Health Reform Tools to Combat Medicare Fraud (April 4, 2012). 3. PPACA Section 6402(h) allows suspensions pending investigation of credible allegations of fraud. a. Medicare: Adds Section 1862(o) to the Social Security Act (42 U.S.C. 1395y(o)) payments. suspensions. (1) Discretionary; good cause exceptions allow continuation of (2) Consult with OIG required with respect to imposition of b. Medicaid: Amends Soc. Sec. Act 1903(i)(2) (42 U.S.C. 1396b(i)(2)) (1) No FFP unless State determines that there is good cause not to suspend payments to these entities. c. Implementing Regulations: (1) 76 Fed. Reg (Feb. 2, 2011): Medicare, Medicaid, and Children s Health Insurance Programs; Additional Screening Requirements, Application Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance Plans for Providers and Supplier (Final Rule with Comment Period, effective date: March 25, 2011), revises: (a) 42 C.F.R ) Medicare: 42 C.F.R. Part 405, Subpart C (primarily (b) Medicaid: 42 C.F.R. Part 455 (primarily 42 C.F.R ; see also 42 C.F.R , denial of FFP). d. Credible Allegation of Fraud (Medicare and Medicaid) (1) The term is not defined in the PPACA. (2) Medicare Regulation (42 C.F.R (a)): A credible allegation of fraud is an allegation from any source, including but not limited to the following: 17

18 (a) (b) Fraud hotline complaints. Claims data mining. (c) Patterns identified through provider audits, civil false claims cases, and law enforcement investigations. (d) Allegations are considered to be credible when they have indicia of reliability. (e) Medicaid definition also includes requirement for State verification (42 C.F.R ( which has been verified by the State )) e. Payment Suspensions: Medicare (1) 18 months maximum duration, beyond which the suspension cannot continue absent special circumstances. (2) Suspension period can be extended if case has been referred to, and is being considered by OIG, OR DOJ submits written request to CMS to continue suspension. (3) Suspension for recovery of an overpayment might follow/extend a suspension for investigation. (4) CMS consults with OIG, but the ultimate decisional authority as to suspend payments or not will be retained by CMS. and D. (5) Applies to Parts A and B; separate authorities for Parts C f. Payment Suspensions: Medicaid (1) Suspensions may be implemented without prior notice; up to 30 days prior to notice, plus 2 additional 30 days (by that time CMS would expect the provider/supplier to notice it was not receiving payments!). (2) CMS gives deference to the States in further defining credible allegations supporting suspensions, but there is a recognition that the standard will be lower than that now existing. (3) No retroactive application of these regulations, but upon the effective date CMS expects States to suspend payments to those against whom there exist pending investigations of fraud. 18

19 (4) Medicare s 180 day presumptive limit for suspensions not adopted for Medicaid. (5) State can decide that suspension is not in the best interests of the Medicaid program. (6) Good cause exception may be found if a provider/supplier submits written evidence that persuades the State not to pursue suspension. (7) No additional due process provisions are provided as part of the Final Rule provisions, but CMS confirms that the notice of suspension should include a reference to existing appeal rights. (8) CMS promises close scrutiny of State performance in imposing suspensions under this authority - including review of the documentation of good cause determinations. B. Medicare Payment Suspensions (General) 1. Suspension of Payment Defined: The withholding of payment by a Medicare contractor from a provider or supplier of an approved Medicare payment amount before a determination of the amount of the overpayment exists, or until the resolution of a credible allegation of fraud. 42 C.F.R The Medicare contractor s determination to impose a suspension, offset or recoupment is expressly not an appealable determination. 42 C.F.R (c). a. There is no administrative process to protest a suspension, offset or recoupment except for rebuttal statements and evidence. 42 C.F.R standards. mixed. b. Access to is courts limited by jurisdictional bars, TRO c. Bankruptcy? Consider as an option; results have been 3. A suspension can be based upon reliable information that an overpayment exists or that the payments to be made may not be correct, although additional information may be needed for a determination. 42 C.F.R (a)(1). 4. Suspensions are imposed by CMS, or Medicare contractor (not OIG or DOJ directly). In the case of suspected fraud, CMS/Contractor must consult with OIG, and, as appropriate, with the Department of Justice, as to whether to impose the 19

20 suspension and if prior notice is appropriate. CMS is the real party in interest and is responsible for the decision. 42 C.F.R a. Note the possibly conflicting interests between law enforcement and CMS with respect to time frames, determination of appeal rights (with potential reversals by ALJs), tipoffs to providers/suppliers, etc. 5. A suspension may be imposed against part or all of the Medicare payments due to a provider or supplier. 42 C.F.R (a)(1). a. Only payments are suspended; the Medicare contractor will continue to process and credit claims notwithstanding the suspension, resulting in the accumulation of a suspense account much like an escrow. See Program Integrity Manual (PIM) Chap. 8, Sect (Claims Review). Claims may be subjected to pre-pay review before being credited to the suspense account, or postpayment review, before the overpayment determination is issued. (1) Consider: negotiating with the Medicare contractor to limit the suspension to a particular item, service or dollar amount. ( Suspension in Part ). 6. The notice period to a provider/supplier of an impending suspension is short. If failure to furnish information is the basis for the suspension, no notice is required; if harm to the trust fund is suspected notice may be waived. If notice is required or given, usually it will be at least 15 days in advance of the suspension, although the contractor or carrier may extend or shorten that time frame as appropriate. 42 C.F.R , PIM Chap. 8, Sect Why is this remedy not used more by the government? OIG Memorandum Report: The Use of Payment Suspensions to Prevent Inappropriate Medicare Payments (OEI ) (253 suspensions in 2007 and 2008). a. Recognition of impact on provider/supplier. b. Short time frames for agency action. c. Degree of scrutiny within the agency might as well just finish up the overpayment determination and be done with it. d. Litigious reactions TROs, bankruptcy filings, etc. C. The Process of Imposing a Payment Suspension 1. Reasons for a Suspension (42 C.F.R ) 20

21 a. A suspension may be imposed when there is reliable information that an overpayment exists, or that payments to be made may not be correct, although additional evidence may be needed for a determination. See also, PIM Chap. 8, Sect ( Payments to be Made May Not be Correct based on reliable information ). b. Suspensions may also be imposed when there has been a failure to furnish records and other requested information. PIM Chap. 8, Sect Per regulation, this includes authorities provided by Sections 1815(a) (42 U.S.C. 1395g) (for Part A) or 1833(e) (42 U.S.C. 1395l) (for Part B) (essentially, a failure to provide information required to determine the amounts due to the provider or supplier). 42 C.F.R (a)(2). c. Suspensions may be premised upon reliable information of fraud or willful misrepresentation. (1) Fraud is a concept which is broadly intended and distinguished from false claims. Specific examples include suspected upcoding of DRGs; suspected violations of the physician self-referral prohibitions; forged signatures on CMN s, treatment plans, etc. Per PIM Chap. 8, Sect , [c]redible allegations of such practices are cause for suspension pending further development. complaints. (2) Fraud suspensions may be premised upon credible (3) Fraud suspensions may also result when a provider is identified as engaging in practices described in a CMS Fraud Alert. (4) Requests from outside agencies to contractors to impose fraud suspensions. PIM Chap. 8, Sect specifies necessary actions depending upon source of request: (a) CMS initiate suspension as requested. (b) OIG/FBI/DOJ request The contractor must forward the written request to the [CMS] CO DBIMO for its review and determination. (5) Other situations in which suspension may be recommended by the contractor include situations where (as identified in PIM Chap. 8, Sect C): 21

22 (a) The provider has pled guilty to, or been convicted of federal health care program or private health fraud and is still billing Medicare for services; (b) Federal/State law enforcement has subpoenaed the records of, or executed a search warrant, at a health care provider billing Medicare; (c) The provider has been indicted by a Federal grand jury for fraud, theft, embezzlement, breach of fiduciary responsibility, or other misconduct related to a health care program; (d) The provider presents a pattern of evidence of known false documentation or statements sent to the contractor, e.g., false treatment plans, false statements on provider application forms. 2. Unfiled Cost Reports (see 42 C.F.R (d)) results in immediate suspension and the notice provisions of 42 C.F.R do not apply. 3. Prior Notice Versus Concurrent Notice. Advance notice may be waived if the Medicare Trust Fund would be harmed by giving prior notice of the suspension, if the suspension results from a failure to furnish requested information, or there is a fraud suspension (see PIM Chap. 8, Sect ). If advance notice is waived, notice should be given concurrent with the implementation of the suspension. PIM, Chap. 8, Sect Otherwise, contractors should give 15 calendar days notice. 4. Content of the Notice (PIM Chap. 8, Sect ). The provider should be advised: a. That a suspension action will be imposed; b. The extent of the suspension (whole or part); c. That a suspension action is not appealable; d. That CMS has approved implementation of the suspension; e. When a suspension will begin; f. Which items or services will be affected; g. How long the suspension is expected to be in effect; h. The reason for suspending payment (albeit in fraud cases it should be done so as not to disclose information that would undermine a potential fraud case); 22

23 i. That the provider has the opportunity to submit a rebuttal statement to the contractor within 15 days of notification; j. Where to mail the rebuttal. 5. Rebuttal (42 C.F.R (b), , PIM Chap. 8, Sect ) a. The contractor must give the provider or supplier an opportunity for rebuttal. This is a statement submitted by the provider or supplier (to include any pertinent information) as to why the suspension should not be put into effect on the date specified. Providers/suppliers are generally given 15 days to submit their rebuttal. For cause, the contractor may expand the period for response, or make it shorter. b. Per PIM Chap. 8, Sect , the CO DBIMO FASS team will consult with the HHS Office of General Counsel and advise the contractor before the contractor responds to any rebuttal statements. c. Implementation of the suspension is not delayed by the receipt of a rebuttal statement. d. The government s response to the rebuttal statement is due within 15 days. e. Practice Point: Types of information to include in the rebuttal: reasons why the suspected overpayment may be unfounded; injury to the business/community if the suspension is imposed; financial information; suggestions as to limitations for the suspension to partial payments, particular codes, specified amounts, etc. Cf. Information required to request an extended repayment plan. 6. Duration of the Suspension of Payment a. 42 C.F.R (d) generally limited to 180 days after the onset of the suspension, except as provided in (d)(2) and (d)(3). See also, PIM Chap. 8, Sect A. b. A contractor, or, in cases of fraud and misrepresentation, OIG or a law enforcement agency, may request a one-time only extension of up to 180 additional days. The request must be submitted in writing to CMS CO DBIMO. c. Per PIM Chap. 8, Sect B, CMS may grant an extension in addition to the second 180 days if the Department of Justice submits a written request to CMS that the suspension of payments be continued. The DOJ 23