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New CMS Regulation Targets Billing Privileges

Posted on December 11, 2014 in Health Law News

Published by: Hall Render

Providers and suppliers who continually submit noncompliant claims to Medicare may have their billing privileges revoked by the Centers for Medicare & Medicaid Services (“CMS”) according to a final rule recently published in the Federal Register (“Final Rule”).  The new regulation will appear at 42 CFR § 424.535(a)(8)(ii) and will be effective on February 3, 2015.  The Federal Register publication is available for review here.

Current regulations state that a provider or supplier’s Medicare billing privileges may be revoked if the provider or supplier submits claims that could not have been furnished on the date of service.  In the Final Rule, CMS expanded this regulation to permit revocation if CMS determines that the provider or supplier has a pattern or practice of billing for services that do not meet Medicare requirements.

This new regulation is intentionally broad in order to apply regardless of the reasons for the repeated claim denials.  CMS believes that providers and suppliers are responsible for submitting valid claims at all times and that entities who repeatedly fail to do so pose a risk to the Medicare Trust.  In the Final Rule, CMS reassures providers and suppliers that this section is not targeted at those entities that make occasional mistakes.  Rather, the focus is on “providers and suppliers that engaged in a systemic ongoing, and repetitive practice of improper billing notwithstanding the public availability of CMS educational materials.”

Although many commenters urged for a specific definition of “pattern or practice,” CMS declined to formally define the term.  Instead, CMS will consider a number of factors as to whether a revocation is warranted, including:

  • The percentage of submitted claims that were denied;
  • The reason(s) for the claim denials;
  • Whether the provider or supplier has any history of final adverse actions and the nature of any such actions;
  • The length of time over which the pattern has continued;
  • How long the provider or supplier has been enrolled in Medicare; and
  • Any other information regarding the provider or supplier’s specific circumstances that CMS determines relevant to its determination as to whether the provider or supplier has engaged in the pattern or practice.

CMS will make all such revocation decisions and Medicare Administrative Contractors will not have the authority to revoke billing privileges under this section.   However, CMS will not implement a knowledge standard regarding whether the provider or supplier knew or should have known that the claims were repeatedly submitted inaccurately.  CMS believes the burden of determining the provider’s or supplier’s knowledge would be too great and other federal provisions already prohibit providers and suppliers from recklessly submitting false claims.

The Final Rule discusses other noteworthy Medicare provider enrollment changes as well.  Specifically, there is a new provision allowing CMS to deny enrollment of providers, suppliers and owners affiliated with an entity that has an unpaid Medicare debt.  Additionally, CMS will be able to deny enrollment or revoke billing privileges of a provider or supplier if a managing employee has been convicted of certain major felonies.

Finally, CMS has limited the ability of revoked providers and suppliers to submit a Corrective Action Plan in situations where the revocation was based on noncompliance with the enrollment requirements.

Practical Takeaways

We encourage providers and suppliers to review their pattern of claims denials in light of the expanded CMS authority to revoke billing privileges.  A continued and repeated pattern of improper billing, although unintentional and not fraudulent, may be a cause for concern.  Additionally, to help ensure all Medicare billing regulations are followed consistently, we suggest continued education for all individuals responsible for submitting claims on behalf of the billing entity as well as regular claim activity audits.  Finally, CMS declined to implement an expedited appeals process for providers or suppliers with billing privileges revoked under this section.  However, there are appeal avenues available and providers and suppliers need to be aware of their appeal rights.

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