Medicare Enrollment Revocations & Appeals

The Centers for Medicare & Medicaid Services (CMS) holds extensive program integrity tools to curb fraud, waste, and abuse in the federal healthcare programs. Historically, CMS predominately carried out this task by auditing Medicare providers in an effort to recoup payments improperly reimbursed by the Medicare program. Over the past few years, CMS has gradually shifted its program integrity efforts away from a “pay and chase” model towards preventing overpayments and fraud at the outset, including payment suspensions and prepayment reviews. However, arguably the most powerful weapon in CMS’s arsenal is its authority to prevent providers from billing the Medicare program altogether by revoking their Medicare billing privileges.

Beginning in 2006, federal regulations were implemented enabling CMS to revoke the Medicare billing privileges of enrolled providers. While initially CMS could only exercise its revocation authority under a limited set of circumstances, subsequent amendments were gradually introduced through CMS’s rulemaking powers to capture a wider range of questionable or non-compliant providers. In December 2014, CMS released a final rule significantly expanding its authority to revoke providers’ Medicare billing privileges, and has since proposed additional meaningful expansions to its revocation authority.

As a result of the recent and ongoing expansions to CMS’s revocation authority, Wachler & Associates has witnessed a growing number of providers faced with revocations of their Medicare billing privileges. While CMS has generally expressed that its revocation authority is intended to protect the Medicare program and its beneficiaries from questionable and dishonest providers, CMS nevertheless holds all participating providers accountable for complying with the extensive and detailed Medicare enrollment laws, regulations, and policies. In light of the current Medicare landscape, it is now more important than ever for providers to ensure compliance with the numerous enrollment requirements or risk potential revocation of their Medicare billing privileges.

The attorneys at Wachler & Associates have significant experience representing Medicare providers on a variety of enrollment matters. Our attorneys can help you recognize all of the potential enrollment pitfalls and help ensure full compliance with Medicare enrollment requirements. In addition, our experienced Medicare enrollment and revocation attorneys have successfully defended providers in appeals of CMS revocation determinations.

CMS’s revocation authority is set forth at 42 CFR §424.535 of the Code of Federal Regulations. Pursuant to §424.535, CMS may revoke a currently enrolled provider’s Medicare billing privileges and any corresponding provider agreement (or supplier agreement) for any of the following reasons:

1. Noncompliance. The provider is determined not to be in compliance with the enrollment requirements applicable to its provider type, and the provider has not submitted a plan of correction action for curing the corresponding deficiency. Examples of noncompliance includes, but is not limited to, no longer having a physical business address where services can be rendered, not being appropriately licensed, or failing to pay any user fees.

2. Provider Conduct. The provider (including any owner, managing employee, authorized official, delegated official, medical director, supervising physician, or other personnel of the provider) is excluded from the Medicare, Medicaid, or any other federal health care program.

3. Felony Conviction. The provider (or any owner or managing employee) was convicted a federal or state felony offense within the past 10 years that CMS determines to be detrimental to the best interests of the Medicare program and its beneficiaries. The regulations provide specific enumerated offenses determined by CMS to be “detrimental to the best interest of the Medicare program and its beneficiaries,” which include: (1) felony crimes against persons (e.g., murder, rape, assault); (2) financial crimes (e.g., extortion, embezzlement, insurance fraud); (3) felony crimes pacing the Medicare program or its beneficiaries at immediate risk (e.g., malpractice suit resulting in a criminal neglect or misconduct conviction); and (4) any felonies that would result in mandatory exclusion (e.g., felony convictions relating to health care fraud or controlled substances). While the language in the regulation provides the specific enumerated offenses above, CMS clarified in its December 2014 Final Rule that its revocation authority is not limited to these enumerated offenses, but rather extends to any offense determined by CMS to be “detrimental to the best interest of the Medicare program and its beneficiaries.”

4. False or Misleading Information on the Enrollment Application. The provider certified as “true” information that was misleading or false when completing and submitting its Medicare enrollment/revalidation application to CMS.

5. On-Site Review. CMS determines that the provider is no longer operational or otherwise fails to satisfy any other Medicare enrollment requirement. Such a determination by CMS may be made through performing an on-site review or receipt of other reliable evidence.

6. Provider Screening Requirements (institutional providers only). (1) An application fee or hardship exception request is not submitted with the Medicare revalidation application; or (2) if the requested hardship exception is not granted, the provider fails to submit the applicable application form and fee within 30 days from the date that the provider received notice of the denied hardship exception.

7. Misuse of Billing Number. The provider knowingly sells its Medicare billing number to another person, or knowingly allows another person to use its Medicare billing number (except under scenarios involving a valid reassignment of benefits or a change of ownership).

8. Abuse of Billing Privileges. The provider submits claim(s) for services that could not have been furnished to a specific individual on the date of service indicated on the claim (e.g., beneficiary is deceased, provider was not in the state or country on the date the service was purportedly rendered, or the necessary equipment was not present at the place any testing purportedly occurred). In addition, the December 2014 Final Rule significantly expanded CMS’s ability to revoke a provider for abuse of billing privileges. Consequently, a provider may now also be revoked if CMS determines that the provider has a pattern or practice of submitting claims that fail to meet Medicare requirements. While CMS declined to define what constitutes “a pattern or practice of submitting claims that fail to meet Medicare requirements,” CMS will take into account the following factors in making its revocation determination: (1) percentage of denied claims, (2) claim denial reasons, (3) history and nature of any final adverse actions, (4) length of time in which the pattern or practice has continued, (5) how long the provider has been enrolled in the Medicare program, and (6) any other information CMS deems relevant.

9. Failure to Report. The provider (physicians, non-physician practitioners, and physician/non-physician organizations only) failed to report to CMS any adverse legal action or change in practice location within 30 days of the reportable event taking place.

10. Failure to Meet Documentation Requirements. The provider did not comply with the requirements for maintaining and providing CMS access to certain documentation related to the ordering or furnishing of covered DMEPOS, clinical laboratory services, imaging services, or home health services (as set forth in 42 CFR 424.516(f)).

11. Home Health Agency (HHA) Capitalization. The HHA fails to provide CMS with documentation verifying that the HHA meets the initial reserve operating funds requirement within 30 days of CMS requesting this information.

12. Medicaid Termination. A State Medicaid Agency has terminated or revoked the provider’s Medicaid billing privileges, and the provider has exhausted all applicable appeal rights.

13. Prescribing Authority. The provider’s DEA certificate has been suspended or revoked, or the provider’s ability to prescribe drugs has been otherwise suspended or revoked by the applicable state licensing body.

14. Improper Prescribing Practices. CMS determines that the provider has a pattern or practice of prescribing Medicare Part D drugs that is abusive, threatens the health and safety of Medicare beneficiaries, or fails to meet Medicare requirements.

Any provider revoked by CMS is entitled to appeal the revocation decision. The appeals process is comprised of multiple levels, as outlined below.

Corrective Action Plan (CAP). Under limited circumstances, a provider revoked by CMS is granted the opportunity to correct the specific deficiencies that resulted in its Medicare billing privileges being revoked via the CAP process. Following the December 2014 Final Rule taking effect, only those providers that are revoked for noncompliance under 42 CFR 424.535(a)(1) are entitled to submit a CAP, and CMS will not accept any CAP submitted by providers revoked for reasons other than noncompliance. For eligible providers, the CAP must be submitted within 30 days from the date of the revocation notice, and must contain verifiable evidence that the provider is in compliance with the applicable Medicare requirements. If the CAP is approved by CMS, the revocation will be withdrawn and the provider’s Medicare billing privileges will be restored with an effective date equal to the date in which the provider came into full compliance. If the CAP is denied by CMS, the provider is still afforded its appeal rights. If a CAP and an appeal are submitted concurrently, the appeal will be processed following denial of the CAP. An appeal can also be filed subsequent to submitting the CAP; however, it is important for providers to know that submission of a CAP will not stay the appeal deadline.

Reconsideration. The first level of appeal for providers to challenge a decision to revoke its Medicare billing privileges is known as the Reconsideration appeal stage. The reconsideration appeal must be submitted within 60 days from the date of the revocation notice. For the majority of revocations, the reconsideration appeal is submitted to the provider’s Medicare Administrative Contractor (MAC) where the appeal will be reviewed and decided by a reconsideration hearing officer. However, in cases where the revocation is based on abuse of billing privileges under 42 CFR 424.535(a)(8), the reconsideration appeal will be decided by CMS, as opposed to the MAC.

When appealing to the reconsideration level of appeal, the provider must submit with its appeal any additional information or evidence that it wishes for the hearing officer to consider. If the provider fails to submit any additional information at the reconsideration stage, the provider will be precluded from submitting the information at the next stage of appeal unless the Administrative Law Judge (ALJ) finds that good cause exists for submitting new evidence for the first time at the ALJ appeal level.

In our experience, the reconsideration appeal stage can provide a valuable opportunity for providers to resolve revocations. This is because revocation of a provider’s Medicare billing privileges is considered a discretionary action by CMS, which enables CMS to take into account additional factors and considerations that may bear on whether or not a provider should be revoked (e.g., mitigating circumstances such quality of care, access to care, etc.). Conversely, decision makers at subsequent appeal levels, such as an ALJ, are generally limited to determining whether CMS had the authority to revoke as opposed to whether CMS properly exercised its discretion to revoke.

Administrative Law Judge (ALJ) Hearing. If a provider receives an unfavorable reconsideration decision, the provider is next entitled to an ALJ hearing before the Departmental Appeals Board, Civil Remedies Division. A provider must submit a written ALJ appeal request within 60 days from the date of the reconsideration decision. An ALJ hearing is an adversarial process with a CMS attorney assigned by the Regional Office of General Counsel to represent CMS during the ALJ hearing. Each party is generally entitled to submit written briefs and motions, as well as introduce evidence and witness/expert testimony.

In the majority of ALJ cases, the ALJ will issue a decision based solely upon the written arguments and evidence submitted by the parties. This process is known as “summary judgement,” whereby the ALJ rules in favor of a party prior to the actual hearing being held when the record shows that there is no genuine issue as to any material fact.

As mentioned above, CMS’s decision to revoke a provider is a discretionary act, and an ALJ may not substitute his or her discretion for that of CMS in determining whether revocation is appropriate. Instead, an ALJ is limited to deciding whether CMS had the authority to revoke the provider (i.e., determining whether the regulatory elements for revocation are established by the record).

Departmental Appeals Board (DAB) Hearing. Any party dissatisfied with the ALJ’s decision, including CMS, has the right to request review of the ALJ’s decision by the Departmental Appeals Board, Appellate Division. The party seeking DAB review must file its request in writing within 60 days from the date of the ALJ decision. The DAB’s decision is the final administrative decision in the revocation appeal process. Judicial Review. A provider has exhausted its administrative appeal rights upon receipt of the DAB’s decision. If the DAB’s decision is unfavorable, the provider may seek judicial review by filing a civil action in a United States District Court within 60 days from the date of the DAB decision.

If my Medicare billing privileges get revoked by CMS, how long must I wait before re-enrolling in the Medicare program?

When CMS revokes a provider’s billing privileges, CMS will also apply a re-enrollment bar preventing the provider from re-enrolling in the Medicare program for a set period of time. The re-enrollment bar established by CMS will depend on the severity of the basis for revocation, but not less than one year and no more than three years. The re-enrollment period begins 30 days after the provider receives the notice of revocation letter from CMS.

If I am revoked, can I still submit claims for services furnished prior to being revoked?

Yes, but any claim must be submitted within 60 calendar days after the effective date of revocation. Furthermore, no claims will be paid for any service furnished after the date of the revocation letter.

What is the effective date of revocation?

In most cases, revocation will become effective 30 days after CMS mails the revocation notice letter to the provider. However, when CMS’s decision to revoke a provider is based on a felony conviction, license suspension, or other final adverse actions, the effective date of revocation will be retroactive to the date of the final adverse action. Similarly, if CMS revokes a provider based on its determination that the provider’s practice location is not operational, the effective date of revocation will be retroactive to the date that CMS determined the provider was no longer operational.

Will the effective date of revocation be postponed while I appeal CMS’s revocation decision?

No, the revocation will take effect on the effective date indicated in the revocation notice letter regardless of whether any appeal is pending or the provider has yet to exhaust its administrative appeal rights. However, if the revocation is reversed on appeal, the provider’s billing privileges will be retroactively reinstated.

Can CMS revoke for felony convictions that were the result of plea bargains or that have been expunged?

Yes, 42 CFR §424.535(a)(3) incorporates the definition of “convicted” set forth in 42 CFR §1001.2, which states, “Convicted means that—(a) A judgment of conviction has been entered against an individual or entity by a Federal, State or local court, regardless of whether: (1) There is a post-trial motion or an appeal pending, or (2) The judgment of conviction or other record relating to the criminal conduct has been expunged or otherwise removed; (b) A Federal, State or local court has made a finding of guilt against an individual or entity; (c) A Federal, State or local court has accepted a plea of guilty or nolo contendere by an individual or entity; or (d) An individual or entity has entered into participation in a first offender, deferred adjudication or other program or arrangement where judgment of conviction has been withheld.”