Note: This blog post originally appeared on Law360 on September 9, 2019.
On Sept. 5, the Centers for Medicare & Medicaid Services of the U.S. Department of Health and Human Services released its final rule with comment period adding program integrity enhancements to the provider enrollment process. The rule was printed in the Federal Register on Sept. 10 and will take effect on Nov. 4 (although CMS will take comments on the new provisions until that date).
The new Medicare rule, which revises several regulations and adds 42 C.F.R. § 424.519 titled “Disclosure of affiliations,” adds several new authorities to revoke or deny enrollment, including authorizing CMS to deny or revoke enrollment based on the disclosure of certain affiliations that CMS determines poses an undue risk of fraud, waste or abuse.
Although the proposed rule’s affiliations disclosure requirements would have applied to all providers and suppliers, the final rule with comment period adopts a “phased-in” approach. For now, the disclosure requirements are applicable to a targeted subset of providers and suppliers that CMS determines have at least one applicable affiliation. The requirements will be expanded following additional rulemaking and assessment of the phased-in approach.
Similar provisions are also added for Medicaid, and require that a state plan must provide that the specified requirements are met.
The rule’s affiliation disclosure requirement implements an Affordable Care Act provision that is intended to identify individuals and entities that pose a risk to the programs based on their relationships with previously sanctioned entities.
The rule applies to initially enrolling or revalidating providers or suppliers specifically selected by CMS after it has determined that the provider or supplier may have at least one applicable affiliation. Such a provider or supplier “must disclose any and all affiliations that it or any of its owning or managing employees or organizations ... has or, within the previous 5 years, had with a currently or formerly enrolled Medicare, Medicaid, or CHIP provider or supplier that has a disclosable event.”
In other words, it does not matter whether the affiliation has ended or whether the providers or suppliers were enrolled in a federal health care program at the time of the affiliation. Additionally, if CMS determines a provider has one affiliation and requests a disclosure, the provider must conduct additional diligence to determine whether it has any other applicable affiliations.
The newly added definition of “affiliation” is broad and includes not only ownership interests but even reassignment relationships. Affiliation means:
The rule’s inclusion of indirect ownership interests in the definition of affiliation includes parties with ownership interests through a publicly traded company, mutual fund or other large investment vehicle.
An affiliation must be disclosed when it is with a provider or supplier that has one of the following “disclosable events” (also a newly defined term):
Except for a current uncollected debt, the timing of the disclosable event is irrelevant. Thus, if the enrolled or enrolling provider or supplier had an affiliation with a provider/supplier in the past five years, and that provider/supplier at any point — prior to or after the termination of the affiliation — had a payment suspension, exclusion or a denial, revocation or termination of billing privileges, the affiliation must be disclosed.
Currently, information regarding uncollected debt, payment suspensions and enrollment actions are not generally available to enrolling providers and suppliers. Thus, obtaining such information could prove incredibly difficult if not impossible in some situations. CMS recognized this and noted that it had proposed “a knew or should reasonably have known” standard for determining whether to deny or revoke enrollment.
In determining whether or not to deny or revoke a provider or supplier’s enrollment, CMS proposed, and finalized, a “reasonableness” standard. Under the standard, CMS would require “information to be reported only if the disclosing provider or supplier knew or should reasonably have known of said data.” CMS noted that a provider or supplier may not necessarily know whether a disclosable event occurred after an affiliation ceases.
CMS reiterated that it would review each situation on a case-by-case basis in determining whether the disclosing entity knew or should have known of the information. The agency intends to issue subregulatory guidance clarifying the level of effort that it expects from the provider/supplier for securing relevant affiliation information.
The factors that CMS will consider in determining whether an affiliation poses an undue risk of fraud, waste or abuse “focus largely, though not exclusively, on – (1) the length and period of the affiliation; (2) the nature and extent of the affiliation; and (3) the type of disclosable event and when it occurred.” The closer, longer and more recent an affiliation, and the more serious the disclosable event (e.g., exclusion or a large uncollected debt), the more likely it is that CMS will find that the affiliation presents a greater risk to the programs compared to a brief affiliation that occurred 5 years ago.
As noted above, CMS had initially planned to require all Medicare, Medicaid and CHIP providers and suppliers to begin disclosing applicable affiliations where the affiliated provider or supplier had a disclosable event in the past five years. However, in response to comments on the proposed rule, CMS acknowledged the potentially sizable burden on physician and practitioner organizations and decided to implement a “phased in” approach.
For now, CMS will require the disclosures only from providers or suppliers that it determines have one or more affiliations that would trigger a disclosure. CMS will use Provider Enrollment, Chain, and Ownership System, its electronic enrollment system, and other means to identify affiliations.
The requirement, even for the “phased in” period, will not become effective until CMS revises the enrollment forms (Forms CMS-855) to accommodate the required disclosures, which CMS notes will require notice and comment rulemaking. The application of the disclosure requirement to a broader group of providers would also require additional rulemaking.
The rule also gives CMS additional authorities related to a providers or supplier’s own conduct, including:
Although these provisions are seemingly straightforward and apply to the provider or supplier’s own conduct, there could still be some difficulty in implementation. For example, although a pattern or practice is required for denials or revocations based on abusive orders or certifications, the term “abusive” is not defined.
For now, providers and suppliers will not be required to disclose affiliations unless CMS determines that the provider or supplier has at least one affiliation that includes any of the four disclosable events and specifically requests it to do so.
Providers and suppliers should not, however, expect this rule to disappear. CMS stated its intention to move forward with an expansion of the disclosure requirements in the following the initial phase-in period. Although the disclosure requirements have the potential to snare honest providers, the rule addresses an identified program integrity issue of sanctioned individuals and entities using affiliations, including opening businesses in the names of friends or family members to avoid detection, to bill the programs and to avoid debt repayment.
For now, providers should begin planning how they will determine and track whether their affiliations — including practitioners who reassign benefits using the Form CMS-855R (including physicians), board members, directors and investors — have a disclosable event. Medicare exclusion and background checks will not be sufficient, and there are currently no public databases of Medicare payment suspensions or revocations.
 42 C.F.R. § 424.519(f) (factors for determining undue risk).
 See 42 C.F.R. §§ 455.104 – 455.107.
 42 C.F.R. § 424.519(b).
 42 C.F.R. § 424.502.
 42 C.F.R. § 424.502.
 See 42 C.F.R. § 424.519(e).
 See 42 C.F.R. § 424.519(e).
 See preamble to Medicare, Medicaid, and Children's Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process, Final rule with comment period, RIN 0938-AS84 (Sept. 10, 2019).
 See preamble; see 42 C.F.R. § 424.519(f) (factors for determining undue risk).