Medicaid Moratoria: CMS Directs State to Limit Provider Enrollment in Minnesota

Key Takeaways. 

• CMS’ action signals a broader federal focus on using provider enrollment moratoria to address perceived fraud risks.
• Providers operating in the affected categories should anticipate revalidation, increased audit activity, and potential constraints on future hiring and expansion.

Background. The Minnesota Department of Human Services (Minnesota) is appealing a decision by the federal Department of Health & Human Services (HHS) to withhold over $2 billion in Medicaid funding. That decision was based on HHS’ conclusion that Minnesota failed to take appropriate actions to fight fraud in the Minnesota Medicaid program. As most relevant to this discussion, CMS concluded that “CMS analysis of Minnesota Medicaid data shows extraordinary growth in provider enrollment and payments for several of these services that is inconsistent with beneficiary growth and service utilization trends.”¹

The Moratoria on Provider Enrollment in Minnesota. In addition to the proposed $2 billion withhold of federal funds, as noted in a Minnesota press release, CMS also directed Minnesota to limit enrollment of certain categories of providers in addition to Minnesota’s previously announced two-year licensing freezes on home and community-based services and adult day programs. Specifically, Minnesota will “temporarily” limit further enrollments in Medicaid for the following 13 categories of providers: 

• Adult companion services,
• Adult day services,
• Adult rehabilitative mental health services,
• Assertive community treatment,
• Community first services and supports,
• Early intensive developmental and behavioral intervention,
• Individualized home supports,
• Integrated community supports,
• Intensive residential treatment services,
• Night supervision services,
• Nonemergency medical transportation services,
• Peer recovery support services, and
• Recuperative care.

The press release further indicates that Minnesota was directed to review and revalidate the enrollment of current providers in the 13 high-risk provider categories. 

CMS Authorities for Moratoria on Provider Enrollment. The Medicaid enrollment moratoria provisions were added by the 2010 Affordable Care Act (ACA) as part of a package of program integrity provisions that rely upon provider enrollment as the vehicle for enforcement. See Section 1902(kk)(4)(B) of the Social Security Act and 42 C.F.R. Part 455. The Trump Administration has previously announced its intentions to focus upon and apply the ACA provisions that allow for payment suspensions based upon a “credible allegation” of fraud. See our prior discussion at “DOJ-HHS False Claims Act Working Group: Focus on Medicare Payment Suspensions.” 

Implementing regulations require that the Secretary consult with any affected State Medicaid Agency (SMA) prior to imposing a moratoria. The SMA will [sic] impose temporary moratoria on the enrollment of new providers or provider types identified by the Secretary as posing an increased risk to the Medicaid program. Notably, the SMA is not required to impose such a moratorium if it determines that doing so would adversely impact beneficiary access. The initial term of a moratorium is six months and may be extended thereafter by the SMA in six-month increments. 

There are parallel provisions for Medicare enrollment moratoria at 42 C.F.R. § 424.570, but according to the CMS website, there are currently no active Medicare Provider Enrollment Moratoria in any states or U.S. territories. 

What are the implications for providers? Although the moratoria provisions require a state assessment of potential access concerns before a moratorium is implemented, providers who rely upon professionals now identified as “high risk” may find a shortage of enrolled professionals available for future hires. In addition, revalidation requirements for existing provider enrollments in these high-risk categories will result in additional administrative work to update those enrollments. It can also be assumed that providers offering programs and services provided by these high-risk categories may be subject to program audits for services already provided and potentially enhanced scrutiny of new claims before payment is made. 

Moreover, the existing $2 billion funding dispute now being appealed by Minnesota but premised upon allegations of ineffective Medicaid program integrity is likely to lead to increased compliance requirements for Minnesota providers, as well as increased scrutiny by enforcement entities. Providers should closely monitor state implementation of the moratoria, including any guidance on revalidation timelines and enforcement priorities. 

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