CMS expands revocation authority and other provider enrollment updates for 2024

On November 16, 2023, the Centers for Medicare & Medicaid Services (CMS) published the Medicare Physician Fee Schedule (PFS), finalizing its payment rules and policies for Calendar Year (CY) 2024.   Included for 2024 are a number of Medicare provider and supplier enrollment changes, which are intended by CMS to serve a “gatekeeper” function to prevent unqualified and potentially fraudulent individuals and entities from entering the program and inappropriately billing Medicare. However, some new provisions may result in unintended consequences for inadvertent errors occurring within the regular course of business operations.

Below, we have highlighted the major provider enrollment changes in the CY 2024 PFS. These changes will go into effect on January 1, 2024.

False Claims Act (FCA) civil judgment. The new rules authorize CMS to deny or revoke enrollment if a provider, supplier, or any owner, managing employee or organization, officer, or director thereof has had a civil judgment under the FCA imposed against them within the preceding ten years.  For purposes of this revocation basis, the term “civil judgment” would not include FCA settlement agreements.  Recognizing that the specific facts and circumstances of each case will differ, CMS would consider the following factors in deciding whether to issue a denial or revocation:

• The number of provider or supplier actions that the judgment incorporates (for example, the number of false claims submitted)
• The types of provider or supplier actions involved
• The monetary amount of the judgment
• When the judgment occurred
• Whether the provider or supplier has any history of final adverse actions
• Any other information that CMS deems relevant to its determination 

CMS specifically included owners, managing employees and organizations, and officers and directors within the scope of this denial/revocation basis to reflect its recognition that certain owning and managing parties exercise great influence over the provider or supplier organization and its daily operations.  

Retroactive revocation situations. CMS added situations where a revocation could be applied retroactively.  Among others, these include revocations based on a state license surrender in lieu of further disciplinary action (effective from the date of the license surrender); revocations based on termination from a federal healthcare program other than Medicare – for example, Medicaid (effective from the date of termination); revocations based on termination of a provider agreement under 42 CFR part 489 (the effective date would be, as applicable to the type of provider involved, the later of the following: (1) the date of the provider agreement termination or, (2) as applicable, a different date that CMS establishes). CMS also extended the retroactive effective date for revocations based on non-compliance with certain supplier standards or condition violations, as discussed below.  

Reduction of timeframe for reversing a revocation from 30 days to 15 days.  Currently, a revocation due to adverse activity (ie, sanction, exclusion, felony) by a party (eg, owner, managing employee, authorized or delegated official, supervising physician) may be reversed if the provider or supplier terminates its business relationship with the party within 30 days of the revocation notice and submits proof of such termination.  

However, CMS believes that providers and suppliers should not be afforded “so much time” to terminate this business relationship. Each day the revoked provider or supplier remains affiliated with the party in question will contribute to the Medicare dollars inappropriately paid during this time. As a result, CMS has reduced the 30-day period to 15 days.  

Stay of enrollment. CMS added a discretionary “stay of enrollment” as a new status. This is an  interim status that comes before any subsequent deactivation or revocation that would represent, in CMS’s words, a “pause” in enrollment. During this pause, the provider or supplier will remain enrolled in Medicare, and the stay will not be treated as a sanction or adverse action for purposes of Medicare enrollment. CMS will notify the affected provider or supplier in writing of the stay. A stay will last no longer than 60 days, and providers and suppliers will have 15 days to submit a rebuttal to the imposition of the stay action and/or the effective date of the stay action.  

The stay of enrollment applies when provider or supplier is non-compliant with at least one enrollment requirement in Title 42 and CMS ascertains that the provider or supplier could remedy the non-compliance by submitting an applicable enrollment application form (ie, a “minor” instance of non-compliance).  During a stay of enrollment, a provider or supplier will not receive payment for any services or items furnished during this period, but rather, claims will be rejected (versus denied) and may be resubmitted once CMS determines the non-compliance is remedied.  

CMS emphasized that its authority to impose a stay is discretionary. A stay is not mandatory for a subsequent deactivation or revocation.  

Timeframe for reporting changes in practice location – all providers and suppliers. Currently, physicians, nonphysicians practitioners, and their organizations are required report changes to practice locations within 30 days of the change; all other providers and suppliers have 90 days to report this change. In a finalized proposal, CMS will now require all providers and suppliers to report a change in practice location within 30 days of the change. A change in practice location will include adding a new location or deleting an existing one.  

Violation of supplier standards. CMS may revoke certain suppliers’ enrollment if they violate supplier standards or conditions specific to them. These include independent diagnostic testing facilities, durable medical equipment prosthetics and orthotics suppliers, opioid treatment programs, home infusion therapy suppliers, and Medicare diabetes prevention programs.  

Physical therapists (PTs) and occupational therapists (OTs) in private practice and speech-language pathologists (SLPs).  CMS will include a definition of “supplier” in 42 C.F.R. § 424.502 that includes PTs and OTs in private practice and SLPs, as well as individuals and entities that qualify as suppliers under § 400.202.  

Debt referred to the US Department of Treasury.  CMS currently has authority to revoke a provider or supplier’s enrollment if it determines that the provider has an existing debt that CMS appropriately referred to the US Department of Treasury. However, beginning in 2024, CMS will not be able to revoke enrollment when (1) a provider’s or supplier’s Medicare debt has been discharged by a bankruptcy court or (2) the administrative appeals process concerning the debt has not been exhausted or the timeline for filing such an appeal, at the appropriate level, has not expired.  

The impact of these changes

While not all changes to the enrollment rules in the 2024 PFS relate to CMS’s denial or revocation authority, it is clear from the rulemaking that CMS is continuing to broaden its authority to remove providers and suppliers from the Medicare program. 

Some of these updates may be beneficial. For instance, the stay of enrollment could offer providers/suppliers a significant opportunity to resolve allegations of non-compliance prior to a deactivation or revocation action. However, this is still a discretionary action by CMS, and its decisions regarding what it constitutes as “minor” remain to be seen. The fact that CMS has created the stay, but still concludes that “any form of non-compliance is cause for concern [and to] permit even minor non-compliance to go unremedied could threaten the Trust Funds,” suggests that CMS may not be willing to use the stay in each instance of minor non-compliance.  

An ongoing concern with the enrollment rules is that consequences for non-compliance, even when minor and devoid of fraudulent or abusive intent or effect, may present harsh and long-lasting repercussions. Confounding the problem is that providers and suppliers facing a denial, termination, or revocation from Medicare are often left without any meaningful recourse; appeals of these actions can take years. 

In that time, a provider/supplier may be forced out of business, as an adverse action by a federal healthcare program may have reverberating negative effects across all aspects of operations (eg, licensure, commercial payor participation, contractual notifications and terminations in agreements with other healthcare providers, suppliers, and vendors, among others). 

Ensuring that Medicare and Medicaid enrollment records are updated regularly can be a significant administrative lift for a provider or supplier focused on patient care, especially for a healthcare system taxed by staff shortages, revenue loss, and other fallout from the recent pandemic.  

The effects of a revocation can be dire, with inadvertent mistakes punished harshly. Therefore, CMS’s self-proclaimed “gatekeeper” functions in the provider enrollment arena should be approached with caution and awareness.  Providers and suppliers are encouraged to remain vigilant and timely in responding to adverse actions, licensure status changes, and reporting changes to the Medicare program.  

For more information about these developments, please contact your DLA Piper relationship attorney or the authors of this alert.