New Rule Expands Bases on Which Providers Can Be Excluded from Participation in Medicare

On December 3, the Centers for Medicare & Medicaid Services (“CMS”) issued a new rule that enhances CMS’s ability to exclude or remove providers from participation in Medicare. According to a press release issued by CMS, the new rule is designed to “prevent physicians and other providers with unpaid debt from re-entering Medicare, remove providers with patterns or practices of abusive billing, and implement other provisions to help save more than $327 million annually.”

The new rule has several provisions. The first, and most significant given CMS’s stated purpose for the rule, is as follows:

CMS may now deny enrollment if the provider, supplier or owner thereof was previously the owner of a provider or supplier that had a Medicare debt that existed when the latter’s enrollment was voluntarily terminated, involuntarily terminated or revoked AND

• The owner left the provider or supplier that had the Medicare debt within 1 year of that provider or supplier’s voluntary termination, involuntary termination, or revocation;
• The Medicare debt has not been fully repaid; AND
• CMS determines that the uncollected debt poses an undue risk of fraud, waste or abuse.

There are terms under which the provider, supplier or owner thereof can avert the denial, including repaying the debt in full, or agreeing to a repayment schedule for the entire debt if the provider meets the criteria for an extended repayment schedule provided by 42 C.F.R. § 401.607.

To illustrate how this rule may be applied, consider the following example.  Provider ABC is owned by Owner X.  ABC terminates its enrollment in Medicare.  At the time of the termination, ABC had an outstanding Medicare debt.  Owner X leaves ABC less than a year after the termination. Thereafter, as long as ABC’s debt remains unpaid, Owner X may be excluded from participating in Medicare, either as a provider or supplier or as an owner thereof, if CMS determines that the outstanding debt poses an “undue risk of fraud, waste or abuse.”  It is not clear from the rules what CMS considers to constitute an “undue risk”, and whether that is based on a dollar figure, or some other criteria.  Owner X may avoid denial if he/she agrees to a repayment schedule for the debt, or pays the debt in full.

The new rule also expands the bases on which CMS can deny enrollment or revoke billing privileges based on prior felony convictions.  Under the prior rule, CMS could deny enrollment to any provider, supplier or owner who was convicted of a state or federal felony in the prior 10 years. The new rule expands that to include “managing employees”.

CMS can now revoke Medicare billing privileges if the provider or supplier has a “pattern or practice of submitting claims that fail to meet Medicare requirements”, including the requirement that the service be reasonable and necessary.  Many commenters to the proposed rule suggested that the provision was arbitrary and subjective, granting too much discretion to CMS.  CMS responded by stating that “sporadic billing errors would not result in revocation”.  CMS does not define “pattern or practice”, but listed several factors that would be considered, including:  (1) percentage of submitted claims that were denied; (2) total number of claims denied; (3) the reason(s) for the claim denials; (4) whether there is a history of final adverse actions; (5) the time period over which the pattern has continued; and (6) how long the provider has been enrolled in Medicare.  With respect to factors (1) and (2), CMS declined to establish objective numerical thresholds.

The new rule also provides that revoked providers must submit all remaining claims within 60 days after revocation.  Revoked providers and suppliers may now only submit a corrective action plan where the revocation was based on noncompliance with the enrollment requirements, or the enrollment application.  In other words, a revocation based on provider or supplier conduct is no longer eligible for a corrective action plan.

The new rule goes into effect on February 3, 2015.

Physician Supervision Requirements under CMS Regulations – False Claims Act Cases on the Rise

In 2013, the Department of Justice collected over $3.8 billion in qui tam and non-qui tam settlements and judgments under the False Claims Act (“FCA”). Of the total amount collected, $2.7 billion, or 70% were in cases in which the Department of Health and Human Services (“HHS”) was the primary client agency. In comparison, cases from the Department of Defense represented just 1% of the total collections. Surprisingly, the total numbers for 2013 were actually slightly lower than 2012 numbers. In 2012, total collections were $4.9 billion, with HHS cases representing $3.1 billion, or 63%.

Notwithstanding the slight decrease in total judgments and settlements, it is clear that one type of case under the FCA is beginning to account for an increasing portion of the total:  cases where the government has alleged that the services were not properly supervised by a physician or a qualified non-physician provider (“NPP”), such as a licensed physical therapist.

CMS regulations define three types of physician supervision:

• General supervision: the physician or NPP must be available by telephone.
• Direct supervision: the physician or NPP must be “immediately available” and “interruptible” throughout the performance of the procedure. The physician or NPP does not need to be present in the room. CMS will not explicitly define “immediate” but has said that the requirement is not met where the physician or NPP is “so physically far away…from the location where…outpatient services are being furnished that he or she could not intervene right away.”
• Personal supervision: the physician or NPP must be in the room during the procedure.

In order to bill Medicare or Medicaid for certain services, the service must have been appropriately supervised under these definitions. The government takes the position that services billed but not properly supervised are not “reasonable and necessary” and are, therefore, false claims. For example, MRIs with contrast require direct supervision.  Although the supervising physician need not be in the room during the treatment, the physician must be “immediately available” somewhere on the premises.  What is more, it is not enough that any physician or NPP is immediately available – the supervising physician or NPP must have within his or her State scope of practice and hospital privileges the ability to perform the service or procedure.

The following recent settlements provide some insight into the types of services where the government is paying close attention:

• A Florida hospital and doctor group settled with the government for $3.5 million.  The allegations in that case were that the group billed Medicare, Medicaid and TRICARE for radiation oncology services (which require direct supervision) that were performed without the necessary supervision. In particular, the government alleged that the services were often performed while the defendant doctors were on vacation or were working at another radiation oncology clinic.
• In April 2013, a North Carolina neurologist and his practice paid $2 million to resolve allegations under the False Claims Act that the neurologist had improperly billed for intravenous immunoglobulin therapy services, which require direct supervision.  The government alleged that the services had been performed by registered nurses when the neurologist was not present in the office suite. There were no allegations that any patients had been harmed; what is more, in many instances there were other physicians on site and the neurologist himself was, in his words, “no more than 8 seconds away” from the office suite.
• A Georgia-based collection of companies settled a False Claims Act case for $1.2 million in April 2013.  The allegations in that case were that the companies had billed for contrast MRI procedures where only clerical staff and technicians were onsite.

It is worth noting that most, if not all, of the major settlements involved physician supervision over services that require direct supervision, rather than general or personal. This is perhaps not surprising:  general and personal supervision are clearly and understandably defined, whereas CMS has declined to provide specific time or distance limits that would meet the definition of “immediate” and “interruptible” for direct supervision.

Direct supervision is required for most outpatient services.  The following is a non-exclusive list of services that require direct supervision:

• Diagnostic services furnished to outpatients, including drugs and biologicals required in the performance of those services (for example, MRIs with contrast);
• IV therapy services, such as chemotherapy
• Physical and occupational therapy (a licensed therapist must provide direct supervision)
• Pulmonary, cardiac and intensive cardiac rehabilitation;
• Glaucoma screening examinations; and
• Services and supplies provided “incident to” a physician’s services in a non-institutional setting (such as a physician’s office)

Understanding the level of supervision that a particular service or treatment requires is extremely important, particularly for health care providers who bill for services that they do not perform themselves. The consequences for billing for services where the requisite level of supervision was not present could be dire and could include not only significant financial liability, but exclusion from federally funded healthcare programs.