skip to content
Increased Scrutiny On Provider Enrollment Under The ACA: How The New CMS Proposed Rule Creates Additional Considerations For Health Care Transactions

Increased Scrutiny On Provider Enrollment Under The ACA: How The New CMS Proposed Rule Creates Additional Considerations For Health Care Transactions

Health Care Law Note
(March 24, 2016)

The proposed rule
On March 1, 2016, the Centers for Medicare & Medicaid Services ("CMS") published a lengthy proposed rule detailing program integrity enhancements to the provider enrollment process that, if adopted, would:

  • implement sections of the Affordable Care Act (the "ACA") that require Medicare, Medicaid, and Children's Health Insurance Program ("CHIP") providers and suppliers to disclose certain current and previous affiliations with other providers and suppliers;
  • provide CMS with additional authority to deny or revoke a provider's or supplier's Medicare enrollment; and
  • require that to order, certify, refer, or prescribe any Part A or B service, item, or drug, a physician must be enrolled in Medicare in an approved status or have validly opted-out of the Medicare program.

In practice, providers would need to determine all new affiliations and make any necessary disclosures. CMS would then determine if the affiliation creates an undue risk of fraud, waste, or abuse; if so, it would either deny or revoke enrollment. The practical effects of such a rule on an honest provider would be to increase its disclosure obligations with respect to its affiliates, as well as to increase scrutiny on its enrollment if another provider owned by the same business entity suffers a revocation.

It is unclear from the proposed rule and provided examples whether a currently enrolled provider would have to make new disclosures prior to its scheduled revalidation.  Public comments on the proposed rule are open until April 25, 2016.

Takeaway for transaction planning
For the above reasons, and to help prevent buyer’s remorse later, providers considering a change of ownership, acquisition/merger, or consolidation may want to consider amending their request for proposal and due diligence questionnaires now to account for the:

  • proposed expanded definition of "affiliation" (including, but not limited to, a 5% ownership interest, general or limited partnership interest, or operational or managerial control interest in another organization); and
  • lengthened list of disclosable events. 

Specifically, under the proposed rule 42 C.F.R. 424.519 the following would qualify as additional disclosable events for providers: 

  • Currently has an uncollected debt to Medicare, Medicaid or CHIP, regardless of (1) the amount of the debt; (2) whether the debt is currently being repaid; or (3) whether the debt is currently being appealed;
  • Has been or is subject to a payment suspension under a federal health care program, regardless of when the payment suspension occurred or was imposed;
  • Has been or is excluded from participation in Medicare, Medicaid or CHIP, regardless of whether the exclusion is currently being appealed or when the exclusion occurred or was imposed (although section 1866(j)(5) of the Social Security Act states "has been excluded," CMS believes it is appropriate to clarify that a current exclusion is also a disclosable event); or
  • Has had its Medicare, Medicaid or CHIP enrollment denied, revoked or terminated, regardless of (1) the reason for the denial, revocation or termination; (2) whether the denial, revocation or termination is currently being appealed; or (3) when the denial, revocation or termination occurred or was imposed. For purposes of § 424.519 only, and as stated in proposed paragraph (a), the terms "revoked," "revocation," "terminated," and "termination" would include situations where the affiliated provider or supplier voluntarily terminated its Medicare, Medicaid or CHIP enrollment to avoid a potential revocation or termination.

If you have any questions regarding the contents of this Law Note or would like further information regarding other health care legal issues, please contact Justin Puleo at (919) 755-8802.

Associated Industries

Each of our lawyer's e-mail address is provided with his or her biography. If you are not a current client of our firm, you should not e-mail our lawyers with any confidential information or any information about a specific legal matter, given that our firm may presently represent persons or companies who have interests that are adverse to you. If you are not a current client and you e-mail any lawyer in our firm, you do so without any expectation of confidentiality. We will not establish a professional relationship with you via e-mail. Instead, you should contact our firm by telephone so that we can determine whether we are in a position to consult with you about any legal matters before you share any confidential or sensitive information with us.