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CMS changes tactics, targets health care provider affiliates

Since 2010, the United States Department of Justice has continually increased its focus on health care fraud crimes. Due to this focus, prosecution against those the agency accuses of false billing, illegal kickbacks and other forms of healthcare fraud has steadily increased. The agency recently announced the passage of a new law that will further their ability to increase the rate of these prosecutions.

What is this rule?

The United States Centers for Medicare and Medicaid Services (CMS) recently released the Program Integrity Enhancements to the Provider Enrollment Process rule. The rule allows the agency to bar participation in federal programs for those who affiliate with certain "bad actors" who pose an "undue risk" of fraudulent activity.

The CMS will take many factors into consideration to determine if an undue risk is present, including:

  • Duration. The length of time the affiliate had a relationship with the alleged bad actor.
  • Extent. The agency will also review the degree and extent of the affiliation between the parties. One example would include the percentage of ownership.
  • Termination. If the relationship was terminated, the agency will take into consideration the reason for the end of the agreement.

The agency has stated this rule will allow it to take a more proactive approach to enforcement.

What does the agency define as a "bad actor" for the rule's purposes?

Examples of bad actors for these purposes can include those who are guilty of fraudulent billing as well as those with uncollected debt, payment suspensions under federal healthcare programs, exclusion from such programs or otherwise has denied billing privileges with these programs.

What are the concerns with this rule?

Regulatory experts have voiced concerns the rule is "overly broad" and could result in draconian penalties for affiliates that may be unaware of an arrangement with a bad actor. Unfortunately, once a penalized it will likely be difficult for the individual or organization to move forward with an appeal.

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