New CMS rule ties Medicare billing privileges to owners’ misconduct

Dive Insight:

The Trump administration has prioritized rooting out what it says is fraud, waste and abuse in federal healthcare programs, including creating several multi-agency groups to fight fraud and deferring billions of dollars in Medicaid payments to a handful of states accused of lackluster enforcement.

Regulators say the latest final rule builds on the administration’s efforts by giving the CMS greater authority to bar providers that pose a high risk to Medicare’s payment integrity, specifically addressing the rise of profit-maximizing companies.

The CMS will now be able to deny or revoke Medicare enrollment due to violations committed by a company’s owners or parent companies, whereas the agency could only boot providers for their own violations. This includes whether they have had their license suspended or revoked in another state, or whether another federal healthcare program has suspended them.

Additionally, any actions taken against providers will now be retroactive to when the CMS or its contractors notify providers of noncompliance.

Increasing rates of private equity ownership in healthcare have drawn intense scrutiny from federal and state enforcers over their profit-seeking missions, which some argue has incentivized and exacerbated fraud, waste and abuse across the industry.

Regulators have said statutory blind spots have limited their ability to identify and stop fraud as ownership changes accelerated over the last decade. 

The rule also ramped up fraud enforcement for home health agencies, hospices and medical equipment suppliers, requiring them to re-enroll as new providers with Medicare when they undergo a change in majority ownership, such as an acquisition by a private equity firm. Failing to complete new accreditation could cause these providers to lose their ability to bill or enroll in Medicare, the CMS said.

The Trump administration has said these providers pose an especially high risk to Medicare payment integrity, citing minimal operational oversight, exploitation of vulnerable patients and explosive market growth that has attracted a swarm of private equity investors.

The CMS has already homed in on home health and hospice providers as part of its fraud prevention strategy, enacting a six-month pause on new Medicare enrollments earlier this year. The agency also promised to investigate more providers using advanced analytics of enrollment data and fraud, waste and abuse indicators.

Still, Medicare finalized a boost to home health payments for next year as it continues to shift the agencies from a volume-based method to one based on patient characteristics.

Hospices also received a pay bump last month under a July final rule that increased their rates by 2.3%, or $755 million. The rule also introduced a new measure for identifying fraud called the Service and Spending Variation Index, which tracks a hospice’s utilization and spending on services unrelated to end-of-life care.

Previously published on our sister site, Healthcare Dive.

Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy, and health IT since 2016.