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Corporate Practice of Medicine, or CPOM for short, is a legal doctrine that refers to who is authorized to own and operate a medical practice and, specifically, to employ physicians. Most states regulate CPOM in one way or another, on the rationale that physicians should be able to practice medicine free of influence that may be wielded by an employer who is not licensed. As a practical matter, CPOM regulations also usually increase the importance and bargaining power of physicians in business arrangements.

Every state sets its own policy and rules regarding CPOM, but they fall into three broad categories. First, some states have very strict CPOM rules and only allow physicians to be employed by entities that are 100% owned and controlled by other licensed physicians. Second, some states have few or no CPOM restrictions and any entity can employ physicians, regardless of the licensure of ownership or management. Third, most states fall somewhere in the middle. They may require that the entity that employs physicians have a certain percentage of physician ownership, say 51%, while the remainder can be owned by nonphysicians. They may allow multiple types of licensed practitioners to join together in one practice, for example, physicians and podiatrists owning a practice that practices both medicine and podiatry. They may have exceptions that allow certain types of licensed healthcare facilities to employ physicians.

These complex regulations can create a need for complex business arrangements to maintain compliance. One of the most common is the management services organization (MSO) model. Under an MSO model, the medical practice is owned by licensed practitioners as required by the CPOM rules in the particular state. The medical practice then contracts with the MSO, which is generally owned by un-licensed investors, to provide certain management, administrative, and other services in exchange for a management fee.  In addition to the complex business concerns, these arrangements can raise numerous legal and regulatory compliance concerns, including control over the practice and medical decision making, influence of non-licensed investors, control over personnel decisions, fee-splitting concerns, fraud waste and abuse concerns regarding how the management fee is calculated and any other revenue streams or referrals between the entities, and many more. The MSO model, especially variations backed by private equity, has recently come under scrutiny by professional groups and government entities raising these and other issues. Physician practices contemplating such an arrangement should be mindful of both the reasons for such an arrangement and the compliance concerns, CPOM and otherwise, regarding how the arrangement is structured.

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When a Medicare provider or supplier receives claims denials or an overpayment demand as a result of a Medicare audit, the decision whether and how to appeal the decision, or to simply repay the amount demanded by the Medicare contractor, is usually a business decision. In some cases, it may initially appear that the value of the demand simply does not justify the effort and cost of pursuing an appeal. However, a Medicare provider in this position should be aware that forgoing an appeal may have consequences far above and beyond paying back the amount demanded by Medicare.

In many cases, choosing to forego an appeal is not simply a matter of repaying funds to the Medicare program, but the Centers for Medicare & Medicaid Services (CMS) and its contractors will generally take a decision not to appeal as an admission by the provider that the audit results are correct and that the claims were properly denied. CMS and its contractors may use this perceived admission of ‘guilt’ against a provider later, long after it is far too late for the provider to appeal the audit findings.

For example, a provider may receive a Medicare probe audit. The contractor conducting the probe audit reviews medical records for 10 claims and denies all 10, claiming that the provider did not meet Medicare requirements for coverage. The repayment demand is ‘only’ $3,000. The provider strongly disagrees with the contractor’s allegation, but decides it is not worth it to appeal and simply pays the $3,000. A few months later, the provider receives another probe audit. The contractor reviews 12 claims and denies all 12 for the same reasons as in the first probe audit. Again, the repayment demand is ‘only’ $4,000, so even though the provider strongly believes their claims meet Medicare requirements, the provider chooses to repay the $4,000 rather than expend the time and resources to pursue the lengthy and complex Medicare claims appeal process.

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In September 2024, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) published a report detailing its recent review of remote patient monitoring (RPM) services furnished to Medicare beneficiaries and recommending additional oversight of RPM services. The OIG’s call for heightened scrutiny in this area is likely an indicator of increased audit activity of providers of these services.

By way of background, remote patient monitoring services typically use digital technologies to collect medical and other forms of health data from a patient in one location and electronically transmit that data to the patient’s healthcare provider in a different location for evaluation and treatment management. In many instances, the data collected is automatically electronically transmitted to providers for review and allows for efficient patient management. In some cases, these technologies can either trigger direct patient engagement or facilitate communication between the patient and provider.

In 2019, the Centers for Medicare & Medicaid Services (CMS) expanded payment for remote patient monitoring services. Shortly thereafter, the availability of Medicare reimbursement for remote monitoring services led to a substantial increase of providers furnishing RPM services. OIG’s report specifically highlights the increase in utilization of RPM services between 2019 and 2022, with Medicare payments for RPM services totaling more than $300 million in 2022, compared to $15 million in 2019.

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Medicare claims audits can be a complex and frustrating experience for healthcare providers who choose to accept Medicare. If claims are denied during the audit – and they nearly always are – the appeal process can itself take months or years and contains many strategic decisions for a provider to make.

A Medicare audit generally begins when a Medicare contractor requests medical records from a provider. At this stage, it is important to note which type of contractor is making the request (is it a MAC, UPIC, RAC, SMRC, etc.?), which type of review the contractor is performing (pre-payment, post-payment, TPE, PPEO, CERT, is it likely to be statistically extrapolated, etc.?), and any special circumstances of the provider (Has it received similar audits or requests recently? Did it have a recent change of ownership? Does a separate entity possess relevant documentation? Etc.).  Depending on the circumstances of the review, the provider may take additional steps to increase the likelihood that the claims reviewed by the contractor are found payable in the first instance. A provider may choose to submit additional records, retain a clinical expert, engage in additional communication with the contractor, or submit some form of legal brief or position paper. On the other hand, in some cases, it may be more appropriate to simply submit the records and await a response.

If claims are denied during the review, such claims are generally eligible for the Medicare claims appeal process, a complex, 5-step administrative appeals process. First is Redetermination, usually with the same contractor that issued the denials initially. Second is Reconsideration, before a different Medicare contractor. Third is review by an Administrative Law Judge (ALJ), where the provider has the opportunity to conduct a hearing and present witnesses. Fourth is review by the Medicare Appeals Council, the highest level of appeal within the Department of Health and Human Services. Fifth is appeal to federal court, which is usually limited in scope and not appropriate in many cases.

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The number of Medicare payment suspensions issued by the Centers for Medicare & Medicaid Services (CMS) has grown in recent years. Although generally framed as a temporary and less severe sanction than an outright revocation of Medicare billing privileges, a suspension of Medicare payments can be just as devastating to a Medicare provider or supplier and can in many cases put the provider out of business, leading to significant procedural and due process concerns regarding CMS’ frequent use of payment suspensions.

A Medicare payment suspension is a suspension of a Medicare-enrolled provider or supplier’s ability to receive payment from the Medicare program. Suspensions are usually scheduled to last for 180 days, but they can be extended essentially indefinitely. While a provider may technically continue to treat Medicare patients and submit Medicare claims for payment – the claims simply will not get paid until the suspension ends – for a provider with a high percentage of Medicare patients, a sudden, unforeseen, and indefinite interruption of all Medicare payments can wreak havoc on cash flow and destroy a practice or business as quickly and effectively as any enrollment or licensing sanction. Payment suspensions are also often issued without notice, meaning that a provider’s Medicare payments may abruptly stop, often days before the provider receives a letter informing them of the suspension.

Given the devastating effects of a suspension of Medicare payments, one may think there may be significant procedural, due process, or appeal protections in place for providers. That is not the case. Although federal law only explicitly authorizes CMS to issue payment suspensions where there is a “credible allegation of fraud,” CMS has implemented regulations that also give it the authority to suspend payments any time CMS believes it has “reliable information that an overpayment exists” and that broadly expand the definition of what constitutes a “credible allegation of fraud.” These regulations also give CMS extremely broad authority to issue suspensions without first notifying the provider, while giving the provider very limited appeal rights.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently updated its Work Plan, adding several new audits and reviews. The OIG Work Plan forecasts the projects that the OIG plans to implement over the foreseeable future. These new initiatives are a signal of which areas the OIG views as warranting heightened scrutiny,  and providers in these areas should take note of the OIG’s actions.

One of the most notable projects on the OIG Work Plan focuses on auditing Medicare claim lines for which the payment exceeds the actual charge. CMS contracts with various Medicare Administrative Contractors (MACs) to, among other things, process and pay claims submitted by providers for items and services covered under Medicare Part B. Generally, Part B payments are based on a fee schedule, prospective payment system, or some other method, rather than a cost or charge basis. In most cases, a healthcare provider’s billed charges exceed the amount that Medicare pays for Part B items and services. Under this Work Plan item, the OIG is focused on Medicare payments that exceed the billed charges, which can be overpayments. Providers should keep a close watch on their Medicare remittance advices or explanation of benefits to be aware of any payments that exceed the corresponding billed charge.

In terms of specific healthcare services, the OIG is turning its attention to hyaluronic acid injections, commonly used to treat knee osteoarthritis. While these injections are widely used for joint pain, there are ongoing questions about whether they are worth the cost and being used appropriately. The OIG’s audit will review Medicare reimbursements for these treatments and whether providers are following proper billing procedures.

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Simply put, Medicare rarely audits dentists because Medicare generally does not cover or pay for dentistry. However, doctors of dental surgery and doctors of dental medicine may perform far more complex surgical procedures than the examinations, cleanings, and fillings that are in the common perception of what a dentist does. Where Medicare does cover and subsequently audits services provided by dentists, the issues raised are generally complex and nuanced. Dentists who bill Medicare should be familiar with the Medicare claims appeal process and some of the issues specific to Medicare coverage of dental services.

The Medicare claims appeal process is a lengthy and complex 5-step process. After the provider receives a determination of claim denials and demand to repay an alleged overpayment, the first appeal step is Redetermination, often before the same Medicare contractor that issues the initial claim denials. Second is Reconsideration before a different Medicare contractor. Third is review by an Administrative Law Judge (ALJ), which may include a hearing – often telephonic – where the provider can present evidence and testimony. Fourth is appeal to the Medicare Appeal Council, the highest adjudicatory body within the Department of Health and Human Services. Fifth is appeal to federal court, which is often limited in scope and may not be appropriate in every case. It can take several months, if not years, for a case to fully work its way through the Medicare claims appeal process, depending on the circumstances.

Medicare audits of services provided by dentists nearly always involve the “dental services exclusion.” By law, the Medicare program does not cover services performed in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting the teeth, which is generally considered to include the periodontium. Procedures on other parts of the mandible or maxilla may be covered where they are medically necessary and meet other coverage criteria. Because of the key distinction between procedures in connection with the teeth and structures directly supporting the teeth, dentists who bill Medicare may consider how they document procedures to clearly document procedures which may not be subject to the coverage exclusion. Procedures on the teeth and periodontium may also be covered where they are inextricably linked to a primary covered service. Further, Medicare contractors may mistakenly interpret the statutory coverage exclusion to mean that Medicare never covers any services provided by a dentist, simply because they are performed by a dentist. However, this assertion is generally inconsistent with the Social Security Act and Medicare guidance.

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On July 31, 2024, the Centers for Medicare & Medicaid Services (CMS) published the Calendar Year 2025 Physician Fee Schedule (PFS) Proposed Rule. Among other changes, the 2025 PFS Proposed Rule includes additional proposed changes to the so-called “60-day rule” regarding returning identified overpayments. Initially established by the 2010 Affordable Care Act, the 60-day rule requires healthcare providers to report and return Medicare and Medicaid overpayments within 60 days of identifying such overpayments. The potential consequences for failing to comply with the 60-day rule are severe, and can result in the imposition of a civil monetary penalty or an alleged violation of the Federal False Claims Act. Providers should pay close attention to the potential changes to the 60-day rule included in the 2025 PFS Proposed Rule.

The 2025 PFS Proposed Rule is not the first time that CMS has proposed changes to the 60-day rule, and it likely will not be the last. In December 2022, CMS published a proposed rule that would amend the regulations regarding the standard for an “identified overpayment” under the Medicare program. Specifically, the December 2022 Overpayment Proposed Rule proposed to remove the existing “reasonable diligence” standard and adopt by reference the Federal False Claims Act definition of “knowing” and “knowingly.” To date, CMS has not finalized these proposals with respect to identified overpayments under the Medicare program.

In the 2025 PFS Proposed Rule, CMS states that it is retaining the proposals published in the December 2022 Overpayment Proposed Rule, and proposes further changes to revise the regulations regarding the timeframe for reporting and returning overpayments. Currently, the applicable regulations require that an overpayment be reported and returned by the later of:  (1) the date which is 60 days after the date on which the overpayment was identified; or (2) the date any corresponding cost report is due, if applicable. However, under the 2025 PFS Proposed Rule, the deadline for returning a reported overpayment would be suspended under specified circumstances. The 2025 PFS Proposed Rule would create an entirely new regulatory provision to suspend the deadline for reporting and returning overpayments for up to 6 months to allow time for providers to investigate and calculate overpayments. Previously, in 2016 rulemaking regarding reporting and returning of overpayments, CMS discussed that under the “reasonable diligence” standard, providers would be allowed a 6-month period in which to conduct a good-faith investigation of credible information of a potential overpayment. At the time of the 2016 rulemaking, CMS had not proposed to implement this 6-month period into the applicable regulations.

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Much has been made of the recent end of Chevron deference and the impact it may have on the authority of federal regulations and the power of federal agencies. As the healthcare industry is heavily regulated by multiple federal agencies, administrations, and departments, it is natural to ask what impact the end of Chevron deference may have on healthcare providers and suppliers.

Chevron deference, named after the landmark 1984 Supreme Court case Chevron v. Natural Resources Defense Council, was a legal doctrine that generally required federal judges, where a statute was unclear, to defer to the interpretation of the applicable federal agency, even where the judge would have made a different decision on their own. In the recent case Loper Bright Enterprises v. Raimondo (“Loper”), the Supreme Court ended Chevron deference, finding that it was contrary to the mandate in the federal Administrative Procedures Act (“APA”) that judges exercise independent legal judgment. The Court also recognized that federal agencies have no special expertise in statutory interpretation, often change their interpretations, and are particularly unsuited for deference in matters involving the scope of the agency’s own power.

Because the decision in Loper is based on the APA, disputes handled under the APA are most directly affected. In these disputes, federal judges are no longer required to defer to the interpretation of the federal agency, but must exercise independent judgement. Disputes not handled under the APA – such as most of the disputes under Medicare, which are governed by the Social Security Act (“SSA”) – may be less directly affected. While Medicare disputes are technically not subject to the APA and therefore to Loper, portions of the APA are based on portions of the SSA and there is some support for the position that that same rules should apply to both. Therefore, Loper may be applicable in some Medicare disputes. It is important to note that this only applies to disputes before federal judges. The agency itself and its contractors are generally still bound by their own regulations during the often-lengthy Medicare administrative appeals process.

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Physicians and other clinical providers expend tremendous amounts of time and effort accurately documenting the medical care that they provide to patients. Usually, the documentation is intended to be read and understood by another physician, either the physician who created the record or another treating physician. It may also be intended to be read by billers or coders who are familiar with the practice and the type of documentation at issue. But there is another, sometimes very consequential, audience that reviews medical records: reviewers at government agencies or contractors, or commercial insurance companies that audit claims submitted by the practice.

All payors periodically audit claims submitted to them by providers. Medicare and Medicaid generally use outside contractors to perform medical review of the documentation created by providers, but may perform some review in-house, Commercial insurance companies may use a mix of contracted and in-house medical review. Generally, the payor or their contractor will request that the provider submit the medical records or other documentation that supports claims submitted by the provider, review the documentation, and issue findings, usually accompanied by a demand that the provider repay some alleged overpayment based on a deficiency that the payor will claim to have identified in the medical documentation.

The medical records review itself is often performed by nurses, coders, or others that may have a very different level of education, training, and clinical experience than the physician who created the record. Even where the reviewers are ostensibly supervised by physicians, these supervisors often have very high caseloads and rarely have the practical ability to exercise more than cursory supervision of the reviewers. It is therefore relatively common for medical reviewers to misunderstand or misinterpret the documentation they review. Extensive use of abbreviations, specialized shorthand, or clinical jargon with little context are often ripe for this type of reviewer mistake. For example, does “PCA” in a progress note mean “posterior cortical atrophy syndrome” or “posterior cerebral artery stroke”? Does a nurse reviewer with no training or experience in vascular procedures know the difference between Rutherford 3 and Rutherford III? Documentation conventions or usages that would be easily understood by another specialized clinician may not be understood by a contracted nurse reviewer with little to no training or experience in a particular specialty. More often than not, a medical reviewer that does not understand documentation will lead to claim denials.

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