CMS Expansion of Revocation Authority Requires Increased Diligence in Audit Response

In November 2021, the Centers for Medicare & Medicaid Services (CMS) published a final rule expanding their ability to revoke Medicare billing privileges of providers and suppliers. This rule went into effect January 1, 2022, and has significantly increased the importance of a diligent and careful response when faced with a CMS audit.

Prior regulations required CMS to consider the following three factors when determining whether a provider or supplier was engaged in the type of billing practices which could support a revocation: (1) the reason for any claim denials, (2) the length of time over which any pattern or practice of submitting claims that fail to meet Medicare requirements occurred, and (3) how long the provider or supplier had been enrolled in Medicare.

CMS asserted that these three considerations inhibited their ability to “target brief periods involving a significant percentage of denied claims” and therefore proposed revisions to this framework which it believed would strengthen CMS’ overall program integrity efforts. The new framework now considers the following four factors:

• The percentage of submitted claims that were denied during the period under consideration.
• Whether the provider or supplier has any history of final adverse actions and the nature of any such actions.
• The type of billing non-compliance and the specific facts surrounding said non-compliance (to the extent this can be determined).
• Any other information regarding the provider or supplier’s specific circumstances that CMS deems relevant to its determination.

Many commenters expressed concerns over the new framework, however CMS published the final rule without any modifications. One concern raised was that erroneous claims may occur for brief periods due to a myriad of reasons which do not indicate any fraudulent or abusive intent by the provider or supplier (including technological, system, or inadvertent mistakes and changes to CMS or MAC procedures). CMS responded that their revocation authority “is strictly discretionary and not mandatory.” The Center also emphasized providers’ and suppliers’ responsibility to always submit correct claims, asserting that a short period of noncompliant billing practices does not absolve those submitting claims to CMS of this duty.

Another concern raised by commenters was that CMS should consider the providers’ and suppliers’ overall billing compliance history rather than short periods of non-compliance. CMS responded that doing so “could hamper efforts to address shorter but significant periods of non-compliance” within a longer time frame. CMS described this change as necessary to remediate instances in which they were unable to pursue revocation action against providers and suppliers whose long period of enrollment overrode shorter billing aberrations.

Concerns were also raised about the perceived inconsistency between removal of the consideration of the reason for claim denial in exchange for the “type of billing non-compliance and the specific facts surrounding said non-compliance.” CMS responded to these commenters by asserting “the core consideration is the incorrect claim submission itself rather than the reason it occurred.” CMS further remarked that considering reasons for claim denial in non-adherence to Medicare claim submission requirements was inconsistent with the overarching need to protect the Medicare Trust Funds.

With these regulations, CMS effectively lowered its threshold for establishing an abuse of billing privileges and thus expanded their revocation authority. Providers and suppliers should take careful note of the fact that CMS may now revoke billing privileges for short periods of noncompliance, regardless of compliant billing history, and that the reasons for claim denials are not considered when a provider or supplier is under revocation review. Furthermore, the addition of CMS’ consideration of prior adverse actions is particularly salient for providers and suppliers, who should deem this a strong warning against disregarding CMS billing inquiries and audits.

A Medicare revocation can mean the loss of significant revenue for providers and suppliers, potentially jeopardizing the stability of a practice or business altogether. As such, when a provider or supplier is faced with an audit, they should take steps to respond assiduously in order to ensure their billing privileges remain intact.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to Medicare audits or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.