The Centers for Medicare & Medicaid Services (“CMS”) recently finalized a rule (“Final Rule”) that expands its ability to impose a Provisional Period of Enhanced Oversight (“PPEO”) on providers, including post-acute providers, reactivating their Medicare enrollment. This regulation, authorized under Section 1866(j)(3)(A) of the Social Security Act (“Act”), is designed to strengthen Medicare program integrity and minimize fraud, waste and abuse. The Final Rule extends the definition of a “new provider or supplier”—previously limited to newly enrolling or ownership-changing providers—to include those reactivating their Medicare enrollment and billing privileges.
Enrollment
Section 1866(j)(1)(A) of the Act requires the Secretary of Health and Human Services to establish a process for the enrollment of providers and suppliers into the Medicare program. These rules were intended not only to clarify or strengthen certain components of the enrollment process, but also to enable us to take action against providers and suppliers: (1) engaging (or potentially engaging) in fraudulent or abusive behavior; (2) presenting a risk of harm to Medicare beneficiaries or the Medicare Trust Funds; or (3) that are otherwise unqualified to furnish Medicare services or items. There are two principal categories of legal authorities for the Medicare provider enrollment provision addressed in the final rule (a) Section 1866(j) of the Act furnishes specific authority regarding the enrollment process for providers and suppliers; and (b) Sections 1102 and 1871 of the Act provide general authority for the Secretary to prescribe regulations for the efficient administration of the Medicare program.
Provisional Period of Enhanced Oversight
Section 1866(j)(3)(A) of the Act states that the Secretary shall establish procedures to provide for a provisional period of between thirty days and one year during which new providers and suppliers—as the Secretary determines appropriate, including categories of providers or suppliers—will be subject to enhanced oversight. Under Section 1866(j)(3)(A) of the Act, such oversight can include, but is not limited to, prepayment review and payment caps. CMS’s authority under Section 1866(j)(3)(A) of the Act to impose a PPEO is not restricted to certain provider and supplier types (for example, hospices). Still, it can apply to any provider or supplier type the Secretary determines appropriate.
As authorized by Section 1866(j)(3)(B) of the Act, CMS previously implemented such procedures through sub-regulatory guidance with respect to newly enrolling home health agencies (“HHAs”) requests for anticipated payments (“RAPs”). CMS eliminated the use of RAPs for HHAs; beginning January 1, 2022, CMS replaced RAP submissions with a Notice of Admission.
More recently, in July 2023 CMS began placing new hospices in Arizona, California, Nevada and Texas in a provisional period of enhanced oversight. See our previous article here.
During the PPEO involving HHA RAPs, CMS received several stakeholder requests for clarification regarding the PPEO’s scope. One of these requests for clarification concerned the meaning of the term “new” for purposes of applying a PPEO. CMS finalized new 42 CFR Sec. 424.527(a) in the “Calendar Year (CY) 2024 Home Health (HH) Prospective Payment System Rate Update” final rule to address this issue.
Specifically, new 42 CFR Sec. 424.527(a)(1) through (3) defined a “new” provider or supplier as any of the following:
- A newly enrolling Medicare provider or supplier. This includes providers that must enroll as a new provider per the change in majority ownership provisions in 42 CFR Sec. 550(b).
- A certified provider or certified supplier undergoing a change of ownership consistent with the principles of 42 CFR Sec. 489.18. This includes providers that qualify under 42 CFR Sec. 424.550(b)(2) for an exception from the change in majority ownership requirements in 42 CFR Sec. 424.550(b)(1) but which are undergoing a change of ownership under 42 CFR 489.18.
- A provider or supplier (including an HHA or hospice) undergoing a 100 percent change of ownership via a change of information request under 42 CFR Sec. 424.516.
CMS stated that it included these transactions within the definition of a “new” provider because they have historically involved the effective establishment of a new provider or supplier for purposes of Medicare enrollment.
The Final Rule extends the definition of a “new provider or supplier” to now include a provider or supplier reactivating the provider’s or supplier’s Medicare enrollment and billing privileges.
Practical Takeaways
- Expansion of PPEO to Reactivating Providers:
- CMS has determined that providers and suppliers seeking reactivation of their Medicare enrollment are functionally equivalent to new providers in terms of risk assessment. These entities will now be subject to the same level of scrutiny as new enrollees, with a PPEO period ranging from thirty days to one year.
- Ensure Compliance Before Reactivating:
- Providers seeking reactivation should conduct a thorough internal audit before submitting their application. Key areas to review include updated enrollment records, billing compliance and adherence to Medicare requirements. Addressing any deficiencies beforehand can reduce delays and mitigate compliance risks.
- Be Aware of Enrollment Revocation Risks:
- Failure to meet compliance standards under PPEO could result in Medicare enrollment revocation, leading to further operational disruptions and requiring a lengthy reapplication process.
If you have questions or would like additional information about this topic, please contact:
- Sean Fahey at (317) 977-1472 or sfahey@hallrender.com;
- Brian Jent at (317) 977-1402 or bjent@hallrender.com;
- Todd Selby at (317) 977-1440 or tselby@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
