As you may have read in our earlier email, on Aug. 27, the Centers for Medicare and Medicaid Services published a final rule on Medicare enrollment standards for DMEPOS providers. The rule expands on existing standards that providers must meet to establish and maintain billing privileges in the Medicare program; the new supplier standards took effect Sept. 27. We have reviewed several different written opinions, have spoken with other experts in the field and have conducted our own analysis of the issues that may affect you. Most recently, our conversations centered on the new provision that addresses overpayments. In the final rule, CMS has added a new paragraph to the existing regulations regarding supplier standard violations and overpayments. That paragraph applies to all of the standards.
The new language requires CMS, the National Supplier Clearinghouse and the DME MACs to treat as “overpayments” all payments to a supplier for equipment and services rendered after the date of a revocation, an adverse legal action or a felony conviction. This means that any payment received by a supplier for services rendered after an adverse action will be considered overpayments, subject to recoupment. In addition, this new language emphasizes the supplier’s obligation to report the triggering adverse action to the NSC.
CMS has added a definition for a “final adverse action” to clarify when this provision would apply. Any one of the following will qualify as an “Adverse Legal Action: 1) a Medicare imposed revocation of a billing number; 2) suspension or revocation of a state license; 3) revocation or suspension of accreditation; 4) a conviction of a federal or state felony within the 10 years preceding enrollment, revalidation, or enrollment; or (5) an exclusion or debarment from participation in a federal or health care program.
You should know that the rule only applies to claims for services rendered after the final adverse action. In the comments CMS made when publishing the rule, we believe that the rule should not apply to services rendered during the notice period before the revocation is “official.” So, in theory, services rendered during the notice period should continue to be reimbursed.
This new rule also applies to “an exclusion or debarment from participation from a Federal or State health care program.” Because of the emphasis CMS has placed on employee background checks, we believe that CMS will apply this rule to suppliers who employ (or contract with) persons who have been excluded from the Medicare program. Because CMS makes it clear that the potential overpayments occur from the date of the “final adverse action,” this could mean that all payments made to a supplier who hires an excluded employee or contractor will be deemed ineligible from the date of that hire. In other words, 100 percent of all Medicare billings after a prohibited hiring would be subject to overpayment challenge if this interpretation holds true.
CMS wants suppliers to ensure that they are not hiring or contracting with persons who are ineligible for federal funds. Though this is not a new position, it does emphasize a longstanding CMS policy. It also emphasizes the supplier’s obligation to promptly report adverse legal events. The consequence of a careless hiring could bankrupt many suppliers. So please, screen new hires to ensure they are allowed to participate in providing Medicare reimbursed services.