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Rule gives CMS authority to act against affiliates of bad actors

The Centers for Medicare and Medicaid Services (CMS) have a new rule that allows a more proactive approach to enforcement efforts. Lawmakers wrote the rule to provide another tool against health care fraud. According to the Federal Register, the Program Integrity Enhancements to the Provider Enrollment Process, has two main provisions.

Provision #1: Required reporting of affiliations

The rule requires providers and suppliers of Medicare, Medicaid and Children's Health Insurance Program (CHIP) to disclose affiliation with certain "bad actors." For the purposes of this rule, the law defines a bad actor as those who 1) have uncollected debt, 2) have payment suspended from a federal health care program or are 3) excluded from these programs or have had billing privileges denied or revoked.

Some examples of an affiliation as defined within this rule include a direct or indirect ownership of 5% or greater, general or limited partnership interest, operational or managerial control over the organization, and the presence as an officer or director in the organization.

The agency stated this rule will reduce the risk that a bad actor would close down one fraudulent operation to start up another.

Provision #2: CMS given greater authority

The rule also allows expands the CMS' ability to revoke provider and supplier enrollment in these federal programs and increase the maximum reenrollment period from three years to ten.

The agency expects to see 2,600 new revocations annually as a result of this rule. Although the change will likely translate to increased government savings, it also poses a risk of an overbroad approach. Several commentators have voiced this concern, noting many failures to report are mere oversights and not intentional instances of fraud. As a result, a revocation in these instances is likely an overly severe penalty.

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