CMS Publishes New Fraud and Abuse Measures

Significant Impact on Ambulance Services

On February 2, 2011 the Centers for Medicare and Medicaid Services (CMS) published a Final Rule that drastically enhances the government’s ability to crack down on fraud and abuse in federal healthcare programs. For the ambulance industry, this means increased compliance obligations and more scrutiny from federal and state investigators. 
Below is an overview of the pertinent provisions of the Final Rule.
The Final Rule establishes new screening measures for new and Medicare existing providers and suppliers (collectively referred to as “providers” in this article) when enrolling or revalidating with Medicare. The new screening procedures begin on March 25, 2011.
CMS assigned each type of provider (e.g., ambulance providers) to a specific level of screening based upon “the risk of fraud, waste, and abuse with respect to the category of provider.” This is based on CMS’s past experience with that type of provider. The three risk levels are: (1) limited; (2) moderate; and (3) high. Medicare contractors must then apply the specific screening tools mandated by CMS to the providers assigned to that screening level. 
In the Proposed Rule, CMS originally assigned government owned/affiliated services to the “limited risk” level and non-government owned/affiliated services to the “moderate risk” level. However, after receiving several comments about the distinction, CMS decided to eliminate it and assign ALL ambulance providers to the moderate risk level.
Measures in the moderate risk screening level (applicable to all newly enrolling and revalidating ambulance providers) include:
(1)     Verification that the ambulance provider meets any applicable federal or state requirements for the type of services furnished;
(2)     Verification that the ambulance provider meets applicable licensure requirements (may include licensure checks across state lines);
(3)     Database checks (to verify SSN, NPI, NPDB licensure, OIG exclusion, TIN, etc.) on a pre- and post-enrollment basis to ensure that the provider continues to meet the enrollment criteria; and
(4)     Unannounced and unscheduled pre- and/or post enrollment site visits.
For Medicaid-only or CHIP-only providers, states are required to conduct their own assessment of the risks posed by providers and then assign them to a particular level of screening (the screening measures are the same as Medicare). For dually-enrolled providers, states can rely on the screening of Medicare contractors and they do not have to conduct independent screening activities. However, states may utilize any additional screening measures beyond those prescribed by CMS.

New Medicare Application Fee
The Final Rule introduces a Medicare application fee to cover the cost of the new screening measures and other program integrity efforts. Initially, the fee is $500, and it will be adjusted annually by the percentage change in the consumer price index. The application fee is required: (1) with new enrollment applications (or re-enrollment applications); (2) for applications to establish a new practice location; (3) as part of the revalidation process; and (4) in response to a CMS revalidation request. CMS may, on a case-by-case basis, exempt a provider from the fee if it determines that the fee would result in a hardship to the provider. 
The fee will apply to ambulance providers after March 25, 2011. So, all new ambulance providers and currently enrolled ambulance providers who are re-enrolling or revalidating must submit the application fee and/or a request for a hardship exception after this date. Medicare contractors are instructed to reject and return any applications submitted without the application fee. Further, a Medicare contractor can revoke Medicare billing privileges if a provider does not submit a fee with the revalidation application. 

Temporary Moratoria on Enrollment of Medicare Providers
The Final Rule permits CMS to impose “temporary moratoria” on the enrollment of new Medicare, Medicaid, or CHIP providers if CMS determines that a moratorium is necessary to prevent or combat fraud, waste, or abuse under those programs. 
A moratorium can be imposed in 6-month increments in situations where: (1) CMS, based on its review of existing data, indentifies a trend that appears to be associated with a high risk of fraud, waste or abuse; (2) a state has imposed a moratorium on enrollment in a particular geographic area or on a particular provider type or both; or (3) CMS identifies either a particular provider type or a particular geographic area that has a significant potential for fraud, waste or abuse in the Medicare program.  A moratorium can be extended by CMS in 6-month increments if CMS believes it is necessary. 
All applications received from providers covered by an existing moratorium during a moratorium will be denied. However, this denial is subject to the administrative review process, so providers may appeal the denial up to the Department Appeal Board level. 
The “temporary moratoria” rule is limited to: (1) newly enrolling providers; and (2) the establishment of new practice locations,not the change of practice locations. So, this would not affect existing ambulance providers unless they are attempting to expand operations to new practice locations where a temporary moratorium is in place. In addition, the rule does not apply in situations involving changes in ownership of existing providers or suppliers, mergers, or consolidations. 
The Rule also requires states to comply with any temporary moratorium imposed by the CMS, unless the state determines that it would “adversely affect Medicaid beneficiaries' access to care.” States are also permitted to impose temporary enrollment moratoria, numerical caps, or other limits on providers identified by CMS as being at high risk for fraud, waste, or abuse. 

New Ability to Suspend Reimbursement Upon “Credible Allegations of Fraud”
The Final Rule grants new authority to CMS to suspend payments to providers pending an “investigation of a credible allegation of fraud unless [CMS] determines that there is good cause not to suspend payments.” Currently, CMS is authorized to suspend payments where overpayments are identified or where there is reliable information about fraud or willful misrepresentation. However, this new rule will substantially enhance CMS’s authority to suspend payments to providers given the broad language of the regulation.   
CMS states a "credible allegation of fraud" means: “an allegation from any source, including but not limited to fraud hotline complaints, claims data mining, patterns identified through provider audits, civil False Claims Actand law enforcement investigations.”  Allegations are considered to be credible when they have “indicia of reliability.” This standard is very broad and CMS offers little guidance in the Final Rule regarding what these terms mean. 
CMS states that the determination of whether allegations are credible (and whether to suspend payments) will be made by looking at all of the circumstances at hand. CMS must also consult with the OIG in determining whether the allegation is credible. Generally, payment suspensions cannot continue when an investigation continues for more than 18 months, unless there is some action being contemplated against the provider by a federal agency.
With respect to Medicaid, the Final Rule lays out the circumstances under which payment suspensions are mandatory, requires that state Medicaid agencies make written reports of suspected fraud to the state Medicaid Fraud Control Units or the appropriate law enforcement agency, and sets forth certain good-cause exceptions when a state may determine not to suspend payments. States are required to suspend Medicaid or CHIP payments during any period when an investigation of a credible allegation of fraud against a provider is pending.

Solicitation of Comments Regarding Mandatory Compliance Programs
The ACA requires providers, as a condition of enrollment in Medicare, Medicaid or CHIP, to establish compliance programs that contain certain "core elements" established by CMS. CMS will determine the date that each provider type needs to establish the required compliance program, and will publish future rulemakings that apply this requirement to each provider type. We expect that in the future, CMS will issue a rule that requires all ambulance services to have a compliance program and that rule will contain essential elements for an ambulance service compliance program.    
Mandatory Termination of MediCAID and CHIP Program Participation
The Rule also requires states to deny Medicaid program enrollment, or terminate Medicaid program enrollment, for any provider that has been terminated under Medicare or any other state's Medicaid program or CHIP. The provider is required to reenroll with the applicable program if they wish billing privileges to be reinstated.

Permissive Revocation of MediCARE Enrollment Upon State Action
The Final Rule permits CMS, directly or through its contractor, to revoke Medicare billing privileges when a State Medicaid agency terminates, revokes, or suspends a provider’s Medicaid enrollment or billing privileges.