CMS Proposes New Rules to Prevent Health Care Fraud and Abuse

Last week CMS published proposed rules which would subject providers to new screening procedures intended to reduce the risk of health care fraud, waste, and abuse. Though not yet final, the proposed measures include:

Requiring CMS contractors to review State licensing board data on a monthly basis to check for license discipline.
Revoking a provider's Medicare billing privileges for failing to report a final adverse action (revocation, suspension, felony conviction) from a State licensing Board.
Mandating Durable Medical Equipment (DME), Prosthetics, Orthotics, and Supplies providers (DMEPOS) undergo rigorous pre-enrollment site visits and unannounced post-enrollment site visits.
Conducting comprehensive cross-database checks of eligible professionals, providers, owners, and employees for exclusion from the Medicare or Medicaid programs. These checks also encompass State licensure verifications and Social Security Number data.
Requiring certain "high risk" providers and applicants to submit to fingerprint and criminal history background checks.

These changes to Medicare and Medicaid anti-fraud efforts implement portions of the PPACA, better known as the Health Care Reform Act. Neither the PPACA nor these rules prohibit any State from issuing more onerous screening techniques. In addition to the measures above, these rules permit CMS to categorize different providers based upon their perceived "risk" of fraudulent activity. A large publicly-traded provider in business for many years, for example, would be deemed a "limited" risk, whereas a small, newly-created company in the home health or DMEPOS industry would be deemed a "moderate" or "high risk." Depending on where the provider or applicant falls on the risk spectrum, they would be subject to varying levels of anti-fraud screening.

As CMS notes in these proposed rules, traditionally it had used a "Pay and Chase" approach of paying claims first and then chasing after any alleged fraud. The new rules, however, signal a more preventative anti-fraud strategy which would screen out so called "sham operations" existing solely to defraud the government. Despite this shift, the proposed rules would apply to all providers in Medicare, Medicaid, CHIP, or other federal health programs. CMS is soliciting comments on the proposed rules for a period of 60 days (or until November 16, 2010), which may be provided online at regulations.gov or via mail.

If you have any questions on these proposed rules or health care fraud and abuse in general, please contact Mark Bina at 312-423-9305 or mbina@kdlegal.com, or Randall Fearnow at 312-423-9304 or refearnow@kdlegal.com.