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[Federal Register Volume 78, Number 82 (Monday, April 29, 2013)]
[Proposed Rules]
[Pages 25013-25033]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-09991]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 420, 424, and 498

[CMS-6045-P]
RIN 0938-AP01

Medicare Program; Requirements for the Medicare Incentive Reward 
Program and Provider Enrollment

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Incentive Reward Program 
provisions in Sec.  420.405 and certain provider enrollment 
requirements in part 424, subpart P. The most significant of these 
revisions include: changing the Incentive Reward Program potential 
reward amount for information on individuals and entities who are or 
have engaged in acts or omissions which resulted in the imposition of a 
sanction from 10 percent of the overpayments recovered in the case or 
$1,000, whichever is less, to 15 percent of the final amount collected 
applied to the first $66,000,000 for the sanctionable conduct; 
expanding the instances in which a felony conviction can serve as a 
basis for denial or revocation of a provider or supplier's enrollment; 
if certain criteria are met, enabling us to deny enrollment if the 
enrolling provider, supplier, or owner thereof had an ownership 
relationship with a previously enrolled provider or supplier that had a 
Medicare debt; enabling us to revoke Medicare billing privileges if we 
determine that the provider or supplier has a pattern or practice of 
submitting claims for services that fail to meet Medicare requirements; 
and limiting the ability of ambulance suppliers to ``backbill'' for 
services performed prior to enrollment. We believe this proposed rule 
would--increase the incentive for individuals to report information on 
individuals and entities that have or are engaged in sanctionable 
conduct; improve our ability to detect new fraud schemes; and help us 
ensure that fraudulent entities and individuals do not enroll in or 
maintain their enrollment in the Medicare program.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on June 28, 2013.

ADDRESSES: In commenting, please refer to file code CMS-6045-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By Regular Mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-6045-P, P.O. Box 8013, 
Baltimore, MD 21244-8013.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By Express or Overnight Mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-6045-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By Hand or Courier. Alternatively, you may deliver (by hand or 
courier) your written comments ONLY to the following addresses prior to 
the close of the comment period:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
call telephone number (410) 786-7195 in advance to schedule your 
arrival with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Morgan Burns, (202) 690-5145, for 
issues related to the Incentive Reward Program. Frank Whelan, (410) 
786-1302, for issues related to provider enrollment.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning

[[Page 25014]]

approximately 3 weeks after publication of a document, at the 
headquarters of the Centers for Medicare & Medicaid Services, 7500 
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of 
each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view 
public comments, phone 1-800-743-3951.

I. Executive Summary and Background

A. Executive Summary

1. Purpose
a. Need for Regulatory Action
    This proposed rule is necessary to make revisions to the Incentive 
Reward Program in 42 CFR 420.405, and to make certain changes to the 
provider enrollment provisions in 42 CFR part 424, subpart P. This 
proposed rule would: (1) increase the incentive for individuals to 
report information on individuals and entities that have or are engaged 
in sanctionable conduct; and (2) help ensure that fraudulent entities 
and individuals do not enroll in or maintain their enrollment in the 
Medicare program.
b. Legal Authority
    As discussed in more detail in section I.B. of this proposed rule, 
there are several legal authorities for our proposed provisions as 
follows:
     Incentive Reward Program. Section 203(b)(1) of the Health 
Insurance Portability and Accountability Act of 1996, codified at 42 
U.S.C. 1395b-5, instructed the Secretary to establish a program to 
encourage individuals to report information regarding persons and 
entities that have or are engaged in acts or omissions that constitute 
grounds for the imposition of a sanction under sections 1128, 1128A or 
1128B of the Act or who have otherwise engaged in sanctionable fraud 
and abuse against the Medicare program under Title XVIII of the Social 
Security Act (the Act).
     Provider enrollment provisions. Sections 1102 and 1871 of 
the Act provide general authority for the Secretary to prescribe 
regulations for the efficient administration of the Medicare program. 
Also, section 1866(j) of the Act, codified at 42 U.S.C. 1395cc(j), 
provides specific authority with regard to the enrollment process for 
providers and suppliers.
2. Brief Summary of the Major Provisions
a. Incentive Reward Program
    We propose to increase the potential reward structure from 10 
percent of the overpayments recovered in the case or $1,000, whichever 
is less, to 15 percent of the final amount collected applied to the 
first $66,000,000 for the sanctionable conduct. We are also proposing 
other changes that would clarify which individuals are eligible for a 
reward.
b. Provider Enrollment Provisions
    We are proposing the following provisions regarding provider 
enrollment:
     Allow denial of enrollment if the provider, supplier or 
current owner thereof was the owner of another provider or supplier 
that had a Medicare debt when the latter's enrollment was voluntarily 
or involuntarily terminated or revoked and--
    ++ The owner left the provider or supplier that had the Medicare 
debt within 1 year of that provider or supplier's voluntary 
termination, involuntary termination, or revocation;
    ++ The Medicare debt has not been fully repaid; and
    ++ We determine that the uncollected debt poses an undue risk of 
fraud, waste, or abuse.
     Allow denial of enrollment or revocation of Medicare 
billing privileges if the provider, supplier, owner or managing 
employee thereof was convicted of a felony within the past 10 years. 
(Currently, enrollment cannot be denied or revoked based on a managing 
employee's felony conviction.)
     Allow revocation of Medicare billing privileges if the 
provider or supplier has a pattern or practice of billing for services 
that do not meet Medicare requirements.
     With the exception noted in section II.B.5. of this 
proposed rule, require all revoked providers and suppliers (regardless 
of type) to submit their remaining claims within 60 days after their 
revocation.
     Limit the ability of ambulance companies to ``back bill'' 
for services furnished prior to enrollment. Under Sec.  424.520(d), 
physicians, nonphysician practitioners, and physician and nonphysician 
practitioner organizations currently cannot bill for services furnished 
prior to the later of the date the supplier filed an enrollment 
application that was subsequently approved or the date the supplier 
began furnishing services at a practice location. (Independent 
diagnostic testing facilities (IDTFs) and suppliers of durable medical 
equipment, prosthetics, orthotics, and supplies (DMEPOS) have similar 
restrictions.) We propose to expand this to include ambulance 
suppliers.
     Eliminate the ability of revoked providers and suppliers 
to submit a corrective action plan (CAP) unless the revocation is based 
on Sec.  424.535(a)(1).
3. Summary of Costs and Benefits
    The following table provides a summary of the costs and benefits 
associated with the principal provisions in this proposed rule.

                                      Table 1--Summary of Costs and Impacts
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         Provision description                                           Impacts
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Incentive Reward Program...............  Based upon the experience under the IRS reward program, the increase in
                                          the portion of the amount collected eligible for a reward will likely
                                          result in an increase of reporting of sanctionable conduct, which
                                          would increase the collection of improper payments by the federal
                                          government. There may also be a sentinel effect whereby fraud and
                                          errors are reduced by Medicare beneficiaries' scrutiny of their bills.
                                          For these reasons, and as further explained in the Regulatory Impact
                                          Analysis of this proposed rule, we tentatively project a net increase
                                          in recoveries of $24.5 million per year as a result of our proposed
                                          changes to the Incentive Reward Program. Estimated costs of preparing
                                          attestations $0.07 million.
Denial of Enrollment Based on Prior      Though a savings to the federal government would accrue from such a
 Medicare Debt.                           denial, the monetary amount cannot be quantified.
Expansion of Ability to Deny or Revoke   Though a savings to the federal government would accrue from such a
 Medicare Billing Privileges Based on     denial or revocation, the monetary amount cannot be quantified.
 Felony Conviction.
Revocation Based on Pattern or Practice  Though a savings to the federal government would accrue from such a
 of Billing for Services that Do Not      revocation, the monetary amount cannot be quantified.
 Meet Medicare Requirements.

[[Page 25015]]

 
Requirement for Revoked Providers and    Monetary amount cannot be quantified. We believe, however, that this
 Suppliers to Submit Remaining Claims     requirement would (1) limit the Medicare program's vulnerability to
 within 60 Days after Revocation.         fraudulent claims; and (2) allow more focused medical review. This
                                          would likely result in some savings to the federal government.
Inclusion of Ambulance Suppliers within  Would result in a transfer of $327.4 million per year (primary
 Sec.   424.520(d).                       estimate) from ambulance suppliers to the federal government.
Elimination of Ability to Submit CAP if  Monetary amount cannot be quantified. However, the provision would
 Revoked on Grounds Other Than Sec.       prevent these providers and suppliers from being able to immediately
 424.535(a)(1).                           begin billing Medicare again once they submit the correct information.
----------------------------------------------------------------------------------------------------------------

B. Background and General Overview

1. Incentive Reward Program
    Section 203(b)(1) of HIPAA required the Secretary to establish a 
program to encourage individuals to report information on individuals 
and entities who are engaging in or who have engaged in acts or 
omissions that constitute grounds for the imposition of a sanction 
under sections 1128, 1128A or 1128B of the Act or who have otherwise 
engaged in fraud and abuse against the Medicare program under Title 
XVIII of the Act for which there is a sanction provided under law, 
otherwise referred to ``sanctionable conduct'' throughout the rule. 
Section 203(b)(2) of HIPAA authorized the Secretary to pay a portion of 
the amounts collected to individuals who report information to the 
Secretary under the program established by section 203(b)(1) of HIPAA 
which serves as the basis for collection by the Secretary or the 
Attorney General of the United States of at least $100 (excluding 
penalties under section 1128B of the Act). Section 203(b)(2) of HIPAA 
also requires that any reward be paid from the amounts collected, under 
procedures similar to those applicable under section 7623 of the 
Internal Revenue Code of 1986 for payments to individuals providing 
information on violations of such Code. The purpose of these provisions 
is to help protect the Medicare Trust Funds by providing incentives to 
Medicare beneficiaries and other parties to report suspected conduct. 
The intent of these provisions is not to provide rewards for ``simple 
mistakes'' or unintentional billing errors.
    In the June 8, 1998 Federal Register (63 FR 31123), we published a 
final rule with comment period titled, ``Medicare Program; Incentive 
Programs-Fraud and Abuse.'' This final rule with comment period 
implemented section 203(b) of HIPAA by establishing a reward program to 
encourage individuals to report potential fraud and abuse to Medicare 
and by adding a new section, 42 CFR 420.405, to the regulations. 
Section 420.405(a) specifies a collection threshold of at least $100 
(consistent with section 203(b)(2) of HIPAA). Section 420.405(b) 
specifies that in order for an individual to be eligible to receive a 
reward, the information must relate to the activities of a specific 
individual or entity and must specify the time period of the alleged 
activities. Examples of specific activities include, but are not 
limited to, billing for services never rendered, and billing for 
supplies not ordered. Other activities may include offers of money, 
goods or free services in exchange for the beneficiary's Medicare 
identification number. The rule also states that CMS does not give a 
reward for information relating to an individual or entity that, at the 
time the information is provided, is already the subject of a review or 
investigation by CMS or law enforcement. Section 420.405(e) states the 
amount of a reward represents what CMS considers to be adequate 
compensation in the particular case, not to exceed 10 percent of the 
overpayments recovered in the case or $1,000, whichever is less.
2. Provider Enrollment
    In the April 21, 2006 Federal Register (71 FR 20754), we published 
a final rule titled, ``Medicare Program; Requirements for Providers and 
Suppliers to Establish and Maintain Medicare Enrollment.'' As its title 
indicates, the final rule set forth requirements in part 424, subpart P 
that providers and suppliers must meet in order to obtain and maintain 
Medicare billing privileges. Since its publication in April 2006, we 
have updated subpart P to address a number of enrollment issues. Such 
topics have included the establishment of performance standards for 
IDTFs, issues related to the National Provider Identifier (NPI), 
ordering and certifying requirements, enrollment application fees, site 
visits, and screening requirements.
    In the April 2006 final rule, we cited sections 1102 and 1871 of 
the Act as general authority for our establishment of these 
requirements, which were designed for the efficient administration of 
the Medicare program. Pursuant to this general rulemaking authority and 
pursuant to section 1866(j) of the Act, we again propose several 
changes to our provider enrollment regulations to ensure that Medicare 
payments are only made to qualified providers and suppliers. Section 
1866(j) of the Act states that, the Secretary shall establish by 
regulation a process for the enrollment of providers of services and 
suppliers that includes certain specified statutory elements, including 
a process for screening providers and suppliers.

II. Provisions of the Proposed Regulations

A. Incentive Reward Program (IRP)

    As demonstrated by the sustained record-breaking returns to the 
federal government that result from private persons filing suit on 
behalf of the government, fraud reporting by individuals is a proven 
tool for the government to detect fraud, waste and abuse in the 
Medicare program. In 2012, the Health Care Fraud and Abuse Control 
Program had record collections for health care fraud, where collections 
topped $4 billion.\1\ Public involvement in our anti-fraud efforts is 
critical because alert and vigilant providers, beneficiaries, family 
members, and caregivers are able to detect and prevent fraud as it 
occurs. Information from beneficiaries and other parties helps us to 
quickly identify fraudulent practices, stop payment to suspect 
providers and suppliers for inappropriate services or items, and 
prevent further abuses in the program. However, many people do not 
report suspected fraud because they are not monitoring claims submitted 
to Medicare for their care, or noticed a suspicious claim but were not 
motivated to report. Every fraudulent claim submitted contains a 
beneficiary's Medicare number. Therefore, we believe

[[Page 25016]]

that each complaint we receive may represent hundreds of other 
individuals that did not spot a fraudulent activity or did not report 
their suspicions to us.
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    \1\ http://oig.hhs.gov/publications/docs/hcfac/hcfacreport2012.pdf.
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    To promote the importance of reporting fraud, we conduct national 
campaigns to train Medicare beneficiaries and caregivers to detect and 
prevent health care fraud. On March 7, 2012, we released new 
explanations of benefits (Medicare Summary Notices (MSNs)) that are 
easier to read and provide instructions on how to spot fraud available 
online, and starting in 2013, the new MSNs will be mailed out quarterly 
to beneficiaries. We believe these changes will encourage beneficiaries 
to routinely review their MSNs. The State Health Insurance Assistance 
Programs and Senior Medicare Patrol counselors also educate 
beneficiaries about the importance of viewing and monitoring their 
health care claims and of identifying and reporting any suspicious 
activity 1-800-Medicare or 1-800-HHS-TIPS.
    We have evaluated the existing Incentive Reward Program (IRP) and 
believe that the proposed changes for enhanced incentives would 
motivate more individuals to review their MSNs and to report suspicious 
activity. Section 203(b)(2) of HIPAA permitted CMS to pay a portion of 
amounts collected under procedures similar to section 7623 of the 
Internal Revenue Code, which authorized reward payments to individuals 
providing information on violations of the IRS code by individual 
taxpayers. The Congress enacted the Medicare Incentive Reward Program 
in HIPAA on August 21, 1996, shortly after the Taxpayer Bill of Rights 
2 (Pub. L. 104-168) was enacted on July 30, 1996 that amended the IRS 
program.
    In 2006, the Tax Relief and Health Care Act of 2006 (Pub. L. 109-
432) \2\ was enacted, further amending section 7623 of the Internal 
Revenue Code to provide rewards of 15 to 30 percent of collected 
amounts to individuals for information on claims exceeding $2 million 
(and in the case of an individual taxpayer, the taxpayer had gross 
income exceeding $200,000), while maintaining the reward structure of 
15 percent of collected amounts not to exceed $10 million applied to 
claims in dispute of less than $2 million (in case of an individual 
taxpayer, the individual's gross income was below $200,000). In June 
2010, the IRS aligned the reward amounts for claims under and above the 
$2 million threshold, if the claim was filed after July 1, 2010.\3\ 
Individuals may now receive rewards of 15 to 30 percent of collected 
amounts on claims of any value. However, rewards for claims filed 
before July 1, 2010 will be paid under the reward structure of 15 
percent not to exceed $10 million.
---------------------------------------------------------------------------

    \2\ The Internal Revenue Service Fiscal Year 2011 Report to 
Congress on the Use of Section 7623, available at http://www.irs.gov/pub/irs-utl/fy2011_annual_report.pdf.
    \3\ The Internal Revenue Service Fiscal Year 2011 Report to 
Congress on the Use of Section 7623, available at http://www.irs.gov/pub/irs-utl/fy2011_annual_report.pdf.
---------------------------------------------------------------------------

    The reward structure of IRS program for claims received after July 
2010 is similar to the qui tam provisions of the False Claims Act (FCA) 
under 31 U.S.C. 3729 through 3733. Private individuals called 
``relators'' may file a qui tam action on behalf of the federal 
government and are eligible for a share of the amounts collected as a 
result of the action. Many states have enacted laws similar to the FCA 
that permit individuals to file suit on behalf of the state. The FCA 
generally imposes civil liability on any person who submits, or causes 
the submission of, a false or fraudulent claim to the government 
(including federal health care programs like Medicare and Medicaid) for 
payment. The Department of Justice is the only government agency that 
can release a person's liability under the FCA. Relators generally 
obtain legal counsel prior to the filing of a FCA complaint and may be 
significantly involved in the development of a FCA case. The potential 
relator's share in a qui tam action can range between 15 and 30 percent 
of the total amount collected, depending on whether the government 
``intervenes'' or joins the qui tam action.
    We are proposing to revise Sec.  420.405(e)(2) to increase the 
reward for information on individuals and entities that leads to the 
imposition of a sanction to 15 percent of the final amount collected 
applied to the first $66,000,000 for the sanctionable conduct; the 
reward would not increase if the amount collected was greater than 
$66,000,000.\4\ This approach is similar to the IRS reward structure 
for claims received before July 1, 2010. We are proposing this 
structure because the IRS program has proved to be highly successful in 
generating leads that returned far greater sums than the existing 
Medicare IRP, which limited rewards to 10 percent of the first $10,000 
of the final amount collected. Since the current IRP was put into 
operation in July, 1998, only 18 rewards have been paid, for a total of 
less than $16,000 and amounts collected of less than $3.5 million. In 
contrast, between 2007 and 2012, the IRS collected almost $1.6 billion, 
and paid approximately $193 million in rewards.\5\ Based on the 
reported experience of the IRS, we believe our proposed improvements 
will provide greater incentives to beneficiaries, providers, and other 
parties to report sanctionable conduct. Providing potential rewards for 
15 percent of the final amounts collected applied the first $66,000,000 
for the sanctionable conduct sends a clear message to individuals 
trying to defraud Medicare--we are using all available tools to root 
out systematic and widespread fraud from the program.
---------------------------------------------------------------------------

    \4\ Section 7623(a) of the Internal Revenue Code is implemented 
at 26 CFR 301.7623-1(c). Section 301.7623-1(c) states that the 
amount of a reward will represent what the district or service 
center director deems to be adequate compensation in the particular 
case, generally not to exceed 15 percent of the amounts (other than 
interest) collected by reason of the information. Payment of a 
reward will be made as promptly as the circumstances of the case 
permit, but not until the taxes, penalties, or fines involved have 
been collected. However, if the informant waives any claim for 
reward with respect to an uncollected portion of the taxes, 
penalties, or fines involved, the claim may be immediately 
processed. The reward for information that led to the collection of 
the first $66,000,000 will not be more than $10 million, similar to 
the IRS program.
    \5\ The Internal Revenue Service Fiscal Year 2012 Report to 
Congress on the Use of Section 7623, available at http://www.irs.gov/pub/whistleblower/2012%20IRS%20Annual%20Whistleblower%20Report%20to%20Congress_mvw.pdf.
---------------------------------------------------------------------------

    We believe that proposing a reward structure for the IRP that is 
similar to the IRS program for claims under the $2 million threshold 
and received before July 2010 will provide additional incentives to 
individuals who otherwise would not have brought the information to the 
government's attention by filing a qui tam lawsuit. We believe 
proposing a reward program with a range of 15 to 30 percent could 
result in confusion about the IRP and the qui tam provisions of the 
FCA. The IRS program does not interact with the qui tam provisions 
because recoveries under Title 26 (the Internal Revenue Code) are 
excluded from the FCA (31 U.S.C. 3729(d)). We note that the Congress 
enacted the law that created the Medicare incentive reward program 
after the FCA had been in place for many years and had been 
significantly amended in 1986, thus we infer the Congress anticipated 
that the IRP would exist in parallel with the FCA, but not as a 
supplement to it. We believe the reward structure proposed here will 
fulfill the mandate of the Medicare statute and also create clear 
distinguishing features from the FCA.
    We are also proposing this reward structure because it has an 
administrative structure similar to the existing IRP program. On that 
basis, we believe it will be administratively more

[[Page 25017]]

efficient to implement. In particular, keeping the reward at a fixed 
percent of the amounts collected up to a set dollar amount avoids the 
need to establish a new administrative process to adjudicate the size 
of a reward that could range from 15 percent to 30 percent. This reward 
structure would be the simplest both to administer and, for individuals 
who may eligible for the IRP, to understand. Additionally, we believe 
the potential for a larger reward would motivate individuals to report 
who may otherwise have been discouraged by the length of collection, 
since we have estimated that the average timeframe for collection is 3 
to 5 years before overpayment appeals are exhausted, Medicare funds are 
collected, and applicable fines and penalties are collected.
    Although we believe the reward structure of 15 percent of final 
amounts collected applied to the first $66,000,000 for the sanctionable 
act is the preferred approach, we are soliciting comments on whether we 
should adopt the reward structure of 15 to 30 percent of amounts 
collected that the IRS offers for claims received after July 1, 2010 or 
a different reward structure, and whether the 15 percent reward should 
apply to final amounts collected other than $66,000,000. We anticipate 
that in increasing the size of the amounts collected that we would 
apply a reward for from $10,000 to $66,000,000, which would ensure that 
the vast majority of individuals would receive a portion of the 
collected amount that corresponds with the value of their information. 
Reports that have resulted in a reward under the IRP have led to an 
average collection of $193,069 by CMS, with the highest single 
collection of $998,770. In contrast, the IRS reported collecting 
$61,556,175 in 2003, the earliest data reported by the IRS.\6\ In 2012, 
the IRS reported collecting a $592,498,294.\7\ While there are 
limitations on estimating an increase in recoveries from the IRS' 
experience, given the significant upward trend in collections reported 
by the IRS following the changes to the reward amount in 2004, and 
again in 2006, we believe that the potential for a larger reward may 
encourage more individuals to report the specific information needed to 
begin the review or investigation of a provider or supplier for 
sanctionable conduct that may lead to the recoupment of an overpayment, 
which could result in higher amounts collected than we have experienced 
in the past.
---------------------------------------------------------------------------

    \6\ The Internal Revenue Service First Report to Congress on the 
Whistleblower Program, available at http://www.irs.gov/pub/whistleblower/whistleblower_annual_report.pdf.
    \7\ See the IRS Web site at http://www.irs.gov/pub/whistleblower/whistleblower_annual_report.pdf.
---------------------------------------------------------------------------

    We anticipate that some commenters may question the interaction of 
the IRP and the qui tam provisions of FCA described previously. We are 
proposing to clarify that an individual is not eligible for an IRP 
reward if he or she has filed a qui tam lawsuit under the federal or 
any state False Claims Act. We are also proposing that we do not give a 
reward for the same or substantially similar information that is the 
basis of a payment of a share of the amounts collected under the False 
Claims Act or any state False Claims Act, or if the same or 
substantially similar information is the subject of a pending False 
Claim Act case. We believe these restrictions on information eligible 
for a reward prevent us from paying rewards from amounts collected for 
the same sanctionable conduct.
    Section 420.405(a) specifies that we will pay a monetary reward for 
information that leads to the collection of at least $100 of Medicare 
funds from individuals and entities that are engaging in, or have 
engaged in, acts or omissions that constitute grounds for the 
imposition of a sanction under section 1128, 1128A or section 1128B of 
the Act or that have otherwise engaged in sanctionable fraud and abuse 
against the Medicare program. Section 420.405(b) specifies that in 
order for an individual to be eligible to receive a reward, the 
information must relate to the activities of a specific individual or 
entity and must specify the time period of the alleged activities and 
states that CMS does not give a reward for information relating to an 
individual or entity that, at the time the information is provided, is 
already the subject of a review or investigation by CMS or law 
enforcement. The determination of whether an individual provided 
information eligible for a reward and whether the specific individual 
or entity was already the subject of a review or investigation by CMS 
or law enforcement are at the exclusive discretion of CMS. We pay 
rewards only if a reward is not otherwise provided for by law. When we 
apply the criteria specified in paragraphs (b), (c), and (e) of this 
section to determine the eligibility and the amount of the reward, the 
recipient is notified as specified in paragraph (d) of this section.
    In Sec.  420.405(a), we propose two revisions. First, we are 
proposing to redesignate the existing text in paragraph (a) to 
paragraph (a)(2) to emphasize that the determinations as to whether the 
reward criteria are met and the amount of the reward are at the 
exclusive discretion of CMS. Second, we are proposing to move the 
remaining text stating that when CMS applies the criteria specified in 
paragraphs (b), (c), and (e), and determines the eligibility and amount 
of the reward, it notifies the recipient as specified at new (a)(3).
    In new paragraph (b)(3), we propose to specify that we do not give 
a reward for the same or substantially similar information that was the 
basis for a payment of a share of the amounts collected under the False 
Claims Act or any state False Claims Act, or if the same or 
substantially similar information is the subject of a pending False 
Claim Act case. This proposed change would prevent us from paying 
rewards from amounts collected for the same sanctionable conduct, or 
from amounts that may collected as a result of a pending False Claims 
Act case.
    In new paragraph (c)(2)(v), we propose to clarify that an 
individual is not eligible for a reward under the IRP if he or she is 
eligible for a reward for furnishing the same or substantially similar 
information to the federal government under any other federal reward 
program or payment under federal law.
    At Sec.  420.405(e)(2), we propose to change the reward structure 
from an amount not to exceed 10 percent of the overpayments recovered 
in the case or $1,000, whichever is less for information received after 
the effective date of the final rule to 15 percent of the final amounts 
collected applied to the first $66,000,000 for the sanctionable 
conduct. It is important to note that the degree of specificity in the 
information provided is significant because a tip needs to provide 
sufficient information to start a review or investigation by CMS or law 
enforcement or otherwise lead to the collection of amounts for 
sanctionable conduct before an individual is eligible for a reward.
    At Sec.  420.405(e)(3), we propose to limit eligibility for a 
reward to the first individual who provides us with specific 
information on a provider or supplier that is engaging in, or has 
engaged in, acts or omissions that constitute grounds for the 
imposition of a sanction under section 1128, section 1128A or section 
1128B of the Act or that has otherwise engaged in sanctionable fraud 
and abuse that leads to a review or investigation by CMS or law 
enforcement or other actions that result in the imposition of a 
sanction. Once we receive information on a specific provider or 
supplier for a specific time period of the alleged sanctionable 
conduct, we will consider the provider or supplier to be subject to a 
review or investigation by CMS, its

[[Page 25018]]

contractors, or its law enforcement partners.
    In Sec.  420.405 (f)(1), we propose to remove the reference to the 
submission of information regarding sanctionable conduct to Medicare 
intermediaries or carriers. We refer generally to the CMS contractor 
that has jurisdiction.
    In new paragraph (f)(3), we propose to add a requirement that upon 
notification of eligibility, or when otherwise required by CMS, an 
individual must complete an attestation stating that he or she is not 
participating and has not participated in the sanctionable conduct, is 
not otherwise ineligible to receive a reward, that the information he 
or she has furnished is accurate and truthful to the best of their 
knowledge, and that he or she acknowledges that knowingly failing to 
provide truthful information could subject him or her to potential 
civil and criminal liability. Section 203(b) of HIPAA directs us to 
discourage the provision of, and to not consider, information that is 
frivolous or irrelevant to the imposition of a sanction. An attestation 
may discourage individuals from furnishing baseless reports of 
sanctionable conduct. We are soliciting comments on whether we should 
adopt the proposed approach of requiring the completion of an 
attestation, the timing of the attestation, and on the content of any 
attestation.
    In revised Sec.  420.405 (h)(1), we propose to clarify that CMS 
reserves its right to recover a reward from the individual if CMS finds 
that the individual was ineligible for the reward. In new paragraph 
(h)(2), we propose that CMS would notify an individual in writing of 
our determination of ineligibility, and request a full refund within 30 
days. We are soliciting comments on whether CMS should provide an 
appeals process, and what such an appeals process may consist of. We 
are also soliciting comments on whether an individual may request that 
CMS review and waive the request for a full refund of the reward. We 
note that our proposed IRP revisions would not apply to information 
furnished under Sec.  420.405 before the effective date of the final 
rule.
    Given the aforementioned proposed revisions, we would make the 
following regulatory changes to Sec.  420.405:
     In new paragraph (a)(1), we propose to incorporate the 
first sentence of existing Sec.  420.405(a).
     In new paragraph (a)(2), we propose to reemphasize that 
the determinations as to whether the eligibility criteria are met are 
at the exclusive discretion of CMS.
     In new paragraph (a)(3), we propose to incorporate the 
last sentence of existing Sec.  420.405. When CMS applies the criteria 
specified in paragraphs (b), (c), and (e) of this section to determine 
the eligibility and the amount of the reward, it notifies the 
individual as specified in paragraph (d) of this section.
     In a new paragraph (b)(3), we propose to add that CMS does 
not give a reward if the same or substantially similar information was 
the basis of payment for a relator's share of the amounts collected 
under the False Claims Act or any state False Claims Act.
     In new paragraph (c)(2)(v), we propose to clarify that an 
individual is not eligible for the IRP if he or she is eligible for a 
reward for furnishing the same or substantially similar information to 
the federal government under any other federal reward program or 
payment under federal law.
     In paragraph (e)(2), we propose to change the reward 
structure from 10 percent of the recovered overpayments not to exceed 
$1,000, to 15 percent of the final amounts collected applied to the 
first $66,000,000 for sanctionable conduct for information received 
after the effective date of the final rule.
     In paragraph (e)(3), we propose to limit eligibility for a 
reward to the first individual who provides us with specific 
information, defined in paragraph (b), on a specific individual or 
entity that is engaging in, or has engaged in, acts or omissions that 
constitute grounds for the imposition of a sanction under sections 
1128, 1128A or 1128B of the Act or that has otherwise engaged in 
sanctionable fraud and abuse against the Medicare program that leads to 
the imposition of a sanction.
     In paragraph (f)(1), we propose to remove the reference to 
submitting information regarding fraud and abuse to Medicare 
intermediaries or carriers, and propose to add new paragraphs (f)(1)(i) 
identifying the Office of Inspector General and (f)(1)(ii) identifying 
CMS or the CMS contractor that has jurisdiction of the provider.
     In new paragraph (f)(3), we propose to add a requirement 
that upon notification of eligibility, an individual must complete an 
attestation stating that he or she is not participating and has not 
participated in the sanctionable act, is not otherwise ineligible to 
receive a reward under paragraph (c)(2), that the information he or she 
has furnished is accurate and truthful to the best of their knowledge, 
and that he or she acknowledges that knowingly failing to provide 
truthful information could subject him or her to potential criminal 
and/or civil liability.
     In revised paragraph (h)(1), we propose to modify the 
current paragraph at (h) to clarify that CMS reserves its right to 
recover a reward from the individual.
     In new paragraph (h)(2), we propose that CMS would notify 
an individual in writing of our determination of ineligibility, and 
request a full refund within 30 days.

B. Provider Enrollment

    As noted previously, in April 2006 we published a final rule that 
set forth requirements that providers and suppliers must meet in order 
to obtain and maintain Medicare billing privileges. Since the final 
rule's publication, we have revised and supplemented certain provisions 
in part 424, subpart P to address various payment safeguard issues. In 
this proposed rule, we are revising the provider enrollment regulatory 
provisions identified in this section.
1. Definition of Enrollment
    Most physicians and nonphysician practitioners enroll in Medicare 
to receive payment for covered services furnished to Medicare 
beneficiaries. However, some physicians and nonphysician practitioners 
who are not enrolled in Medicare via the Form CMS-855I enrollment 
application may wish to enroll for the sole purpose of ordering or 
certifying items or services for Medicare beneficiaries. Consistent 
with Sec.  424.507, these individuals can become eligible to do so, 
assuming all other applicable requirements are met, by completing the 
CMS-855O via a paper application or via the Internet-based Provider 
Enrollment, Chain, and Ownership System (PECOS) process. The use of the 
CMS-855O (OMB Approval  0938-0685), which began in July 2011, 
is exclusively designed to allow physicians and eligible professionals 
to enroll in Medicare solely to order or certify items or services.
    Physicians and nonphysician practitioners who complete the CMS-855O 
are not eligible to send claims to Medicare for services they provide, 
as they are not granted Medicare billing privileges. We believe that 
several of our existing regulatory provisions do not, as currently 
written, adequately articulate the distinction between enrolling in 
Medicare: (1) To obtain Medicare billing privileges; and (2) solely to 
order or certify items or services for Medicare beneficiaries. We 
believe it is important to clarify that suppliers who enroll solely to 
order or certify cannot bill the

[[Page 25019]]

Medicare program and are not granted Medicare billing privileges.
    Therefore, we are proposing the following regulatory changes:
     The first involves the definition of ``Enroll/enrollment'' 
in Sec.  424.502. The initial sentence of the definition currently 
reads: ``Enroll/enrollment means the process that Medicare uses to 
establish eligibility to submit claims for Medicare covered services 
and supplies.'' We propose to revise this to state: ``Enroll/enrollment 
means the process that Medicare uses to establish eligibility to submit 
claims for Medicare covered items and services, and the process that 
Medicare uses to establish eligibility to order or certify for 
Medicare-covered items and services.'' This is to clarify that the 
overall enrollment process includes enrollment via the CMS-855O.
     We also propose to change paragraph (4) of Sec.  424.502 
in the definition of ``Enroll/enrollment'' from ``(g)ranting the 
provider or supplier Medicare billing privileges'' to the following: 
``(4) Except for those suppliers that complete the CMS-855O form or 
CMS-identified equivalent or successor form or process for the sole 
purpose of obtaining eligibility to order or certify Medicare-covered 
items and services, granting the Medicare provider or supplier Medicare 
billing privileges.'' This is to emphasize that while enrollment via 
the CMS-855O enables the supplier to order or certify Medicare-covered 
items and services, it does not convey Medicare billing privileges to 
the supplier.
     The last change involves Sec.  424.505. This section 
states that a provider or supplier, once enrolled, receives Medicare 
billing privileges. We propose to revise the second sentence of this 
section to state: ``Except for those suppliers that complete the CMS-
855O or CMS-identified equivalent or successor form or process for the 
sole purpose of obtaining eligibility to order or certify Medicare 
covered items and services, once enrolled the provider or supplier 
receives billing privileges and is issued a valid billing number 
effective for the date a claim was submitted for an item that was 
furnished or a service that was rendered. (See 45 CFR part 162 for 
information on the National Provider Identifier and its use as the 
Medicare billing number.)'' Again, we wish to stress that enrollment 
via the CMS-855O enables the supplier to order or certify Medicare-
covered items and services but does not grant Medicare billing 
privileges to a supplier.
    Given the proposals noted previously, we would make the following 
regulatory changes to 42 CFR part 424, subpart P:
     In Sec.  424.502, we propose to change the first sentence 
to state: ``Enroll/enrollment means the process that Medicare uses to 
establish eligibility to submit claims for Medicare covered items and 
services, and the process that Medicare uses to establish eligibility 
to order or certify Medicare-covered items and services.''
     We also propose to revise paragraph (4) in Sec.  424.502 
to read: ``(4) Except for those suppliers that complete the CMS-855O 
form or CMS-identified equivalent or successor form or process for the 
sole purpose of ordering or certifying Medicare covered items and 
services, granting the Medicare provider or supplier Medicare billing 
privileges.''
     In Sec.  424.505, we propose to change the second sentence 
to read: ``Except for those suppliers that complete the CMS-855O form 
or CMS-identified equivalent or successor form or process for the sole 
purpose of ordering or certifying Medicare covered items and services, 
once enrolled the provider or supplier receives billing privileges and 
is issued a valid billing number effective for the date a claim was 
submitted for an item that was furnished or a service that was 
rendered. (See 45 CFR part 162 for information on the National Provider 
Identifier and its use as the Medicare billing number.)''
2. Debts to Medicare
    Section 424.530(a) lists a number of reasons for which a provider 
or supplier's Medicare enrollment application may be denied. Under 
Sec.  424.530(a)(6), an application can be denied if ``[t]he current 
owner (as defined in Sec.  424.502), physician or nonphysician 
practitioner has an existing overpayment at the time of filing of an 
enrollment application.'' This provision was established in large part 
to address situations in which the owner of a provider or supplier 
incurs a substantial debt to Medicare, exits the Medicare program or 
shuts down operations altogether, and attempts to re-enroll through 
another vehicle or under a new business identity. Indeed, such 
situations were discussed in a November 2008 Department of Health and 
Human Services Office of Inspector General (OIG) Early Alert Memorandum 
titled ``Payments to Medicare Suppliers and Home Health Agencies 
Associated with `Currently Not Collectible' Overpayments'' (OEI-06-07-
00080). The memorandum stated that anecdotal information from OIG 
investigators and assistant United States Attorneys indicated that 
DMEPOS suppliers with outstanding Medicare debts may inappropriately 
receive Medicare payments by, among other means, operating businesses 
that are publicly fronted by business associates, family members, or 
other individuals posing as owners.\8\ In its study, the OIG selected a 
random sample of 10 DMEPOS suppliers in Texas that each had Medicare 
debt of at least $50,000 deemed currently not collectible (CNC) by CMS 
during 2005 and 2006.\9\ The OIG found that 6 of the 10 reviewed DMEPOS 
suppliers were associated with 15 other DMEPOS suppliers or HHAs that 
received Medicare payments totaling $58 million during 2002 through 
2007.\10\ Most associated DMEPOS suppliers had lost billing privileges 
by January 2005 and had accumulated a total of $6.2 million of their 
own CNC debt to Medicare.\11\ The OIG also found that most of the 
reviewed DMEPOS suppliers were connected with their associated DMEPOS 
suppliers and HHAs through shared owners or managers.\12\
---------------------------------------------------------------------------

    \8\ Department of Health and Human Services, Office of Inspector 
General (OIG). ``Early Alert Memorandum: Payments to Medicare 
Suppliers and Home Health Agencies Associated with `Currently Not 
Collectible' Overpayments'' (OEI-06-07-00080), November 26, 2008, 
p.1.
    \9\ Ibid. p.1.
    \10\ Ibid. p.7.
    \11\ Ibid. p.7
    \12\ Ibid. p.2.
---------------------------------------------------------------------------

    Since this memorandum was issued, we have continued to receive 
reports of providers, suppliers, and owners thereof accumulating large 
Medicare debts, departing Medicare, and then attempting to reenter the 
program through other channels--often to incur additional debts. While 
the current version of Sec.  424.530(a)(6) gives us the ability to stem 
this practice to a certain extent, it is limited to situations where an 
enrolling physician, nonphysician practitioner, or an owner of the 
enrolling provider or supplier has a current Medicare overpayment. It 
does not apply to instances where an enrolling provider or supplier 
entity has a current Medicare debt, be it an overpayment or some other 
type of financial obligation to the Medicare program. Furthermore, it 
does not address cases where an entity that the enrolling provider, 
supplier or owner was affiliated with had incurred the debt. We believe 
that these latter situations were of particular concern to the OIG in 
the aforementioned report. They remain of concern to us as well. 
Therefore, to enhance the existing authority in Sec.  424.530(a)(6), we 
propose several changes.
a. New Paragraph Sec.  424.530(a)(6)(i)
    We propose to incorporate the existing language of Sec.  
424.530(a)(6) into

[[Page 25020]]

a new paragraph (a)(6)(i) that would apply to all enrolling providers, 
suppliers (including physicians and nonphysician practitioners), and 
owners thereof. We do not believe that the purview of the current 
version of (a)(6) should be limited to individual physicians and 
nonphysician practitioners. All providers and suppliers, regardless of 
type, are responsible for reimbursing Medicare for the debts they owe 
to the program. Permitting them to enroll additional provider or 
supplier sites in Medicare when they have existing debts to Medicare 
potentially endangers the Trust Fund. If the provider or supplier 
cannot repay its existing Medicare debts, this raises questions about 
its ability to pay future debts incurred as part of any additional 
enrollments. In addition, we note that physicians and nonphysician 
practitioners fall within the ``limited'' level of categorical risk 
under Sec.  424.518. To not include other provider and supplier types 
of equal or greater risk--such as hospices and IDTFs, which are 
classified as ``moderate'' risk under Sec.  424.518--within the scope 
of proposed Sec.  424.530(a)(6)(i) would only add to the existing 
threat to the Trust Fund posed by providers and suppliers that fail to 
repay their Medicare debts.
    Notwithstanding these concerns, a denial of Medicare enrollment 
under paragraph (a)(6)(i) could be avoided if the enrolling provider, 
supplier, or owner thereof satisfies the criteria set forth in Sec.  
401.607 and agrees to an extended CMS-approved repayment schedule for 
the entire outstanding Medicare debt. We believe this provision is 
appropriate because an agreement to a CMS-approved repayment plan 
indicates that the provider, supplier, or owner is not seeking to avoid 
its debts to Medicare. The provider, supplier, or owner thereof could 
also, of course, avoid denial by simply repaying the debt in full. We 
solicit comment on whether the scope of our proposed revision to Sec.  
424.530(a)(6)(i) should be expanded to include the enrolling provider 
or supplier's managing employees (as that term is defined in Sec.  
424.502), corporate officers, corporate directors, and/or board 
members.
    We note that the term ``overpayment'' as currently used in Sec.  
424.530(a)(6) would be changed to ``Medicare debt'' in our regulatory 
text. We believe that the latter term more appropriately describes the 
types of debts that are subject to (a)(6). Moreover, as indicated 
earlier, we believe that our denial authority under proposed (a)(6) 
should include all forms of debt to Medicare, not just overpayments. It 
is the fact that a debt exists, rather than the specific type of debt 
involved, that is of concern to us. We nonetheless solicit comments on: 
(1) our proposal to replace the term ``overpayment'' with ``Medicare 
debt'' and our rationale for the change; and (2) the appropriate scope 
of the term ``Medicare debt'' for purposes of Sec.  424.530(a)(6) only, 
specifically whether there are certain types of debts that should or 
should not fall within the purview of Sec.  424.530(a)(6).
b. New Paragraph Sec.  424.530(a)(6)(ii)
    We propose in new paragraph Sec.  424.530(a)(6)(ii) that a denial 
of Medicare enrollment is warranted if the provider, supplier or 
current owner (as defined in Sec.  424.502) thereof was the owner (as 
defined in Sec.  424.502) of another provider or supplier that had a 
Medicare debt that existed when the latter's enrollment was voluntarily 
or involuntarily terminated or revoked, and the following criteria are 
met:
     The owner left the provider or supplier that had the 
Medicare debt within 1 year of that provider or supplier's voluntary 
termination, involuntary termination, or revocation.
     The Medicare debt has not been fully repaid.
     We determine that the uncollected debt poses an undue risk 
of fraud, waste, or abuse.
    Similar to proposed Sec.  424.530(a)(6)(i), we propose that the 
enrolling provider or supplier would be able to avoid a denial under 
Sec.  424.530 (a)(6)(ii) if the enrolling provider, supplier or owner 
thereof agrees to an extended repayment schedule for the entire 
outstanding Medicare debt of the revoked provider or supplier. Again, 
we believe this provision is warranted because agreement to a repayment 
plan evidences an intention to pay back the debt. Also, no denial would 
occur under paragraph (a)(6)(ii) if the debt was repaid in full.
    As discussed earlier, the difference between our proposed addition 
and the existing language in Sec.  424.530(a)(6) is that the latter 
involves situations in which the current owner, physician or 
nonphysician practitioner had a Medicare debt. However, our proposed 
addition focuses on the entity with which the enrolling provider, 
supplier, or owner thereof had a prior relationship. That is, the 
``prior entity'' had a debt to Medicare rather than the enrolling 
provider, supplier, or owner thereof. Consider the following 
illustration: Provider X is applying for enrollment in Medicare. Y owns 
50 percent of X. Y was also a 20 percent owner of Supplier Entity Z, 
which was revoked from Medicare 12 months ago and currently has a large 
outstanding Medicare debt. The current version of Sec.  424.530(a)(6) 
could not be used to deny X's application because X's current owner (Y) 
does not have a Medicare debt. Rather, the entity with which Y was 
associated (Z) has the debt. Under proposed Sec.  424.530(a)(6)(ii), 
however, and assuming the criteria identified therein are met, X's 
application could be denied because X's owner was an owner of a 
supplier (Z) that has a Medicare debt.
    Again, we believe that our proposed provision is necessary to 
further address cases in which individuals and entities depart Medicare 
with substantial Medicare debts and attempt to re-enter the program via 
other vehicles in order to avoid these financial obligations. We 
further believe that, as with proposed Sec.  424.530(a)(6)(i), proposed 
paragraph (ii): (1) may enhance our debt recovery efforts by spurring 
individuals and entities seeking to enroll in Medicare to facilitate 
the repayment of the debts of the organizations with which they were 
associated; and (2) would protect the Medicare Trust Fund by preventing 
individuals and entities intent on reentering Medicare and falsely 
billing the program and incurring additional Medicare debts.
    The authority for our proposed change is section 1866(j)(5) of the 
Act, codified at 42 U.S.C. 1395cc(j)(5) and which was established by 
section 6401(a)(3) of the Affordable Care Act. Section 1866(j)(5) 
states the following:
     A provider of medical or other items or services or 
supplier who submits an application for enrollment or revalidation of 
enrollment in the program under this title, title XIX, or title XXI on 
or after the date that is 1 year after the date of enactment of this 
paragraph shall disclose (in a form and manner and at such time as 
determined by the Secretary) any current or previous affiliation 
(directly or indirectly) with a provider of medical or other items or 
services or supplier that has uncollected debt, has been or is subject 
to a payment suspension under a federal health care program (as defined 
in section 1128B(f) of the Act), has been excluded from participation 
under the program under this title, the Medicaid program under title 
XIX, or the CHIP program under title XXI, or has had its billing 
privileges denied or revoked.
     If the Secretary determines that such previous affiliation 
poses an undue risk of fraud, waste, or abuse, the Secretary may deny 
such application. Such a denial shall be subject to appeal in 
accordance with paragraph [(8)].

[[Page 25021]]

    Under section 1866(j)(5) of the Act, therefore, providers and 
suppliers seeking to enroll in or revalidate their enrollment in 
Medicare must disclose any current or previous direct or indirect 
affiliation with a provider or supplier that has uncollected debt. The 
disclosing provider or supplier's application can be denied if we 
believe that the affiliation poses an undue risk of fraud, waste, or 
abuse. We believe that our proposed addition is entirely consistent 
with section 1866(j)(5) of the Act, in that the application would be 
denied only if the ``undue risk'' threshold is met. We would determine 
whether such a risk exists by considering various factors, including, 
but not limited to the following:
     The amount of the Medicare debt.
     The length and timeframe that the enrolling provider, 
supplier, or owner thereof was an owner of the prior entity.
     The percentage of the enrolling provider's, supplier's, or 
owner's ownership of the prior entity.
    The scope and breadth of ownership interests will vary widely (for 
example, the amount of ownership; direct versus indirect ownership). 
For this reason, we must reserve for ourselves the flexibility to deal 
with each situation on a case-by-case basis, utilizing the factors 
previously outlined. However, we are soliciting comment on the 
following issues related to these factors:
     Whether additional factors should be considered and, if 
so, what those factors should be.
     Which, if any, of the factors previously identified should 
not be considered.
     Which, if any, factors should be given greater or lesser 
weight than others.
     Whether a minimum or maximum threshold for consideration 
should be established for the ``amount of Medicare debt'' and 
``percentage of ownership'' factors.
    We also solicit comment on whether the purview of our proposed 
revision to Sec.  424.530(a)(6) should be expanded to include the 
enrolling entity's current managing employees (as that term is defined 
in Sec.  424.502), corporate officers, corporate directors, and/or 
board members.
    We note that while we are only proposing to implement the 
overarching rationale of section 1866(j)(5) of the Act with respect to 
Medicare debts, we are continuing to consider implementation options 
regarding the previously cited provisions of section 1866(j)(5) of the 
Act that address exclusions, payment suspensions, denials, and 
revocations.
    Given this, we propose to revise Sec.  424.530(a)(6) as follows:
     In paragraph (a)(6)(i), we propose that a denial of 
Medicare enrollment is warranted if the enrolling provider, supplier, 
or owner thereof has an existing Medicare debt. A denial of Medicare 
enrollment under this paragraph can be avoided if the enrolling 
provider, supplier, or owner thereof satisfies the criteria set forth 
in Sec.  401.607 and agrees to a CMS-approved extended repayment 
schedule for the entire outstanding Medicare debt or pays the debt in 
full.
     In paragraph (a)(6)(ii), we propose that a denial of 
Medicare enrollment is warranted if the enrolling provider, supplier, 
or owner thereof was the owner of another Medicare provider or supplier 
that had a Medicare debt that existed when the latter's enrollment was 
voluntarily or involuntarily terminated or revoked, and the following 
criteria are met:
    ++ The owner left the provider or supplier that had the Medicare 
debt within 1 year of that provider or supplier's voluntary 
termination, involuntary termination, or revocation.
    ++ The Medicare debt has not been fully repaid.
    ++ We determine that the uncollected debt poses an undue risk of 
fraud, waste, or abuse.
    A denial of Medicare enrollment under this paragraph can be avoided 
if the enrolling provider, supplier, or owner thereof satisfies the 
criteria set forth in Sec.  401.607 and agrees to a CMS-approved 
extended repayment schedule for the entire outstanding Medicare debt.
3. Felony Convictions
    Under Sec.  424.530(a)(3) and Sec.  424.535(a)(3), respectively, we 
may deny or revoke a provider or supplier's Medicare billing privileges 
if the provider or supplier--or any owner of the provider or supplier--
has, within the 10 years preceding enrollment or revalidation of 
enrollment, been convicted of a federal or state felony offense that 
CMS has determined to be detrimental to the best interests of the 
Medicare program and its beneficiaries. Under Sec.  424.535(a)(3)(i), 
as currently codified, such offenses include the following:
     Felony crimes against persons, such as murder, rape, 
assault, and other similar crimes for which the individual was 
convicted, including guilty pleas and adjudicated pretrial diversions.
     Financial crimes, such as extortion, embezzlement, income 
tax evasion, insurance fraud and other similar crimes for which the 
individual was convicted, including guilty pleas and adjudicated 
pretrial diversions.
     Any felony that placed the Medicare program or its 
beneficiaries at immediate risk, such as a malpractice suit that 
results in a conviction of criminal neglect or misconduct.
     Any felonies that would result in mandatory exclusion 
under section 1128(a) of the Act.
    (Section 424.530(a)(3)(i) mirrors Sec.  424.535(a)(3)(i) with the 
exception of paragraph (D), which uses the phrase: ``Any felonies 
outlined in section 1128 of the Act.'')
    We propose to make the following changes to Sec.  424.530(a)(3) and 
Sec.  424.535(a)(3):
     To modify the list of felonies in each section such that 
any felony conviction--including guilty pleas and adjudicated pretrial 
diversions--that we have determined to be detrimental to the best 
interests of the Medicare program and its beneficiaries would 
constitute a basis for denial or revocation. This would give us the 
discretion to deny or revoke enrollment based on any felony conviction 
that we believe to be detrimental to the best interests of Medicare and 
its beneficiaries. There are several reasons for this change:
    ++ In light of the very serious nature of any felony conviction, we 
believe it is unwise to restrict our authority in Sec.  
424.530(a)(3)(i) and Sec.  424.535(a)(3)(i) to the categories of 
felonies identified in (a)(3)(i); this is especially true considering 
that the types of felony offenses often vary from state to state. Any 
felony conviction, regardless of the type, raises real questions as to 
whether the provider or supplier can be relied upon to be a trustworthy 
partner in the Medicare program, and it is important to do everything 
possible to prevent unnecessary risks to Medicare beneficiaries and the 
Medicare Trust Fund. That stated, we are aware that certain felony 
convictions may raise more concerns than others, and we will continue 
to carefully assess the types of felony convictions that pose greater 
risk to Medicare beneficiaries and the Medicare Trust Fund.
    We note that in the April 2006 final rule (77 FR 20760), in which 
we finalized the provisions in Sec.  424.530(a)(3) and Sec.  
424.535(a)(3), we stated that we were relying upon the authority 
afforded to us in many of the HIPAA fraud and abuse provisions and 
section 4302 of the BBA. We are relying upon this same authority with 
respect to our proposed change.
    ++ The current list of felonies in Sec.  424.530(a)(3) and Sec.  
424.535(a)(3) includes many felonies but does not encompass all 
felonies. In order to allow us discretion to deny or revoke

[[Page 25022]]

enrollment based on any felony conviction that we believe is 
detrimental to the Medicare program or its beneficiaries, we propose to 
eliminate the enumerated list of felonies and instead provide that 
enrollment may be denied or revoked based upon any such felony 
conviction.
     We propose to expand Sec.  424.530(a)(3) and Sec.  
424.535(a)(3) to include felony convictions against a provider or 
supplier's ``managing employee,'' as that term is defined in Sec.  
424.502. We have found numerous instances in which a particular 
managing employee of a provider or supplier has as much, if not more, 
control of and involvement with the entity as does the owner. We 
believe that managing employees should be held to the same standard as 
owners in this regard. Clearly, having a managing employee with a 
felony conviction raises questions about whether the provider or 
supplier can be a responsible participant in the Medicare program.
     In Sec.  424.530(a)(3) and Sec.  424.535(a)(3), we propose 
to change the language ``within the 10 years preceding enrollment or 
revalidation of enrollment'' to ``within the preceding 10 years.'' The 
existing language has caused confusion as to how far back the 10-year 
period actually goes. We believe that our proposed wording is clearer 
and more straightforward.
     In Sec.  424.530(a)(3) and Sec.  424.535(a)(3), we propose 
to state that the term ``convicted''--as used in these two sections--
has the same definition as the one set forth in 42 CFR 1001.2. We have 
received inquiries over the years regarding the proper interpretation 
of the term ``convicted'' as it is used in the context of Sec.  
424.530(a)(3) and Sec.  424.535(a)(3). We believe that utilizing a 
well-established regulatory definition of the term would clarify for 
the public the types and scopes of convictions that fall within the 
purview of these two sections. We note that this regulatory definition 
is based on the definition of ``convicted'' in section 1128(i) of the 
Act.
    In light of the foregoing discussion, Sec.  424.530(a)(3) and Sec.  
424.535(a)(3) would be revised as follows:
     In Sec.  424.530(a)(3)--
    ++ We propose to combine the opening paragraph and existing 
paragraph (a)(3)(i) into a revised paragraph (a)(3)(i) that would 
state: ``The provider, supplier, or any owner or managing employee of 
the provider or supplier was, within the preceding 10 years, convicted 
(as that term is defined in 42 CFR 1001.2) of a federal or state felony 
offense that CMS has determined to be detrimental to the best interests 
of the Medicare program and its beneficiaries.''
    ++ We also propose to delete paragraphs (a)(3)(i)(A) through (D).
    ++ Existing paragraph (a)(3)(ii) would remain intact.
     In Sec.  424.535--
    ++ We propose to combine the introductory text and existing 
paragraph (a)(3)(i) into a revised paragraph (a)(3)(i) that would read: 
``The provider, supplier, or any owner or managing employee of the 
provider or supplier was, within the preceding 10 years, convicted (as 
that term is defined in 42 CFR Sec.  1001.2) of a federal or state 
felony offense that CMS has determined to be detrimental to the best 
interests of the Medicare program and its beneficiaries.''
    ++ We propose to make changes to paragraph (c). See section II.G. 
of this proposed rule for more information about our proposed change to 
paragraph (c).
4. Abuse of Billing Privileges
    Section 424.535(a)(8) states that a provider or supplier's Medicare 
billing privileges may be revoked if the provider or supplier submits a 
claim or claims for services that could not have been furnished to a 
specific individual on the date of service. These instances include, 
but are not limited to, situations where the beneficiary is deceased, 
the directing physician or beneficiary is not in the state or country 
when services were furnished, or when the equipment necessary for 
testing is not present where the testing is said to have occurred.
    We propose to expand this revocation reason by adding a new 
paragraph (a)(8)(ii) to Sec.  424.535. (The existing revocation reason 
will be incorporated into a new paragraph (a)(8)(i).) Our proposed new 
paragraph (a)(8)(ii) would permit revocation if we determine that the 
provider or supplier has a pattern or practice of billing for services 
that do not meet Medicare requirements such as, but not limited to, the 
requirement that the service be reasonable and necessary. This 
revocation reason would differ from that in paragraph (a)(8)(i) in two 
ways. First, while the former deals with individual claims, paragraph 
(a)(8)(ii) addresses overall billing patterns. Second, paragraph 
(a)(8)(i) addresses situations involving claims for services that could 
not have been furnished. Paragraph (a)(8)(ii) would deal with cases 
where the services were furnished but the claims do not meet Medicare 
requirements.
    We believe that our proposed revocation reason is important because 
it would place providers and suppliers on notice that they are under a 
legal obligation to always submit correct and accurate claims. 
Providers and suppliers would know that a failure to do so may result 
in the revocation of their Medicare billing privileges if such failures 
establish a pattern of incorrect or inaccurate claims. Because the 
current revocation reason at Sec.  424.535 (a)(8), again, focuses on 
individual claims and not on the submission of numerous claims over an 
extended period of time, we are proposing this authority so we may have 
the discretion to also revoke based on a pattern of inaccurate or 
erroneous claim submissions. We believe that a provider or supplier 
should be responsible for submitting valid claims at all times and that 
the provider or supplier's repeated failure to do so poses a risk to 
the Medicare Trust Fund.
    While we solicit comment on what should qualify as a ``pattern or 
practice'' under our proposed change, we envision that a common--though 
by no means the only--scenario in which proposed Sec.  
424.535(a)(8)(ii) could apply would be one where a provider or supplier 
is placed on prepayment review and a significant number of its claims 
are denied for failing to meet medical necessity requirements over 
time. Indeed, any situation in which an unusually or abnormally high 
volume of claims are denied over time because they do not meet Medicare 
requirements could potentially trigger Sec.  424.535(a)(8)(ii), though 
much would depend, of course, on the particular facts of the situation. 
In each case, we would take into account several factors, including, 
but not limited to the following:
     The percentage of submitted claims that were denied.
     The total number of claims that were denied.
     The reason(s) for the claim denials.
     Whether the provider or supplier has any history of 
``final adverse actions'' (as that term is defined under Sec.  
424.502).
     The length of time over which the pattern has continued.
     How long the provider or supplier has been enrolled in 
Medicare.
    With respect to these factors, we solicit comment on the following:
     Whether additional factors should be considered and, if 
so, what those factors should be.
     Which, if any, of these factors should not be considered.
     Which, if any, of these factors should be given greater or 
lesser weight than others.

[[Page 25023]]

     Whether a minimum or maximum threshold for consideration 
should be established for the ``percentage of claims denied'' and 
``total number of claims denied'' factors.
    We also solicit comment on whether there should be a set knowledge 
standard associated with our proposed provision--specifically, whether 
revocation is warranted only if the provider or supplier submitted the 
claims in question with ``reckless disregard'' as to their accuracy or 
the provider ``knew or should have known'' that the claims did not meet 
Medicare requirements.
    We wish to emphasize and to reassure the provider and supplier 
communities that proposed Sec.  424.535(a)(8)(ii) is not meant to be 
used to revoke providers and suppliers for isolated and sporadic claim 
denials or for innocent errors in billing. Our focus is instead on 
situations where a provider or supplier regularly fails to submit 
accurate claims in such a way as to--when considering the factors 
previously mentioned--pose a risk to the Medicare Trust Fund. We 
further note that as with any revocation of Medicare billing 
privileges, the provider or supplier may appeal a revocation based on 
Sec.  424.535(a)(8)(ii).
    Given this, Sec.  424.535(a)(8) would be revised to--
     Add a new paragraph (a)(8)(ii) that states: ``CMS 
determines that the provider or supplier has a pattern or practice of 
submitting claims for services that fail to meet Medicare 
requirements.''
     Incorporate the existing language in Sec.  424.535(a)(8) 
into a new paragraph (i).
5. Post-Revocation Submission of Claims
    In the November 19, 2008 Federal Register (73 FR 69726), we 
published a final rule with comment period titled, ``Medicare Program; 
Revisions to Payment Policies Under the Physician Fee Schedule and 
Other Revisions to Part B for CY 2009; and Revisions to the Amendment 
of the E-Prescribing Exemption for Computer Generated Facsimile 
Transmissions,'' (hereinafter referred to as the CY 2009 PFS final 
rule). In that rule, we finalized a provision in Sec.  424.535(h) 
stating that a revoked physician organization, physician, nonphysician 
practitioner or IDTF must submit all claims for items and services 
furnished within 60 calendar days of the effective date of the 
revocation.
    Our rationale for this policy was outlined in the CY 2009 PFS 
proposed rule, published in the July 7, 2008 Federal Register (73 FR 
38539). We noted that we had historically allowed revoked providers and 
suppliers to continue billing for services furnished prior to 
revocation for up to 27 months after the revocation effective date. We 
stated that this extensive post-revocation period posed a significant 
risk to the Medicare program and that the change to 60 days was 
necessary to limit Medicare's exposure to future vulnerabilities from 
revoked physician and nonphysician practitioner organizations and 
individual practitioners. We further noted that some physician and 
nonphysician practitioner organizations and individual practitioners 
were able to create false documentation to support claims payment and 
that our proposed change would allow Medicare to conduct focused 
medical review on the submitted claims to ensure that they are 
supported by verifiable medical documentation.
    Indeed, our rationale for our expansion of Sec.  424.535(h) is the 
same as that which we expressed in the CY 2009 PFS proposed rule. It is 
important that we limit the Medicare program's exposure to fraudulent 
claims. We believe that the longer a post-revocation timeframe a 
revoked provider or supplier has, the more opportunity the provider or 
supplier would have to submit false claims. Under Sec.  
424.518(c)(3)(ii), in fact, a revoked provider or supplier falls within 
the ``high'' categorical risk level. This heightened risk posed by 
revoked providers and suppliers, combined with the lengthy 12-month 
period they currently have for submitting claims, threatens the 
Medicare Trust Fund. Therefore, we believe that an expansion of Sec.  
424.535(h) to include all revoked providers and suppliers is warranted.
    We propose to expand the purview of Sec.  424.535(h) to include all 
revoked Medicare providers and suppliers, regardless of type (for 
example, DMEPOS suppliers, rural health clinics, skilled nursing 
facilities). All providers and suppliers, with the exception of home 
health agencies (HHAs), would have 60 days after the effective date of 
their revocation to submit their remaining claims for services 
furnished prior to the date of the revocation letter; for HHAs, the 
date would be 60 days after the later of: (1) The effective date of 
their revocation; or (2) the date that the HHA's last payable episode 
ends. The reason for the modification for HHAs is that under current 
CMS policy, an HHA can bill for episodes that began before it was 
terminated and be paid for up to 30 days following the termination 
date. The HHA would need to wait to bill those episodes until they were 
complete, which could be day 59 after the termination, giving the HHA 1 
day to bill. Thus, we believe that 60 days after the later of: (1) the 
effective date of their revocation; or (2) the date that the HHA's last 
payable episode ends would be reasonable.
    We note that nothing in our proposed revision to Sec.  424.535(h) 
would impact the requirements of Sec.  424.44 regarding the timely 
filing of claims.
    Given this, and as stated previously, we propose in Sec.  
424.535(h) to require that a revoked provider or supplier (excluding 
HHAs) submit, within 60 days after the effective date of the 
revocation, all claims for items and services furnished prior to the 
date of the revocation letter. For HHAs, the date would be 60 days 
after the later of: (1) The effective date of the revocation; or (2) 
the date that the HHA's last payable episode ends.
6. Effective Date of Billing Privileges
    Under Sec.  424.520(d), the effective date of billing privileges 
for physicians, nonphysician practitioners, and physician and 
nonphysician practitioner organizations is the later of: (1) the date 
of filing of a Medicare enrollment application that was subsequently 
approved by a Medicare contractor; or (2) the date an enrolled 
physician or nonphysician practitioner first began furnishing services 
at a new practice location. This policy was proposed in the CY 2009 PFS 
proposed rule. It was meant to address our concerns about providers and 
suppliers being able to bill for Medicare services rendered well prior 
to enrollment. We explained in that proposed rule that our proposed 
approach was not only consistent with our requirements found at Sec.  
410.33(i) that limit the retrospective billing for IDTFs, but also that 
it was not possible to verify that a supplier has met all of Medicare's 
enrollment requirements prior to submitting an enrollment application. 
Thus, the Medicare program should not be billed for services before the 
later of the two aforementioned dates.
    We propose to expand the scope of Sec.  424.520(d) to include 
ambulance suppliers. Ambulance suppliers as a class pose an elevated 
risk to the Medicare program--higher, in fact, than the physician and 
nonphysician practitioner categories already identified in Sec.  
424.520(d). In a January 2006 OIG report entitled, ``Medicare Payments 
for Ambulance Transports'' (OEI-05-02-000590), the OIG found that 25 
percent of ambulance transports did not meet Medicare's program 
requirements; this resulted in an estimated $402 million in improper 
payments. We have also seen an overabundance of ambulance

[[Page 25024]]

suppliers and an overutilization of ambulance services in particular 
regions of the country, which has raised questions as to the 
qualifications and integrity of some ambulance suppliers. In certain 
areas of ambulance supplier fraudulent activity, for instance, we have 
received claims for ambulance transports to hospitals with no 
associated hospital claims. These program integrity issues involving 
ambulance suppliers heighten our concerns about our inability to 
conclusively verify that a supplier was in compliance with Medicare's 
enrollment requirements during the months prior to submitting an 
enrollment application. It is this concern that leads us to the 
conclusion that allowing an ambulance supplier to ``back bill'' for 
services furnished well before enrollment dramatically increases the 
risk of improper payments and endangers the Medicare Trust Fund. 
Therefore, we believe that expanding Sec.  424.520(d) to include these 
elevated risk suppliers is justified.
    While we are not including other categories of providers and 
suppliers in the ``moderate'' or ``high'' screening level under Sec.  
424.518 (such as newly enrolling HHAs, community mental health centers 
and comprehensive outpatient rehabilitation centers), we note that the 
enrollment process for most of these other providers and suppliers is 
more extensive than that for ambulance suppliers because it involves 
certification. An enrolling ambulance supplier submits a CMS-855B 
application to its Medicare contractor, which reviews the application, 
performs all necessary verifications, and renders a final decision. 
However, for certified providers and certified suppliers, the applicant 
provider or supplier makes a request to its state Survey Agency (SA) 
for Medicare participation and submits a Medicare enrollment 
application to its Medicare contractor, which reviews the application, 
performs the required validations and, if a recommendation for approval 
is made, typically refers its recommendation to the SA. Thereafter, a 
survey that determines the applicant provider's or supplier's 
compliance with the applicable Medicare conditions or requirements will 
be conducted by the SA or a CMS-approved accrediting organization. If 
the applicant provider or supplier is determined to be in compliance 
with its Medicare conditions or requirements for Medicare 
participation, the SA will make its recommendation to the CMS regional 
office (RO) for review. If the RO determines that the applicant 
provider or supplier has met all federal requirements for Medicare 
participation, including all enrollment requirements, the RO issues an 
effective date for Medicare participation in accordance with Sec.  
489.13, and Medicare billing privileges would be conveyed. However, 
under Sec.  489.13 the effective date of a Medicare provider agreement 
or supplier approval may not be earlier than the latest date on which 
all applicable federal requirements have been met; such requirements 
include the Medicare contractor's review and verification of the 
provider/supplier's CMS-855 application. A certified provider or 
supplier is not eligible for Medicare payment of any services provided 
prior to the effective date of its Medicare provider agreement or 
supplier approval.
    Because of the exhaustive and extensive review process involved 
with certified providers and certified suppliers and the existing 
limitations posed by Sec.  489.13 on the ability of certified providers 
and certified suppliers to ``backbill'' for services, we have decided 
not to include these providers and suppliers in our proposal at this 
time. Ambulance suppliers, on the other hand, do not have this 
multilayered review process, which makes it more difficult to determine 
whether they met enrollment requirements 12 months previously. It is 
for these reasons that we are limiting our expansion of Sec.  
424.520(d) to ambulance companies. We solicit comment on whether any 
other non-certified provider or non-certified supplier type that is not 
currently subject to a backbilling restriction similar to the one we 
are proposing should be included within the purview of our proposal.
    Given these factors, we would revise Sec.  424.520(d) to include 
ambulance suppliers.
7. Effective Date of Re-Enrollment Bar
    Under Sec.  424.535(c), a revoked provider, supplier, delegated 
official, or authorizing official is barred from participating in 
Medicare from the effective date of the revocation until the end of the 
re-enrollment bar. The re-enrollment bar, as mentioned previously, is a 
minimum of 1 year, but not greater than 3 years, depending on the 
severity of the basis for revocation. In accordance with Sec.  
424.535(g), the effective date of a revocation is either of the 
following:--
     Thirty days after CMS or the CMS contractor mails notice 
of its determination to the provider or supplier.
     If the revocation is based on a federal exclusion or 
debarment, felony conviction, license suspension or revocation, or the 
practice location is determined by CMS or its contractor not to be 
operational, the date of exclusion, debarment, felony conviction, 
license suspension or revocation or the date that CMS or its contractor 
determined that the provider or supplier was no longer operational.
    We propose to revise Sec.  424.535(c) to specify that all re-
enrollment bars begin 30 days after CMS or the CMS contractor mails 
notice of the revocation determination to the provider or supplier. The 
reason for this change is to address situations where the revocation is 
based on a federal exclusion or debarment, felony conviction, license 
revocation or suspension, or non-operational status. Due to possible 
delays in the updating of databases with criminal conviction and 
licensure information, the revocation effective dates for these actions 
can be months prior to the date the contractor mails the revocation 
letter, and it is from these retroactive effective dates that the re-
enrollment bar runs. This can eliminate several months from the re-
enrollment bar period; for instance, rather than a full 3-year re-
enrollment bar for a felony conviction, the re-enrollment bar might 
only be 2 years and 10 months--or even less. By starting the re-
enrollment bar period after the revocation letter is sent, the full 
period can be imposed; we do not believe that a revoked provider or 
supplier should be benefited by a shorter reenrollment bar simply 
because of a gap between the effective date of the revocation and the 
date on which the revocation letter is mailed. As an illustration, 
suppose an enrolled nonphysician practitioner was convicted of a felony 
on January 15, 2014. On February 15, the contractor mailed notice to 
the practitioner that his Medicare billing privileges were revoked 
effective January 15, 2014. Under the current version of Sec.  
424.535(c), the re-enrollment bar would run until January 15, 2017, or 
2 years and 11 months after the date the revocation notice was sent. 
However, under our proposed revision, the reenrollment bar would run 
until February 15, 2017, or 3 years after the revocation notice was 
mailed.
    Given this, we would revise the first sentence of Sec.  424.535(c) 
to state that the re-enrollment bar is effective 30 days after CMS or 
its contractor mails notice of its revocation determination to the 
provider or supplier until the end of the re-enrollment bar.

[[Page 25025]]

8. Corrective Action Plans
    Consistent with Sec.  405.809, a provider or supplier whose 
Medicare billing privileges are revoked may submit a corrective action 
plan (CAP). The CAP must provide evidence that the provider or supplier 
is in compliance with Medicare requirements. If CMS or the Medicare 
contractor determines that the provider or supplier is, in fact, in 
compliance with Medicare requirements, the provider or supplier's 
billing privileges can be reinstated.
    We propose to revise Sec.  405.809 to state in new paragraph (a)(1) 
that a provider or supplier may not submit a CAP unless the revocation 
was based on Sec.  424.535(a)(1), which states in part that a provider 
or supplier's billing privileges may be revoked if the provider or 
supplier is determined not to be in compliance with our enrollment 
requirements. Generally, we do not believe that providers and suppliers 
should be exonerated from failing to fully comply with Medicare 
enrollment requirements simply by furnishing a CAP. It is the duty of 
providers and suppliers to always maintain such compliance. However, we 
do believe that a CAP may be appropriate for revocations based on Sec.  
424.535(a)(1). We have seen numerous instances where a provider or 
supplier revoked under Sec.  424.535(a)(1) had only minimally failed to 
comply with our enrollment requirements. To revoke its billing 
privileges when the problem can be quickly and easily corrected via a 
CAP could in some instances lead to unfair results.
    With other revocation reasons, though, we believe that a CAP either 
should not be available or would be impractical. For instance, if a 
provider is revoked based on an OIG exclusion or felony conviction, no 
amount of corrective action would be able to change this. If a supplier 
is revoked under Sec.  424.535(a)(4) for furnishing false or misleading 
information or under Sec.  424.535(a)(9) for failing to report a change 
in practice location, the provider should not be able escape revocation 
merely by furnishing the truthful or updated information through a CAP, 
as it was the provider's responsibility to provide this information 
earlier.
    We note that in cases where Sec.  424.535(a)(1) is one of several 
reasons for a particular revocation, the provider would be able to 
submit a CAP with respect to the Sec.  424.535(a)(1) revocation reason. 
For the other revocation bases, however, the provider would not be able 
to use the CAP process; the provider would instead have to utilize the 
appeals process under Part 498.
    We further propose in new paragraph (a)(2) that providers and 
suppliers have only one opportunity to correct all of the deficiencies 
that served as the basis of the revocation through a CAP. We do not 
believe that providers should be given multiple opportunities to become 
compliant when it is crucial that such compliance always be maintained.
    Notwithstanding these proposed changes, we note that providers and 
suppliers may still avail themselves of the appeals process under Part 
498. Nothing in this proposed rule alters the provider or supplier's 
rights in this regard.
    We also propose to delete the last sentence in Sec.  424.535(a)(1), 
which reads: ``All providers and suppliers are granted an opportunity 
to correct the deficient compliance requirement before a final 
determination to revoke billing privileges, except for those imposed 
under paragraphs (a)(2), (a)(3), or (a)(5) of this section.'' This 
sentence is inconsistent with our proposed change in Sec.  
405.809(a)(1).
    Finally, we propose to incorporate the existing language in Sec.  
405.809 into a new subparagraph (b).
    Given this, we would make the following regulatory changes:
     Add a new paragraph to Sec.  405.809(a)(1) stating the 
following:
    ++ The provider or supplier may not submit a CAP unless the 
revocation was for noncompliance under Sec.  424.535(a)(1).
     Add a new paragraph (2) to Sec.  405.809(a) stating the 
following: Subject to paragraph (a)(1), providers and suppliers have 
only one opportunity to correct all deficiencies that served as the 
basis of the revocation through a CAP.
     Add a new subsection (b) to Sec.  405.809 that includes 
the existing language in Sec.  405.809.
     Delete the last sentence in Sec.  424.535(a)(1), which 
reads: ``All providers and suppliers are granted an opportunity to 
correct the deficient compliance requirement before a final 
determination to revoke billing privileges, except for those imposed 
under paragraphs (a)(2), (a)(3), or (a)(5) of this section.''
9. Revisions to Sec.  424.530(a)(5) and Sec.  424.535(a)(5)
    We also propose to revise Sec.  424.530(a)(5) and Sec.  
424.535(a)(5). We believe that the language in each of these 
subsections is redundant. To illustrate, the first sentence of Sec.  
424.530(a)(5) states that a provider or supplier's Medicare enrollment 
may be denied if, upon on-site review or other reliable evidence, CMS 
determines that the provider or supplier is not operational or is not 
meeting Medicare enrollment requirements. Later, paragraphs Sec.  
424.530(a)(5)(i) and (a)(5)(ii) essentially--and, in our view, 
needlessly--repeat this language. The same repetition is evident in 
Sec.  424.535(a)(5), wherein paragraphs (a)(5)(i) and (a)(5)(ii) 
effectively duplicate the language in the first sentence of Sec.  
424.535(a)(5).
    Therefore, Sec.  424.530(a)(5) would be revised to state that the 
provider or supplier's enrollment can be denied if ``(u)pon on-site 
review or other reliable evidence, CMS determines that the provider or 
supplier is either of the following: (i) not operational to furnish 
Medicare covered items or services, or (ii) otherwise fails to satisfy 
any Medicare enrollment requirements.'' Likewise, Sec.  424.535(a)(5) 
would be revised to state that a provider or supplier's Medicare 
billing privileges would be revoked if ``(u)pon on-site review or other 
reliable evidence, CMS determines that the provider or supplier is 
either of the following: (i) no longer operational to furnish Medicare 
covered items or services, or (ii) otherwise fails to satisfy any 
Medicare enrollment requirements.''
    We note that our proposed revision to Sec.  424.535(a)(5) would 
also add the phrase ``or other reliable evidence'' to this subsection. 
There are two reasons for this change. First, Sec.  424.530(a)(5) 
currently contains the ``or other reliable evidence'' standard. We 
believe that these two paragraphs, Sec.  424.530(a)(5) and Sec.  
424.535(a)(5), should contain consistent standards. Second, we believe 
it is important to be able to ascertain and take action under Sec.  
424.535(a)(5) against a non-operational or non-compliant provider or 
supplier through means other than a site review.
10. Technical Changes
    We further propose certain technical changes related to the 
provider and supplier enrollment regulations.
    In Sec.  424.530(a)(1), we propose to change the word ``section'' 
to ``subpart P'' in the first sentence so that the sentence would 
read--``[t]he provider or supplier is determined not to be in 
compliance with the enrollment requirements described in this subpart 
P, or in the enrollment application applicable for its provider or 
supplier type, and has not submitted a plan of corrective action as 
outlined in part 488 of this chapter.'' The purpose of this change is 
to clarify that the provider or supplier must comply with all of the 
provider enrollment provisions in 42 CFR subpart P, not merely those in 
Sec.  424.530.

[[Page 25026]]

    For the same reason, we propose to revise Sec.  424.535(a)(1) to 
state as follows: ``The provider or supplier is determined not to be in 
compliance with the enrollment requirements described in this subpart 
P, or in the enrollment application applicable for its provider or 
supplier type and has not submitted a plan of corrective action as 
outlined in part 488 of this chapter.''
    Also, in Sec.  424.535(a)(3)(ii), we propose to change the term 
``denials'' to ``revocations'', as Sec.  424.535 does not address 
denials.
    Lastly, Sec.  498.5(l)(4) states that for appeals of denials based 
on Sec.  424.530(a)(9) related to temporary moratoria, the scope of the 
review is limited to whether the temporary moratorium applies to the 
provider or supplier. However, Sec.  424.530(a)(10), rather than Sec.  
424.530(a)(9), applies to temporary moratoria. We therefore propose to 
correct Sec.  498.5(l)(4) by changing the reference to Sec.  
424.530(a)(9) therein to Sec.  424.530(a)(10).

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.

A. ICRs Regarding Rewards for Information Relating to Medicare Fraud 
and Abuse (Sec.  420.405)

Attestation
    Our proposed revisions to the IRP at Sec.  420.405(f)(3) would 
require the reporting individual complete and submit an attestation, 
which would result in an increase in ICR burden. Between the years of 
2000 and 2012, 18 rewards were paid by us under the IRP. Although we 
believe that the number of paid rewards would rise because of the 
increased monetary incentive, it is very difficult to estimate this 
figure. Yet we note that since the 2006 reward amount changes to the 
IRS program, the IRS has paid an average of 149 rewards per year, from 
a low of 97 to a high of 227. While there are limitations with using 
this data to estimate that similar ranges of rewards would be paid 
under the proposed IRP changes, we believe it indicates that the number 
of rewards made under IRP would very likely increase from an average of 
1.5 a year. For purposes of this ICR section only, we will therefore 
propose to use the average of 149 attestations in our ICR calculations.
    Persons likely to submit an attestation would include 
beneficiaries, medical providers, and health care administrative 
personnel that have been notified that they are eligible for a reward 
under the IRP. We believe that most individuals would prepare the 
attestation themselves. It is possible, however, that in light of the 
legal nature of the attestation, some may elect to have legal counsel 
draft the document. For purposes of estimating the potential cost of 
this activity only and so as not to underestimate the possible burden, 
we will utilize the hourly wage for lawyers in our cost calculations.
    According to the most recent wage data provided by the Bureau of 
Labor Statistics for May 2012, the mean hourly wage for the category of 
``lawyers'' is $62.93 (see http://www.bls.gov/oes/current/oes231011.htm). With fringe benefits and overhead, the per hour rate 
would be $95. We further project that the attestation preparation and 
submission process would take the attesting individual approximately 5 
hours to complete. Applying our figure of 149 attestations, this 
results in an average annual burden of 745 hours at a cost of $70,775 
(or $95 x 5 hours x 149).
    We are soliciting comments on (1) our estimate of the number of 
attestations per year, (2) our estimate of 5 hours for an individual to 
complete and submit the attestation; and (3) the per hour rate of $95.

B. ICRs Regarding Our Proposed Provider Enrollment Provisions (Sec.  
424.530 and Sec.  424.535)

1. Definition of Enrollment
    Our proposed revisions to Sec.  424.502 and Sec.  424.505 reflect 
the existing usage of the CMS-855O (OMB Approval number 0938-
0685) and, as such, would not impose any additional ICR burden. 
Consistent with Sec.  424.507, an individual who wishes to enroll in 
Medicare for the sole purpose of ordering or certifying items or 
services for Medicare beneficiaries can become eligible to do so by 
completing the CMS-855O. Use of the CMS-855O commenced in July 2011, 
and the ICR burden associated with its use was approved by OMB at that 
time.
2. Debts to Medicare
    Our proposed revisions to Sec.  424.530 would likely result in an 
increase in application denials. While these revisions would not 
directly impose an information collection burden, the increase in 
denials could lead to more appeals from denied providers and suppliers. 
However, we are unable to estimate the number of potential denials 
because we do not have data available that can support such an 
estimate. Therefore, we cannot project the potential ICR burden that 
could arise from an increased number of: (1) Appeals of denials, or (2) 
resubmitted enrollment applications from the denied providers and 
suppliers.
3. Felony Convictions
    Our proposed revisions to Sec.  424.530(a)(3) and Sec.  
424.535(a)(3), while not paperwork burdens directly imposed by the 
rule, would likely result in an increase in application denials and 
revocations, respectively. We believe this would stem mostly from the 
expansion of these two paragraphs to include managing employees. We 
believe the changes involving the elimination of the detailed list of 
felonies would not result in a significant increase in denials or 
revocations because the ``detrimental to the best interests of 
Medicare'' standard is currently in these two provisions. However, we 
cannot estimate the potential increase in denials and revocations based 
on these proposed changes, as we do not have data available that can 
support such an estimate. Therefore, we cannot project the potential 
ICR burden that could arise from an increased number of appeals of 
denials and revocations.
4. Abuse of Billing Privileges
    Our proposed addition of Sec.  424.535(a)(8)(ii) would likely 
result in an increase in the ICR burden because there would likely be a 
concomitant increase in revocations and associated appeals. However, we 
are unable to estimate the number of potential revocations. We do not 
have data available that can support such an estimate as each situation 
would have to be very carefully reviewed and addressed on a case-by-
case basis.

[[Page 25027]]

5. Post-Revocation Submission of Claims
    Our proposed change to Sec.  424.535(h) would likely not result in 
a change in the ICR burden. While the claims in question would need to 
be submitted within a shorter timeframe (60 days), they would likely be 
submitted regardless of the applicable submission period. The shorter 
timeframe would, in general, neither increase nor decrease the number 
of claims submitted.
6. Effective Date of Billing Privileges
    Our proposed change to Sec.  424.520(d) would likely result in a 
decrease in the ICR burden because fewer claims would be eligible for 
submission under this change. However, we are unable to project the 
decrease in the number of claims because we do not have data available 
to support such an estimate.
7. Effective Date of Re-Enrollment Bar
    Our proposed change to Sec.  424.535(c) would neither increase nor 
decrease the ICR burden. With or without this revision, the provider 
would still need to submit a CMS-855 application after the expiration 
of the re-enrollment bar in order to enroll again in Medicare.
8. Corrective Action Plans
    Our proposed change to Sec.  405.809 would result in a decrease in 
the ICR burden because there would be a reduction in the number of CAPs 
submitted. However, we are unable to estimate the decrease in the 
number of CAPs submitted because we do not have sufficient data to 
support such an estimate.
9. Revisions to Sec.  424.530(a)(5) and Sec.  424.530(a)(5)
    Our proposed changes to Sec.  424.530(a)(5) and Sec.  424.535(a)(5) 
would not result in a change to the ICR burden because we do not 
believe there would be any change in the number of denials or 
revocations. We note that Sec.  424.530(a)(5) already permits 
revocation based upon a site review ``or other reliable evidence.'' 
Thus, there would be no change in the number of (1) appeals of denials, 
or (2) resubmitted enrollment applications from denied providers and 
suppliers. As for Sec.  424.535(a)(5), it is true that the ``or other 
reliable evidence'' standard is not in the current version of that 
paragraph. But we note that Sec.  424.535(a)(1) permits revocation if 
the provider or supplier is determined not to be in compliance with the 
enrollment requirements in this section, or in the enrollment 
application that is applicable to its provider or supplier type. The 
authority to revoke based on reliable evidence of non-compliance, 
therefore, is largely similar to the reasons for revocation stated in 
Sec.  424.535(a)(1). Hence, we do not believe there would be any change 
in the number of: (1) Appeals of revocations, or (2) resubmitted 
enrollment applications from revoked providers and suppliers.
    If you comment on these information collection and recordkeeping 
requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of this proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: CMS Desk Officer, 
[CMS-6045-P], Fax: (202) 395-6974; or Email: OIRA_submission@omb.eop.gov.

IV. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

V. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule is necessary to: (1) Increase the incentive for 
individuals to report information on individuals and entities that have 
or are engaged in sanctionable conduct; and (2) make important 
revisions to certain Medicare provider enrollment requirements to help 
ensure that fraudulent actors neither enroll in nor maintain their 
enrollment in the Medicare program.

B. Background

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4) and Executive Order 13132 on Federalism (August 4, 
1999).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year).
    As we explain in more detail later in this section, we encountered 
several uncertainties in estimating the economic impact of many of our 
proposed provisions. We could not estimate the number of denials and 
revocations that might stem from the proposed enrollment changes. We 
were also unable to estimate the potential monetary savings to the 
federal government or the costs to providers and suppliers resulting 
from the remaining proposed revisions. However, we estimate that our 
proposed changes to Sec.  424.520(d) and Sec.  420.405(e) would result 
in an annual transfer of more than $100 million from providers and 
suppliers to the federal government. Therefore, we have prepared an RIA 
because this is a major rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organization, and small governmental 
jurisdictions. Most entities and most other providers and suppliers are 
small entities, either by nonprofit status or by having revenues 
between $7 million and $34.5 million in any 1 year. Individuals and 
states are not included in the definition of a small entity.
    Several provisions could have at least some effect on certain small 
entities. These include: (1) The proposed change at Sec.  424.520(d) to 
the effective date of billing privileges for ambulance suppliers; (2) 
the proposed change at Sec.  424.530(a)(6) to Medicare debt; (3) the 
proposed revision at Sec.  424.535(a)(8) to the abuse of billing 
privileges; (4) the proposed change at Sec.  424.535(h) to the 
submission of claims after revocation; and (5) the proposed revision at 
Sec.  405.809 to the reinstatement of provider or supplier billing 
privileges following corrective action. However, as explained below we 
do not believe that this proposed rule would have a significant 
economic impact on a substantial number of small entities.
    Our proposal at Sec.  424.520(d) which would change the effective 
date of billing privileges for ambulance suppliers would only impact 
newly-enrolling ambulance suppliers. Each year, new ambulance providers 
constitute only a very small addition to the overall universe of the 
roughly 1.4

[[Page 25028]]

million Medicare-enrolled providers and suppliers an average of 1,127 
ambulance suppliers enrolled in Medicare each year between 2006 and 
2011. We further note that this provision would not in any way affect 
their ability to bill for services furnished after the later of the two 
events specified in Sec.  424.520(d)(1) and (2).
    Denials and revocations under, respectively, Sec.  424.530(a)(6) 
and Sec.  424.535(a)(8), would not occur prior to an extremely careful 
examination by CMS of: (1) The level of undue risk that the unpaid debt 
poses; or (2) the criteria for determining whether the provider or 
supplier has a pattern or practice of submitting non-compliant claims. 
As such, while we do anticipate an increase in some denials and 
revocations under these two provisions, we do not believe they would 
impact a substantial number of small entities.
    Our proposed change to Sec.  424.535(h) would not have a 
significant impact on small businesses because: (1) Only a small number 
of Medicare providers and suppliers have their billing privileges 
revoked, and (2) the revoked provider's claims would likely be 
submitted regardless of the shorter submission period.
    Our proposed change to Sec.  405.809 would impact some small 
entities' ability to submit CAPs in response to a revocation. However, 
these small entities would still able to file a request for 
reconsideration. Consequently, the overall effect of this proposed 
change would not impact a substantial number of small entities.
    In short, we believe that the vast majority of providers and 
suppliers--both small and large--do not commit fraud, have not been 
convicted of a felony, and are otherwise compliant with Medicare 
enrollment requirements. Consequently, they would not be affected by 
most of the provisions in this proposed rule.
    Section 1102(b) of the Act requires us to prepare a regulatory 
impact analysis if a rule may have a significant impact on the 
operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital that is located outside of a Metropolitan Statistical Area for 
Medicare payment regulations and has fewer than 100 beds. We are not 
preparing an analysis for section 1102(b) of the Act because we have 
determined and the Secretary certified that this proposed rule would 
not have a significant impact on the operations of a substantial number 
of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2013, this 
is approximately $141 million. We believe that this proposed rule would 
have no consequential effect on state, local or tribal governments or 
on the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirements or costs on 
state and local governments, preempts state law, or otherwise has 
federalism implications. Since this regulation does not impose any 
costs on state or local governments, the requirements of Executive 
Order 13132 are not applicable.

C. Anticipated Effects

1. Incentive Reward Program
    Our proposed change at Sec.  420.405(e)(5) would likely result in 
an increase in savings to the federal government. As stated earlier in 
the ICR section of this proposed rule, the IRS paid an average of 149 
rewards per year following the 2006 reward structure changes to its 
program. We proposed to estimate that CMS may make a similar number of 
rewards as the IRS under our proposed reward structure. We are 
soliciting comments on using the IRS' experience of paying an average 
of 149 rewards since 2006 to estimate the potential increase in amounts 
collected and associated rewards. However, as the IRS experience 
demonstrates, the amount of collections and the number of rewards paid 
can vary significantly each year. There are limitations with using this 
estimated based on IRS experience, however we believe that creating an 
incentive program similar to the IRS' long-standing reward program 
could reasonably result in a similar number of rewards made under such 
a program.
    In the past decade, we have had an average collection of $193,069 
as a result of information provided by individuals who qualified for a 
reward under the IRP. We anticipate that the amount of the collections 
may increase under the proposed modifications; but we do not have any 
internal data on which to base an estimate. We propose to project the 
impact of the IRP changes on amounts collected by multiplying the 
proposed estimated increase in the number of rewards requiring 
attestations --149--by the average amount collected by CMS of $193,069. 
We solicit comments on this proposed estimate of $28,767,281 (149 x 
$193,069) of future amounts collected. We also solicit comment on using 
a range of estimates for the increase in the number of rewards, and 
also solicit comment on using the increase in amounts collected 
experienced by the IRS to estimate the potential future increases in 
collections to us. We also propose to estimate the impact of the IRP 
changes on reward payments by multiplying the proposed estimate of 
amounts collected, $28,767,281, by the proposed reward structure, 15 
percent. We solicit comments on this proposed estimate of $4,315,092 in 
future reward payments ($28,767,281 x .15)--which would result in a net 
amount collected of $24,452,189 by us. We also solicit comments on: (1) 
using a range of estimates for the increase in the amount reward 
payments; and (2) the increase in amounts collected experienced by the 
IRS to estimate the potential future increases in reward payments made 
by CMS. While there may be an increase in costs to the federal 
government to administer the program due to the proposed changes, we do 
not have sufficient data to estimate the magnitude of such an increase 
at this time and believe that any increased costs would be offset by an 
accompanying increase in returns to the federal government.
2. Provider Enrollment Provisions
    We indicated in the ICR section that there could be an ICR burden 
associated with several of our provider enrollment provisions but that 
said burden could not be estimated. The following subsections discuss 
other potential costs--as well as savings--associated with our proposed 
enrollment changes.
a. Definition of Enrollment
    As stated earlier, use of the CMS-855O commenced in July 2011. Our 
proposed revisions to Sec.  424.502 or Sec.  424.505 are merely 
intended to reflect the usage of the CMS-855O and, as such, would not 
result in any additional costs or savings.
b. Debts to Medicare
    Our proposed revisions to Sec.  424.530(a)(6) would likely result 
in additional application denials. However, we are unable to estimate 
the number of potential denials because we do not have data available 
that could support such an estimate. Therefore, we cannot project any 
costs in potential lost billings to providers and suppliers or any 
concomitant potential savings to the government. There may be an 
increase

[[Page 25029]]

in costs to the federal government towards identifying and making 
available to enrollment contractors information about individuals that 
were associated with a revoked entity with an unpaid Medicare debt, 
however, we are unable to estimate the magnitude of any potential 
increase at this time, and we also anticipate that an increase in costs 
would be offset by savings to the government by preventing billing by 
such providers or suppliers, or by the repayment of debt by such 
providers or suppliers.
c. Felony Convictions
    As stated in the ICR section, our proposed revisions to Sec.  
424.530(a)(3) and Sec.  424.535(a)(3) would likely result in additional 
application denials and revocations, respectively. Yet we cannot 
estimate the potential increase in denials and revocations and 
associated appeals based on these proposed changes, because we do not 
have data available that could support such an estimate. Thus, we 
cannot project the potential costs to providers and suppliers in lost 
potential billings or the potential costs or savings to the government 
arising from these proposed revisions.
d. Abuse of Billing Privileges
    Our proposed addition of Sec.  424.535(a)(8)(ii) would likely 
result in an increase in revocations. However, we are unable to project 
the number of providers and suppliers that might be revoked based on 
this proposed change because we do not have data available that could 
support such an estimate. Thus, we cannot project the potential costs 
to providers and suppliers in lost potential billings or the potential 
costs or savings to the government arising from these proposed 
revisions.
e. Post-Revocation Submission of Claims
    Our proposed change to Sec.  424.535(h) is unlikely to increase or 
decrease the number of claims submitted. While the revoked provider or 
supplier's claims would need to be submitted within a shorter 
timeframe, we believe that the vast majority of claims would still be 
submitted. Thus, we project negligible change in costs to providers and 
suppliers in their claim submissions.
f. Effective Date of Billing Privileges
    Our proposed change to Sec.  424.520(d) will likely result in a 
decrease in claims submitted to Medicare. Rather than being able to 
bill for Medicare services furnished up to 12 months prior to 
enrollment, newly enrolling ambulance suppliers would be unable to bill 
for services furnished prior to the later of: (1) The date of filing a 
Medicare enrollment application that was subsequently approved; or (2) 
the date the supplier first began furnishing services at a new practice 
location.
    According to our statistics, and as stated earlier, an average of 
1,127 ambulance suppliers enrolled in Medicare each year between 2006 
and 2011. We will use this figure in our calculations. As a result of 
our proposed change, these suppliers could lose up to 10 months in 
potential Medicare billings for services furnished prior to the later 
of (1) or (2) in the previous paragraph.
    Based on our data, the average ambulance supplier receives 
approximately $581,000 in Medicare payments per year, though this, of 
course, varies by individual supplier. Ten-twelfths of this amount 
(that is, 10 months divided by 12 months) is $484,167. Thus, we 
estimate that up to $545.7 million each year (or $484,167 x 1,127) in 
savings to the federal government could accrue as a result of this 
proposed change.
    We emphasize that our $545.7 million estimate is a high-end 
estimate. There may be new ambulance suppliers that, absent our 
proposed change, would have met our requirements less than 10 months 
prior to enrollment. For instance, if the average newly enrolling 
ambulance supplier would have met our requirements 3 months prior to 
enrollment, the potential savings would be roughly $163.7 million (or 
$581,000 x 3/12 x 1,127). If the average figure is 6 months, our 
estimate would be approximately $327.4 million. We have no way of 
predicting the ratio of ambulance suppliers that would have met our 
requirements 10 months, 6 months or 3 months (or any other point, for 
that matter) prior to enrollment. Therefore, we will use these three 
timeframes as, respectively, high-end, primary, and low-end estimates 
in the Accounting Statement.
g. Effective Date of Re-Enrollment Bar
    Our proposed revision to Sec.  424.535(c) would result in a longer 
re-enrollment bar than currently exists in cases where the date of the 
offenses that is the basis of the revocation occurs months before the 
issuance of the revocation letter. The longer period during which a 
provider or supplier is unable to enroll in Medicare could result in 
lost billings to the provider or supplier. This could also result in a 
savings to the government because a provider or supplier that may have 
been billing Medicare would not be eligible to do so as soon as would 
otherwise be the case. However, we are unable to estimate the costs to 
providers and suppliers or the savings to the federal government 
because we do not have data available to support to support such an 
estimate. We also cannot estimate (1) how many providers and suppliers 
would be affected by this proposed change, or (2) the specific types of 
providers and suppliers that would be affected.
h. Corrective Action Plans
    Our proposed change to Sec.  405.809 would result in a reduction in 
the number of CAPs submitted, as noted in the ICR. This could result in 
lost billings to the provider or supplier in cases where a CAP resulted 
in a favorable decision more quickly than a reversal of the revocation 
at the appeals level, as the CAP review process often takes place 
sooner than the reconsideration process. The reduction in the 
submission of CAPs would also result in a savings to the federal 
government due to a decrease in the resources needed to review the 
CAPs. However, we cannot estimate the potential lost billings of 
providers or suppliers resulting from this proposed provision, or the 
savings to the federal government. We do not have data that can assist 
us in predicting: (1) the number of provider and suppliers that our 
proposed change would impact; or (2) the specific types of providers 
and suppliers that would be affected.
i. Revisions to Sec.  424.530(a)(5) and Sec.  424.530(a)(5)
    We stated earlier, that we do not believe there would be any change 
in the total number of denials or revocations based on our proposed 
changes to Sec.  424.530(a)(5) and Sec.  424.530(a)(5). Therefore, we 
do not anticipate any resultant change in overall costs or savings.
j. Technical Changes
    As these are simply technical revisions, there are no costs or 
savings associated therewith.
3. Conclusion
    While we are unable to furnish detailed cost and savings estimates 
at this point regarding many of our proposed provisions, we are 
soliciting comments from the public regarding their views as to the 
potential burdens and costs of our proposals as well as the possible 
savings.

D. Accounting Statement and Table

    As required by OMB Circular A-4 (available at link http://
www.whitehouse.gov/sites/default/files/omb/assets/regulatory--matters--
pdf/a-

[[Page 25030]]

4.pdf), we have prepared an accounting statement.
    The ``transfer'' category in Table 2 reflects the application of a 
7 percent and 3 percent annualized rate to:
     The high-end, primary, and low-end estimates referred to 
in section V.C.2.f. of this proposed rule and involving our proposed 
change to Sec.  424.520(d).
     Our estimate of the net amount that could be recovered 
under our proposed IRP changes. Specifically, the annualized rates are 
applied to a figure of $24,452,189 or the difference between the 
previously estimated total recovery amount ($28,767,281) and the 
previously estimated total reward payments ($4,315,092). Note that we 
solicited comment on the advisability of establishing $72,675 estimate 
of the potential ICR burden of IRP attestation submissions.
    The 7 and 3 percent figures were applied over a 10-year period 
beginning in 2013, with the figures in the accounting statement 
reflecting the average annualized costs over this period.
    The accounting statement does not address the potential financial 
benefits of this proposed rule from the standpoint of its effectiveness 
in preventing or deterring certain providers and suppliers from 
enrolling in Medicare or maintaining their enrollment in Medicare. It 
is not possible for us to quantify these benefits in monetary terms. In 
addition, the statement does not include those provisions above that we 
believe would or could result in a cost or savings that nevertheless 
could not be estimated.

                                                         Table 2--Accounting Statement and Table
                                                                      [In millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Primary                                                      Discount rate      Period
                        Category                             estimates     Low estimates  High estimates   Year dollars      (percent)        covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Resulting from the change in the effective date of                 327.4           163.7           545.7            2013               7       2014-2023
 billing privileges for ambulance suppliers.............           327.4           163.7           545.7            2013               3       2014-2023
                                                         -----------------------------------------------------------------------------------------------
From Whom to Whom.......................................                     Transfers from Ambulance Suppliers to Federal Government
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Potential net recoveries under the IRP..................            24.5             N/A             N/A            2013               7       2014-2023
                                                                    24.5             N/A             N/A            2013               3       2014-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
From Whom to Whom.......................................                   Transfers from Providers and Suppliers to Federal Government
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Potential total reward payment..........................             4.3             4.3             N/A            2013               7       2014-2023
                                                                     4.3             4.3             N/A            2013               3       2014-2023
                                                         -----------------------------------------------------------------------------------------------
From Whom to Whom.......................................         Transfers from Providers and Suppliers to Individuals that received an IRP reward
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Submission of Attestations..............................           * 0.1             N/A             N/A            2013               7       2014-2023
                                                                   * 0.1             N/A             N/A            2013               3       2014-2023
                                                         -----------------------------------------------------------------------------------------------
Who is Affected?........................................                              Individuals that received an IRP reward
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Rounded to the nearest hundred-thousandth.

E. Alternatives Considered

1. Incentive Reward Program
    We considered a potential reward structure of a different portion 
and for a different amount collected than that which we have proposed. 
First, we considered increasing the amount of the collection we would 
pay a reward for, but keeping the portion of the reward at 10 percent. 
We also considered mirroring the current IRS program of offering a 
range of 15 to 30 percent with no limit on the amounts collected we 
would pay a reward for. However, we have proposed ``15 percent of the 
final amount collections applied to first $66,000,000 for sanctionable 
conduct'' for two principal reasons. First, this reward structure is 
largely consistent with that used in the highly successful IRS reward 
program without creating the appearance of an overlap between CMS' IRP 
and the qui tam provisions of the False Claims Act. This is important 
because rewards are potentially available to individuals under both the 
CMS IRP and the False Claims Act but the requirements under each are 
distinct. Second, the proposed structure of a fixed percent that pays 
up to a certain dollar amount of collections is identical to the 
current IRP reward structure. We believe that this will make a new 
reward structure administratively easier to implement, as well as more 
transparent to individuals that may receive a reward under the IRP.
2. Provider Enrollment
    As stated, our proposed provider enrollment provisions are needed 
to help ensure that fraudulent actors neither enroll in nor maintain 
their enrollment in the Medicare program. Nonetheless, we did consider 
four alternatives when preparing our enrollment provisions.
    First, with respect to Sec.  424.530(a)(6)(i) and (ii), we 
considered--and elected to propose--an exception to these denial

[[Page 25031]]

reasons for providers, suppliers, and owners thereof that have agreed 
to an extended repayment schedule. We believe that such an agreement 
indicates a willingness to satisfy the debt.
    Second, we considered expanding the purview of proposed Sec.  
424.520(d) to include all certified providers and certified suppliers, 
such as hospitals, skilled nursing facilities, and ambulatory surgical 
centers. Yet as stated earlier in this proposed rule, we concluded that 
this approach would be unnecessary and even impractical. There is 
already an exhaustive and extensive review process involved with 
certified providers and certified suppliers, and there already are 
limitations posed by Sec.  489.13 on the ability of such providers and 
suppliers to ``backbill'' for services.
    Third, we contemplated eliminating CAPs altogether, as the existing 
appeals process already affords providers and suppliers adequate due 
process rights. In the interests of fairness and efficiency, however, 
we elected to retain the CAP process for revocations based on Sec.  
424.535(a)(1). We believe that our decision would continue to give 
certain providers and suppliers an additional opportunity to try to 
remedy inadvertent or minor errors without subjecting all parties to 
the lengthier appeals process. However, for reasons outlined in this 
proposed rule we believe that eliminating the CAP process for all other 
revocation reasons is warranted.
    Finally, the possibility of expanding the purview of Sec.  
424.530(a)(3) and Sec.  424.535(a)(3) to include not only managing 
employees but also corporate officers, corporate directors, and board 
members was considered. We determined that the better approach would be 
to simply solicit comment on the prospect of applying these sections to 
these individuals.

F. Impact on Beneficiary Access

    We do not believe that our proposed provisions would impact 
beneficiary access. While it is possible that some providers and 
suppliers may have their Medicare enrollment applications denied or 
their Medicare billing privileges revoked as a result of our proposed 
enrollment provisions, we believe this number would be small.
    In accordance with the provisions of Executive Order 12866, this 
rule was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
professions. Kidney diseases, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, X-rays.

42 CFR Part 420

    Fraud, Health facilities, Health professions, Medicare.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
Medicare, Reporting and recordkeeping requirements.

42 CFR Part 498

    Administrative practice and procedure, Health facilities, Health 
professions Medicare, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, the Centers for Medicare & 
Medicaid Services proposes to amend 42 CFR Chapter IV as follows:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority for part 405 continues to read as follows:

    Authority:  Secs. 205(a), 1102, 1861, 1862(a), 1869, 1871, 1874, 
1881, and 1886(k) of the Social Security Act (42 U.S.C. 405(a), 
1302, 1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 
1395ww(k)), and sec. 353 of the Public Health Service Act (42 U.S.C. 
263a).

0
2. Section 405.809 is revised to read as follows:

Sec.  405.809  Reinstatement of provider or supplier billing privileges 
following corrective action.

    (a) General rule. A provider or supplier--
    (1) May not submit a corrective action plan unless the revocation 
was for noncompliance under Sec.  424.535(a)(1) of this chapter; and
    (2) Subject to paragraph (a)(1) of this section, has only one 
opportunity to correct all deficiencies that served as the basis of its 
revocation through a corrective action plan.
    (b) Review of a corrective action plan. Subject to paragraph (a)(1) 
of this section, CMS or its contractor reviews a submitted corrective 
action plan and does either of the following:
    (1) Reinstates the provider or supplier's billing privileges if the 
provider or supplier provides sufficient evidence to CMS or its 
contractor that it has complied fully with the Medicare requirements, 
in which case--
    (i) The effective date of the reinstatement is based on the date 
the provider or supplier is in compliance with all Medicare 
requirements; and
    (ii) CMS or its contractor may pay for services furnished on or 
after the effective date of the reinstatement.
    (2) Refuses to reinstate a provider or supplier's billing 
privileges. The refusal of CMS or its contractor to reinstate a 
provider or supplier's billing privileges based on a corrective action 
plan is not an initial determination under part 498 of this chapter.

PART 420--PROGRAM INTEGRITY: MEDICARE

0
3. The authority for part 420 continues to read as follows:

    Authority:  Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

0
4. Section 420.405 is amended by--
0
A. Revising paragraph (a).
0
B. In paragraph (b)(2), removing the phrase ``or the OIG,'' and adding 
in its place the phrase ``the OIG,''.
0
C. Adding new paragraphs (b)(3) and (c)(2)(v).
0
D. Revising paragraph (d)(1).
0
E. Revising paragraphs (e)(2), (e)(3), and (f)(1).
0
F. Adding paragraph (f)(3).
0
G. Revising paragraph (h).
    The revisions and additions read as follows:

Sec.  420.405  Rewards for information relating to Medicare fraud and 
abuse.

    (a) General rules. (1) CMS pays a monetary reward for information 
that leads to the collection of at least $100 of Medicare funds from 
individuals and entities that are engaging in, or have engaged in, acts 
or omissions that constitute grounds for the imposition of a sanction 
under sections 1128, 1128A, or 1128B of the Act or that have otherwise 
engaged in sanctionable fraud and abuse against the Medicare program, 
otherwise referred to as ``sanctionable conduct.''
    (2) The determination of whether an individual meets the criteria 
for a reward is at the exclusive discretion of CMS.
    (3) When CMS applies the criteria specified in paragraphs (b), (c), 
and (e) of this section to determine the eligibility and the amount of 
the reward, it notifies the individual as specified in paragraph (d) of 
this section.
* * * * *
    (b) * * *
    (3) CMS does not give a reward if the same or substantially similar 
information was the basis for payment of a relator's share of the 
amounts collected under the False Claims Act, or if the same or 
substantially similar information is the subject of a pending False 
Claim Act case.

[[Page 25032]]

    (c) * * *
    (2) * * *
    (v) An individual who is eligible for a reward for furnishing the 
same or substantially similar information to the Federal government 
under any other federal reward program or payment under Federal law is 
excluded from receiving a reward under this section.
    (d) * * *
    (1) General rule. After all Medicare funds have been collected and 
CMS has determined an individual eligible to receive a reward under the 
provisions of this section, CMS notifies the informant of his or her 
eligibility, in writing, at the most recent address supplied by the 
individual. It is the individual's responsibility to ensure that CMS 
has been notified of any change in his or her address or other relevant 
personal information (for example, change of name, phone number).
* * * * *
    (e) * * *
    (2) The amount of a reward represents what CMS considers to be 
adequate compensation in the particular case as follows:
    (i) For information received before [the effective date of the 
final rule], 10 percent of the final amounts collected applied to the 
first $10,000 for the sanctionable conduct.
    (ii) For information received on or after [the effective date of 
the final rule], 15 percent of the final amounts collected applied to 
the first $66,000,000 for the sanctionable conduct.
    (3) CMS allocates the total reward amount to the first individual 
who provides CMS with specific information, as defined in paragraph (b) 
of this section, on a specific individual or entity that is engaging 
in, or has engaged in, acts or omissions that constitute grounds for 
the imposition of a sanction under sections 1128, 1128A or 1128B of the 
Act or that has otherwise engaged in sanctionable fraud and abuse 
against the Medicare program that leads to the imposition of a 
sanction.
* * * * *
    (f) * * *
    (1) An individual may submit information on persons or entities 
engaging in, or that have engaged in, fraud and abuse against the 
Medicare program to either of the following:
    (i) The Office of Inspector General.
    (ii) CMS or the CMS contractor that has jurisdiction over the 
suspected fraudulent provider or supplier.
* * * * *
    (3) Attestation requirements: Upon notification of reward 
eligibility, an individual must complete an attestation that specifies 
that the individual has or will do all of the following:
    (i) Is not participating and has not participated in the 
sanctionable conduct.
    (ii) Is not otherwise ineligible to receive a reward under 
paragraph (c)(2) of this section.
    (iii) Has furnished information that is accurate and truthful to 
the best of his or her knowledge.
    (iv) Acknowledges that knowingly failing to provide truthful 
information could subject him or her to potential criminal and civil 
liability.
* * * * *
    (h)(1) Finding of ineligibility after reward is accepted. If CMS 
finds an individual ineligible after payment of a reward, CMS reserves 
the right to recover such reward from the individual.
    (2) Notification of ineligibility. CMS notifies an individual in 
writing upon the determination of ineligibility, and requests a full 
refund within 30 days.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
5. The authority for part 424 continues to read as follows:

    Authority:  Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

0
6. Section 424.502 is amended in the definition of ``Enroll/
Enrollment'' by revising the introductory text and paragraph (4) to 
read as follows:

Sec.  424.502  Definitions

* * * * *
    Enroll/Enrollment means the process that Medicare uses to establish 
eligibility to submit claims for Medicare-covered items and services, 
and the process that Medicare uses to establish eligibility to order or 
certify Medicare-covered items and services. The process includes--
* * * * *
    (4) Except for those suppliers that complete the CMS-855O form, 
CMS-identified equivalent, successor form or process for the sole 
purpose of obtaining eligibility to order or certify Medicare covered 
items and services, granting the Medicare provider or supplier Medicare 
billing privileges.
* * * * *

Sec.  424.505  [Amended]

0
7. Section 424.505 is amended by removing the phrase ``Once enrolled, 
the provider or supplier receives'' and adding in its place the phrase 
``Except for those suppliers that complete the CMS-855O form or CMS-
identified equivalent, successor form or process for the sole purpose 
of obtaining eligibility to order or certify Medicare covered items and 
services; once enrolled the provider or supplier receives,''.
0
8. Section 424.520 is amended by revising paragraph (d) to read as 
follows:

Sec.  424.520  Effective date of Medicare billing privileges.

* * * * *
    (d) Physicians, nonphysician practitioners, physician and 
nonphysician practitioner organizations, and ambulance suppliers. The 
effective date for billing privileges for physicians, nonphysician 
practitioners, physician and nonphysician practitioner organizations, 
and ambulance suppliers is the later of--
    (1) The date of filing of a Medicare enrollment application that 
was subsequently approved by a Medicare contractor; or
    (2) The date that the supplier first began furnishing services at a 
new practice location.
0
9. Section 424.530 is amended by revising paragraphs (a)(1), (3), (5), 
and (6) to read as follows:

Sec.  424.530  Denial of enrollment in the Medicare program

    (a) * * *
    (1) Noncompliance. The provider or supplier is determined to not be 
in compliance with the enrollment requirements in this subpart P or in 
the enrollment application applicable for its provider or supplier type 
and has not submitted a plan of corrective action as outlined in part 
488 of this chapter.
* * * * *
    (3) Felonies. The provider, supplier or any owner or managing 
employee of the provider or supplier was, within the preceding 10 
years, convicted (as that term is defined in 42 CFR 1001.2) of a 
Federal or State felony offense that CMS has determined to be 
detrimental to the best interests of the Medicare program and its 
beneficiaries.
* * * * *
    (5) On-site review. Upon on-site review or other reliable evidence, 
CMS determines that the provider or supplier is either of the 
following:
    (i) Not operational to furnish Medicare covered items or services.
    (ii) Otherwise fails to satisfy any Medicare enrollment 
requirements.
    (6) Medicare debt. (i) The enrolling provider, supplier, or owner 
(as defined in Sec.  424.502), has an existing Medicare debt.
    (ii) The enrolling provider, supplier, or owner (as defined in 
Sec.  424.502)

[[Page 25033]]

thereof was previously the owner (as defined in Sec.  424.502) of a 
provider or supplier that had a Medicare debt that existed when the 
latter's enrollment was voluntarily terminated, involuntarily 
terminated, or revoked and all of the following criteria are met:
    (A) The owner left the provider or supplier that had the Medicare 
debt within 1 year of that provider or supplier's voluntary 
termination, involuntary termination or revocation.
    (B) The Medicare debt has not been fully repaid.
    (C) CMS determines that the uncollected debt poses an undue risk of 
fraud, waste or abuse.
    (iii) A denial of Medicare enrollment under this paragraph (a)(6) 
can be avoided if the enrolling provider, supplier or owner thereof 
does both of the following:
    (A) Satisfies the criteria set forth in Sec.  401.607.
    (B)(1) Agrees to a CMS-approved extended repayment schedule for the 
entire outstanding Medicare debt; or
    (2) Repays the debt in full.
* * * * *
0
10. Section 424.535 is amended by revising paragraphs (a)(1) 
introductory text and (a)(3), (a)(5), (a)(8), (c), and (h) to read as 
follows:

Sec.  424.535  Revocation of enrollment and billing privileges in the 
Medicare program.

* * * * *
    (a) * * *
    (1) Noncompliance. The provider or supplier is determined not to be 
in compliance with the enrollment requirements described in this 
subpart P, or in the enrollment application applicable for its provider 
or supplier type, and has not submitted a plan of corrective action as 
outlined in part 488 of this chapter. The provider or supplier may also 
be determined not to be in compliance if it has failed to pay any user 
fees as assessed under part 488 of this chapter.
* * * * *
    (3) Felonies. (i) The provider, supplier, or any owner or managing 
employee of the provider or supplier was, within the preceding 10 
years, convicted (as that term is defined in 42 CFR 1001.2) of a 
federal or state felony offense that CMS has determined to be 
detrimental to the best interests of the Medicare program and its 
beneficiaries.
    (ii) Revocations based on felony convictions are for a period to be 
determined by the Secretary, but not less than 10 years from the date 
of conviction if the individual has been convicted on one previous 
occasion for one or more offenses.
* * * * *
    (5) On-site review. Upon on-site review or other reliable evidence, 
CMS determines that the provider or supplier is either of the 
following:
    (i) No longer operational to furnish Medicare covered items or 
services.
    (ii) Otherwise fails to satisfy any Medicare enrollment 
requirements.
* * * * *
    (8) Abuse of billing privileges. Abuse of billing privileges 
includes either of the following:
    (i) The provider or supplier submits a claim or claims for services 
that could not have been furnished to a specific individual on the date 
of service. These instances include but are not limited to the 
following situations:
    (A) Where the beneficiary is deceased.
    (B) The directing physician or beneficiary is not in the state or 
country when services were furnished.
    (C) When the equipment necessary for testing is not present where 
the testing is said to have occurred.
    (ii) CMS determines that the provider or supplier has a pattern or 
practice of submitting claims for services that fail to meet Medicare 
requirements.
* * * * *
    (c) Reapplying after revocation. If a provider, supplier, owner, or 
managing employee has their billing privileges revoked, they are barred 
from participating in the Medicare program from the date of the 
revocation until the end of the re-enrollment bar.
    (1) The re-enrollment bar begins 30 days after CMS or its 
contractor mails notice of the revocation and lasts a minimum of 1 
year, but not greater than 3 years, depending on the severity of the 
basis for revocation.
    (2) The re-enrollment bar does not apply in the event a revocation 
of Medicare billing privileges is imposed under paragraph (a)(1) of 
this section based upon a provider or supplier's failure to respond 
timely to a revalidation request or other request for information.
* * * * *
    (h) Submission of claims for services furnished before revocation. 
(1)(i) Except for HHAs as described in paragraph (h)(1)(ii) of this 
section, a revoked provider or supplier must, within 60 calendar days 
after the effective date of revocation, submit all claims for items and 
services furnished before the date of the revocation letter.
    (ii) A revoked HHA must submit all claims for items and services 
within 60 days after the later of the following:
    (A) The effective date of the revocation.
    (B) The date that the HHA's last payable episode ends.
    (2) Nothing in this paragraph (h) impacts the requirements of Sec.  
424.44 regarding the timely filing of claims.

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT 
PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT 
AFFECT THE PARTICIPATION OF ICFs/MR AND CERTAIN NFs IN THE MEDICAID 
PROGRAM

0
10. The authority citation for part 498 continues to read as follows:

    Authority:  Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Sec.  498.5  [Amended]

0
11. In Sec.  498.5, paragraph (l)(4) is amended by removing the cross-
reference ``Sec.  424.530(a)(9)'' and adding the cross-reference 
``Sec.  424.530(a)(10)'' in its place.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: August 23, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: April 17, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-09991 Filed 4-24-13; 11:15 am]
BILLING CODE 4120-01-P
```