§ 402.1 Basis and scope. ( a ) *Basis.* This part is based on the sections of the Act that are specified in paragraph (c) of this section.
( b ) *Scope.* This part— ( 1 ) Provides for the imposition of civil money penalties, assessments, and exclusions against persons that violate the provisions of the Act specified in paragraph (c), (d), or (e) of this section; and
( 2 ) Sets forth the appeal rights of persons subject to penalties, assessments, or exclusion and the procedures for reinstatement following exclusion.
( c ) *Civil money penalties.* CMS or OIG may impose civil money penalties against any person or other entity specified in paragraphs (c)(1) through (c)(35) of this section under the identified section of the Act. (The authorities that also permit imposition of an assessment or exclusion are noted in the applicable paragraphs.) ( 1 ) Sections 1833(h)(5)(D) and 1842(j)(2)—Any person that knowingly and willfully, and on a repeated basis, bills for a clinical diagnostic laboratory test, other than on an assignment-related basis. This provision includes tests performed in a physician's office but excludes tests performed in a rural health clinic. (This violation may also include an assessment and cause exclusion.)
( 2 ) Section 1833(i)(6)—Any person that knowingly and willfully presents, or causes to be presented, a bill or request for payment for an intraocular lens inserted during or after cataract surgery for which the Medicare payment rate includes the cost of acquiring the class of lens involved.
( 3 ) Section 1833(q)(2)(B)—Any entity that knowingly and willfully fails to provide information about a referring physician, including the physician's name and unique physician identification number for the referring physician, when seeking payment on an unassigned basis. (This violation, if it occurs in repeated cases, may also cause an exclusion.)
( 4 ) Sections 1834(a)(11)(A) and 1842(j)(2)—Any durable medical equipment supplier that knowingly and willfully charges for a covered service that is furnished on a rental basis after the rental payments may no longer be made (except for maintenance and servicing) as provided in section 1834(a)(7)(A). (This violation may also include an assessment and cause exclusion.)
( 5 ) Sections 1834(a)(18)(B) and 1842(j)(2)—Any nonparticipating durable medical equipment supplier that knowingly and willfully, in violation of section 1834(a)(18)(A), fails to make a refund to Medicare beneficiaries for a covered service for which payment is precluded due to an unsolicited telephone contact from the supplier. (This violation may also include an assessment and cause exclusion.)
( 6 ) Sections 1834(b)(5)(C) and 1842(j)(2)—Any nonparticipating physician or supplier that knowingly and willfully charges a Medicare beneficiary more than the limiting charge, as specified in section 1834(b)(5)(B), for radiologist services. (This violation may also include an assessment and cause exclusion.)
( 7 ) Sections 1834(c)(4)(C) and 1842(j)(2)—Any nonparticipating physician or supplier that knowingly and willfully charges a Medicare beneficiary more than the limiting charge, as specified in section 1834(c)(4)(B), for mammography screening. (This violation may also include an assessment and cause exclusion.)
( 8 ) Sections 1834(h)(3) and 1842(j)(2)—Any supplier of prosthetic devices, orthotics, and prosthetics that knowingly and willfully charges for a covered prosthetic device, orthotic, or prosthetic that is furnished on a rental basis after the rental payment may no longer be made (except for maintenance and servicing). (This violation may also include an assessment and cause exclusion.)
( 9 ) Section 1834(j)(2)(A)(iii)—Any supplier of durable medical equipment, including a supplier of prosthetic devices, prosthetics, orthotics, or supplies, that knowingly and willfully distributes a certificate of medical necessity in violation of section 1834(j)(2)(A)(i) or fails to provide the information required under section 1834(j)(2)(A)(ii).
( 10 ) Sections 1834(j)(4) and 1842(j)(2)— ( i ) Any supplier of durable medical equipment, including a supplier of prosthetic devices, prosthetics, orthotics, or supplies, that knowingly and willfully fails to make refunds in a timely manner to Medicare beneficiaries for services billed other than on an assignment-related basis if— ( A ) The supplier does not possess a Medicare supplier number;
( B ) The service is denied in advance under section 1834(a)(15); or
( C ) The service is determined not to be medically necessary or reasonable.
( ii ) These violations may also include an assessment and cause exclusion.
( 11 ) Sections 1842(b)(18)(B) and 1842(j)(2)—Any practitioner specified in section 1842(b)(18)(C) (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, certified nurse-midwives, clinical social workers, and clinical psychologists) or other person that knowingly and willfully bills or collects for any services by the practitioners on other than an assignment-related basis. (This violation may also include an assessment and cause exclusion.)
( 12 ) Sections 1842(k) and 1842(j)(2)—Any physician who knowingly and willfully presents, or causes to be presented, a claim or bill for an assistant at cataract surgery performed on or after March 1, 1987 for which payment may not be made because of section 1862(a)(15). (This violation may also include an assessment and cause exclusion.)
( 13 ) Sections 1842(l)(3) and 1842(j)(2)—Any nonparticipating physician who does not accept payment on an assignment-related basis and who knowingly and willfully fails to refund on a timely basis any amounts collected for services that are not reasonable or medically necessary or are of poor quality, in accordance with section 1842(l)(1)(A). (This violation may also include an assessment and cause exclusion.)
( 14 ) Sections 1842(m)(3) and 1842(j)(2)— ( i ) Any nonparticipating physician, who does not accept payment for an elective surgical procedure on an assignment-related basis and whose charge is at least $500, who knowingly and willfully fails to— ( A ) Disclose the information required by section 1842(m)(1) concerning charges and coinsurance amounts; and
( B ) Refund on a timely basis any amount collected for the procedure in excess of the charges recognized and approved by the Medicare program.
( ii ) This violation may also include an assessment and cause exclusion.
( 15 ) Sections 1842(n)(3) and 1842(j)(2)—Any physician who knowingly and willfully, in repeated cases, bills one or more beneficiaries, for purchased diagnostic tests, any amount other than the payment amount specified in section 1842(n)(1)(A) or section 1842(n)(1)(B). (This violation may also include an assessment and cause exclusion.)
( 16 ) Section 1842(p)(3)(A)—Any physician or practitioner who knowingly and willfully fails promptly to provide the appropriate diagnosis code or codes upon request by CMS or a carrier on any request for payment or bill not submitted on an assignment-related basis for any service furnished by the physician. (This violation, if it occurs in repeated cases, may also cause exclusion.)
( 17 ) Sections 1848(g)(1)(B) and 1842(j)(2)— ( i ) Any nonparticipating physician, supplier, or other person that furnishes physicians' services and does not accept payment on an assignment-related basis, that— ( A ) Knowingly and willfully bills or collects in excess of the limiting charge (as defined in section 1848(g)(2)) on a repeated basis; or
( B ) Fails to make an adjustment or refund on a timely basis as required by section 1848(g)(1)(A)(iii) or (iv).
( ii ) These violations may also include an assessment and cause exclusion.
( 18 ) Section 1848(g)(3)(B) and 1842(j)(2)—Any person that knowingly and willfully bills for State plan approved physicians' services, as defined in section 1848(j)(3), on other than an assignment-related basis for a Medicare beneficiary who is also eligible for Medicaid (these individuals include qualified Medicare beneficiaries). This provision applies to services furnished on or after April 1, 1990. (This violation may also include an assessment and cause exclusion.)
( 19 ) Section 1848(g)(4)(B)(ii), 1842(p)(3), and 1842(j)(2)(A)— ( i ) Any physician, supplier, or other person (except any person that has been excluded from the Medicare program) that, for services furnished after September 1, 1990, knowingly and willfully— ( A ) Fails to submit a claim on a standard claim form for services provided for which payment is made under Part B on a reasonable charge or fee schedule basis; or
( B ) Imposes a charge for completing and submitting the standard claims form.
( ii ) These violations, if they occur in repeated cases, may also cause exclusion.
( 20 ) Section 1862(b)(6)(B)—Any entity that knowingly, willfully, and repeatedly— ( i ) Fails to complete a claim form relating to the availability of other health benefit plans in accordance with section 1862(b)(6)(A); or
( ii ) Provides inaccurate information relating to the availability of other health benefit plans on the claim form.
( 21 ) Section 1862(b)(7)(B)—Except for the situation described in paragraphs (c)(21)(ii)(A) and (B) of this section, any entity that has a reporting obligation under section 1862(b)(7) of the Act (“reporting entity”) that— ( i ) Fails to report any beneficiary record within 1 year of the last acceptable reporting date, defined as 365 days from the GHP coverage effective date or the Medicare beneficiary's entitlement date, whichever is later.
( ii ) A civil money penalty (CMP) is not imposed if— ( A ) The incident of noncompliance is associated with a specific reporting policy or procedural change on the part of CMS that has been effective for less than 6 months following the implementation of that policy or procedural change (or for 1 year, should CMS be unable to provide a minimum of 6 months' notice prior to implementing such changes).
( B ) The entity complies with any reporting thresholds or any other reporting exclusions.
( 22 ) Section 1862(b)(8)(E)—Except for the situations described in paragraph (c)(22)(ii)(A), (B) and (C) of this section, any applicable plan that has a reporting obligation under section 1862(b)(8) of the Act (“applicable plan”), that— ( i ) Fails to report any beneficiary record within 1 year from the date of the settlement, judgment, award, or other payment, or the effective date where ongoing payment responsibility for medical care has been assumed by the entity.
( ii ) A CMP is not imposed in the following situations: ( A ) An NGHP applicable plan fails to report required information as a result of the applicable plan's inability to obtain an individual's last name, first name, date of birth, gender, Medicare Beneficiary Identifier (MBI), Social Security Number (SSN), or the last 5 digits of the SSN, and the applicable plan has made a good faith effort to obtain this information by meeting the following: ( 1 ) Has communicated the need for this information to the individual and his or her attorney, or other representative, if applicable, or both.
( 2 ) Has requested the information from the individual and his or her attorney, or other representative (if applicable), at least three times— ( i ) Once in writing (including electronic mail);
( ii ) Then at least once more by mail; and
( iii ) At least once more by phone or other means of contact in the absence of a response to the mailings.
( 3 ) Has not received a response or has received a written response clearly indicating that the individual refuses to provide the needed information. Should the applicable plan receive a written response from the individual or their attorney or representative that clearly and unambiguously declines or refuses to provide any portion of the information specified herein, no additional communications with the individual or their attorney or other representative are required.
( 4 ) Has documented its efforts to obtain the MBI or SSN (or the last 5 digits of the SSN). This documentation, including any written rejection correspondence, must be retained for a minimum of 5 years.
( B ) An NGHP applicable plan complies with any reporting thresholds or any other reporting exclusions.
( C ) The incident of noncompliance is associated with a specific reporting policy or procedural change on the part of CMS that has been effective for less than 6 months following the implementation of that policy or procedural change (or for 12 months, should CMS be unable to provide a minimum of 6 months' notice prior to implementing such changes).
( 23 ) Section 1877(g)(5)—Any person that fails to report information required by HHS under section 1877(f) concerning ownership, investment, and compensation arrangements. (This violation may also include an assessment and cause exclusion.)
( 24 ) Sections 1879(h), 1834(a)(18), and 1842(j)(2)— ( i ) Any durable medical equipment supplier, including a supplier of prosthetic devices, prosthetics, orthotics, or supplies, that knowingly and willfully fails to make refunds in a timely manner to Medicare beneficiaries for services billed on an assignment-related basis if— ( A ) The supplier did not possess a Medicare supplier number;
( B ) The service is denied in advance under section 1834(a)(15) of the Act; or
( C ) The service is determined not to be payable under section 1834(a)(17)(b) because of unsolicited telephone contacts.
( ii ) These violations may also include an assessment and cause exclusion.
( 25 ) Section 1882(a)(2)—Any person that issues a Medicare supplemental policy that has not been approved by the State regulatory program or does not meet Federal standards on and after the effective date in section 1882(p)(1)(C). (This violation may also include an assessment and cause exclusion.)
( 26 ) Section 1882(p)(8)—Any person that sells or issues Medicare supplemental policies, on or after July 30, 1992, that fail to conform to the NAIC or Federal standards established under section 1882(p). (This violation may also include an assessment and cause exclusion.)
( 27 ) Section 1882(p)(9)(C)— ( i ) Any person that sells a Medicare supplemental policy and— ( A ) Fails to make available for sale the core group of basic benefits when selling other Medicare supplemental policies with additional benefits; or
( B ) Fails to provide the individual, before the sale of the policy, an outline of coverage describing the benefits provided by the policy.
( ii ) These violations may also include an assessment and cause exclusion.
( 28 ) Section 1882(q)(5)(C)— ( i ) Any person that fails to— ( A ) Suspend a Medicare supplemental policy at the policyholder's request, if the policyholder applies for and is determined eligible for medical assistance, and the policyholder provides notice within 90 days of the eligibility determination; or
( B ) Automatically reinstate the policy as of the date of termination of medical assistance if the policyholder loses eligibility for medical assistance and the policyholder provides notice within 90 days of loss of eligibility.
( ii ) These violations may also include an assessment and cause exclusion.
( 29 ) Section 1882(r)(6)(A)—Any person that fails to provide refunds or credits as required by section 1882(r)(1)(B). (This violation may also include an assessment and cause exclusion.)
( 30 ) Section 1882(s)(4)— ( i ) Any issuer of a Medicare supplemental policy that— ( A ) Does not waive any time periods applicable to preexisting conditions, waiting periods, elimination periods, or probationary periods if the time periods were already satisfied under a preceding Medicare supplemental policy; or
( B ) Denies a policy, conditions the issuance or effectiveness of the policy, or discriminates in the pricing of the policy based on health status or other criteria as specified in section 1882(s)(2)(A).
( ii ) These violations may also include an assessment and cause exclusion.
( 31 ) Section 1882(t)(2)— ( i ) Any issuer of a Medicare supplemental policy that— ( A ) Fails substantially to provide medically necessary services to enrollees seeking the services through the issuer's network of entities;
( B ) Imposes premiums on enrollees in excess of the premiums approved by the State;
( C ) Acts to expel an enrollee for reasons other than nonpayment of premiums; or
( D ) Does not provide each enrollee at the time of enrollment with the specific information provided in section 1882(t)(1)(E)(i) or fails to obtain a written acknowledgment from the enrollee of receipt of the information (as required by section 1882(t)(1)(E)(ii)).
( ii ) These violations may also include an assessment and cause exclusion.
( 32 ) Sections 1834(k)(6) and 1842(j)(2)—Any person or entity who knowingly and willfully bills or collects for any outpatient therapy services or comprehensive outpatient rehabilitation services on other than an assignment-related basis. (This violation may also include an assessment and cause exclusion.)
( 33 ) Sections 1834(l)(6) and 1842(j)(2)—Any supplier of ambulance services who knowingly and willfully bills or collects for any services on other than an assignment-related basis. (This violation may also include an assessment and cause exclusion.)
( 34 ) Section 1806(b)(2)(B)—Any person who knowingly and willfully fails to furnish a beneficiary with an itemized statement of items or services within 30 days of the beneficiary's request.
( 35 ) Section 1128G (b) (1) and (2)—Any applicable manufacturer or applicable group purchasing organization that fails to timely, accurately, or completely report a payment or other transfer of value or an ownership or investment interest to CMS, as required under part 403, subpart I, of this chapter.
( d ) *Assessments.* CMS or OIG may impose assessments in addition to civil money penalties for violations of the following statutory sections: ( 1 ) Section 1833: Paragraph (h)(5)(D).
( 2 ) Section 1834: Paragraphs (a)(11)(A), (a)(18)(B), (b)(5)(C), (c)(4)(C), (h)(3), (j)(4), (k)(6), and (l)(6).
( 3 ) Section 1842: Paragraphs (k), (l)(3), (m)(3), and (n)(3).
( 4 ) Section 1848: Paragraph (g)(1)(B).
( 5 ) Section 1877: Paragraph (g)(5).
( 6 ) Section 1879: Paragraph (h).
( 7 ) Section 1882: Paragraphs (a)(2), (p)(8), (p)(9)(C), (q)(5)(C), (r)(6)(A), (s)(3), and (t)(2).
( e ) *Exclusions.* ( 1 ) CMS or OIG may exclude any person from participation in the Medicare program on the basis of any of the following violations of the statute: ( i ) Section 1833: Paragraphs (h)(5)(D) and, in repeated cases, (q)(2)(B).
( ii ) Section 1834: Paragraphs (a)(11)(A), (a)(18)(B), (b)(5)(C), (c)(4)(C), (h)(3), (j)(4), (k)(6), and (l)(6).
( iii ) Section 1842: Paragraphs (b)(18)(B), (k), (l)(3), (m)(3), (n)(3), and, in repeated cases, (p)(3)(B).
( iv ) Section 1848: Paragraphs (g)(1)(B), (g)(3)(B), and, in repeated cases, (g)(4)(B)(ii).
( v ) Section 1877: Paragraph (g)(5).
( vi ) Section 1879: Paragraph (h).
( vii ) Section 1882: Paragraphs (a)(2), (p)(8), (p)(9)(C), (q)(5)(C), (r)(6)(A), (s)(4), and (t)(2).
( 2 ) CMS or OIG must exclude from participation in the Medicare program any of the following, under the identified section of the Act: ( i ) Section 1834(a)(17)(C)—Any supplier of durable medical equipment and supplies that are covered under section 1834(a)(13) that knowingly contacts Medicare beneficiaries by telephone regarding the furnishing of covered services in violation of section 1834(a)(17)(A) and whose conduct establishes a pattern of prohibited contacts as described under section 1834(a)(17)(A).
( ii ) Section 1834(h)(3)—Any supplier of prosthetic devices, orthotics, and prosthetics that knowingly contacts Medicare beneficiaries by telephone regarding the furnishing of prosthetic devices, orthotics, or prosthetics in the same manner as in the violation under section 1834(a)(17)(A) and whose conduct establishes a pattern of prohibited contacts in the same manner as described in section 1834(a)(17)(C).
( f ) *Responsible persons.* ( 1 ) If CMS or OIG determines that more than one person is responsible for any of the violations described in paragraph (c) or paragraph (d) of this section, it may impose a civil money penalty or a civil money penalty and assessment against any one of those persons or jointly and severally against two or more of those persons. However, the aggregate amount of the assessments collected may not exceed the amount that could be assessed if only one person were responsible.
( 2 ) A principal is liable for penalties and assessments for the actions of his or her agent acting within the scope of the agency.
( g ) *Time limits.* Neither CMS nor OIG initiates an action to impose a civil money penalty, assessment, or proceeding to exclude a person from participation in the Medicare program unless it begins the action within 6 years from the date on which the claim was presented, the request for payment was made, or the incident occurred.
[63 FR 68690, Dec. 14, 1998, as amended at 66 FR 49546, Sept. 28, 2001; 78 FR 9520, Feb. 8, 2013; 88 FR 70372, Oct. 11, 2023]