Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Proposed Rules 25013 

safety risks subject to Executive Order 

13045 (62 FR 19885, April 23, 1997); 

• is not a significant regulatory action 

subject to Executive Order 13211 (66 FR 

28355, May 22, 2001); 

• is not subject to requirements of 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (15 U.S.C. 272 note) because 

application of those requirements would 

be inconsistent with the Clean Air Act; 

and 

• does not provide EPA with the 

discretionary authority to address 

disproportionate human health or 

environmental effects with practical, 

appropriate, and legally permissible 

methods under Executive Order 12898 

(59 FR 7629, February 16, 1994). 

In addition, these rules do not have 

tribal implications as specified by 

Executive Order 13175 (65 FR 67249, 

November 9, 2000), because the SIP is 

not approved to apply in Indian country 

located in the State, and EPA notes that 

it will not impose substantial direct 

costs on tribal governments or preempt 

tribal law. 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Incorporation by 

reference, Intergovernmental relations, 

Ozone, Volatile organic compounds, 

Reporting and recordkeeping 

requirements. 

Authority: 42 U.S.C. 7401 et seq. 

Dated: April 12, 2013. 

Jared Blumenfeld, 

Regional Administrator, Region IX. 

[FR Doc. 2013–10048 Filed 4–26–13; 8:45 am] 

BILLING CODE 6560–50–P 

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. 

SUMMARY: This proposed rule would 

revise the Incentive Reward Program 

provisions in § 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 


emcdonald on DSK67QTVN1PROD with PROPOSALS
25014 Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Proposed Rules 

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 

§ 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 § 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

Provision description Impacts 

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 Medicare Debt.

Though a savings to the federal government would accrue from such a denial, the monetary amount cannot be quantified. 

Expansion of Ability to Deny or Revoke Medicare Billing Privileges 

Based on Felony Conviction.

Though a savings to the federal government would accrue from such a denial or revocation, the monetary 

amount cannot be quantified. 

Revocation Based on Pattern or 

Practice of Billing for Services 

that Do Not Meet Medicare Requirements.

Though a savings to the federal government would accrue from such a revocation, the monetary amount 

cannot be quantified. 


emcdonald on DSK67QTVN1PROD with PROPOSALS
Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Proposed Rules 25015 

1http://oig.hhs.gov/publications/docs/hcfac/ 

hcfacreport2012.pdf. 

TABLE 1—SUMMARY OF COSTS AND IMPACTS—Continued 

Provision description Impacts 

Requirement for Revoked Providers 

and Suppliers to Submit Remaining Claims within 60 Days after 

Revocation.

Monetary amount cannot be quantified. We believe, however, that this requirement would (1) limit the 

Medicare program’s vulnerability to 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 § 424.520(d).

Would result in a transfer of $327.4 million per year (primary estimate) from ambulance suppliers to the 

federal government. 

Elimination of Ability to Submit CAP 

if Revoked on Grounds Other 

Than § 424.535(a)(1).

Monetary amount cannot be quantified. However, the provision would prevent these providers and suppliers from being able to immediately 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 


emcdonald on DSK67QTVN1PROD with PROPOSALS
25016 Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Proposed Rules 

2The 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. 

3The 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. 

4Section 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. 

5The 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. 

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. 

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. 

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 

§ 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. 

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 


emcdonald on DSK67QTVN1PROD with PROPOSALS
Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Proposed Rules 25017 

6The Internal Revenue Service First Report to 

Congress on the Whistleblower Program, available 

at http://www.irs.gov/pub/whistleblower/

whistleblower_annual_report.pdf. 7See the IRS Web site at http://www.irs.gov/pub/ 

whistleblower/whistleblower_annual_report.pdf. 

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. 

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 § 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 § 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 § 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 


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contractors, or its law enforcement 

partners. 

In § 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 § 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 

§ 420.405 before the effective date of the 

final rule. 

Given the aforementioned proposed 

revisions, we would make the following 

regulatory changes to § 420.405: 

• In new paragraph (a)(1), we propose 

to incorporate the first sentence of 

existing § 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 § 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 § 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 Internetbased 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 


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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. 

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 § 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 § 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 § 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 § 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 § 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 § 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 

§ 424.530(a)(6), an application can be 

denied if ‘‘[t]he current owner (as 

defined in § 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

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 § 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 § 424.530(a)(6), we propose 

several changes. 

a. New Paragraph § 424.530(a)(6)(i) 

We propose to incorporate the 

existing language of § 424.530(a)(6) into 


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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 § 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 § 424.518— 

within the scope of proposed 

§ 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 § 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 

§ 424.530(a)(6)(i) should be expanded to 

include the enrolling provider or 

supplier’s managing employees (as that 

term is defined in § 424.502), corporate 

officers, corporate directors, and/or 

board members. 

We note that the term ‘‘overpayment’’ 

as currently used in § 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 

§ 424.530(a)(6) only, specifically 

whether there are certain types of debts 

that should or should not fall within the 

purview of § 424.530(a)(6). 

b. New Paragraph § 424.530(a)(6)(ii) 

We propose in new paragraph 

§ 424.530(a)(6)(ii) that a denial of 

Medicare enrollment is warranted if the 

provider, supplier or current owner (as 

defined in § 424.502) thereof was the 

owner (as defined in § 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 § 424.530(a)(6)(i), 

we propose that the enrolling provider 

or supplier would be able to avoid a 

denial under § 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 § 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 

§ 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 § 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 

§ 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)]. 


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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-bycase 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 

§ 424.530(a)(6) should be expanded to 

include the enrolling entity’s current 

managing employees (as that term is 

defined in § 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 

§ 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 

§ 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 § 401.607 and agrees to a CMSapproved extended repayment schedule 

for the entire outstanding Medicare 

debt. 

3. Felony Convictions 

Under § 424.530(a)(3) and 

§ 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 § 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 

§ 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 § 424.530(a)(3) and 

§ 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 

§ 424.530(a)(3)(i) and § 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 

§ 424.530(a)(3) and § 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 

§ 424.530(a)(3) and § 424.535(a)(3) 

includes many felonies but does not 

encompass all felonies. In order to allow 

us discretion to deny or revoke 


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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 

§ 424.530(a)(3) and § 424.535(a)(3) to 

include felony convictions against a 

provider or supplier’s ‘‘managing 

employee,’’ as that term is defined in 

§ 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 § 424.530(a)(3) and 

§ 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 § 424.530(a)(3) and 

§ 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 § 424.530(a)(3) and 

§ 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, 

§ 424.530(a)(3) and § 424.535(a)(3) 

would be revised as follows: 

• In § 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 § 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 § 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 § 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 § 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 § 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 

§ 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 

§ 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. 


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• 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 § 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 § 424.535(a)(8)(ii). 

Given this, § 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 

§ 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 § 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 postrevocation 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 § 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 

§ 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 § 424.535(h) to include all revoked 

providers and suppliers is warranted. 

We propose to expand the purview of 

§ 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 § 424.535(h) would impact 

the requirements of § 424.44 regarding 

the timely filing of claims. 

Given this, and as stated previously, 

we propose in § 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 § 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 § 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 

§ 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 § 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 


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25024 Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Proposed Rules 

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 

§ 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 § 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 § 489.13, and Medicare billing 

privileges would be conveyed. However, 

under § 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 § 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 § 424.520(d) to 

ambulance companies. We solicit 

comment on whether any other noncertified 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 

§ 424.520(d) to include ambulance 

suppliers. 

7. Effective Date of Re-Enrollment Bar 

Under § 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 reenrollment 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 § 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 § 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 reenrollment 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 

§ 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 § 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. 


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8. Corrective Action Plans 

Consistent with § 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 § 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 

§ 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 § 424.535(a)(1). We 

have seen numerous instances where a 

provider or supplier revoked under 

§ 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 § 424.535(a)(4) for furnishing 

false or misleading information or under 

§ 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 

§ 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 § 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 § 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 § 405.809(a)(1). 

Finally, we propose to incorporate the 

existing language in § 405.809 into a 

new subparagraph (b). 

Given this, we would make the 

following regulatory changes: 

• Add a new paragraph to 

§ 405.809(a)(1) stating the following: 

++ The provider or supplier may not 

submit a CAP unless the revocation was 

for noncompliance under 

§ 424.535(a)(1). 

• Add a new paragraph (2) to 

§ 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 

§ 405.809 that includes the existing 

language in § 405.809. 

• Delete the last sentence in 

§ 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 § 424.530(a)(5) and 

§ 424.535(a)(5) 

We also propose to revise 

§ 424.530(a)(5) and § 424.535(a)(5). We 

believe that the language in each of 

these subsections is redundant. To 

illustrate, the first sentence of 

§ 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 § 424.530(a)(5)(i) and 

(a)(5)(ii) essentially—and, in our view, 

needlessly—repeat this language. The 

same repetition is evident in 

§ 424.535(a)(5), wherein paragraphs 

(a)(5)(i) and (a)(5)(ii) effectively 

duplicate the language in the first 

sentence of § 424.535(a)(5). 

Therefore, § 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, § 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 

§ 424.535(a)(5) would also add the 

phrase ‘‘or other reliable evidence’’ to 

this subsection. There are two reasons 

for this change. First, § 424.530(a)(5) 

currently contains the ‘‘or other reliable 

evidence’’ standard. We believe that 

these two paragraphs, § 424.530(a)(5) 

and § 424.535(a)(5), should contain 

consistent standards. Second, we 

believe it is important to be able to 

ascertain and take action under 

§ 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 § 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 

§ 424.530. 


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For the same reason, we propose to 

revise § 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 § 424.535(a)(3)(ii), we 

propose to change the term ‘‘denials’’ to 

‘‘revocations’’, as § 424.535 does not 

address denials. 

Lastly, § 498.5(l)(4) states that for 

appeals of denials based on 

§ 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, § 424.530(a)(10), 

rather than § 424.530(a)(9), applies to 

temporary moratoria. We therefore 

propose to correct § 498.5(l)(4) by 

changing the reference to § 424.530(a)(9) 

therein to § 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 (§ 420.405) 

Attestation 

Our proposed revisions to the IRP at 

§ 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 × 5 hours × 

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 

(§ 424.530 and § 424.535) 

1. Definition of Enrollment 

Our proposed revisions to § 424.502 

and § 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 § 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 § 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 

§ 424.530(a)(3) and § 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 

§ 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. 


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5. Post-Revocation Submission of 

Claims 

Our proposed change to § 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 § 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 § 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 § 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 § 424.530(a)(5) and 

§ 424.530(a)(5) 

Our proposed changes to 

§ 424.530(a)(5) and § 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 

§ 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 

§ 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 § 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 § 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 § 424.520(d) and § 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 § 424.520(d) to the effective date of 

billing privileges for ambulance 

suppliers; (2) the proposed change at 

§ 424.530(a)(6) to Medicare debt; (3) the 

proposed revision at § 424.535(a)(8) to 

the abuse of billing privileges; (4) the 

proposed change at § 424.535(h) to the 

submission of claims after revocation; 

and (5) the proposed revision at 

§ 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 § 424.520(d) which 

would change the effective date of 

billing privileges for ambulance 

suppliers would only impact newlyenrolling ambulance suppliers. Each 

year, new ambulance providers 

constitute only a very small addition to 

the overall universe of the roughly 1.4 


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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 § 424.520(d)(1) and (2). 

Denials and revocations under, 

respectively, § 424.530(a)(6) and 

§ 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 § 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 § 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 

§ 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 × $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 × .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 § 424.502 or 

§ 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 

§ 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 


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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 § 424.530(a)(3) 

and § 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 

§ 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 § 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 § 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 × 

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 

× 3/12 × 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 § 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 § 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 § 424.530(a)(5) and 

§ 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 § 424.530(a)(5) and 

§ 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/ 

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emcdonald on DSK67QTVN1PROD with PROPOSALS
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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 lowend estimates referred to in section 

V.C.2.f. of this proposed rule and 

involving our proposed change to 

§ 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] 

Category Primary 

estimates Low estimates High estimates Year dollars Discount rate (percent) 

Period 

covered 

Transfers 

Resulting from the change in the effective date of billing privileges for ambulance suppliers ..................................... 327.4 

327.4 

163.7 

163.7 

545.7 

545.7 

2013 

2013 

7 

3 

2014–2023 

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 § 424.530(a)(6)(i) 

and (ii), we considered—and elected to 

propose—an exception to these denial 


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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 § 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 § 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 § 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 § 424.530(a)(3) and 

§ 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 

■ 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). 

■ 2. Section 405.809 is revised to read 

as follows: 

§ 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 § 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 

■ 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). 

■ 4. Section 420.405 is amended by— 

■ A. Revising paragraph (a). 

■ B. In paragraph (b)(2), removing the 

phrase ‘‘or the OIG,’’ and adding in its 

place the phrase ‘‘the OIG,’’. 

■ C. Adding new paragraphs (b)(3) and 

(c)(2)(v). 

■ D. Revising paragraph (d)(1). 

■ E. Revising paragraphs (e)(2), (e)(3), 

and (f)(1). 

■ F. Adding paragraph (f)(3). 

■ G. Revising paragraph (h). 

The revisions and additions read as 

follows: 

§ 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. 


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25032 Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Proposed Rules 

(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 

■ 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). 

■ 6. Section 424.502 is amended in the 

definition of ‘‘Enroll/Enrollment’’ by 

revising the introductory text and 

paragraph (4) to read as follows: 

§ 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, CMSidentified 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. 

* * * * * 

§ 424.505 [Amended] 

■ 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,’’. 

■ 8. Section 424.520 is amended by 

revising paragraph (d) to read as 

follows: 

§ 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. 

■ 9. Section 424.530 is amended by 

revising paragraphs (a)(1), (3), (5), and 

(6) to read as follows: 

§ 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 § 424.502), has an existing Medicare 

debt. 

(ii) The enrolling provider, supplier, 

or owner (as defined in § 424.502) 


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Federal Register / Vol. 78, No. 82 / Monday, April 29, 2013 / Proposed Rules 25033 

thereof was previously the owner (as 

defined in § 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 

§ 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. 

* * * * * 

■ 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: 

§ 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 § 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 

■ 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). 

§ 498.5 [Amended] 

■ 11. In § 498.5, paragraph (l)(4) is 

amended by removing the crossreference ‘‘§ 424.530(a)(9)’’ and adding 

the cross-reference ‘‘§ 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 

DEPARTMENT OF THE INTERIOR 

Fish and Wildlife Service 

50 CFR Part 17 

[Docket Nos. FWS–R4–ES–2012–0068; 

FWS–R4–ES–2013–0010; 4500030114] 

RIN 1018–AY19; 1018–AZ42 

Endangered and Threatened Wildlife 

and Plants; Threatened Status for the 

Spring Pygmy Sunfish and 

Designation of Critical Habitat 

AGENCY: Fish and Wildlife Service, 

Interior. 

ACTION: Proposed rule; reopening of 

comment period. 

SUMMARY: We, the U.S. Fish and 

Wildlife Service (Service), announce the 

reopening of the public comment period 

on our October 2, 2012, proposed listing 

and designation of critical habitat for 

the spring pygmy sunfish (Elassoma 

alabamae) under the Endangered 


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