```

[Federal Register Volume 79, Number 234 (Friday, December 5, 2014)]
[Rules and Regulations]
[Pages 72499-72533]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28505]

[[Page 72499]]

Vol. 79

Friday,

No. 234

December 5, 2014

Part IV

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 405, 424, and 498

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

Federal Register / Vol. 79 , No. 234 / Friday, December 5, 2014 / 
Rules and Regulations

[[Page 72500]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 424, and 498

[CMS-6045-F]
RIN 0938-AP01

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

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

ACTION: Final rule.

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SUMMARY: This final rule implements various provider enrollment 
requirements. These include: 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 that fail to meet Medicare 
requirements; and limiting the ability of ambulance suppliers to 
``backbill'' for services performed prior to enrollment.

DATES: These regulations are effective on February 3, 2015.

FOR FURTHER INFORMATION CONTACT: Frank Whelan, (410) 786-1302.

SUPPLEMENTARY INFORMATION: 

I. Executive Summary and Background

A. Executive Summary

1. Purpose
a. Need for Regulatory Action
    This final rule is necessary to make certain changes to the 
provider enrollment provisions in 42 CFR part 424, subpart P. This 
final rule will strengthen program integrity and help ensure that 
fraudulent entities and individuals do not enroll in or maintain their 
enrollment in the Medicare program.
b. Legal Authority
    Sections 1102 and 1871 of the Social Security 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 
respect to the enrollment process for providers and suppliers.
2. Brief Summary of the Major Provider Enrollment Provisions
    We are finalizing the following major provisions regarding provider 
enrollment:
     Allowing denial of enrollment if the provider, supplier, 
or owner thereof was previously the owner 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--
    ++ 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.
    A denial under this provision can be averted if the enrolling 
provider, supplier, or owner thereof--(1) satisfies the criteria set 
forth in Sec.  401.607 and agrees to a CMS-approved extended repayment 
schedule for the entire outstanding Medicare debt; or (2) repays the 
debt in full.
     Allowing denial of enrollment or revocation of Medicare 
billing privileges if, within the preceding 10 years, the provider or 
supplier, or any owner or managing employee thereof, was convicted of a 
federal or state felony offense that CMS determines to be detrimental 
to the best interests of the Medicare program and its beneficiaries. 
(Under the previous regulation, enrollment could not be denied or 
revoked based on a managing employee's felony conviction.)
     Allowing revocation of Medicare billing privileges if the 
provider or supplier has a pattern or practice of submitting claims 
that fail to meet Medicare requirements.
     With the exception noted in section II.B.5. of this final 
rule, requiring all revoked providers and suppliers (regardless of 
type) to submit all of their remaining claims within 60 days after the 
effective date of their revocation.
     Limiting the ability of ambulance companies to ``back 
bill'' for services furnished prior to enrollment. Under Sec.  
424.520(d), physicians, non-physician practitioners, and physician and 
non-physician practitioner organizations currently cannot bill for 
services furnished prior to the later of the date the supplier filed a 
Medicare enrollment application that was subsequently approved by a 
Medicare contractor or the date the supplier first began furnishing 
services at a new practice location. (Independent diagnostic testing 
facilities (IDTFs) and suppliers of durable medical equipment, 
prosthetics, orthotics, and supplies (DMEPOS) have similar 
restrictions.) We are expanding this to include ambulance suppliers.
     Limiting the ability of revoked providers and suppliers to 
submit a corrective action plan (CAP) to situations where the 
revocation was based on Sec.  424.535(a)(1).
3. Incentive Reward Program (IRP)
    We may finalize the provisions relating to the IRP in future 
rulemaking.
4. Summary of Costs and Benefits
    The following table provides a summary of the costs and benefits 
associated with the principal provisions of this final rule.

                  Table 1--Summary of Costs and Impacts
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         Provision description                       Impacts
------------------------------------------------------------------------
Denial of Enrollment Based on Medicare   Though a savings to the federal
 Debt.                                    government will accrue from
                                          such a denial, the monetary
                                          amount cannot be quantified.
Expansion of Ability to Deny or Revoke   Though a savings to the federal
 Medicare Billing Privileges Based on     government will accrue from
 Felony Conviction.                       such a denial or revocation,
                                          the monetary amount cannot be
                                          quantified.
Revocation Based on Pattern or Practice  Though a savings to the federal
 of Submitting Claims that Do Not Meet    government will accrue from
 Medicare Requirements.                   such a revocation, the
                                          monetary amount cannot be
                                          quantified.
Requirement for Revoked Providers and    Monetary amount cannot be
 Suppliers to Submit Remaining Claims     quantified. However, we
 within 60 Days after Effective Date of   believe this requirement
 Revocation.                              will_(1) limit the Medicare
                                          program's vulnerability to
                                          fraudulent claims; and (2)
                                          allow more focused medical
                                          review. This will likely
                                          result in some savings to the
                                          federal government.

[[Page 72501]]

 
Inclusion of Ambulance Suppliers within  Will result in a transfer of
 Sec.   424.520(d).                       $327.4 million per year
                                          (primary estimate) from
                                          ambulance suppliers to the
                                          federal government.
Limitation of Ability to Submit CAP to   Monetary amount cannot be
 Situations where Revocation based on     quantified. However, the
 Sec.   424.535(a)(1).                    provision will 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

    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.'' 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.
    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 as 
well as to section 1866(j) of the Act, we proposed several additional 
changes to our provider enrollment regulations to help ensure that 
Medicare payments are only made to qualified providers and suppliers.
    In the April 29, 2013 Federal Register (78 FR 25013), we published 
a proposed rule that would revise the IRP provisions and certain 
provider enrollment requirements in part 424, subpart P.

II. Provisions of the Proposed Rule and Analysis of and Responses to 
Public Comments

A. Incentive Reward Program (IRP)

    We received a number of comments regarding our proposed IRP 
provisions. They focused largely on several issues.
    First, a number of commenters stated that the significantly 
increased reward amount would lead to many reports containing 
irrelevant or erroneous information that would ultimately impose a 
heavy burden on CMS and its contractors. Providers would also be 
seriously burdened because they would constantly have to fight 
unwarranted complaints, perhaps leaving less time for such providers to 
treat Medicare beneficiaries.
    Second, several commenters expressed concern regarding our proposal 
to limit reward eligibility to the first reporter of information about 
a provider's actual or potential sanctionable conduct. They contended 
that this could create ``shoot first, ask questions later'' situations; 
such a rush to report could also create tension between providers and 
patients.
    Third, several commenters stated that our proposal would encourage 
whistleblowers to first report their concerns to CMS: (1) Instead of 
using established internal compliance reporting methods (such as 
hotlines) created within Medicare provider organizations; and (2) 
without undertaking any initial validation of facts or discussing the 
matter with the provider.
    Fourth, commenters questioned whether CMS has the resources in 
place to handle the enormous influx of tips and complaints that our 
proposal would generate.
    Due to the complexity of the operational aspects of our proposal, 
we are not finalizing our proposed IRP provisions in this rule. We may 
finalize them in future rulemaking.

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 that rule's 
publication, we have revised and supplemented various provisions in 
part 424, subpart P to address certain payment safeguard issues. As 
discussed in the following section, this final rule makes additional 
changes to subpart P.
1. Definition of Enrollment
    Most physicians and non-physician practitioners enroll in Medicare 
to become eligible to receive payment for covered services furnished to 
Medicare beneficiaries. However, some physicians and non-physician 
practitioners who are not enrolled in Medicare via the Form CMS-855I 
enrollment application may wish to enroll for the sole and exclusive 
purpose of ordering or certifying items or services for Medicare 
beneficiaries. Consistent with Sec.  424.507, and assuming all other 
applicable requirements are met, these individuals are eligible to 
enroll for the sole purpose of ordering or certifying Medicare items or 
services by completing the CMS-855O application. The CMS-855O (OMB 
Approval #0938-0685), which became available for use 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 non-physician practitioners who complete the CMS-
855O are not eligible to submit claims to Medicare for services they 
provide, for they are not granted Medicare billing privileges. Because 
some of our regulatory provisions did not clearly articulate the 
difference between enrolling in Medicare: (1) To obtain Medicare 
billing privileges; and (2) solely to order or certify items or 
services for Medicare beneficiaries, we proposed three remedial 
changes.
    The first change involved the definition of ``Enroll/Enrollment'' 
in Sec.  424.502, the initial sentence of which stated: ``Enroll/
Enrollment means the process that Medicare uses to establish 
eligibility to submit claims for Medicare-covered services and 
supplies.'' We proposed to change this to read: ``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.'' Our purpose was to clarify that 
the overall enrollment process includes enrollment via the CMS-855O.
    The second revision concerned paragraph (4) of the definition of 
``Enroll/Enrollment'' in Sec.  424.502. We proposed to change the 
language in this paragraph 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 was intended to emphasize that

[[Page 72502]]

although 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 third change involved Sec.  424.505, which states in part that 
a provider or supplier, once enrolled, receives Medicare billing 
privileges. We proposed 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, our purpose was to clarify 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 
the supplier.
    The following is a summary of the comments we received on these 
three changes and our responses:
    Comment: Several commenters recommended that the CMS-855O be 
modified to require the applicant to provide information about his or 
her practice location and medical record location. The commenters 
contended that Sec.  424.510(d)(2)(ii) mandates that each submitted 
enrollment application include the submission of all documentation to 
uniquely identify a provider or supplier--including, but not limited 
to, proof of a practice location and medical record storage location. 
Such proof, the commenters stated, can help reduce identity theft and 
other forms of Medicare fraud, waste and abuse. A commenter recommended 
that CMS deactivate the billing privileges of any individual who 
enrolled in Medicare using the CMS-855O because the CMS-855O does not 
collect information on practice locations and medical record storage 
locations. Another commenter suggested that CMS require individuals who 
have enrolled using the CMS-855O to provide practice location 
information.
    Response: These recommended changes regarding the CMS-855O are 
outside the scope of this rule, though we may consider adding practice 
location information to the CMS-855O at a later date.
    Some of the enrollment requirements in Sec.  424.510 are applicable 
only to providers and suppliers enrolling in Medicare to obtain billing 
privileges, and do not apply to providers and suppliers enrolling 
strictly to order or certify items or services for Medicare 
beneficiaries. In order to clarify those requirements that apply to all 
enrollments and those that only apply to enrollments to obtain billing 
privileges, we are revising Sec.  424.510 as follows:
     The first two sentences of existing paragraph (a) will be 
designated as new paragraph (a)(1).
     The third sentence of existing paragraph (a) will be 
designated as new paragraph (a)(2) and is revised to read: ``To be 
enrolled to furnish Medicare-covered items and services, a provider or 
supplier must meet the requirements specified in paragraphs (d) and (e) 
of this section.''
     New paragraph (a)(3) will state the following: ``To be 
enrolled solely to order and certify Medicare items or services, a 
physician or non-physician practitioner must meet the requirements 
specified in paragraph (d) of this section except for paragraphs 
(2)(iii)(B), (2)(iv), (3)(ii), (5), (6), and (9).'' These paragraphs 
only apply to individuals enrolling to obtain Medicare billing 
privileges.
    With respect to the commenter's suggestion regarding deactivation, 
enrollment via the CMS-855O does not confer billing privileges. Hence, 
there are no billing privileges to deactivate.
    Comment: Several commenters disagreed with the use of the CMS-855O, 
arguing that CMS: (1) Lacks the statutory and regulatory basis to 
either establish a registration process for ordering and certifying 
physicians and non-physician practitioners or to use an enrollment 
application for any purpose other than to enroll a provider or supplier 
(including physicians and non-physician practitioners); and (2) 
violates 5 U.S.C. 551 et seq. in its use of the CMS-855O without having 
issued a proposed and final regulation. The commenters further 
contended that Sec.  424.500 does not contemplate such a registration 
process and that CMS did not solicit comments on revising Sec.  424.500 
for such purpose. A commenter recommended that CMS: (1) Discontinue use 
of the CMS-855O until it completes the notice and comment rulemaking 
process described in section 1871 of the Act; and (2) furnish the legal 
basis for registering physicians and non-physician practitioners for 
the sole purpose of ordering or certifying Medicare services or items.
    Other commenters expressed concern that CMS is using the Paperwork 
Reduction Act of 1995 (PRA) to circumvent the notice and comment 
rulemaking requirements of the Administrative Procedure Act as a means 
of establishing a new Medicare enrollment application--specifically, 
the CMS-855O. A commenter contended that CMS essentially used the PRA 
process to prohibit physicians from obtaining Medicare billing 
privileges via the CMS-855O. The commenter recommended that CMS explain 
its use of the CMS-855O: (1) Without having utilized the notice and 
comment rulemaking process; and (2) in lieu of using the CMS-855I, 
which has a legal basis, has already been subject to rulemaking, and 
duplicates all of the data on the CMS-855O; the commenter argued that 
CMS has already established an enrollment application for physicians 
(that is, the CMS-855I) and that the CMS-855O is therefore duplicative 
of the CMS-855I. With respect to the second suggestion regarding CMS 
using the PRA process to prohibit physicians from enrolling to obtain 
billing privileges, the commenter added that CMS could modify the CMS-
855I to accommodate physicians and non-physician practitioners seeking 
only to order or certify items or services. The commenter stated that 
this would ease the paperwork burden on such individuals should they 
later wish to obtain Medicare billing privileges; rather than having to 
complete two separate forms (the CMS-855I and CMS-855O), the commenter 
continued, the individual would only need to submit an updated CMS-855I 
application as part of the enrollment process.
    Another commenter stated that the Privacy Act Statement for the 
CMS-855O includes various references to payments to providers and 
suppliers. Since the CMS-855O is designed for the sole purpose of 
ordering and certifying, the commenter requested that CMS explain its 
rationale for including such references in the CMS-855O Privacy Act 
Statement.
    Response: As already indicated, comments regarding the use or 
content of the CMS-855O are outside the scope of this rule. However, we 
note that section 6405 of the Affordable Care Act gave us the authority 
to require the Medicare enrollment of physicians and non-physician 
practitioners who order or certify certain items or services for 
Medicare beneficiaries. We implemented this statutory provision at 
Sec.  424.507 via a May 5, 2010 interim final rule with comment period 
(75 FR 24437) and an April 27, 2012 final rule (77 FR 25284). These two 
rules, as well as the CMS-855O itself, were subject to a notice-and-
comment process. (We solicited public comments on the CMS-855O in two 
Federal Register notices as

[[Page 72503]]

mandated by the PRA.) Moreover, we disagree with the contention that 
the PRA process was used to prohibit physicians from obtaining Medicare 
billing privileges via the CMS-855O. The CMS-855O was not designed as a 
prohibition of any kind but instead as means of permitting--consistent 
with section 6405 of the Affordable Care Act--certain physicians and 
non-physician practitioners to enroll in Medicare solely to order or 
certify Medicare items or services. We believe that completion of an 
abbreviated form such as the CMS-855O, rather than all or part of the 
CMS-855I, has eased the burden on the physician and non-physician 
practitioner communities.
    Comment: A commenter questioned whether physicians who submit the 
CMS-855O are required to revalidate their enrollment with the Medicare 
contractor every 5 years.
    Response: We reserve the right to require individuals who are 
enrolled solely to order or certify items or services to revalidate 
their enrollment information every 5 years.
    Comment: A commenter stated that since CMS did not discuss 
reassignment in this proposed rule, it would seem that section 1871 of 
the Act would not preclude CMS from barring physicians and non-
physician practitioners from enrolling in Medicare via the CMS-855O and 
reassigning their benefits to a medical group. The commenter sought 
clarification as to whether a physician can enroll using the CMS-855O 
and reassign payment/benefits to either an employer or an entity under 
contractual arrangement. Another commenter questioned whether a 
physician can simultaneously submit a CMS-855O and CMS-855R if he or 
she is billing for services through a group practice.
    Response: The concept of reassignment (as that term is used in 
Sec.  424.80) does not apply to CMS-855O situations because there is no 
right to payment associated with an enrollment via the CMS-855O. In 
other words, a physician or non-physician practitioner who enrolls via 
the CMS-855O does not have Medicare billing privileges, and therefore 
has no right to payment to reassign via the CMS-855R. If he or she 
wishes to enroll in Medicare, bill the program for services, and 
reassign his or her benefits to an eligible party, he or she must 
complete both the CMS-855I and CMS-855R forms. A CMS-855O form cannot 
be used as a means of obtaining Medicare billing privileges.
    Comment: A commenter questioned whether a physician or non-
physician practitioner can use the CMS-855O if he or she submits only 
very few claims to Medicare per year or whether he or she must use the 
CMS-855I.
    Response: In the scenario the commenter poses, the physician or 
non-physician practitioner must use the CMS-855I because he or she will 
be billing for Medicare services. As discussed previously, the CMS-855O 
may only be used by physicians or other eligible practitioners who wish 
to enroll solely to order or certify items or services. It cannot be 
used to obtain Medicare billing privileges.
    Comment: A commenter questioned whether a Medicare-enrolled 
physician or non-physician practitioner who also works part-time at 
(and only orders services from) a rural health clinic (RHC) must 
complete the CMS-855O for his or her activities at the RHC.
    Response: The individual need not complete a CMS-855O in this 
scenario, for he or she is already enrolled in Medicare via the CMS-
855I.
    Comment: A commenter stated that if suppliers who enroll solely to 
order or certify Medicare items or services are not granted Medicare 
billing privileges, the regulatory provisions found in Part 424, 
subpart P do not apply and CMS does not have the authority to approve, 
deny, deactivate, or revoke individuals who have enrolled or seek to 
enroll in Medicare via the CMS-855O solely to order and certify. The 
commenter recommended that CMS propose a new rule to allow CMS to 
approve, deny, revoke, or deactivate the enrollment of a physician or 
non-physician practitioner in such instances.
    Response: The regulations in Part 424, subpart P apply to suppliers 
who are enrolled or enrolling in Medicare and are not limited to 
suppliers who have or seek Medicare billing privileges. In light of our 
changes to Sec. Sec.  424.502, 424.505, and 424.510, the provisions of 
subpart P apply equally to suppliers who enroll in order to obtain 
Medicare billing privileges and those who enroll exclusively to order 
or certify Medicare items or services.
    Comment: A commenter requested clarification as to whether a 
physician must have a valid enrollment record in PECOS to order 
infusion and nebulizer drugs or other Part B drugs.
    Response: We believe this comment is outside the scope of this 
final rule.
    Comment: Several commenters sought clarification from CMS 
concerning the difference between the use of the term ``registration'' 
on the CMS-855O and the proposed changes to Sec. Sec.  424.502 and 
424.505, which use the term ``enrollment.'' One commenter questioned 
whether these two terms have the same meaning. Another commenter 
suggested that CMS establish a definition of ``register.''
    Response: Our use of the term ``registration'' on the CMS-855O was 
designed to clarify the distinction between enrolling in Medicare to 
obtain billing privileges and enrolling in Medicare solely to order or 
certify items and services. In the latter situation, the process is the 
same irrespective of the precise term that is used to describe it. For 
this reason, and because the CMS-855O process will now be included 
within the scope of the enrollment provisions of Sec. Sec.  424.502, 
424.505, and 424.510, we do not believe a separate definition of 
``register'' is warranted or needed.
    Comment: Citing the current definition of ``Enroll/Enrollment'' in 
Sec.  424.502, a commenter noted that the enrollment process includes 
identifying and confirming the provider's practice locations. The 
commenter contended that since the CMS-855O does not collect practice 
location information, referencing the CMS-855O in Sec.  424.502 is 
inappropriate. The commenter suggested that CMS discontinue use of the 
CMS-855O until it proposes changes to the definition of ``Enroll/
Enrollment'' that eliminate the reference to practice location data.
    Response: As mentioned earlier, we may consider adding practice 
location information to the CMS-855O at a later date. Therefore, we do 
not believe that the definition of ``Enroll/Enrollment'' in Sec.  
424.502 should be revised to remove the reference to practice 
locations. However, we will modify paragraph (2) of the definition of 
``Enroll/Enrollment'' in Sec.  424.502 to account for that paragraph's 
inapplicability to CMS-855O applications. The current version of 
paragraph (2) states that the enrollment process includes, ``Validation 
of the provider's or supplier's eligibility to provide items or 
services to Medicare beneficiaries.'' Since suppliers who complete the 
CMS-855O are enrolling solely to order or certify Medicare items and 
services, we are modifying paragraph (2) to state: ``Except for those 
suppliers who complete the CMS-855O form, CMS-identified equivalent, 
successor form or process for the sole purpose of obtaining eligibility 
to order or certify Medicare-covered items and services, validating the 
provider or supplier's eligibility to provide items or services to 
Medicare beneficiaries.'' We note that the new language in paragraph 
(2) is the same as that which is being added to paragraph (4).
    Comment: Several commenters supported our proposed changes to 
Sec. Sec.  424.502 and 424.505 to reflect that

[[Page 72504]]

some physicians and non-physician practitioners may enroll solely to 
order or certify certain items or services for Medicare beneficiaries. 
However, one commenter suggested that the verbiage ``or CMS-equivalent 
or successor form or process for the sole purpose of obtaining 
eligibility to order or certify Medicare-covered items and services'' 
is too wordy and confusing and should be stricken from both sections.
    Response: While we appreciate the commenters' support, we do not 
believe the quoted language should be stricken from Sec. Sec.  424.502 
and 424.505. This language is necessary to account for the possibility 
that a different process for enabling individuals to enroll solely to 
order or certify Medicare items and services could be established in 
the future.
    Comment: A commenter believed that there remains confusion in the 
physician and non-physician practitioner communities regarding the 
difference between enrolling exclusively to order and certify Medicare 
services, and enrolling for the purpose of participating in and billing 
Medicare. The commenter urged CMS to make this distinction clear on the 
CMS-855O form itself and in all applicable CMS educational efforts.
    Response: We have undertaken extensive educational efforts--
including close collaboration with various professional associations--
to clarify for the public and the provider community the distinction 
between the two processes. We will continue our outreach activities on 
this issue.
    Comment: A commenter questioned whether CMS is changing its 
longstanding policy of requiring providers and suppliers to submit to 
CMS or its Medicare contractor the applicable provider enrollment 
application based on the type of provider or supplier enrolling. The 
commenter also requested that CMS propose and explain the differences 
between the Medicare enrollment process to convey Medicare billing 
privileges and this ostensibly new concept of enrolling solely to order 
and certify items and services in the Medicare program.
    Response: All providers and suppliers, including those suppliers 
submitting the CMS-855O, will continue to submit enrollment 
applications based on the provider or supplier type involved. As for 
the second comment, we will continue our educational efforts to clarify 
the distinction between these two processes.
    Comment: A commenter contended that Sec. Sec.  424.507 and 424.510 
must be revised in order for CMS to establish a registration process 
for physicians and non-physician practitioners seeking only to order or 
certify items and services.
    Response: Our use of the term ``registration'' on the CMS-855O was 
intended to articulate the distinction between enrolling in Medicare to 
obtain billing privileges and enrolling in Medicare strictly to order 
or certify items and services. In the latter situation, the process is 
the same regardless of the precise term that is used to describe it. 
The general procedures for completing the CMS-855O and the contractor's 
processing of the application are similar to those used for other CMS-
855 forms. As such, we do not believe that Sec. Sec.  424.507 and 
424.510 need to be revised to establish a unique process for submitting 
and reviewing CMS-855O applications. Nevertheless, we have (as 
explained earlier) revised Sec.  424.510 to clarify which paragraphs in 
that section do not apply to individuals who enroll solely to order or 
certify items or services.
    Comment: A commenter questioned whether a physician who completes 
the CMS-855O can elect to be a participating physician even though he 
or she is ordering services in the Medicare program.
    Response: A CMS-855O form cannot be used as a means of obtaining 
Medicare billing privileges. Medicare participation status does not 
apply in situations where the physician or non-physician practitioner 
enrolls solely for the purpose of ordering or certifying items or 
services. If the individual wishes to enroll in Medicare to furnish 
Medicare services, he or she must submit a CMS-855I application.
    Comment: A commenter recommended that CMS identify whether any 
other federal or state health plan or any state Medicaid agency permits 
a physician or non-physician practitioner to obtain Medicare billing 
privileges for the sole purpose of ordering or certifying services for 
their members. The commenter was unaware of any other health plan that 
permits this.
    Response: One cannot obtain Medicare billing privileges through any 
state health plan, state Medicaid agency, or federal health plan other 
than Medicare.
    Comment: A commenter stated that on May 20, 2011, September 30, 
2011, and April 14, 2012, CMS published a summary of the information 
collection for the CMS-855O in the Federal Register. The commenter 
noted that in each of these summaries, CMS stated that the CMS-855O 
permits a physician to receive a Medicare identification number 
(without being approved for billing privileges) for the sole purpose of 
ordering and referring beneficiaries to approved Medicare providers and 
suppliers. The commenter indicated further that CMS states, in the 
proposed rule on which the commenter is commenting, that the CMS-855O 
is exclusively designed to allow physicians and eligible professionals 
to enroll in Medicare solely to order or certify items or services. The 
commenter requested that CMS explain this apparent discrepancy. The 
commenter also requested CMS to outline how giving a physician or 
practitioner a Medicare billing number (which is already required to be 
the National Provider Identifier) is consistent with enrolling in the 
Medicare program. Another commenter questioned why the September 30, 
2011 and April 14, 2012 notices refer to the registration of such 
individuals while our proposed rule refers to enrollment. This 
commenter also urged CMS to explain why it did not choose to solicit 
public comments on changes to regulatory provisions found in Sec. Sec.  
424.502 and 424.505 for almost 2 years after adopting and using the 
CMS-855O.
    Response: If the commenter is referring to the use of the term 
``order or certify'' in lieu of the term ``order or refer,'' we 
replaced ``refer'' with ``certify'' because, as explained in the April 
27, 2012 final rule: (1) A ``certifying'' provider generally means a 
person who orders/certifies home health services for a beneficiary, and 
(2) home health services fall within the purview of Sec.  424.507.
    The Medicare number referenced in the three notices is not a 
``billing number'' and is not intended to grant billing privileges to 
the individual; it instead serves as an identifier of the physician or 
non-physician practitioner. Likewise, our revisions to Sec. Sec.  
424.502 and 424.505 do not furnish billing privileges to an individual 
who is enrolling solely to order or certify items or services.
    As explained earlier, our use of the term ``registration'' was 
intended to clarify the difference between enrolling in Medicare to 
obtain billing privileges and enrolling in Medicare solely to order or 
certify items and services.
    Comment: A commenter requested whether completion of another CMS-
855O is required if the applicable physician or non-physician 
practitioner moves and opens a new practice in another contractor 
jurisdiction.
    Response: At this time, a separate CMS-855O is required for each

[[Page 72505]]

Medicare contractor jurisdiction in which the individual practices.
    Comment: Section 1866(j) of the Act states that the Secretary shall 
establish by regulation a process for enrolling providers and 
suppliers; such process shall include, in part, a screening process. A 
commenter contended that CMS has violated section 1866(j) of the Act 
because our proposed rule does not establish a screening process for 
physicians and non-physician practitioners enrolling solely to order or 
certify items or services. The commenter recommended that CMS propose a 
moderate level of risk for such physicians and non-physician 
practitioners because CMS cannot link an order from such individual to 
the billing by a DMEPOS supplier, imaging facility, or clinical 
laboratory.
    Response: We disagree with the commenter. The screening process 
implemented pursuant to section 1866(j) of the Act applies to all CMS-
855 applications, including the CMS-855O. Regardless of which CMS-855 
enrollment application is used, physician and non-physician 
practitioners are designated to the limited screening level pursuant to 
Sec.  424.518(a)(1)(i), unless an adjustment applies under Sec.  
424.518(c)(3).
    Comment: A commenter recommended that CMS provide the number of 
individuals enrolled or registered in the Medicare program using the 
CMS-855O since July 2011.
    Response: This comment is outside the scope of this rule.
    Comment: A commenter stated that contrary to the information found 
in the CMS-855O Privacy Act Notice, CMS has not updated the PECOS 
System of Records document to include the CMS-855O. The commenter 
recommended that CMS update the System of Records document No 09-70-
0532 to reflect the collection and dissemination of information from 
the CMS-855O.
    Response: This comment is outside the scope of this rule.
    Comment: A commenter stated that permitting physicians who do not 
bill Medicare to order services for Medicare beneficiaries will likely 
increase Medicare fraud and the number of improper Medicare payments. 
The commenter recommended that CMS: (1) Explain how it will protect the 
Medicare Trust Funds from fraud when it cannot verify whether the 
physician actually conducted an exam or treated a Medicare beneficiary; 
and (2) require prior authorization for any service ordered by a 
physician or practitioner who does not have an associated claim for 
medical services; using prior authorization, the commenter believed, is 
the only way that Medicare can verify that a physician is treating a 
patient and not merely signing an order for services.
    Response: This comment is outside the scope of this rule.
    Comment: A commenter recommended that in lieu of using the CMS-
855O, CMS should exempt infrequent billers or physicians who see 
Medicare patients at a rural health clinic from deactivation for 3 or 5 
years. This approach ensures that a physician can bill if he/she needs 
to, but reduces the amount of paperwork associated with an annual 
deactivation process. Another commenter offered several alternatives to 
the use of the CMS-855O: (1) A 1-year deactivation process for 
physicians who accept assignment and bill the Medicare program on a 
regular basis; (2) a 5-year deactivation process for physicians who 
bill Medicare as non-participating and only bill infrequently; and (3) 
an exception to the 1-year deactivation process for certain 
physicians--such as those listed on the CMS-855O--who bill the Medicare 
program infrequently.
    Response: These comments are outside the scope of this rule.
    After consideration of the comments received, we are finalizing the 
three proposed changes to Sec. Sec.  424.502 and 424.505. We are also 
further modifying the definition of ``enroll/enrollment'' in Sec.  
424.502 and modifying Sec.  424.510(a) as previously discussed.
2. Debts to Medicare
    Under Sec.  424.530(a)(6), an application can be denied if ``[t]he 
current owner (as defined in Sec.  424.502), physician or non-physician 
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.
    As we explained in II.B.2. of the proposed rule, such situations 
were discussed in a November 2008 Department of Health and Human 
Services Office of Inspector General (OIG) Early Alert Memorandum 
entitled, ``Payments to Medicare Suppliers and Home Health Agencies 
Associated with `Currently Not Collectible' Overpayments'' (OEI-06-07-
00080). The memorandum noted 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.\1\ 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.\2\ 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.\3\ 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.\4\
---------------------------------------------------------------------------

    \1\ 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.
    \2\ Ibid. p.1.
    \3\ Ibid. p.7.
    \4\ Ibid. p.2.
---------------------------------------------------------------------------

    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 our current authority to deny 
based on Sec.  424.530(a)(6) enables us to stem this practice to a 
certain extent, it is limited to situations where an enrolling 
physician, non-physician 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 with which the enrolling provider, 
supplier, or owner was affiliated had incurred the debt. We believed 
that these latter situations were of particular concern to the OIG in 
the 2008 memorandum. Therefore, we proposed several changes to Sec.  
424.530(a)(6).
    First, we proposed to incorporate the existing language of Sec.  
424.530(a)(6) into a new paragraph (a)(6)(i) that would apply to all 
enrolling providers, suppliers (including physicians and non-physician 
practitioners), and owners thereof. We stated that we did not believe 
(a)(6) should be limited to individual physicians and non-physician 
practitioners. All providers and suppliers, regardless of type, are

[[Page 72506]]

responsible for reimbursing Medicare for any 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 Funds. 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.
    We proposed that a denial of Medicare enrollment under paragraph 
(a)(6)(i) could be avoided if the enrolling provider, supplier, or 
owner thereof satisfied the criteria set forth in Sec.  401.607 and 
agreed to an extended CMS-approved repayment schedule for the entire 
outstanding Medicare debt; agreement to such a schedule would indicate 
that the provider, supplier, or owner is not seeking to avoid its debts 
to Medicare. The provider, supplier, or owner thereof could also avoid 
denial by repaying the debt in full. We also solicited comment on 
whether the scope of our proposed revision to Sec.  424.530(a)(6)(i) 
should be expanded to include the enrolling provider or supplier's 
managing employees (as that term is defined in Sec.  424.502), 
corporate officers, corporate directors, and/or board members.
    Second, we proposed to replace the term ``overpayment,'' as it is 
currently used in Sec.  424.530(a)(6), with ``Medicare debt'' in our 
regulatory text. We noted that ``overpayment'' more appropriately 
describes the types of debts that are subject to (a)(6). We also stated 
that our denial authority under proposed (a)(6) should include all 
forms of debt to Medicare, not just overpayments. We solicited comments 
on this proposed change as well as on the appropriate scope of the term 
``Medicare debt'' for purposes of Sec.  424.530(a)(6).
    Third, we proposed to add a new paragraph (ii) to Sec.  
424.530(a)(6) permitting a denial of Medicare enrollment if the 
provider, supplier, or current owner (as defined in Sec.  424.502) 
thereof was the owner (as defined in Sec.  424.502) of a provider or 
supplier that had a Medicare debt that existed when the latter's 
enrollment was voluntarily or involuntarily terminated or revoked, and 
the following criteria are met:
     The owner left the provider or supplier that had the 
Medicare debt within 1 year of that provider or supplier's voluntary 
termination, involuntary termination, or revocation.
     The Medicare debt has not been fully repaid.
     We determine that the uncollected debt poses an undue risk 
of fraud, waste, or abuse.
    Similar to proposed Sec.  424.530(a)(6)(i), we proposed in Sec.  
424.530(a)(6)(iii) that the enrolling provider or supplier would be 
able to avoid a denial under Sec.  424.530 (a)(6) if the enrolling 
provider, supplier, or owner thereof satisfies the criteria set forth 
in Sec.  401.607 and agrees to an extended repayment schedule for the 
entire outstanding Medicare debt of the revoked provider or supplier. 
We noted our belief that this provision is warranted because agreement 
to a repayment plan evidences an intention to pay back the debt. We 
also proposed in Sec.  424.530(a)(6)(iii) that no denial would occur 
under paragraph (a)(6)(ii) if the debt was repaid in full.
    We explained that the difference between our proposed Sec.  
424.530(a)(6)(ii) and the existing language in Sec.  424.530(a)(6) was 
that the latter involved situations in which the current owner, 
physician or non-physician practitioner had a Medicare debt. Section 
424.530(a)(6)(ii), on the other hand, would focus 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. We 
offered the following illustration: Provider X is applying for 
enrollment in Medicare. Y owns 50 percent of X. Y was also a 20 percent 
owner of Supplier Entity Z, which was revoked from Medicare 12 months 
ago and currently has a large outstanding Medicare debt. The current 
version of Sec.  424.530(a)(6) could not be used to deny X's 
application because X's current owner (Y) does not have a Medicare 
debt. Rather, the entity with which Y was affiliated (Z) has the debt. 
However, under proposed Sec.  424.530(a)(6)(ii), and assuming the other 
criteria are met, X's application could be denied because X's owner was 
an owner of a supplier (Z) that has a Medicare debt. We cited 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, as 
authority for proposed paragraph (ii).
    We proposed the following as factors we would consider in 
determining whether an ``undue risk'' exists under paragraph (ii): (1) 
The amount of the Medicare debt; (2) the length and timeframe that the 
enrolling provider, supplier, or owner thereof was an owner of the 
prior entity; and (3) the percentage of the enrolling provider's, 
supplier's, or owner's ownership of the prior entity. We also noted 
that the scope and breadth of ownership interests would vary widely 
(for example, the amount of ownership; direct versus indirect 
ownership). For this reason, we believed it was important that CMS have 
the flexibility to make enrollment decisions under Sec.  
424.530(a)(6)(ii) on a case-by-case basis, using the factors previously 
outlined. However, we also solicited 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 proposed factors 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 solicited comments on whether paragraph (ii) should apply 
to the enrolling entity's managing employees (as that term is defined 
in Sec.  424.502), corporate officers, corporate directors, and/or 
board members.
    Many of the comments we received regarding our proposed changes to 
Sec.  424.530(a)(6) were applicable to two or more of the proposals. 
Hence, we have summarized and collectively listed all of the comments 
we received on Sec.  424.530(a)(6). Our responses to these comments are 
as follows:
    Comment: Several commenters supported CMS's proposal to use the 
term ``Medicare debt'' instead of ``overpayment'' for the reasons 
specified in the proposed rule, with one commenter stating that the 
term ``overpayment'' has long seemed inaccurate and, at times, 
confusing to Medicare physicians. One commenter, encouraged CMS to more 
thoroughly define ``Medicare debt.'' Another commenter recommended that 
the term ``Medicare debt'' be interpreted liberally.
    Response: We appreciate the commenters' support for our proposed 
change. We did not propose a definition of ``Medicare debt'' and do not 
do so in this final rule; rather, we had sought comments on the 
appropriate scope of the term for purposes of applying Sec.  
424.530(a)(6).
    With respect to Sec.  424.530(a)(6)(i) and (ii), we agree that the 
term ``Medicare debt'' should be interpreted broadly. An existing 
Medicare liability, simply put, is an unpaid Medicare debt. As such, an 
existing debt to the Medicare program--regardless of its type, or how 
the debt was incurred or discovered--may result in the denial of 
Medicare enrollment under Sec.  424.530(a)(6). The only exceptions to 
this would be the

[[Page 72507]]

situations described in proposed Sec.  424.530(a)(6)(iii) regarding: 
(1) The satisfaction of the criteria set forth in Sec.  401.607 and the 
agreement to an extended repayment schedule for the entire outstanding 
Medicare debt; or (2) the repayment of the debt in full. We are 
finalizing these two exceptions.
    We do not believe that specific types of Medicare debt should be 
articulated in the text of Sec.  424.530(a)(6). Since the particular 
facts of each case will differ, we must retain the flexibility to 
address a variety of situations. We also note that our denial authority 
under Sec.  424.530(a)(6) is discretionary, and there may be instances 
when a denial under Sec.  424.530(a)(6) might not be warranted. For 
instance, under Sec.  424.530(a)(6)(ii), our determination as to 
whether the debt poses an undue risk to the Medicare program will 
include consideration of the three factors we proposed: (1) The amount 
of the Medicare debt; (2) the length and timeframe of the ownership 
interest; and (3) the percentage of ownership interest--as well as two 
additional factors that we discuss in more detail later in this 
section--specifically; (4) whether the Medicare debt is currently being 
appealed; and (5) whether the provider was an owner when the debt was 
incurred. (These factors will be added at Sec.  424.530(a)(6)(ii)(C).) 
We will make all final determinations regarding Sec.  424.530(a)(6)(i) 
and (ii), and may conclude after reviewing the relevant factors that a 
particular denial under Sec.  424.530(a)(6)(i) is unwarranted.
    Comment: A commenter suggested that CMS limit the term ``Medicare 
debt'' to those debts that have undergone and completed the CMS appeals 
process and final administrative adjudication; the commenter 
specifically requested that the phrase ``after final administration 
adjudication'' be inserted into a definition of ``Medicare debt.'' 
Otherwise, the commenter stated, honest and legitimate providers and 
suppliers could be prohibited from expanding or selling their practices 
based upon a single claim determination.
    Response: We have added at Sec.  424.530(a)(6)(ii)(C)(4) the appeal 
status of the debt as a factor in the determination of whether the debt 
poses an undue risk to Medicare. However, we are not wholly excluding 
debts that are being appealed from Sec.  424.530(a)(6)'s application 
for two reasons. First, a provider or supplier with a Medicare debt 
(particularly a large debt) that poses an undue risk to the Medicare 
program should not be given an automatic opportunity to incur future 
debts with additional Medicare billing privileges simply because the 
debt is being appealed. Second, permitting providers and suppliers to 
obtain additional Medicare billing privileges if a Medicare debt is 
being appealed may encourage providers and suppliers to file meritless 
appeals simply to avoid and circumvent the application of Sec.  
424.530(a)(6)(ii).
    Comment: A commenter expressed concern that an expansion of the 
word ``overpayment'' to the word ``debt'' could lead to inequitable 
results, such as denials due to debts stemming from--(1) coordination 
of benefits issues with secondary payers; and (2) meaningful use 
audits. The commenter urged CMS to strictly narrow the scope of 
whatever term it finalizes to ensure that physicians do not 
unreasonably experience enrollment denials.
    Response: As alluded to earlier, we believe that any type of 
Medicare debt--regardless of how it was incurred or discovered--is of 
concern to us. It is for this reason that we are not excluding 
particular types of debts (such as those to which the commenter refers) 
from Sec.  424.530(a)(6)'s scope. Nevertheless, we do not believe that 
our intended use of the term ``Medicare debt'' will lead to inequitable 
results, for we will only exercise our discretion under Sec.  
424.530(a)(6) in a careful and consistent manner.
    Comment: Several commenters did not support expanding Sec.  
424.530(a)(6)'s purview to include the enrolling entity's current 
managing employees, corporate officers, directors, or board members. 
They contended that such an expansion would be excessively broad and 
unnecessarily complicated.
    Response: We disagree that such an expansion would be overly broad 
and complex. To nonetheless ensure that we can focus on the 
implementation of our revisions to Sec.  424.530(a)(6), we have decided 
not to include the enrolling entity's current managing employees, 
corporate officers, directors, or board members within the scope of 
Sec.  424.530(a)(6) at this time, although we may consider doing so via 
future rulemaking.
    Comment: A commenter expressed general support for our proposed 
Sec.  424.530(a)(6)(ii) and stated that CMS identified the appropriate 
factors to consider in this respect. However, the commenter did: (1) 
Suggest that CMS also adopt as a factor whether or not the person was 
an owner at the time the debt was incurred; and (2) urge CMS to 
exercise its discretion regarding Sec.  424.530(a)(6)(ii) fairly and 
carefully; the commenter, citing an example, argued that a 5 percent 
owner for 6 months should not be penalized to the same extent as 
someone who has been a 50 percent owner for 5 years.
    Response: We appreciate the commenter's support and, as stated, 
will apply Sec.  424.530(a)(6)(ii) in a fair and careful manner. We 
also agree with the commenter's suggestion to include as a factor the 
party's ownership status at the time the debt was incurred. We have 
added this as a factor at Sec.  424.530(a)(6)(C)(5), although a finding 
that the party was not an owner when the debt was incurred will not in 
and of itself result in Sec.  424.530(a)(6)(ii)'s non-application. All 
factors and particular circumstances will be considered before a denial 
under Sec.  424.530(a)(6)(ii) is imposed.
    Comment: A commenter expressed concern that a physician group may 
not be aware that an individual physician has unpaid Medicare debt 
related to previous affiliations. The commenter urged CMS to make such 
information available in an accessible database.
    Response: While we understand the commenter's concern, it is 
ultimately the hiring provider or supplier's responsibility to perform 
a thorough review of the physician's background, including his or her 
prior affiliations. We do not believe that such a review should be 
dependent upon the creation of a publicly available database.
    Comment: A commenter disagreed with our proposal to add Sec.  
424.530(a)(6)(ii), contending that CMS did not explain why it--(1) 
needs this new authority; and (2) cannot collect a debt through the 
Federal Payment Levy Program. The commenter also requested CMS to 
explain why it did not propose revoking existing providers and 
suppliers that have Medicare overpayments.
    Response: Our rationale for the proposed addition of Sec.  
424.530(a)(6)(ii) was contained in the preamble of the proposed rule 
and is restated earlier in this final rule. While we are aware of the 
authority furnished by the Federal Payment Levy Program, the issue is 
not merely the collection of existing Medicare debts; it is also the 
need to prevent the accumulation of additional Medicare debts. We 
believe that our denial authority under Sec.  424.530(a)(6)(ii) will be 
an important step in this direction.
    We did not propose to incorporate a new revocation reason regarding 
Medicare debts that would apply to currently enrolled providers (for 
example, via revalidation), for this is a different situation than what 
is being described here. However, we may consider establishing such a 
revocation reason via future rulemaking.

[[Page 72508]]

    Comment: A commenter supported the denial of enrollment of 
providers and suppliers that have existing Medicare debts that have not 
been fully repaid or if the provider or supplier is not current in its 
existing repayment schedule. Yet the commenter urged CMS to exclude 
from Sec.  424.530(a)(6)'s purview debts that: (1) Are currently within 
a CMS-approved appeals process; and (2) have not been forgiven by CMS 
due to financial considerations. Other commenters, too, suggested that 
debts that are currently being appealed or are part of an extended 
repayment plan should be exempt from Sec.  424.530(a)(6)'s application. 
With respect to appeals, one commenter contended that the Congress' 
passage of section 935 of the Medicare Modernization Act (MMA) 
envisioned a congressional intent to permit physicians to delay 
repaying an overpayment pending the completion of the appeals process.
    Response: As explained earlier, we will consider a debt's appeal 
status in our determination of whether the debt poses an undue risk to 
the Medicare program under Sec.  424.530(a)(6)(ii). In addition, we 
will exclude from Sec.  424.530(a)(6)(i) and (ii) those situations 
where the enrolling provider, supplier, or owner thereof meets the 
criteria of Sec.  401.607 and agrees to an extended repayment schedule 
for the entire outstanding Medicare debt. While we are unclear as to 
the commenter's suggestion that debts that CMS has not forgiven due to 
financial considerations be excluded from our Sec.  424.530(a)(6) 
determinations, we can assure the commenter that we will apply Sec.  
424.530(a)(6)(i) and (ii) in a careful and judicious manner.
    We do not believe that our revisions to Sec.  424.530(a)(6) are 
inconsistent with section 935 of the MMA. Our provisions address 
enrollment denials, not recoupment. Nothing in Sec.  424.530(a)(6) 
requires a provider to repay an overpayment prior to the completion of 
the appeals process.
    Comment: Several commenters opposed our proposed Sec.  
424.530(a)(6)(ii), contending that the provision would potentially 
punish persons and entities who: (1) Were not responsible for the debt; 
or (2) had only a very limited association with the party that was 
responsible for the debt. One commenter noted that our proposed 
criteria for denying enrollment under Sec.  424.530(a)(6)(ii) did not 
take into account whether the enrolling provider or supplier is 
actually responsible for the debt. Another commenter contended that our 
proposal is overreaching and exhibits a lack of understanding of the 
complexities of the new coordinated care models that are evolving 
pursuant to payment and delivery reform advanced by the Affordable Care 
Act. The commenter stated that denials under our proposed provision 
could be frequent because many of today's systems of health care are 
diverse, geographically large, and encompass numerous entities and 
groups.
    Response: We are adopting as a factor in our Sec.  
424.530(a)(6)(ii) determinations whether or not the person was an owner 
at the time the debt was incurred. In addition, we will only deny a 
Medicare application under Sec.  424.530(a)(6)(ii) after careful review 
of all the factors associated with a particular situation. We believe 
these actions may alleviate to some extent the commenters' concerns 
about Sec.  424.530(a)(6)(ii)'s application.
    Comment: A commenter requested that CMS furnish evidence that the 
problem of suppliers departing Medicare with large, unpaid overpayments 
and then re-enrolling in Medicare exists with respect to physicians and 
group practices.
    Response: As explained in the proposed rule and earlier in this 
final rule, the OIG's November 2008 Early Alert Memorandum titled 
``Payments to Medicare Suppliers and Home Health Agencies Associated 
with `Currently Not Collectible' Overpayments'' (OEI-06-07-00080) 
cautioned 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. We also noted 
our receipt of reports of providers, suppliers, and owners thereof 
accumulating large Medicare debts, departing Medicare, and then 
attempting to reenter the program through other channels.
    Comment: A commenter expressed concern with CMS's publication of 
Transmittal 469, which operationalizes the current version of Sec.  
424.530(a)(6). The commenter contended that CMS did not abide by the 
Administrative Procedure Act (APA) in issuing Transmittal 469 because 
it did not use the prescribed notice and public comment process. 
Another commenter urged CMS to retract Transmittal 469, contending that 
certain policies in the transmittal conflict with the contents of our 
proposed rule, thereby causing confusion in the provider community. 
Another commenter sought clarification as to how Transmittal 469 would 
interact with our proposed revisions to Sec.  424.530(a)(6). As an 
example, the commenter stated that Transmittal 469 contained a $1,500 
threshold--which the commenter believed was too low--yet the proposed 
rule contained no such threshold and does not define the scope of the 
overpayments that would be subject to our proposed provisions.
    Response: The publication of Transmittal 469--which has since been 
rescinded and replaced by Transmittal 479--did not violate the APA. The 
current version of Sec.  424.530(a)(6) was subject to public notice and 
comment prior to its enactment. Transmittal 479 adds guidance regarding 
existing Sec.  424.530(a)(6) to chapter 15 of our Program Integrity 
Manual (CMS Pub. 100-08).
    Upon publication of this final rule, we will revise CMS Publication 
100-08, chapter 15, to ensure that the guidance to our contractors and 
the public is consistent with our changes to Sec.  424.530(a)(6).
    Comment: A commenter offered several suggestions regarding our 
proposed changes to Sec.  424.530(a)(6). First, the commenter 
recommended that CMS exclude from Sec.  424.530(a)(6)'s scope those 
debts resulting from contractor error or from retroactive changes made 
by CMS or the Congress. Second, the commenter suggested that CMS 
establish a debt monetary threshold below which Sec.  424.530(a)(6) 
would not apply; the commenter cited the $1,500 threshold set forth in 
the aforementioned Transmittal 469 as an example. Third, the commenter 
suggested that CMS establish an ownership percentage threshold below 
which Sec.  424.530(a)(6) would not apply; the commenter recommended 20 
percent. The commenter stated that such thresholds would foster 
consistency and assist CMS's efforts to curb fraud and abuse without 
unnecessarily burdening providers and suppliers that have small debts.
    Response: We mentioned earlier that the amount of the debt and the 
percentage of ownership will be factors in our Sec.  424.530(a)(6)(ii) 
determinations, although specific thresholds will not be established 
due to the need to maintain flexibility to address various situations. 
In terms of contractor errors, we will be including the debt's appeal 
status as another factor.
    We are not adding retroactive changes as a factor because we are 
unclear as to the types of situations to which the commenter is 
referring.
    Comment: A commenter requested that CMS identify the enrollment 
applications and types of enrollment changes that would be impacted by 
our proposed revisions to Sec.  424.530(a)(6).

[[Page 72509]]

    Response: Initial CMS-855 applications are the only applications 
subject to Sec.  424.530(a)(6).
    Comment: A commenter expressed support for our proposed revisions 
to Sec.  424.530(a)(6), stating that this will lead to increased 
scrutiny of the ownership and leadership of provider and supplier 
organizations.
    Response: We appreciate the commenter's support.
    Comment: A commenter contended that our proposed Sec.  
424.530(a)(6) exceeds the statutory authority granted to the Secretary 
in 42 U.S.C. 1395cc(j)(5), which provides that the Secretary may deny 
an application based on a disclosure of a current or previous 
affiliation, subject to a finding of ``undue risk.'' At a minimum, the 
commenter recommended, CMS should revise the proposed regulatory text 
to: (1) Include the criteria for a finding of undue risk as described 
in the proposed rule's preamble; and (2) state that a denial of 
enrollment ``may be warranted,'' rather than ``is warranted''.
    Response: We agree with the commenter's first recommendation and 
will revise the regulatory text accordingly. We note that the second 
recommendation is moot because the regulatory text does not contain the 
phrase ``is warranted.''
    We disagree with the assertion that our changes to Sec.  
424.530(a)(6) exceed our statutory authority. Our expansion of Sec.  
424.530(a)(6)(i)--the existing version of which has been in effect 
since 2009--and our addition of Sec.  424.530(a)(6)(ii) are consistent 
with the authority in section 1866(j)(1) and (5) of the Act (42 U.S.C. 
1395cc(j)(1) and (5)). It is also consistent with our general 
rulemaking authority in sections 1102 and 1871 of the Act.
    Comment: A commenter supported CMS's proposal to extend Sec.  
424.530(a)(6)(i) to other provider and supplier entities. The commenter 
stated that since physicians are in the ``limited'' screening level in 
Sec.  424.518(a), it is sensible to include higher risk providers and 
suppliers in that category as well.
    Response: We appreciate the commenter's support.
    Comment: A commenter stated that CMS proposed Sec.  
424.530(a)(6)(ii) is based on a false premise that any uncollected debt 
poses an undue risk of fraud, waste or abuse and does not take into 
consideration the due process rights that should be afforded to 
providers through the appeals process.
    Response: We do not believe that every uncollected debt poses an 
undue risk of fraud, waste or abuse. As we stated in the proposed rule, 
we will make an individual determination--based on the factors set 
forth at Sec.  424.530(a)(6)(ii)(C)--as to whether the debt in question 
poses an undue risk. If the debt, after our analysis, does not present 
such a risk, we will not deny the enrollment application under Sec.  
424.530(a)(6)(ii).
    Comment: A commenter noted that certain DMEPOS suppliers are 
subject to a $50,000 bond requirement. As such, there is an existing 
avenue--outside of denying enrollment--to address CMS's concerns 
regarding uncollected debts.
    Response: Though it is true that certain DMEPOS suppliers must 
obtain a surety bond in order to enroll in Medicare, there are at least 
1.4 million other Medicare providers and suppliers that do not. 
Moreover, the presence of a surety bond does not in itself guarantee 
that the full amount of a Medicare debt will be recovered via the bond. 
Therefore, we need additional mechanisms--such as those we are 
finalizing with respect to Sec.  424.530(a)(6)--to help ensure that 
Medicare debts are repaid and that providers and suppliers with unpaid 
debts do not incur additional Medicare debts through the establishment 
of additional enrollments.
    Given the comments received and the preceding discussion, we are 
finalizing our proposed revisions to Sec.  424.530(a)(6), albeit with 
three revisions to Sec.  424.530(a)(6)(ii)(C) and one change to Sec.  
424.530(a)(6)(iii):
     We are revising Sec.  424.530(a)(6)(ii)(A) to state: ``The 
owner left the provider or supplier with the Medicare debt within 1 
year before or after that provider or supplier's voluntary termination, 
involuntary termination or revocation.'' The insertion of ``with'' in 
lieu of ``that had'' and the insertion of ``before or after'' are 
merely intended to clarify our original intention that the 1-year 
period applies to separations occurring prior to or after the provider 
or supplier's termination or revocation.
     To Sec.  424.530(a)(6)(ii)(C) will be added a second 
sentence that reads: ``In making this determination, we consider the 
following factors:''
     New paragraphs (1) through (5) will be added to Sec.  
424.530(a)(6)(ii)(C) identifying these factors. The paragraphs state 
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.
    ++ Whether the Medicare debt is currently being appealed.
    ++ Whether the enrolling provider, supplier, or owner thereof was 
an owner of the prior entity at the time the Medicare debt was 
incurred.
     To ensure consistency in application, in Sec.  
424.530(a)(6)(iii) we are combining proposed paragraphs (A) and (B)(1) 
into a revised paragraph (A) that will read as follows: ``(1) Satisfies 
the criteria set forth in Sec.  401.607; and (2) agrees to a CMS-
approved extended repayment schedule for the entire outstanding 
Medicare debt.'' Proposed paragraph (B)(2) will be redesignated as new 
paragraph (B) and will read as follows: ``Repays the debt in full.''
3. Felony Convictions
    Under Sec.  424.530(a)(3) and Sec.  424.535(a)(3), respectively, a 
provider or supplier's Medicare enrollment may be denied or revoked if 
the provider or supplier--or any owner of the provider or supplier--
has, within the 10 years preceding enrollment or revalidation of 
enrollment, been convicted of a federal or state felony offense that 
CMS has determined to be detrimental to the best interests of the 
Medicare program and its beneficiaries. Under Sec.  424.535(a)(3)(i), 
as currently codified, such offenses include the following:
     Felony crimes against persons; such as murder, rape, 
assault, and other similar crimes for which the individual was 
convicted, including guilty pleas and adjudicated pretrial diversions.
     Financial crimes, such as extortion, embezzlement, income 
tax evasion, insurance fraud and other similar crimes for which the 
individual was convicted, including guilty pleas and adjudicated 
pretrial diversions.
     Any felony that placed the Medicare program or its 
beneficiaries at immediate risk, such as a malpractice suit that 
results in a conviction of criminal neglect or misconduct.
     Any felonies that would result in mandatory exclusion 
under section 1128(a) of the Act.
    (Section 424.530(a)(3)(i) mirrors Sec.  424.535(a)(3)(i) with the 
exception of paragraph (D), which uses the phrase: ``Any felonies 
outlined in section 1128 of the Act.'')
    We proposed several changes to Sec. Sec.  424.530(a)(3) and 
424.535(a)(3).
    First, we proposed to modify the list of felonies in each section 
such that any felony conviction that we determine to be detrimental to 
the best interests of the Medicare program and its beneficiaries would 
constitute a basis for denial or revocation. We stated that considering 
the very serious nature of any felony conviction, our authority in 
Sec. Sec.  424.530(a)(3)(i) and 424.535(a)(3)(i) should not be 
restricted to the categories

[[Page 72510]]

of felonies identified in (a)(3)(i); this was especially true 
considering that the types of felony offenses often vary from state to 
state.
    Second, we proposed to expand Sec. Sec.  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 Sec.  
424.502. Since certain managing employees of a provider or supplier may 
have as much (if not more) day-to-day control as an owner, we explained 
that managing employees should be held to the same standard as owners.
    Third, we proposed to revise the language ``within the 10 years 
preceding enrollment or revalidation of enrollment'' in Sec.  
424.530(a)(3) and Sec.  424.535(a)(3) to ``within the preceding 10 
years.'' The existing language has caused confusion as to how the 10-
year period is calculated. We believe that our revised wording 
clarifies this timeframe.
    Fourth, we proposed to clarify in Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) that the term ``convicted''--as used in these two 
sections--has the same definition as the one set forth in 42 CFR 
1001.2. This was intended to address the numerous inquiries we have 
received regarding the proper interpretation of the term ``convicted'' 
as it relates to Sec. Sec.  424.530(a)(3) and 424.535(a)(3).
    The following is a summary of the comments received regarding these 
four proposed changes and our responses thereto.
    Comment: A commenter urged CMS to retain the current language in 
Sec. Sec.  424.530(a)(3) and 424.535(a)(3) that states that CMS will 
consider the severity of the underlying offense before denying or 
revoking enrollment. The commenter contended that while some felony 
convictions may bear directly on a provider's ability to care for 
patients, other convictions may be irrelevant to patient care--
especially those that may be as many as 10 years old. In all instances, 
the commenter added, CMS should employ its denial and revocation 
authority under Sec. Sec.  424.530(a)(3) and 424.535(a)(3) judiciously 
and should use a reasonableness standard in making such determinations.
    Response: Regardless of whether the ``severity of the underlying 
offense'' language is present in Sec. Sec.  424.530(a)(3) and 
424.535(a)(3), we have always considered--and will continue to do so--
the seriousness of the offense in determining whether a denial or 
revocation is warranted under Sec. Sec.  424.530(a)(3) and 
424.535(a)(3). Therefore, we do not believe that including the 
``severity'' verbiage in Sec. Sec.  424.530(a)(3) and 424.535(a)(3) is 
necessary, for CMS already takes this factor into account in such 
determinations.
    Although we did propose to expand the categories of felonies that 
can serve as the basis of a denial or revocation, we are not suggesting 
that every felony conviction will automatically result in such an 
action. Each case will be carefully reviewed on its own merits and, as 
the commenter recommends, we will act judiciously and with 
reasonableness in our determinations.
    Comment: Several commenters disagreed with CMS's proposed expansion 
of Sec. Sec.  424.530(a)(3) and 424.535(a)(3) to include all felonies. 
They contended that (1) our proposal is arbitrary and an abuse of 
discretion; and (2) CMS offered no facts to support its proposal. One 
commenter stated that some felonies--such as those related to drugs, 
alcohol, or traffic violations--could not reasonably be considered as 
detrimental to the Medicare program, yet CMS would have the discretion 
to deny or revoke a provider for such a felony. This could lead to 
unfair results, particularly if a sentence of less than 3 years (which 
is the maximum re-enrollment bar period) is imposed. The commenter--as 
well as several other commenters--requested that CMS reconsider its 
proposal and: (1) Furnish a definition of ``detrimental to the Medicare 
program or its beneficiaries;'' and (2) exclude felonies related to 
drugs, alcohol, or traffic violations from the scope of Sec. Sec.  
424.530(a)(3) and 424.535(a)(3).
    Response: We disagree that our proposal was arbitrary or an abuse 
of discretion. Section 4302 of the Balanced Budget Act (BBA) amended 
section 1866 of the Act to furnish CMS with broad authority to refuse 
to enter into Medicare agreements with individuals or entities 
convicted of felonies that the Secretary determines to be detrimental 
to the best interests of the program or program beneficiaries. We 
identified in the proposed rule the legal grounds for all of our 
proposed enrollment provisions and explained the policy rationale for 
each of them. For instance, we indicated the need for flexibility with 
respect to the application of Sec. Sec.  424.530(a)(3)(i) and 
424.535(a)(3)(i) when considering that categories of felony offenses 
often vary from state to state. We do not believe that felonies 
relating to drugs, alcohol, or traffic violations cannot be detrimental 
to the best interests of Medicare beneficiaries, and thus should be 
automatically excluded from the purview of Sec. Sec.  424.530(a)(3) and 
424.535(a)(3). While certain felonies carry different, potentially more 
severe penalties than others, each case is distinct and state law 
classifications of certain criminal actions can vary widely. Therefore, 
we must maintain the flexibility to address all potential situations.
    Comment: A commenter supported our proposed expansion of Sec. Sec.  
424.530(a)(3) and 424.535(a)(3), believing it was a step forward in 
CMS's attempts to prevent Medicare fraud on the front end.
    Response: We appreciate the commenter's support.
    Comment: A commenter questioned whether CMS will revoke the 
Medicare billing privileges of a physician who is convicted of a non-
violent firearm felony.
    Response: The determination of whether a particular conviction will 
or will not result in the revocation or denial of Medicare enrollment 
will depend upon the specific facts of each individual situation.
    Comment: A commenter expressed concern that CMS will deny or revoke 
billing privileges under Sec.  424.530(a)(3) or Sec.  424.535(a)(3), 
respectively, such that a physician's right to participate in the 
Medicaid program will be affected.
    Response: The commenter correctly notes that under Sec.  
455.416(c), a State Medicaid agency must deny enrollment or terminate 
the enrollment of any provider whose Medicare enrollment is revoked for 
cause, although there is no corresponding requirement in cases where a 
provider is denied enrollment in the Medicare program. As noted 
previously, we will only exercise our authority under Sec.  
424.530(a)(3) or Sec.  424.535(a)(3) after consideration of the 
relative seriousness of the underlying offense and all of the 
circumstances surrounding the conviction.
    Comment: A commenter contended that our proposed expansions of 
Sec. Sec.  424.530(a)(3) and 424.535(a)(3) violate the principles of 
federalism established in Executive Order 13132 3(b), 3(c) and 3(d) and 
diminishes the role of state licensing boards across the country. The 
commenter requested that CMS furnish justification for expanding the 
role of the federal government into matters best resolved by state 
licensing boards.
    Response: We disagree with the commenter. As mentioned earlier, 
section 4302 of the BBA (which amended section 1866 of the Act) gave 
CMS broad authority to refuse to enter into Medicare agreements with 
individuals or entities convicted of felonies that the Secretary 
determines to be detrimental to the best interests of the program or 
program beneficiaries. Additionally, our changes to Sec. Sec.  
424.530(a)(3) and 424.535(a)(3) in no way impair or infringe upon a 
state

[[Page 72511]]

licensing agency's ability to take or not take action on a provider's 
licensure status in the event of a criminal conviction. Such a decision 
will--as it should--remain within the purview of the state.
    Comment: A commenter stated that CMS should not deny or revoke a 
supplier's enrollment based on Sec.  424.530(a)(3) or Sec.  
424.535(a)(3) if the supplier made a good-faith effort--using generally 
accepted employee screening and hiring practices--to ensure that an 
employee did not have a felony conviction. The commenter added, if CMS 
desires comprehensive screening for felony convictions, it should work 
with other government agencies to develop a nationwide database so that 
employers have one reliable source from which to screen their employees 
for felony convictions. The commenter further stated that recent 
enforcement actions by the United States Equal Employment Opportunity 
Commission (EEOC) have targeted companies for alleged discrimination 
against minority applicants based on policies to exclude people from 
employment based on a criminal record. CMS's revisions to Sec. Sec.  
424.530(a)(3) and 424.535(a)(3) should be reconciled with the EEOC's 
current enforcement position.
    Response: We disagree with the commenter. The core issue is not 
whether the organization made a good-faith effort to determine whether 
a current or prospective owner or managing employee has a felony 
conviction. Rather, it is whether the owner or managing employee has 
such a conviction and whether the conviction poses a risk to the 
Medicare program or its beneficiaries. In other words, it is the felony 
conviction itself--not whether the organization screened for such 
convictions--that is the relevant matter. We note that there are many 
resources available to help organizations ascertain one's criminal 
background history; a CMS-initiated project to establish a single, all-
encompassing felony database for the use of employers is not necessary. 
We further add that CMS is not requiring, through its expansion of 
Sec.  424.530(a)(3) and Sec.  424.535(a)(3), that providers and 
suppliers perform criminal background checks of their current or 
prospective owners or managing employees as part of the enrollment 
process.
    We do not believe that the EEOC's recent enforcement actions 
mandate that prospective employers discourage taking into account a 
prospective employee's criminal background history. Our principal focus 
in this rule is to protect the Medicare program from individuals and 
entities that could threaten its integrity, and we believe our 
expansion of Sec. Sec.  424.530(a)(3) and 424.535(a)(3) is an important 
step towards this end.
    Comment: A commenter stated that providers seeking to hire 
physicians or managing employees must have clear rules as to the types 
of felonies that CMS would consider detrimental to the Medicare 
program. The commenter favored retaining the current versions of 
Sec. Sec.  424.530(a)(3) and 424.535(a)(3) because CMS identifies 
specific felonies that fall within the scope of these two provisions. 
If, the commenter added, CMS seeks to include additional categories of 
felonies, it should use the formal rulemaking process to propose these 
new categories and allow the public to comment. Another commenter 
stated that our proposed revisions to Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) fail to provide adequate notice of the types of felony 
convictions that may lead to a denial or revocation of Medicare 
enrollment.
    Response: In light of the differences in state laws, it would be 
impossible to identify in our revised Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) every felony offense that could result in a denial or 
revocation; indeed, if we accepted the commenter's suggestion, hundreds 
of crimes--perhaps even identified on a state-by-state basis--might 
have to be listed. Nevertheless, we agree that retaining the lists of 
felonies in the current versions of Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) could prove helpful in identifying for the public some of 
the felonies that may serve as a basis for denial or revocation, 
respectively. Therefore, we are combining our proposed revisions to 
Sec. Sec.  424.530(a)(3) and 424.535(a)(3) with the existing language 
in both provisions.
    Section 424.530(a)(3) will state that 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 determines is 
detrimental to the best interests of the Medicare program and its 
beneficiaries. Offenses include, but are not limited in scope or 
severity to--
    ++ 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 424.535(a)(3) will state that 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 determines is 
detrimental to the best interests of the Medicare program and its 
beneficiaries. Offenses include, but are not limited in scope or 
severity to--
    ++ 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.
    (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.)
    Note that the previous revisions contain two important changes. 
First, the current language in Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) refers to a felony offense that CMS ``has determined to 
be detrimental to the best interests of the program and its 
beneficiaries.'' (Emphasis added.) Consistent with our proposed 
revisions to Sec. Sec.  424.530(a)(3) and 424.535(a)(3), we are 
revising this language to include any felony offense that CMS 
``determines is detrimental to the best interests of the Medicare 
program and its beneficiaries.'' (Emphasis added.) This distinction is 
important. The phrase ``has determined'' incorrectly implies that the 
only felonies that may serve as a basis for denial or revocation are 
those specifically listed in Sec. Sec.  424.530(a)(3) and 
424.535(a)(3). We believe that the term ``determines'' makes clearer 
that the lists of felonies in these two provisions are not exhaustive 
and

[[Page 72512]]

include other felonies that CMS may deem as meeting the ``detrimental'' 
standard based on the particular facts of the case. Second, and to 
further emphasize CMS' discretion to use felonies other than those 
specified in Sec. Sec.  424.530(a)(3) and 424.535(a)(3) as grounds for 
denial or revocation, we have included the phrase ``but are not limited 
in scope or severity'' within both provisions.
    However, notwithstanding these changes, we again stress that we 
will only exercise our authority under Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) after very careful consideration of the relative 
seriousness of the underlying offense and all of the circumstances 
surrounding the conviction. It should in no way be assumed that every 
felony conviction will automatically result in a denial or revocation.
    Comment: A commenter stated that in proposing its expansion of 
Sec. Sec.  424.530(a)(3) and 424.535(a)(3) to include all felonies, CMS 
did not comply with section 1(b)(7) of Executive Order 12866 and base 
its proposal on reasonably obtainable scientific, technical and other 
information. The commenter recommended that CMS identify the specific 
felony reasons in a new proposed rule.
    Response: We do not agree that our proposed changes to Sec. Sec.  
424.530(a)(3) and 424.535(a)(3) violated section 1(b)(7) of Executive 
Order 12866. To the contrary, the changes were based on a careful 
consideration of the need to ensure that individuals and entities 
convicted of a felony offense that is detrimental to the best interests 
of the Medicare program and its beneficiaries are kept out of the 
Medicare program. For the reasons previously stated, we believe it is 
neither feasible nor practical to identify every conceivable felony 
offense that could result in the application of Sec. Sec.  
424.530(a)(3) or 424.535(a)(3).
    Comment: A commenter recommended that CMS establish protections, 
such as a knowledge threshold, for suppliers that perform reasonable 
due diligence to determine if a potential employee has a felony record. 
The commenter stated that CMS should work with suppliers that act in 
good-faith to determine if a prospective employee has a felony record 
rather than automatically excluding a supplier. The commenter 
specifically suggested adding language to Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) that, in effect, would permit a denial or revocation only 
if: (1) The provider or supplier knew or should have known about the 
conviction; (2) the provider or supplier did not have industry standard 
hiring practices in place; (3) the provider or supplier has not 
submitted a corrective action plan; (4) the disruption to beneficiaries 
does not outweigh the provider or supplier's termination due to one 
individual; and (5) CMS has already established and implemented a 
comprehensive state and federal database that is available to providers 
and suppliers.
    Response: We disagree with the commenter's suggestion. As stated 
earlier, it is the felony conviction itself and not the extent of the 
organization's efforts in performing a criminal background check that 
is the crucial consideration.
    Comment: To improve transparency--and since the OIG publicly posts 
information about individuals and entities excluded from federal health 
care programs--a commenter suggested that CMS post on its provider 
enrollment Web page the name and NPI (if applicable) of any person who 
has had his or her Medicare billing privileges denied or revoked based 
upon a felony conviction; the date of the denial or revocation and, if 
applicable, the length of the re-enrollment bar should be listed as 
well.
    Response: We appreciate this suggestion and may consider it in a 
future initiative to the extent it is consistent with the Privacy Act.
    Comment: A commenter was concerned that the expansion of the 
felonies encompassed by Sec.  424.535(a)(3) would be applied to 
providers and suppliers whose recently submitted revalidation 
applications were approved. The commenter, in other words, opposed the 
retroactive application of our proposed Sec.  424.535(a)(3).
    Response: Our changes to Sec.  424.535(a)(3) do not preclude CMS 
from reviewing the enrollment records of currently enrolled providers 
and suppliers to determine if the provider, supplier, or an owner or 
managing employee thereof has a felony conviction that CMS deems 
detrimental to the best interests of the Medicare program or its 
beneficiaries. However, we again stress that not every felony 
conviction will necessarily result in a denial or revocation.
    Comment: A commenter expressed support for our proposed revisions 
to Sec. Sec.  424.530(a)(3) and 424.535(a)(3).
    Response: We appreciate the commenter's support.
    Comment: A commenter agreed with CMS's proposal to clarify that the 
enrollment bar is for felony convictions ``within the preceding 10 
years'' but suggested that the date be further clarified as ``within 
the 10 years preceding the effective date of the enrollment 
application.''
    Response: While we appreciate the commenter's support, we disagree 
with the commenter's suggestion because it would be difficult to use a 
future date--that is, a date that could be well after the date the 
application was submitted--as the 10-year cut-off point.
    After a careful consideration of the comments and in light of the 
previous discussion, we are revising Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) as follows:
    Section Sec.  424.530(a)(3) will state that 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 determines is 
detrimental to the best interests of the Medicare program and its 
beneficiaries. Offenses include, but are not limited in scope or 
severity to--
    ++ 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 424.535(a)(3) will state that 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 determines is 
detrimental to the best interests of the Medicare program and its 
beneficiaries.
    Offenses include, but are not limited in scope or severity to--
    ++ 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

[[Page 72513]]

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.
    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.
4. Abuse of Billing Privileges
    Section 424.535(a)(8) currently 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 the service was provided, or when the 
equipment necessary for testing was not present where the testing is 
said to have occurred.
    We proposed to expand this revocation reason by adding a new 
paragraph (a)(8)(ii) to Sec.  424.535. The existing revocation reason 
would be incorporated into a new paragraph (a)(8)(i). 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. We explained 
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 Funds. We note that 
the responsibility for submitting valid claims exists irrespective of 
whether the provider or supplier itself submits the claims or hires a 
billing agency to perform this function; in either case, the claims are 
submitted on behalf of the provider or supplier.
    We solicited comment on what should qualify as a ``pattern or 
practice'' under our proposed change. We also proposed several factors 
we would take into account when determining whether a revocation under 
Sec.  424.535(a)(8)(ii) is warranted 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 in Sec.  424.502).
     The length of time over which the pattern has continued.
     How long the provider or supplier has been enrolled in 
Medicare.
    With respect to these factors, we solicited 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.
     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 further solicited comment on whether there should be a set 
knowledge standard associated with our proposed provision--for example, 
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.
    The following is summary of the comments received regarding Sec.  
424.535(a)(8)(ii) and our responses thereto:
    Comment: A commenter stated that it did not dispute CMS's right to 
revoke billing privileges if a Medicare provider has a pattern of 
billing for services that do not meet Medicare requirements. However, 
the commenter recommended that in applying any criteria regarding the 
number of claim denials, CMS should take into account the number of 
denials that were overturned on appeal. Several other commenters also 
stated that they did not object to CMS's proposal, but urged that 
results of the administrative appeals process be considered as a 
significant factor before CMS concludes that a provider has engaged in 
a ``pattern or practice'' of submitting improper claims. Other 
commenters stated that due process mandates that claim denials under 
appeal be excluded from any measurement that takes into account the 
number or percentage of denied claims. Another commenter questioned 
whether an appeal is considered to be successful when it is pursued up 
to and including the Administrative Law Judge (ALJ) level.
    Response: A provider or supplier's claim denial that has been 
both--(1) fully (rather than partially) overturned on appeal; and (2) 
finally and fully adjudicated will be excluded from our consideration 
in determining whether the provider or supplier's Medicare billing 
privileges should be revoked under Sec.  424.535(a)(8)(ii). This is 
because, for purposes of Sec.  424.535(a)(8)(ii), the claim denial has 
been effectively negated. Yet we do not believe a claim denial that 
fails to meet both of these requirements should be excluded from our 
review for two reasons. First, excluding claims that are currently 
being appealed could encourage providers and suppliers to file 
meritless appeals simply to circumvent the application of Sec.  
424.535(a)(8)(ii). Second, merely because a claim is under appeal does 
not necessarily mean it will be overturned.
    For purposes of this claim denial exclusion, the term ``finally and 
fully adjudicated'' means that--(1) the appeals process has been 
exhausted; or (2) the deadline for filing an appeal has passed.
    Comment: A number of commenters opposed CMS's proposed Sec.  
424.535(a)(8)(ii). They stated that: (1) The proposal is arbitrary and 
subjective and grants too much discretion to CMS and its contractors; 
(2) CMS failed to include in its proposed rule a thorough discussion of 
the factors that would be used in making determinations related to 
Sec.  424.535(a)(8)(ii); (3) did not define ``pattern or practice''; 
and (4) there is nothing in the proposed rule that limits CMS's 
authority under Sec.  424.535(a)(8)(ii). They added that despite CMS's 
statement in the proposed rule's preamble that it would not use this 
provision to revoke providers for isolated and sporadic claim denials 
or innocent billing errors, there are no safeguards to prohibit CMS or 
its multiple contractors from doing so. The commenters stated that 
given the complexity of Medicare's billing and coding rules and the 
frequency with which they change, Medicare providers would inevitably 
submit claims that fail to meet Medicare requirements though without 
any nefarious intent. They urged CMS to furnish appropriate, 
consistent, and clear guidelines regarding billing, coding, and payment 
policies before implementing Sec.  424.535(a)(8)(ii). Other commenters 
stated that contractor errors, which can include a contractor's 
misinterpretation or misunderstanding of CMS requirements, sometimes 
result in claim denials.
    Response: We do not believe that our proposal is arbitrary or 
grants CMS unlimited discretion. To the contrary, and as the commenters 
noted, we were

[[Page 72514]]

very clear in the preamble of the proposed rule that sporadic billing 
errors would not result in revocation under Sec.  424.535(a)(8)(ii). 
Although we did not define ``pattern or practice'' to maintain 
flexibility to address a variety of factual scenarios, we listed 
several factors that would be considered in our Sec.  424.535(a)(8)(ii) 
determinations and requested feedback regarding other potential 
factors. Additionally, not only will CMS (rather than its contractors) 
make all such determinations, but also Sec.  424.535(a)(8)(ii) will be 
applied only: (1) In situations where the behavior could not be 
considered sporadic; and (2) after the most careful and thorough 
consideration of the relevant factors. These points cannot be stressed 
enough.
    We recognize that Medicare has many rules and requirements 
regarding billing and coding, and that claims are occasionally 
submitted in error due to a provider's misunderstanding of these 
policies or denied incorrectly by the contractor. It is not CMS's 
intention to revoke billing privileges under Sec.  424.535(a)(8)(ii) in 
such instances. However, Medicare billing privileges come with a 
responsibility for the provider to diligently seek and obtain 
clarification of Medicare policies should there be a misunderstanding 
or confusion. Constant, repeated, and systemic claim denials (as 
opposed to sporadic or occasional claim denials) can be indicative of 
the provider's failure to do so. To address such situations, we believe 
that the implementation of Sec.  424.535(a)(8)(ii) should not be 
delayed, as some of the commenters appeared to suggest we do.
    Comment: Several commenters believed that any appeals stemming from 
revocations initiated under Sec.  424.535(a)(8)(ii) should be subject 
to an expedited appeals process.
    Response: Since the impact of a revocation is the same regardless 
of the reason involved, we do not believe that revocations based on 
certain reasons should be subject to a faster appeals process than 
those predicated on other reasons.
    Comment: A commenter contended that CMS's proposed Sec.  
424.535(a)(8)(ii) will have a chilling effect on the practice of 
medicine because it gives the federal government significant authority 
to target honest physicians. The commenter requested that CMS remove 
this proposed provision from the final rule or at least develop and 
solicit comments on a process for notifying providers of their billing 
issues and giving them an opportunity to correct the problem prior to 
revoking billing privileges.
    Response: We disagree that our proposal will have a chilling effect 
on health care. This rule will not affect providers that take seriously 
their responsibilities to submit valid claims and to seek clarification 
when there is confusion or disagreement involving applicable policies. 
No payer, public or private, should be required to continue doing 
business with a provider or supplier that demonstrates the type of 
clear pattern or practice of billing abuse that this rule addresses. 
Moreover, we do not believe that any additional formal notification to 
the provider of its billing deficiencies prior to the potential 
application of Sec.  424.535(a)(8)(ii) is required. Under our current 
rules and practices, by the time CMS would revoke a provider or 
supplier under Sec.  424.535(a)(8)(ii), the provider would have 
received information and education about the reasons for the claim 
denials on multiple occasions. From the first claim denial, when a 
provider of supplier is notified of the reason for the denial, 
providers receive information indicating compliance or non-compliance 
with Medicare rules and requirements. It is ultimately the provider's 
responsibility to review its denied claims and to take whatever 
remedial action is necessary.
    Comment: A commenter contended that proposed Sec.  
424.535(a)(8)(ii) should have certain objective measures and 
standards--such as a 50 percent benchmark--to ensure that it is not 
applied in an arbitrary manner.
    Response: We solicited and received several comments regarding 
whether certain numerical thresholds should be established in Sec.  
424.535(a)(8)(ii). After considering these comments, we have concluded 
that numerical thresholds should not be established because we need the 
flexibility to address a myriad of scenarios. For example, merely 
because a provider had over 30 percent of its claims denied does not 
automatically mean that a Sec.  424.535(a)(8)(ii) revocation should be 
imposed; likewise, an under-30 percent denial rate does not mean that a 
Sec.  424.535(a)(8)(ii) revocation is never warranted. Each case must 
be judged on its own specific facts, and establishing numerical 
thresholds would, we believe, hinder our ability to do so.
    Comment: A few commenters recommended that CMS exclude providers 
from the application of Sec.  424.535(a)(8)(ii) for a period of 1 year 
when Medicare changes the Medicare Administrative Contractor for the 
provider's state, as providers in such instances must learn new local 
coverage determination (LCD) policies.
    Response: We disagree with this recommendation. While we concede 
that providers in these circumstances often need to learn new LCD 
policies, claims can be denied for many reasons unrelated to LCDs. We 
thus believe it would be inappropriate to institute a blanket 1-year 
exemption in such cases, for we would lose the ability during that time 
to take action to address repeated claim denials over a period of time. 
Again, though, and as we have stated elsewhere in this preamble, we 
recognize that Medicare has many rules and requirements regarding 
billing and coding, and that claims are sometimes submitted in error 
due to a provider's honest misunderstanding of these policies. It is 
not our intention to revoke billing privileges under Sec.  
424.535(a)(8)(ii) for such occasional misinterpretations.
    Comment: A commenter recommended that CMS delay implementation of 
Sec.  424.535(a)(8)(ii) for 2 years after the implementation of the 
ICD-10 standard. The commenter believed that ICD-10's implementation 
will likely lead to the submission of incorrect claims for a period of 
time.
    Response: We do not believe that a delay in the implementation of 
Sec.  424.535(a)(8)(ii) is necessary. Again, any delay of the 
applicability of Sec.  424.535(a)(8)(ii) would deny us the ability to 
address situations (unrelated to the ICD-10 implementation) involving 
repeated claim denials. Furthermore, as we have already noted, we 
recognize that Medicare has many requirements and that in isolated 
instances claims are submitted erroneously due to a provider's 
misinterpretation of these policies. Such occasional misunderstandings 
will generally not rise to the level of a ``pattern or practice'' of 
improper billing, and thus will not warrant revocation under Sec.  
424.535(a)(8)(ii).
    Comment: A commenter stated that it would be inappropriate for CMS 
to revoke billing privileges under Sec.  424.535(a)(8)(ii) when no 
finding of fraud is involved. The commenter recommended that CMS 
withdraw this proposed provision.
    Response: We disagree. Revocation is an administrative remedy 
separate and distinct from the government's other remedies for 
fraudulent behavior, and is intended to protect the Medicare program 
and its beneficiaries from fraud, waste, and abuse. Indeed, many of our 
existing revocation reasons under Sec.  424.535(a) do not require a 
finding of fraud. For example, Sec.  424.535(a)(1) permits revocation 
of the provider or supplier's Medicare billing privileges if the 
provider or supplier is out of

[[Page 72515]]

compliance with Medicare enrollment requirements. The fact that there 
has not been a legal finding of fraudulent conduct does not 
automatically mean the behavior or activity in question is compliant 
with Medicare requirements. We maintain that repeated claim denials 
over a period of time raise questions as to the provider or supplier's 
ability or willingness to comply with Medicare's billing and coding 
requirements and procedures.
    Comment: A commenter opposed proposed Sec.  424.535(a)(8)(ii), 
contending that: (1) CMS already has the authority and tools to revoke 
the billing privileges of unscrupulous actors who defraud or abuse the 
Medicare program; (2) denial of payment is the appropriate remedy for 
the submission of an incorrect claim; (3) CMS should not assume that 
providers cannot correct their existing practices to ensure that 
accurate claims are submitted; and (4) there is no guarantee that the 
determination criteria CMS has outlined would not be improperly or 
inconsistently applied.
    Response: We currently do not have the ability to revoke a provider 
or supplier's billing privileges based on a pattern or practice of 
submitting non-compliant claims, hence the need for Sec.  
424.535(a)(8)(ii). We agree that a claim denial can serve as an 
adequate remedy in many cases. However a repeated pattern of submitting 
non-compliant claims indicates that the associated claim denials are 
not altering the provider's behavior. More serious remedial action--
specifically, the revocation of billing privileges under Sec.  
424.535(a)(8)(ii)--may thus be necessary in some cases.
    We do not assume that providers cannot correct their existing 
practices to ensure that they submit compliant claims. We believe very 
strongly that they can, which is precisely why a failure to do so could 
warrant a revocation under Sec.  424.535(a)(8)(ii).
    CMS, rather than our contractors, will make all determinations 
under Sec.  424.535(a)(8)(ii) and will consistently apply the criteria.
    Comment: A commenter stated that existing procedures, including 
audits, are more than sufficient to detect improper billing and to 
educate providers in complying with Medicare's intricate rules. The 
commenter believes that Sec.  424.535(a)(8)(ii) is in effect 
duplicative of these procedures, and would simply impose another layer 
of complexity and financial burden on providers.
    Response: We agree with the commenter's premise: our current rules 
and procedures are sufficient to bring most providers into compliance 
when mistakes or errors are brought to their attention. However, this 
final rule is focused on providers who cannot or will not come into 
compliance with our payment requirements after repeated claim denials. 
Despite our audit practices and educational activities, we continue to 
see situations where certain providers and suppliers regularly submit 
non-compliant claims. Clearly, our audit and education activities have 
not been enough to sufficiently stem this behavior in all instances, 
thus demonstrating the need for Sec.  424.535(a)(8)(ii). Yet we 
reiterate that not only will we make all determinations under Sec.  
424.535(a)(8)(ii), but also that this provision will be applied in 
situations where the behavior was not sporadic in nature. We are 
focused on instances where the provider is engaged in an ongoing 
pattern of submitting non-compliant claims.
    Comment: A commenter stated that the proposed rule does not explain 
how or why billing is ``abusive'' merely because the claim appears not 
to meet medical necessity criteria.
    Response: There are reasons other than a failure to meet medical 
necessity requirements for which a claim can be denied (although the 
continuous submission of claims for medically unnecessary services can 
trigger Sec.  424.535(a)(8)(ii)). The term ``abusive,'' as used in the 
context of Sec.  424.535(a)(8)(ii), is meant to capture a variety of 
situations in which a provider or supplier regularly and repeatedly 
submits non-compliant claims over a period of time.
    Comment: Several commenters stated that whatever criteria CMS plans 
to use in determining whether a revocation under Sec.  
424.535(a)(8)(ii) is appropriate should be included in the final rule's 
regulatory text or, as one commenter suggested, be accompanied by a 
binding administrative document (such as an administrator's ruling) as 
part of its implementation.
    Response: We have included in the regulatory text the factors that 
CMS will consider prior to imposing a revocation under Sec.  
424.535(a)(8)(ii).
    Comment: A commenter recommended that before CMS finalizes Sec.  
424.535(a)(8)(ii), it should: (1) Instruct its contractors not to 
repeatedly audit the same beneficiary's claims once the claims have 
been upheld on appeal or in medical review; (2) instruct its 
contractors not to audit a provider for a 1-year period if the provider 
has been audited and found to have an acceptable error rate; (3) 
restore contractors' ability to use clinical judgment when performing 
complex medical reviews; (4) develop a comprehensive education program 
for practitioners who prescribe DMEPOS items; (5) exercise better 
supervision of its contractors; and (6) establish clear guidelines for 
calculating provider-specific error rates used to place providers on 
prepayment review. The commenter believed these changes are necessary 
to better ensure that providers--who are often confused by CMS policy 
changes, which the commenter stated are sometimes applied 
retroactively--are able to submit correct claims and that CMS's 
policies are consistent, clear, and appropriately announced to 
providers with adequate notice.
    Response: While we appreciate the commenter's suggestions, they are 
outside the scope of this rule.
    Comment: A commenter expressed concern that CMS will use audits 
performed by its contractors (for example, RACs) as a legitimate, 
ultimate indicator of either fraudulent behavior or noncompliance with 
Medicare payment policies. The commenter recommended, as did a number 
of other commenters, that CMS eliminate pre-payment audits as a basis 
for detrimental action under Sec.  424.535(a)(8)(ii). These commenters 
stated that some providers undergo pre-payment review merely as a 
preventative or precautionary measure to make sure that the claims 
submitted are appropriate and well-documented or because of the amount 
of the claim. They added that certain providers are subjected to pre-
payment review for reasons beyond their control, and that losing 
billing privileges for being placed on pre-payment review is a 
draconian and inappropriate penalty. Several other commenters stated 
that there is no evidence to suggest that placing certain categories of 
suppliers or product categories under pre-payment review is resulting 
in lower error rates.
    Response: While we do not intend to use the results of audits 
performed by our contractors as the sole and absolute criterion of 
fraudulent behavior or noncompliance with Medicare payment policies, 
such results will be considered in our review of all of the factors in 
Sec.  424.535(a)(8)(ii).
    We will not consider the provider's pre-payment review status in 
and of itself as a factor in Sec.  424.535(a)(8)(ii) determinations. 
Our concern is with actual claim denials, rather than the means through 
which such denials were issued.
    Comment: Several commenters stated that the claim denials of some 
individual practitioners and other suppliers sometimes stem from 
deficiencies in the physician's documentation. The commenters

[[Page 72516]]

believed that CMS's inclusion of such claim denials--that is, claim 
denials based on the insufficient documentation of another provider--in 
its Sec.  424.535(a)(8)(ii) determinations would be arbitrary and 
capricious.
    Response: We disagree. We believe it is the responsibility of the 
provider submitting the claim to ensure that all requirements--
including, as necessary, proper and compliant supporting 
documentation--have been met prior to the claim's submission. Repeated 
denials due to improper documentation are an indication to a provider 
or supplier that its billing behavior must change in order to become 
compliant with Medicare requirements--including documentation 
requirements.
    Comment: A commenter stated that proposed Sec.  424.535(a)(8)(ii) 
should contain a knowledge standard that the provider knew that the 
claims did not meet Medicare requirements. Several other commenters 
contended that CMS should only revoke billing privileges under Sec.  
424.535(a)(8)(ii) if the supplier has specific or actual knowledge of 
the erroneous nature of a particular claim or set of claims. This would 
preclude revocations based on honest mistakes; one commenter noted the 
challenges associated with EHR systems and the possibility that 
erroneous claims could be submitted as a result. One commenter stated 
that the proposed provision lacks any standards concerning the state of 
mind of the entity. Another commenter stated that between the two 
intent standards that are under CMS consideration--``reckless 
disregard'' and ``knew or should have known''--the former would be more 
appropriate. Another commenter urged CMS to apply Sec.  
424.535(a)(8)(ii) only when there is clear evidence that a provider 
acted knowingly and willfully in submitting non-compliant claims. This 
commenter stated that under Medicare's complex billing rules, it would 
be too easy for CMS or a contractor to assert that a provider ``should 
have known'' about a billing rule; as such, CMS should delete the 
phrase ``should have known'' in the final rule. The commenter believed 
that CMS should focus more on educating providers about changes to 
Medicare billing rules than on the punitive remedies outlined in Sec.  
424.535(a)(8)(ii).
    Response: Although we solicited comments on whether a knowledge 
standard should be applied to Sec.  424.535(a)(8)(ii), we have decided 
not to implement such a standard for two principal reasons. First, the 
burden on CMS of determining the provider or supplier's intent for each 
claim it submitted (especially when there could be hundreds of claims 
at issue) would be excessive. Second, if a provider submits a claim 
with specific or actual knowledge that it does not meet Medicare 
requirements or with reckless disregard of said compliance, the federal 
government already has various means to address these situations, such 
as the False Claims Act. Associating a knowledge standard with Sec.  
424.535(a)(8)(ii) would simply duplicate existing authorities.
    Comment: A commenter stated that CMS appears to be attempting to 
keep providers and suppliers from being able to effectively provide 
care for beneficiaries and to limit the overall number of providers and 
suppliers. The commenter believed that: (1) Sec.  424.535(a)(8)(ii) Is 
based on a rationale that all providers and suppliers are a risk to the 
Medicare Trust Funds; and (2) CMS has not fully gauged the proposed 
provision's impact on many honest providers and suppliers that furnish 
services to Medicare beneficiaries.
    Response: We are neither attempting to impede patient care nor 
reduce the number of providers and suppliers. We believe most Medicare 
suppliers and providers are conscientious about submitting claims that 
meet Medicare requirements, and this rule will not affect that 
majority. Once again, we are merely attempting to address the problem 
of providers and suppliers with patterns of non-compliant claim 
submissions. Providers and suppliers that are not engaged in a pattern 
or practice of non-compliant billing will not be adversely affected by 
Sec.  424.535(a)(8)(ii).
    Comment: Several commenters stated that a mere difference of 
opinion about what is medically necessary--a term that is not ``black 
and white''--should not be the basis for a revocation of billing 
privileges, particularly considering that LCDs and views on medical 
necessity will differ among MACs.
    Response: We understand the commenter's concern and believe that 
sporadic claim denials based on a lack of medical necessity generally 
should not result in revocation under Sec.  424.535(a)(8)(ii). However, 
we do not believe that medical necessity-based denials should be 
excluded from the scope of Sec.  424.535(a)(8)(ii). It is of concern to 
us when a provider consistently submits claims for services that are 
not medically necessary, for this raises quality of care issues as well 
as the possibility that the provider is seeking to defraud the Medicare 
program.
    Comment: A commenter noted that while CMS states that Sec.  
424.535(a)(8)(ii) is not designed to revoke enrollment for isolated and 
sporadic claim denials or for innocent errors in billing, the provision 
itself (as proposed) does not make that intent clear.
    Response: The regulatory text of Sec.  424.535(a)(8)(ii) states 
that CMS may revoke billing privileges if a provider or supplier has a 
pattern or practice of submitting claims that fail to meet Medicare 
requirements. It also identified five factors that we will use to make 
such a determination, including: (1) The percentage of claims denied; 
(2) the reasons for the claim denials; (3) a history of final adverse 
actions; (4) the length of time the pattern has continued; and (5) the 
length of time the provider or supplier has been enrolled in Medicare.
    Comment: Several commenters stated that some providers submit many 
claims each year electronically, meaning that a single inadvertent 
error could easily be repeated on numerous claims. The commenters 
expressed concern that such errors when repeated could constitute a 
pattern or practice of submitting erroneous claims under Sec.  
424.535(a)(8)(ii). One of these commenters added that in light of the 
great complexity of Medicare billing and coding requirements, a 
provider could inadvertently submit a claim that failed to meet at 
least one Medicare requirement, even though the provider in good-faith 
believed that the claim was correct.
    Response: We recognize the possibility that a single inadvertent 
error on similar electronic claim submissions could result in multiple 
claim denials. As we stated earlier, we recognize that Medicare has 
many rules and requirements regarding billing and coding, and that 
claims are sometimes submitted in error due to a provider's honest 
misunderstanding of these policies. It is not our intention to revoke 
billing privileges under Sec.  424.535(a)(8)(ii) for such sporadic 
misinterpretations.
    Comment: A commenter suggested that the following factors--in order 
of importance--be used in determining whether a ``pattern or practice'' 
exists under Sec.  424.535(a)(8)(ii) and that such factors be included 
in the regulatory text: (1) The reason(s) for the claim denials; (2) 
the percentage of submitted claims that were denied (for which there 
should be a minimum threshold); (3) how long the provider has been 
enrolled in Medicare; (4) whether the provider has had any final 
adverse actions; and (5) the length of time of the pattern or practice. 
Another commenter requested

[[Page 72517]]

that CMS not use the ``total number of claims denied'' as a criterion, 
for this could disproportionately and unfairly impact larger providers 
that submit many claims. The commenter also requested CMS to clarify 
whether the percentage of submitted claims that were denied would be 
determined using individual, subpart, or organizational NPIs.
    Response: We have decided not to give certain factors greater 
weight in our Sec.  424.535(a)(8)(ii) determinations than other, for 
the importance of each factor may vary based on the particular 
situation. We have also decided not to establish a minimum percentage 
threshold for claim denials; as stated earlier, we need flexibility to 
address a variety of scenarios. However, we included the five factors 
that the first commenter identified--all of which we proposed--in the 
regulatory text as criteria that CMS will consider, as appropriate or 
applicable, in its Sec.  424.535(a)(8)(ii) determinations.
    We agree with the second commenter that the ``total number of 
claims denied'' factor could present a distorted view of the provider 
or supplier's billing practices for purposes of Sec.  
424.535(a)(8)(ii). Therefore, we will not be finalizing this as 
criterion.
    The ``percentage of claims denied'' criterion will be based on the 
NPI listed on the claim.
    Comment: A commenter suggested that: (1) The provider should have 
an opportunity to show that it has remedied any error that occurred; 
and (2) proposed Sec.  424.535(a)(8)(ii) should be limited to 
situations that are within the provider's control. With respect to this 
second suggestion, the commenter stated that providers sometimes rely 
upon physicians to provide information that must be included on the 
claim; if such information is incorrect, CMS should not use this as a 
basis for revocation under Sec.  424.535(a)(8)(ii). Other commenters 
shared this view.
    Response: We disagree with both of the commenter's suggestions. We 
believe that the provider already has an opportunity to remedy an error 
once it receives a claim denial notice. Repeated errors over a period 
of time indicate that the provider is not taking necessary corrective 
steps. Also, while we recognize that providers sometimes rely on 
physicians for certain information, the provider remains ultimately 
responsible for ensuring that the claim and the supporting 
documentation meet Medicare requirements.
    Comment: A commenter stated that inconsistent claim determinations, 
policies, and interpretations of policies among MACs would lead to 
inequitable results under Sec.  424.535(a)(8)(ii). As written, they 
provide far too much latitude for administrative folly, which is nearly 
guaranteed to occur. At a minimum, the commenter stated, the proposed 
rule must not be finalized without: (1) Substantial clarifying text 
written into the regulation itself; or (2) being accompanied by a 
binding administrative document (such as an administrator's ruling) for 
its implementation.
    Response: As stated earlier, CMS, rather than its contractors, will 
make all Sec.  424.535(a)(8)(ii) determinations.
    Comment: Several commenters recommended that CMS include in the 
regulatory text of Sec.  424.535(a)(8)(ii) a statement that the 
authority to make determinations that a ``pattern or practice'' does 
not rest with CMS's contractors. The commenters also suggested that CMS 
incorporate into the regulatory text the following criteria that CMS 
should use in making Sec.  424.535(a)(8)(ii) determinations: (1) 
Whether the provider has any history of ``final adverse actions'' and 
the nature of those actions; (2) the length of time over which the 
pattern or practice has continued; (3) how long the provider has been 
enrolled in Medicare; (4) whether the pattern or practice occurs 
throughout the provider or supplier's industry; (5) whether the 
provider had a specific intent to submit a false or fraudulent claim; 
(6) whether the provider has a corrective action plan in place; (7) the 
number of claims overturned on appeal; and (8) the reasons for the 
claim denials. With respect to the fourth criterion, the commenters 
stated that consistently high industry-wide error rates among suppliers 
are the result of constant changes to billing requirements, uncertain 
and inconsistent interpretation of requirements by regulating and 
enforcing entities (including Medicare contractors), inadequately 
written LCDs, and CMS's expectation that suppliers can enforce 
physician documentation requirements. They recommended that CMS 
consider addressing high industry-wide error rates through billing 
requirement reform rather than implementing another instrument of 
supplier punishment via Sec.  424.535(a)(8)(ii).
    Response: As we have stated elsewhere in this final rule, we will 
make all determinations for revocations under Sec.  424.535(a)(8)(ii). 
We do not believe this needs to be restated in the regulatory text.
    Insofar as the commenters' suggested factors for consideration, we 
agree with the first, second, third, and eighth factors and have 
included them in the regulatory text. We do not agree with the fourth 
suggested factor. Each provider or supplier must be reviewed 
individually, rather than as part of a larger class of providers and 
suppliers. We do not agree with the fifth suggested factor, either; for 
reasons already stated, we will not be applying a knowledge standard to 
Sec.  424.535(a)(8)(ii). We disagree with the sixth factor as well. If 
a provider is repeatedly and consistently submitting non-compliant 
claims, this indicates that the provider's corrective action plan--
assuming it has one--is either being partially or wholly disregarded or 
is inadequate. As for the seventh factor, and as stated earlier, a 
provider or supplier's claim denial that has been both: (1) Fully 
(rather than partially) overturned on appeal; and (2) finally and fully 
adjudicated will be excluded from our Sec.  424.535(a)(8)(ii) 
determinations.
    Finally, we recognize that there may be special circumstances 
surrounding the provider or supplier's non-compliant billing that are 
beyond the scope of the five factors we are finalizing. The particular 
facts of each case will vary widely, and the scenarios the commenters 
have presented underscore this point. To effectively address these 
situations, we believe that a sixth criterion should be established 
that enables CMS to consider any other applicable and available 
information regarding the provider or supplier's specific circumstances 
that CMS deems relevant to its determination of a pattern or practice 
of non-compliant billing. However, information considered under this 
criterion will not alone be decisive in our determinations under Sec.  
424.535(a)(8)(ii); the five other factors will, of course, be 
considered as well. Regardless, we believe that such information, to 
the extent it exists, should be considered in our Sec.  
424.535(a)(8)(ii) determinations to help ensure that the Medicare Trust 
Funds are protected and, by the same token, that providers and 
suppliers are treated fairly.
    Comment: Several commenters recommended that CMS give low 
consideration to claim volume and percentage of claims denied as 
factors under Sec.  424.535(a)(8)(ii) and that thresholds not be 
established for these criteria. The commenters believed that these 
factors may lead CMS to focus on the largest suppliers that rely on 
automated claims administration systems, while missing smaller 
suppliers that do not attract attention because their data does not 
exceed certain thresholds.
    Response: The number of denied claims will not be a factor in our

[[Page 72518]]

Sec.  424.535(a)(8)(ii) determinations, though the ``percentage of 
denied claims'' will remain as a factor and one that is no less 
important than the others. Also, and as explained earlier, we are not 
establishing thresholds for any of our criteria.
    Comment: Several commenters expressed concern that Sec.  
424.535(a)(8)(ii) could be easily misapplied or misused because the 
provision is very vague and without clear standards.
    Response: As previously explained, we are finalizing all but one of 
the factors we proposed and are adopting an additional factor in 
response to the comments we received. We believe this will furnish 
sufficient clarity as to the scope of Sec.  424.535(a)(8)(ii).
    Comment: Several commenters expressed concern about the potential 
application of Sec.  424.535(a)(8)(ii) considering that RACs have a 
financial incentive to deny claims.
    Response: RACs review claim decisions on a post-payment basis. and 
are only paid for a claim denial if a Medicare Administrative 
Contractor (MAC) denial of a claim is upheld on appeal; this, we 
believe, reduces the incentive for RACs to make inappropriate 
determinations regarding claims. We also reiterate that claim denials 
that are reversed on appeal will be excluded from the application of 
Sec.  424.535(a)(8)(ii) if they meet certain criteria.
    Comment: Several commenters urged CMS to reconsider revocations 
based on billing patterns because it does not appear that there is--nor 
does CMS cite any--statutory authority to support such a remedy.
    Response: We cited our statutory authority for Sec.  
424.535(a)(8)(ii) and all of our other provider enrollment provisions 
in both this rule and the proposed rule. Specifically, 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.
    Comment: A commenter stated that: (1) There are often good-faith 
differences between providers and contractors over appropriate coding; 
and (2) different payers may have different rules, which can cause 
confusion over the appropriate way to bill. The commenter contended 
that if there is no evidence that the provider intended to defraud 
Medicare, the provider should be given a chance to remedy the error. 
Medicare, the commenter added, should engage in education, counseling, 
and guidance that leads to correct coding before taking draconian 
measures.
    Response: We believe that frequent claim denials should alert the 
provider that there may be an issue with its claim submissions and that 
remedial action may be required. We do not believe that an interim 
notification from CMS (for example, a ``warning letter'') should be a 
prerequisite for taking action under Sec.  424.535(a)(8)(ii). Further, 
if the provider has questions regarding CMS's billing and coding 
requirements, it should review CMS's manuals, educational articles, and 
other informational documents at CMS's Web site (www.cms.hhs.gov); the 
provider may also contact its local MAC if it has additional questions.
    Comment: A commenter stated that it fully supported proposed Sec.  
424.535(a)(8)(ii).
    Response: We appreciate the commenter's support.
    Comment: Several commenters stated that Medicare providers are 
already well aware of their legal obligation to submit correct and 
accurate claims for services that were reasonable and necessary. They 
noted that: (1) The current claim submission forms require the 
physician to certify that the services ``were medically indicated and 
necessary for the health of the patient''; and (2) enforcement agencies 
already have ample authority under several statutory schemes to 
penalize providers found to have inaccurate claims, including the False 
Claims Act. Therefore, the commenters questioned the benefit of or need 
for Sec.  424.535(a)(8)(ii), especially in light of the danger of CMS 
overreach in its application of this provision.
    Response: We acknowledge these authorities as well as the 
certification language on the current claim submission forms. However, 
we continue to see instances where, despite these obligations, 
providers and suppliers repeatedly submit non-compliant claims. The 
other federal authorities provide remedies different from what we have 
proposed. We thus believe that the authority to revoke billing 
privileges under Sec.  424.535(a)(8)(ii) can be part of a comprehensive 
strategy to address these situations.
    Comment: A commenter stated that there do not appear to be any 
administrative appeal rights if a provider is revoked under Sec.  
424.535(a)(8)(ii).
    Response: Under Sec.  424.545, a provider or supplier may appeal 
any revocation of Medicare billing privileges under 42 CFR part 498.
    Comment: A commenter stated that CMS should exclude physicians from 
the purview of Sec.  424.535(a)(8)(ii) because they fall within the 
``limited'' screening category under Sec.  424.518(a).
    Response: We do not agree. The issue is the correct submission of 
claims, rather than the level of screening to which the provider or 
supplier is normally subject under Sec.  424.518(a).
    Comment: A commenter stated that revocations under proposed Sec.  
424.535(a)(8)(ii) should be limited to instances where CMS has data 
indicating that the provider is engaging in extreme outlier billing and 
has an established and ongoing pattern of abusive practices.
    Response: As stated, we will consider, as appropriate or 
applicable, the six factors discussed previously (and contained in 
Sec.  424.535(a)(8)(ii)(A) through (F)) in determining whether a 
revocation under Sec.  424.535(a)(8)(ii) is warranted. A provider or 
supplier could be an ``outlier biller'' for any number of reasons. 
Hence, a provider or supplier that is an ``outlier biller'' should not 
automatically be subject to revocation based on Sec.  
424.535(a)(8)(ii). We have noted previously that we will only take 
revocation action under Sec.  424.535(a)(8)(ii) after careful review of 
factors surrounding the provider or supplier's billing behavior.
    Comment: A commenter stated that while the proposed rule's preamble 
indicated that ``claims for services that fail to meet Medicare 
requirements'' meant claims denied for failing to satisfy Medicare's 
medical necessity requirements, the regulatory text did not explicitly 
state as such. The commenter recommended that CMS either: (1) Delete 
its proposed Sec.  424.535(a)(8)(ii); or (2) revise the provision to 
clearly limit ``claims for services that fail to meet Medicare 
requirements'' to claims that do not meet medical necessity 
requirements. The lack of a specific reference to ``reasonable and 
necessary'' requirements, the commenter believed, would enable CMS to 
unreasonably apply Sec.  424.535(a)(8)(ii) to a failure to meet any 
Medicare requirement.
    Response: We do not believe that revocations under Sec.  
424.535(a)(8)(ii) should be limited to claim denials based on medical 
necessity. Indeed, proposed Sec.  424.535(a)(8)(ii) was not meant to 
apply only to certain claim denial reasons. Repeated claim denials over 
a period of time are of concern to us irrespective of the particular 
reason(s) involved. To alleviate any confusion about the scope of Sec.  
424.535(a)(8)(ii), we are deleting the language ``for services'' from 
this provision. This will clarify that Sec.  424.535(a)(8)(ii) applies 
to claims

[[Page 72519]]

that are denied for failing to meet Medicare requirements and is not 
limited to cases where the claim is denied because the services did not 
mean Medicare requirements.
    Comment: A commenter stated that CMS should establish a dispute 
resolution process prior to revoking a provider's privileges related to 
claims denials for not meeting Medicare requirements. Several other 
commenters stated that CMS should afford appeal rights under Sec.  
424.535(a)(8)(ii) prior to revoking a provider's billing privileges.
    Response: We disagree with the commenters. No other revocation 
reason under Sec.  424.535(a) currently has an interim appeals or 
dispute resolution process, and we do not see any basis or rationale 
for permitting such processes in the case of Sec.  424.535(a)(8)(ii). 
As with all other revocation reasons, the provider or supplier may 
appeal the revocation.
    Comment: A commenter stated that revocations under Sec.  
424.535(a)(8)(ii) should be reserved for only the most serious of 
abuses.
    Response: We agree. As we have stated, Sec.  424.535(a)(8)(ii) will 
only be applied when it is clearly appropriate. For instance, a Sec.  
424.535(a)(8)(ii) revocation could be proper, once all of the 
appropriate factors have been considered, if--
     There is a demonstrable pattern or practice;
     The pattern is long-term or has otherwise continued over a 
period of time;
     Education regarding appropriate billing is or has been 
made available to the provider in the form of claim denial notices, CMS 
instructional materials (such as manuals and articles) on CMS' Web 
site, etc., yet the provider or supplier continues to submit non-
compliant claims, and
     A significant percentage of the provider's or supplier's 
claims have been denied.
    (We stress that this is merely an example and should be not be 
interpreted as the formal establishment of minimum criteria.)
    We again state that Sec.  424.535(a)(8)(ii) is not targeted toward 
honest providers and suppliers that make occasional billing mistakes. 
Our sole focus is on providers and suppliers that engage in a systemic, 
ongoing, and repetitive practice of improper billing notwithstanding 
the public availability of CMS educational materials or guidance and 
CMS' issuance of claim denial notices to the provider. While we hope 
that this helps to reassure the provider and supplier communities of 
CMS' intentions, we recognize that concerns may linger. To that end, we 
plan to issue written guidance to and communicate with the public once 
this final rule is implemented, whereby we will once again reiterate 
the objective behind Sec.  424.535(a)(8)(ii) and, as necessary, discuss 
certain operational aspects of this provision.
    Comment: A commenter stated that CMS did not--(1) explain how 
determinations under Sec.  424.535(a)(8)(ii) would be made; (2) explain 
how errors in a revocation determination can be remedied short of a 
reapplication after the enrollment bar expires; and (3) furnish 
rationale as to the specific standards--such as the establishment of a 
percentage threshold for claim denials--that CMS will use in its 
determinations.
    Response: We will make all Sec.  424.535(a)(8)(ii) determinations 
after a careful and thorough consideration of the factors outlined in 
Sec.  424.535(a)(8)(ii)(A) through (F). As we explained in the proposed 
rule, any revocation under Sec.  424.535(a)(8)(ii) may be appealed if 
the provider or supplier chooses to do so.
    We stated earlier that each case will be judged on its own specific 
facts, and that establishing specific thresholds would, we believe, 
hinder our ability to do so. We believe that the factors outlined in 
Sec.  424.535(a)(8)(ii)(A) through (F) sufficiently indicate to 
providers and suppliers the rationale we will use in our Sec.  
424.535(a)(8)(ii) determinations.
    Comment: A commenter questioned whether a system would be 
established to ensure that Sec.  424.535(a)(8)(ii) would be implemented 
and enforced uniformly across jurisdictions. The commenter also 
requested which entities (for example, RACs) would be tasked with 
enforcing these provisions as well as any financial incentives for 
identifying wrongdoing.
    Response: Once again, we (not our contractors) will make all 
determinations regarding whether a Sec.  424.535(a)(8)(ii) revocation 
should be imposed. We will apply the criteria consistently.
    Comment: A commenter suggested that in light of the seriousness of 
a revocation under Sec.  424.535(a)(8)(ii), CMS should provide direct 
notice to a provider that its billing privileges may be revoked if its 
continues to bill for services that do not meet Medicare requirements. 
The commenter believed that such a preliminary ``warning'' could 
encourage the provider to improve its claim submission accuracy. The 
commenter also suggested that CMS consider a sliding scale that 
includes a lower-level consequence--such as a suspension--for less 
severe occurrences.
    Response: We do not believe that an interim alert to the provider 
is necessary. The provider's receipt of a substantial number of claim 
denials, in our view, furnishes adequate notice to the provider that 
corrective action is necessary.
    While we appreciate the commenter's suggestion regarding lower-
level consequences for less severe cases, we note again that Sec.  
424.535(a)(8)(ii) is only intended to address the most severe of 
situations. Still, we will closely monitor our application of this 
provision and the scenarios that come before us. Should we determine 
that other sanctions may be appropriate, we may, as needed, undertake 
future rulemaking.
    Comment: A commenter stated that CMS should not finalize Sec.  
424.535(a)(8)(ii) until the public has had an opportunity to comment on 
the specific policy CMS will use in defining ``pattern or practice.''
    Response: As stated, we are not formally defining ``pattern or 
practice'' in this rule. We will instead consider a number of factors 
in our determinations as to whether a Sec.  424.535(a)(8)(ii) 
revocation is warranted.
    Comment: A commenter stated that although CMS sought feedback from 
the provider community regarding Sec.  424.535(a)(8)(ii), it did not 
believe that engaging in this type of review and analysis during a 60-
day public comment period was appropriate. The commenter believed that 
discussions and collaboration with the provider community via a 
stakeholder group should occur beforehand.
    Response: We disagree with the commenter. While we recognize the 
provider community's concerns regarding Sec.  424.535(a)(8)(ii), we do 
not believe that formal discussions with a stakeholder group resulting 
in an agreement as to what Sec.  424.535(a)(8)(ii) should consist of 
are necessary prior to the provision's implementation. This is 
especially true considering that we received valuable comments from 
providers and suppliers regarding Sec.  424.535(a)(8)(ii) and have 
incorporated them into our final provisions as needed. We believe that 
the notice-and-comment process under the APA is the most appropriate 
means of soliciting feedback from the public.
    Comment: A commenter, expressing concern about CMS's potential use 
of statistical analysis in determining patterns under Sec.  
424.535(a)(8)(ii), cited several instances in which a claim is denied 
but cannot automatically or necessarily be considered an abusive 
billing situation: (1) A patient dies prior

[[Page 72520]]

to the interpretation of an applicable test; (2) claims for services 
deemed not medically necessary; (3) the beneficiary needs a Medicare 
denial to file secondary insurance; and (4) the beneficiary has 
exceeded a benefit category unbeknownst to the provider. The commenter 
believed CMS has the capability to distinguish between (a) abusive 
billing patterns and (b) claim denials that occur in the normal course 
of business and are not based on any nefarious intent. The commenter 
added that in providing examples of what may constitute a pattern of 
abusive billing behavior, CMS must account for certain specialty-
specific situations that can occur due to the nature of the provider-
patient encounter; diagnostic services, for example, should not be 
subject to the same standard as other providers due to the remote 
nature of the physician-patient relationship.
    Response: We agree with the commenter's apparent rationale that 
certain claim denials may be for purely innocuous reasons and that CMS 
has the ability to distinguish between these situations and extreme 
instances of non-compliant billing. We note once more that the 
reason(s) for the claim denials will be a factor in our Sec.  
424.535(a)(8)(ii) determinations.
    Comment: A commenter stated that a provider often will not be aware 
of a pattern of alleged improper billing under Sec.  424.535(a)(8)(ii) 
until after a contractor performs an audit. Under such circumstances, 
the commenter believed, the provider should be given an opportunity to 
correct the allegedly improper billing via a plan of correction.
    Response: As already stated, we acknowledge that in sporadic 
instances providers and suppliers may submit claims in error due to a 
misunderstanding of Medicare policies. It is not our intention to 
revoke billing privileges under Sec.  424.535(a)(8)(ii) for such 
isolated misinterpretations.
    Comment: A commenter stated that in situations where coordination 
of benefits is involved, a provider must exhaust all efforts to receive 
payment from a primary payer--such as Medicare--before billing a 
secondary payer. The commenter urged CMS to exclude coordination of 
benefit situations from the category of claim denials that can be 
considered under Sec.  424.535(a)(8)(ii).
    Response: While we do not believe that such situations should be 
automatically excluded from the purview of Sec.  424.535(a)(8)(ii), we 
note that the reasons for the claim denials will be a factor in our 
Sec.  424.535(a)(8)(ii) determinations. Consequently, the situation the 
commenter describes will be considered in such determinations.
    Comment: A commenter stated that ``length of time'' should only be 
considered as a factor if the provider acted in reckless disregard of 
whether its claims did not meet Medicare requirements. The commenter 
added that: (1) The reckless disregard standard should be used in all 
cases involving Sec.  424.535(a)(8)(ii); and (2) CMS should not use 
``the total number of claims denied'' and ``percentage of claims 
denied'' categories in applying Sec.  424.535(a)(8)(ii) because there 
are many instances in which claims are denied--such as in coordination 
of benefit situations--for innocuous purposes.
    Response: As stated, we will neither be applying a knowledge 
standard to Sec.  424.535(a)(8)(ii) nor eliminating the ``percentage of 
claims denied'' or ``length of time'' criteria from our analysis. 
However, we are removing ``the total number of claims denied'' 
criterion.
    Comment: A commenter stated that CMS must furnish the provider 
community with guidance regarding CMS's requirements for proper medical 
record documentation, including the frequency of documentation to 
support medical necessity for each product category. The commenter also 
recommended the inclusion of these documents within an electronic 
health record template.
    Response: We believe these comments are outside the scope of this 
rule.
    Comment: A commenter stated that a provider's claims are sometimes 
denied because of insufficient physician medical record documentation; 
such instances should not be included within the purview of Sec.  
424.535(a)(8)(ii) because the provider had no control over the 
physician's documentation.
    Response: We do not believe that denials based on insufficient 
medical record documentation should be automatically excluded from the 
scope of Sec.  424.535(a)(8)(ii). Again it is ultimately the provider's 
responsibility to ensure that the documentation it furnishes in support 
of a claim meets Medicare requirements, though the reason(s) for the 
claim denial will be a factor in our Sec.  424.535(a)(8)(ii) 
determinations.
    Comment: A commenter stated that claims are occasionally denied 
because information on the certificate of medical necessity is 
inconsistent with CMS's national coverage criteria. The commenter 
suggested that the two decisional documents be streamlined to 
coordinate coverage criteria effectively and uniformly.
    Response: We believe this comment is outside the scope of this 
rule.
    Comment: A commenter expressed concern about what the commenter 
believed was a lack of definition of ``directing physician'' as that 
term is used in Sec.  424.535(a)(8)(i). The commenter stated that the 
professional component of diagnostic testing services is often not 
performed in the same physical location or contractor jurisdiction as 
the technical component, and that the date of service may be different 
if the interpretation is not done on the same date done as the 
technical component. Such normal, compliant practices could be 
misinterpreted under Sec.  424.535(a)(8)(i).
    Response: As we did not propose any changes to the content of 
existing Sec.  424.535(a)(8), which is merely renumbered in this final 
rule as Sec.  424.535(a)(8)(i), this comment is outside the scope of 
this rule.
    Comment: A commenter contended that although Sec.  424.535(a)(8)(i) 
suggests that an abuse of billing privileges includes billing for a 
service when it would have been impossible to actually provide the 
service--such as when the physician performing the service was not 
available to furnish the service, or the patient was not available to 
receive the service because he or she was out of the state or country--
the regulation does not clearly state as such. The commenter expressed 
particular concern regarding the situation where a laboratory is not in 
the same state in which the physician who ordered the service is 
located, meaning that the service could not have been furnished to that 
beneficiary on that date of service. The commenter requested that CMS 
clarify that this situation is outside the scope of scenarios to which 
this rule is meant to apply.
    Response: As we did not propose any changes to the content of 
existing Sec.  424.535(a)(8), which is merely renumbered in this final 
rule as Sec.  424.535(a)(8)(i), we believe this comment is outside the 
scope of this rule.
    Given the comments received and the foregoing discussion, we are 
finalizing proposed Sec.  424.535(a)(8)(ii) with a modification. We are 
adding new paragraphs (A) through (F) to identify the factors for 
consideration.
5. Post-Revocation Submission of Claims
    Section Sec.  424.535(h) currently states that a revoked physician 
organization, physician, non-physician practitioner or IDTF must submit 
all claims for furnished items and services within 60 calendar days of 
the effective date of the

[[Page 72521]]

revocation. As we explained in the proposed rule, the reason for such a 
relatively short post-revocation claim submission period is to limit 
Medicare's exposure to future vulnerabilities and potentially 
fraudulent claims from such revoked individuals and organizations.
    With this in mind, we proposed to expand Sec.  424.535(h) to 
require all revoked providers and suppliers to 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.
    A summary of the comments received and our responses thereto are as 
follows:
    Comment: A commenter questioned why CMS is proposing to grant 
DMEPOS suppliers an additional 45 days after revocation to submit 
claims, for Sec.  424.57(d) currently grants DMEPOS suppliers only 15 
days to submit claims after revocation.
    Response: We believe that the commenter is misreading Sec.  
424.57(d), in that Sec.  424.57(d) does not address the timeframe in 
which post-revocation claims must be submitted.
    Comment: A commenter expressed support for our proposed change, 
stating that all providers and suppliers would now be treated equally 
with respect to the post-revocation claim submission requirement.
    Response: We appreciate the commenter's support.
    Given the very few comments received and the foregoing discussion, 
we are finalizing our proposed changes to Sec.  424.535(h).
6. Effective Date of Billing Privileges
    Under the current version of Sec.  424.520(d), the effective date 
of billing privileges for physicians, non-physician practitioners, and 
physician and non-physician 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 non-physician practitioner first began furnishing 
services at a new practice location. This policy is meant to address 
our concerns about providers and suppliers being able to bill for 
Medicare services rendered well before enrollment, for it is not always 
possible to verify whether a supplier has met all Medicare enrollment 
requirements prior to the date it submits an enrollment application. 
Thus, the Medicare program should not be billed for services performed 
before the later of the two aforementioned dates. In light of this 
concern, we proposed to expand the scope of Sec.  424.520(d) to include 
ambulance suppliers, based in part on the elevated risk they pose to 
the Medicare program as stated in Sec.  424.518. Indeed, 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.
    As explained in the proposed rule, we did not include certified 
providers and certified suppliers in our proposed revision to Sec.  
424.520(d) because of: (1) Existing limitations posed by Sec.  489.13 
on their ability to ``backbill'' for services; and (2) the extensive, 
multilayered review process they must undergo prior to enrolling in 
Medicare. Yet we did solicit comments on whether any other non-
certified provider or non-certified supplier types that are not 
currently subject to a backbilling restriction similar to the one we 
proposed should be included.
    The following is a summary of the comments received regarding this 
proposed change and our responses thereto.
    Comment: A commenter stated that CMS should treat ambulance 
services in a manner consistent with physicians and non-physician 
practitioners when it comes to enrollment and the filing of Medicare 
claims. Retroactive billing for ambulance services, the commenter 
continued, should be similar to the 30-day retroactive billing 
authority that exists for these individuals; the supplier could seek a 
longer retroactive billing period if it can demonstrate that exigent 
circumstances led to a situation that forced it to provide transport 
services prior to the normal billing requirements.
    Response: We agree that the 30-day and 90-day retroactive billing 
provisions in Sec.  424.521(a), to which the commenter is referring, 
should apply to ambulance suppliers to the same extent that they do to 
physicians, physician groups, non-physician practitioners, and non-
physician practitioner groups. This approach would ensure: (1) 
Consistent treatment between ambulance suppliers and the other supplier 
types covered under Sec.  424.520(d); and (2) that ambulance suppliers 
can avail themselves of a brief retroactive billing period if they are 
able to show that urgent circumstances precluded the supplier from 
submitting its enrollment application earlier than it did. Therefore, 
we have revised the regulatory text in Sec.  424.521(a) to include 
ambulance suppliers.
    Comment: Several commenters stated that proposed Sec.  424.520(d) 
should have a mechanism by which ambulance suppliers can obtain 
retroactive billing privileges in situations where the failure to file 
the enrollment application prior to commencing operations resulted from 
circumstances beyond the supplier's control; one commenter cited the 
example of a county-owned ambulance supplier that needs approval from 
the county's governing board before expanding its service area, a 
process that could delay the submission of the supplier's application. 
The commenters had two suggestions in this regard. First, the supplier 
could file a preliminary CMS-855 application when it anticipates 
expanding into a new service area; the supplier could supplement the 
application with additional information at a later date. Second, the 
supplier could appeal for retroactive billing privileges.
    Response: As we explained earlier, we have incorporated a revised 
Sec.  424.521(a) into this final rule. It will permit limited 
retrospective billing in exceptional circumstances. We believe this 
will alleviate some of the commenters' concerns.
    Comment: Several commenters requested CMS to clarify that the 
``date of filing'' of a CMS-855 application is the date on which the 
contractor initially received the application, not the date on which 
the contractor deemed the application ``complete.''
    Response: The ``date of filing'' is the date on which the provider 
or supplier submitted its CMS-855 application via mail or Internet-
based PECOS.
    Comment: Several commenters stated that a more definitive 
distinction must be made as to what is meant by the date of an 
application that is subsequently approved. One commenter stated that it 
is not uncommon for contractors to return applications with a request 
for supporting documentation. Another commenter requested an explicit 
statement that the date the application is entered into PECOS or a 
paper CMS-855B is mailed is the effective date of billing privileges, 
assuming the application is eventually accepted; this would make it 
clear that a request for additional documentation is part of the 
original process and does not begin an entirely new cycle.
    Response: We indicated earlier that the effective date of billing 
privileges under Sec.  424.520(d) will be the later of: (1) The ``date 
of filing'' of an enrollment application that is subsequently approved; 
or (2) the date the supplier began furnishing services at a practice

[[Page 72522]]

location. The ``date of filing'' is considered to be the date on which 
the supplier submitted its CMS-855 application via mail or Internet-
based PECOS.
    The term ``subsequently approved'' includes application submissions 
for which the contractor requested additional information from the 
supplier (or otherwise undertook developmental activities with respect 
to the application) and the application was ultimately approved. It 
does not include applications that were rejected under Sec.  424.525 or 
returned pursuant to CMS Publication 100-08, chapter 15, and were later 
resubmitted. A contractor's request for additional information does not 
constitute a final disposition regarding the application; that is, the 
application is still in process. However, a rejection or return 
indicates that the contractor was unable to process the application to 
completion, meaning that the application processing cycle has ended and 
the supplier must submit a new application.
    Comment: A commenter stated that municipalities are sometimes 
required to temporarily curtail their ambulance services and must 
contract with another ambulance supplier on an emergency, short-term 
basis; in such emergency situations, it may not be possible for the 
municipality to quickly secure all of the necessary paperwork to permit 
Medicare billing for transport services. The commenter stated that the 
municipality should not be held financially responsible for providing 
appropriate transport services for such emergency patients.
    Response: In response to the comments received, we have revised 
Sec.  424.521(a) to allow ambulance suppliers limited retrospective 
billing in exceptional circumstances.
    Comment: A commenter requested that CMS clarify how the 2006 OIG 
report supports CMS's proposed Sec.  424.520(d). The OIG report, the 
commenter contended, did not indicate whether the ambulance transports 
discussed therein occurred prior to the date the ambulance supplier 
submitted its enrollment application; citing the OIG report is 
misleading and creates an unfair and negative view of all ambulance 
suppliers.
    Response: Our citation of the report was not intended to disparage 
all ambulance suppliers but to present examples of instances where 
certain ambulance suppliers were not in compliance with Medicare 
requirements. Our concern about non-compliance is the precise reason 
for our revision to Sec.  424.520(d). We explained earlier that 
allowing an extensive period of backbilling makes it difficult to 
verify whether an ambulance supplier was in compliance with Medicare 
requirements well before it submitted an enrollment application.
    Comment: A commenter requested that CMS: (1) Furnish the 
information it used to single-out ambulance suppliers in Sec.  
424.520(d); and (2) explain why it did not propose a similar 
backbilling limitation for other supplier types such as clinical 
laboratories and mass immunization roster billers.
    Response: As we discussed in the proposed rule, we elected to 
include ambulance suppliers within Sec.  424.520(d) based on: (1) Their 
status as moderate-risk category suppliers under Sec.  424.514; (2) the 
OIG report cited in the preamble; and (3) other program integrity 
issues we have detected regarding ambulance suppliers. Indeed, these 
issues were outlined in a July 31, 2013 notice (78 FR 46339) in which 
we imposed a temporary moratorium on the enrollment of new ground 
ambulance suppliers in several Texas counties; a similar moratorium was 
imposed effective January 30, 2014 against ambulance suppliers in the 
Philadelphia, Pennsylvania area (79 FR 6475).
    Comment: A commenter stated that the loss of revenue to ambulance 
suppliers resulting from Sec.  424.520(d) could preclude them from 
expanding into new areas.
    Response: We understand the commenter's concern. Yet as we have 
stated, it is not always possible for us to verify that the supplier 
met all enrollment requirements many months prior to the application 
submission. To ensure that Medicare payments are made to suppliers that 
we have confirmed met enrollment requirements at the time the service 
was provided, we believe it is necessary to restrict the period of 
backbilling.
    Given these comments and in accordance with the previous 
discussion, we are finalizing our proposed change to Sec.  424.520(d). 
We have also revised the regulatory text of Sec.  424.521(a) to include 
ambulance suppliers.
7. Effective Date of Re-Enrollment Bar
    Currently under Sec.  424.535(c), a revoked provider, supplier, 
delegated official, or authorizing official is barred from 
participating in Medicare from the effective date of the revocation 
until the end of the re-enrollment bar. The re-enrollment bar is a 
minimum of 1 year, but not greater than 3 years, depending on the 
severity of the basis for revocation. In accordance with Sec.  
424.535(g), the effective date of a revocation is either of the 
following:
     Thirty days after CMS or the CMS contractor mails notice 
of its determination to the provider or supplier.
     If the revocation is based on a federal exclusion or 
debarment, felony conviction, license suspension or revocation, or if 
the practice location is determined by CMS or its contractor not to be 
operational, the date of the 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 constitutes the effective date of the revocation and, 
hence, the date on which the re-enrollment bar commences.
    We proposed to revise Sec.  424.535(c) to specify that all re-
enrollment bars begin 30 days after CMS or the CMS contractor mails 
notice of the revocation determination to the provider or supplier. The 
rationale for this change was 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 potential 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. By starting the re-enrollment 
bar period after the revocation letter is sent, the full period can be 
imposed.
    A summary of the comments we received as well as our responses 
follow:
    Comment: A commenter requested that CMS identify the reason for its 
statement in the preamble discussion for proposed Sec.  424.535(a)(3) 
regarding months of potential delay in updating databases with criminal 
conviction and licensure information. The commenter further requested 
CMS to indicate: (1) Whether the requirement under Sec.  424.516 for 
physicians, non-physician practitioners, and owners to report a felony 
conviction within 30 days is being waived; and (2) if Sec.  424.516 is 
being waived, whether CMS is also waiving the requirement in Sec.  
424.565 that CMS assess an overpayment back to the date of the adverse 
action.
    Response: We indicated in the proposed rule that there could be 
instances where a delay exists in updating a state Web site with felony 
or licensure data. With respect to the commenter's two requests, this 
rule

[[Page 72523]]

does not waive the aforementioned requirement to report felony 
convictions or the overpayment assessment mandate in Sec.  424.565.
    Comment: A commenter disagreed with CMS's proposed revision to 
Sec.  424.535(c) because this would effectively limit overpayment 
collections from the date of the felony conviction or guilty plea, or 
would expose physicians and non-physician practitioners to higher 
Medicare overpayment amounts. The commenter stated that CMS should 
retain the current policies in these two provisions until it explains: 
(1) Their impact on the overpayment provision found in Sec.  424.565; 
and (2) CMS's intent to impose overpayments based on an OIG exclusion 
or felony conviction from the date of the felony conviction or 
exclusion, the date of the revocation letter, or the actual revocation 
date.
    Response: Our revision to Sec.  424.535(c) neither addresses nor 
impacts overpayment determinations or collections. It simply specifies 
when the enrollment bar begins. For example, if a provider is revoked 
with a retroactive effective date, the enrollment bar--whatever the 
length--will commence as specified in Sec.  424.535(c). Yet the 
effective date of the revocation (and from which date overpayments can 
be collected) will be the same as that which currently exists under our 
regulations.
    Comment: A commenter stated that our proposal that all re-
enrollment bars would begin 30 days after CMS mails the revocation 
notice to the provider appears prudent, for it would streamline and 
simplify current policy. The commenter also expressed support for our 
additional proposals to eliminate redundancies and make technical 
corrections to the regulatory text.
    Response: We appreciate the commenter's support.
    Given this, we are finalizing our proposal to revise Sec.  
424.535(c) to state that the re-enrollment bar is effective 30 days 
after CMS or its contractor mails notice of its revocation 
determination to the provider or supplier.
8. Corrective Action Plans
    Consistent with Sec.  405.809, a provider or supplier whose 
Medicare billing privileges are revoked may currently 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, compliant with Medicare requirements, the provider or 
supplier's billing privileges can be reinstated.
    We proposed to revise Sec.  405.809 to state in new paragraph 
(a)(1) that a provider or supplier may only submit a CAP when the 
revocation was based on Sec.  424.535(a)(1), which states in part that 
a provider or supplier's billing privileges may be revoked if the 
provider or supplier is determined not to be in compliance with our 
enrollment requirements. We stated that providers and suppliers 
generally should not be exonerated from failing to fully comply with 
Medicare enrollment requirements simply by furnishing a CAP, for it is 
the duty of providers and suppliers to always maintain such compliance. 
The proposed exception for Sec.  424.535(a)(1) was based on our 
experiences where a provider or supplier revoked under Sec.  
424.535(a)(1) had only minimally failed to comply with our enrollment 
requirements. To revoke its billing privileges when the problem can be 
quickly and easily corrected via a CAP could in some instances lead to 
unfair results. In cases where Sec.  424.535(a)(1) is one of several 
reasons for a particular revocation, the provider would be able to 
submit a CAP with respect to the Sec.  424.535(a)(1) revocation reason. 
For the other revocation grounds, though, the provider would not be 
able to use the CAP process; the provider would instead have to use the 
appeals process under Part 498.
    We also proposed in new paragraph (a)(2) that providers and 
suppliers would have only one opportunity through a particular CAP to 
correct all of the deficiencies that served as the basis of the 
revocation. We expressed our view that providers and suppliers should 
not be given multiple opportunities to become compliant when it is 
crucial that such compliance always be maintained.
    We further proposed to delete the last sentence of Sec.  
424.535(a)(1), which reads: ``All providers and suppliers are granted 
an opportunity to correct the deficient compliance requirement before a 
final determination to revoke billing privileges, except for those 
imposed under paragraphs (a)(2), (a)(3), or (a)(5) of this section.'' 
This sentence was inconsistent with our proposed change to Sec.  
405.809(a)(1).
    Lastly, we proposed to incorporate the existing language of Sec.  
405.809 into a new paragraph Sec.  405.809(b).
    A summary of the comments we received on these proposed changes and 
our responses follow:
    Comment: Several commenters noted that under CMS's proposal to 
restrict the availability of CAPs, a CAP could not be used in cases 
where a revocation occurred due to the provider's failure to report a 
practice location under Sec.  424.535(a)(9). Although these commenters 
generally supported the proposed change, they urged CMS to clarify the 
definition of a ``practice location'' for ambulance services because 
Medicare contractors may be interpreting this term differently; for 
instance, some may define it as the location of the supplier's 
management, billing, or administrative staff, while others consider it 
to be where the supplier garages and/or maintains its vehicles.
    Response: We clarified the meaning of the term ``practice 
location'' as it pertains to ambulance suppliers in CMS Transmittal 
499, dated December 27, 2013.
    Comment: Several commenters opposed our proposed change to Sec.  
405.809 and urged CMS to allow CAPs to be available for additional 
scenarios beyond those encompassed by Sec.  424.535(a)(1). One 
commenter stated that many enrollment violations can be cured. The 
commenter stated that CAPs should be permitted except in cases where a 
CAP clearly jeopardizes program integrity or beneficiary health and 
safety. Another commenter expressed concern about CMS's statement in 
the preamble concerning the revocation of billing privileges for 
failing to report a practice location change; to have the provider in 
such an instance go through the appeals process without the 
availability of a CAP, the commenter believed, would be unjust. Another 
commenter stated that CMS should never be unwilling to receive correct 
information and that, in the commenter's opinion, Medicare contractors 
furnish misleading and inaccurate information to providers and 
suppliers during the enrollment process.
    Response: As we explained in the proposed rule, we believe that 
CAPs are inappropriate in a number of revocation situations and should 
accordingly be unavailable; to illustrate, revocations based on a 
failure to timely report a practice location change should not be 
retroactively corrected via a CAP. Indeed, we must be promptly notified 
of all practice location changes so we can ensure that services are 
only performed at valid locations and, consequently, that payments are 
made correctly. More basically, it is the provider or supplier's 
responsibility--as indicated on the CMS-855 forms that the provider or 
supplier completes and signs as part of the enrollment process--to 
report changes to CMS on a timely basis.
    Comment: A commenter recommended that CMS eliminate the provider 
enrollment CAP process and work with Medicare contractors to

[[Page 72524]]

eliminate revocations based on a trivial matter.
    Response: We believe that CAPs are appropriate for revocations 
based on Sec.  424.535(a)(1), and they will remain available. Moreover, 
we stress that revocations are not imposed for trivial reasons. Each 
prospective revocation is carefully reviewed to ensure that there are 
legitimate grounds for taking such action and that the integrity of the 
Medicare program warrants it.
    Comment: A commenter stated that there generally is not enough time 
for a provider to submit both a corrective action plan and appeal, for 
the latter is frequently not filed until the results of the former are 
known. The commenter thus recommended that CMS either discontinue the 
CAP process or require its contractors to decide upon and respond to a 
CAP within 10 days of receipt.
    Response: We do not agree that the CAP process should be entirely 
discontinued or that a provider must wait until the CAP determination 
has been made before filing an appeal. In fact, many providers and 
suppliers file a CAP and an appeal as part of the same package. 
Requiring a 10-day period is unnecessary and could hinder the 
reviewer's ability to conduct a thorough, careful analysis of the 
merits of the CAP.
    Comment: A commenter urged the continued use of CAPs in situations 
where the provider misinterpreted a requirement or failed to comply 
with an administrative or record-keeping requirement but otherwise 
acted in good-faith.
    Response: CAPs will remain available for revocations based on Sec.  
424.535(a)(1). With respect to other revocation reasons that we suspect 
the commenter may classify as ``record-keeping'' in nature--
specifically, Sec.  424.535(a)(9) and (a)(10)--we do not view these as 
mere administrative requirements. The reporting mandates referred to in 
paragraph (a)(9)--and which are codified in Sec.  424.516(d)(1)(ii)--
help ensure that CMS has correct, up-to-date information on the 
provider so CMS can determine if a provider or supplier is still in 
compliance with Medicare requirements. The maintenance of documentation 
requirements referred to in paragraph (a)(10) and codified in Sec.  
424.516(f) assist CMS in confirming that the physician or other 
eligible professional was qualified to order or certify the item or 
service that the provider or supplier furnished.
    Comment: Another commenter stated that unless DHHS can provide 
suppliers with accurate and routine visibility to statistics (such as 
the supplier's error rates, enrollment file, and beneficiary 
complaints) that furnish an opportunity for suppliers to investigate, 
respond to, and correct potential deficiencies, CMS should not finalize 
its proposed change to Sec.  405.809.
    Response: Much of the data the commenter refers to is either 
currently available to individual providers and suppliers (for example, 
by reviewing the provider or supplier's PECOS record) or can be made 
available to them upon request. However, it is ultimately the provider 
or supplier's responsibility to ensure that it has sufficient internal 
controls to detect deficiencies on its own. Providers and suppliers 
must be proactive in their efforts to comply with Medicare 
requirements. Thus, we do not believe that the commenter's contention 
constitutes grounds for withdrawing our proposed change to Sec.  
405.809.
    Given these comments and the aforementioned discussion, we are 
finalizing our proposed CAP provisions without modification.
9. Revisions to Sec. Sec.  424.530(a)(5) and 424.535(a)(5)
    We also proposed to revise Sec. Sec.  424.530(a)(5) and 
424.535(a)(5). We stated in the proposed rule that the language in 
these two subsections is redundant. To illustrate, the first sentence 
of Sec.  424.530(a)(5) states that a provider or supplier's Medicare 
enrollment may be denied if, upon on-site review or other reliable 
evidence, CMS determines that the provider or supplier is not 
operational or is not meeting Medicare enrollment requirements. Later, 
paragraphs Sec.  424.530(a)(5)(i) and (a)(5)(ii) essentially repeat 
this language. The same repetition is evident in Sec.  424.535(a)(5), 
wherein paragraphs (a)(5)(i) and (a)(5)(ii) effectively duplicate the 
language in the first sentence of Sec.  424.535(a)(5).
    Accordingly, we proposed to revise Sec.  424.530(a)(5) 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: (1) Not operational to 
furnish Medicare-covered items or services; or (2) otherwise fails to 
satisfy any Medicare enrollment requirements. Likewise, we proposed to 
revise Sec.  424.535(a)(5) 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: (1) No longer operational to 
furnish Medicare-covered items or services; or (2) otherwise fails to 
satisfy any Medicare enrollment requirements.
    We also proposed to add the phrase ``or other reliable evidence'' 
to Sec.  424.535(a)(5) for two reasons. First, Sec.  424.530(a)(5) 
currently contains the ``or other reliable evidence'' standard, and we 
believe these two paragraphs (Sec.  424.530(a)(5) and Sec.  
424.535(a)(5)) should have consistent standards. Second, we believe it 
is important to be able to ascertain and take action under Sec.  
424.535(a)(5) against a non-operational or non-compliant provider or 
supplier through means other than a site review.
    We received one comment regarding these proposed changes:
    Comment: A commenter requested clarification of the term ``other 
reliable evidence'' as it is used in Sec.  424.530(a)(5) and Sec.  
424.535(a)(5).
    Response: The term means any credible evidence that demonstrates 
that the provider is not in compliance with Medicare requirements.
    Given the foregoing, we are finalizing the proposed changes 
discussed in section II.B.9 of this final rule albeit with one very 
minor technical edit. The term ``enrollment requirements'' will be 
changed to ``enrollment requirement'' to clarify our original intention 
that the provider or supplier's non-compliance with any enrollment 
requirement can constitute grounds for revocation.
10. Technical Changes
    We also proposed certain technical changes related to our provider 
and supplier enrollment regulations.
    In Sec.  424.530(a)(1), we proposed 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 was 
to clarify that the provider or supplier must comply with all of the 
provider enrollment provisions in 42 CFR subpart P, not merely those in 
Sec.  424.530.
    For the same reason, we proposed to revise Sec.  424.535(a)(1) to 
state as follows: ``The provider or supplier is determined not to be in 
compliance with the enrollment requirements described in this subpart P 
or in the enrollment application applicable for its provider or 
supplier type, and has not submitted a plan of corrective action as 
outlined in part 488 of this chapter.''
    Also, in Sec.  424.535(a)(3)(ii) we proposed to change the term 
``denials''

[[Page 72525]]

to ``revocations,'' as Sec.  424.535 does not address denials.
    Finally, Sec.  498.5(l)(4) states that for appeals of denials based 
on Sec.  424.530(a)(9) related to temporary moratoria, the scope of the 
review is limited to whether the temporary moratorium applies to the 
provider or supplier. Yet Sec.  424.530(a)(10), rather than Sec.  
424.530(a)(9), applies to temporary moratoria. We proposed to correct 
Sec.  498.5(l)(4) by changing the reference to Sec.  424.530(a)(9) 
therein to Sec.  424.530(a)(10).
    We received no comments on these proposed technical changes. 
Therefore, we are finalizing these revisions without modification.

C. General and Other Comments

    We also received a number of general comments regarding the 
proposed rule. A summary of these comments and our responses are as 
follows:
    Comment: A commenter indicated general support for the changes in 
this rule that expand CMS's enrollment denial authority, for this would 
improve CMS's ability to detect new fraud schemes. However, the 
commenter expressed concern that CMS's anti-fraud efforts could 
inadvertently harm law-abiding physicians who unintentionally make a 
mistake during the enrollment process--a process, the commenter 
believed, that has become increasingly complicated. The commenter 
recommended that CMS continually evaluate PECOS and remove and identify 
unnecessary and outdated requirements.
    Response: Although we are unclear as to the specific anti-fraud 
effort(s) or regulatory provision(s) of concern to the commenter, we 
are committed to ensuring that the enrollment process poses as minimal 
a burden as possible on those providers and suppliers that are 
conscientious about complying with Medicare requirements. We have taken 
steps in this direction, including--but not limited to--allowing 
providers and suppliers to complete CMS-855 applications via the 
Internet as opposed to requiring a paper application. We also, as the 
commenter suggested, regularly evaluate PECOS, our Program Integrity 
Manual instructions, and our regulations to determine whether 
improvements or revisions are necessary. We believe it is important and 
indeed necessary to strive to achieve an appropriate balance between 
ensuring the integrity of the Medicare Trust Funds and easing the 
burden on the provider and supplier communities.
    Comment: A commenter recommended that CMS develop the systems and 
resources necessary to effectively implement our new provider 
enrollment requirements.
    Response: We will ensure that the resources are available and the 
necessary systems changes are made to implement the provider enrollment 
requirements outlined in this rule.
    Comment: A commenter suggested that CMS consider sharing with other 
payers (both public and private) information regarding actions taken 
against providers pursuant to our proposed provisions (for example, 
revocations under Sec.  424.535(a)(8)(ii)). The commenter stated that 
such dissemination of data is critical to the prevention of fraud and 
abuse in our nation's health care system.
    Response: We agree with the commenter that the exchange of 
information between medical payers is important to the prevention of 
health care fraud and abuse. CMS, is working to expand the exchange of 
information with other payers as evidenced by its initiative, the 
Healthcare Fraud Prevention Partnership.
    Comment: A commenter stated that any final decision regarding the 
revocation of a provider's Medicare billing privileges should come from 
CMS Central Office rather than from the Medicare contractor.
    Response: For reasons mentioned earlier, we agree.
    Comment: A commenter expressed support for CMS's clarification that 
the re-enrollment bar does not apply if a revocation is based on the 
provider's failure to respond timely to a revalidation request or other 
request for information.
    Response: We appreciate the commenter's support.
    Comment: Several commenters stated that physicians need more 
information and education on common billing and coding mistakes and 
better guidance on how to avoid audits. The commenters recommended that 
CMS: (1) Publicly release information on frequent billing and coding 
errors, including aggregate statistics on such errors at a local (MAC 
level) and national level, as well as by specialty; (2) educate 
providers on these errors through existing educational channels (for 
instance, Open Door Forum calls and MedLearn Matters articles); (3) 
develop a dedicated web presence for publishing the aforementioned 
information and an associated CMS email list-serve to disseminate new 
data as it becomes public; (4) provide technical assistance for 
physician practices--primarily those with a high volume of coding and 
billing errors--on how to avoid these errors, perhaps through an 
expanded scope of work for Medicare's quality improvement organizations 
(QIOs); and (5) furnish additional guidance on the myriad of Medicare 
rules and regulations, which the commenter believes are often 
burdensome and confusing.
    Response: We appreciate these suggestions and will continue, as 
necessary, to expand our outreach efforts to providers and suppliers 
regarding important coding and billing issues.
    Comment: With respect to Sec. Sec.  424.530(a)(1) and 
424.535(a)(1), a commenter stated that CMS should make available to 
providers various information (for example, the supplier's error rates, 
enrollment file, and beneficiary complaints) that would enable 
providers to investigate and address potential deficiencies. Only 
through this vehicle can a provider confirm that it is in compliance 
with enrollment requirements and, if necessary, take corrective action.
    Response: As we stated earlier in response to a similar comment, 
much of this information is either currently available to the provider 
or can be made available upon request. Still, providers must be 
proactive in establishing adequate internal controls to ensure 
compliance with Medicare requirements; such compliance should not be 
contingent upon the provider first receiving substantial quantities of 
information from CMS.
    Comment: A commenter stated that program integrity is best ensured 
when providers fully understand how to comply with complex Medicare 
requirements. The commenter thus urged CMS to issue final rules 
regarding the requirements of mandatory compliance programs (as 
outlined in the Affordable Care Act) as soon as possible. The commenter 
added that CMS should work with the OIG to update the current 
compliance guidance by working with industry stakeholders.
    Response: We appreciate the commenter's concerns. However, the 
compliance plan provisions outlined in section 6401 of the Affordable 
Care Act are outside the scope of this rule.
    Comment: A commenter stated that if CMS sees any provider or 
Medicare debt as a risk and plans to do everything possible to prevent 
unnecessary threats to Medicare beneficiaries and the Medicare Trust 
Funds, this gives CMS unrestrained discretion to deny enrollment or 
revoke billing privileges. The proposed rule, the commenter continued, 
does not focus on narrowly tailoring the approach to target fraud and 
abuse but instead seems geared towards reducing the total number of 
providers (including those not engaged

[[Page 72526]]

in fraudulent or abusive actions) based on CMS's apparent belief that 
doing so will concomitantly reduce fraud and abuse.
    Response: We have repeatedly stated in numerous forums and 
throughout this rule that the overwhelming majority of Medicare 
providers and suppliers submit claims that meet Medicare requirements. 
It is not CMS's overriding objective to reduce the total number of 
Medicare providers and suppliers. Nonetheless, a small percentage of 
providers and suppliers are engaging in fraudulent, wasteful, 
inappropriate, or abusive activities. Our provider enrollment revisions 
are directed at such providers and suppliers, and we believe that 
removing them, as necessary, from the Medicare program will only serve 
to benefit Medicare beneficiaries, the Trust Funds, the taxpayers, and 
the hundreds of thousands of legitimate Medicare providers and 
suppliers that have proven to be reliable partners of the program.
    Comment: A commenter expressed concern that the proposed rule would 
give CMS's contractors unprecedented discretion to revoke Medicare 
billing privileges. The commenter also stated that CMS must clearly 
articulate the appeal rights that providers have in revocation cases.
    Response: As stated previously, a MAC must receive prior CMS 
approval before revoking a provider's Medicare billing privileges. With 
respect to appeal rights in revocation cases, these are outlined in 42 
CFR part 498 and in CMS Publication 100-08, chapter 15.
    Comment: A commenter supported the proposed rule's intent to reduce 
the time necessary to institute a recovery of Medicare funds for a 
provider who has submitted bad or faulty billings.
    Response: We appreciate the commenter's support for our anti-fraud 
efforts.
    Comment: A commenter urged CMS to amend its opt-out policy to allow 
physicians to opt-out of the Medicare program without a requirement to 
reaffirm the opt-out. After the 2-year minimum required by law, the 
commenter explained, the opt-out period should be effective 
indefinitely unless and until the physician chooses to terminate his or 
her opt-out status and private contracts with patients in order to 
rejoin Medicare as a participating or non-participating physician.
    Response: This comment is outside the scope of this rule.
    Comment: A commenter questioned why Medicaid was excluded from the 
scope of our proposed rule.
    Response: We have chosen to address only Medicare enrollment in 
this rule, though Medicaid enrollment may be addressed in the future.

III. Provisions of the Final Rule

A. Incentive Reward Program

    In light of the complexity of the operational aspects of our 
proposal, we are not finalizing our proposed IRP provisions in this 
rule. We may finalize them in future rulemaking.

B. Enrollment Provisions

    Based on public comments, we are finalizing our proposed provider 
enrollment provisions with the following revisions:
     In Sec.  424.502, we are modifying paragraph (2) of the 
definition of ``Enroll/Enrollment'' to read as follows: Except for 
those suppliers who complete the CMS-855O form, CMS-identified 
equivalent, successor form or process for the sole purpose of obtaining 
eligibility to order or certify Medicare-covered items and services, 
validating the provider or supplier's eligibility to provide items or 
services to Medicare beneficiaries.
     In Sec.  424.510, we are redesignating the first two 
sentences of existing paragraph (a) as new paragraph (a)(1).
    ++ Revising the third sentence of existing paragraph (a) and 
redesignating as new paragraph (a)(2). The new paragraph (a)(2) will 
state the following: To be enrolled to furnish Medicare-covered items 
and services, a provider or supplier must meet the requirements 
specified in paragraphs (d) and (e) of this section.
    ++ Adding a new paragraph (a)(3) that states the following: To be 
enrolled solely to order and certify Medicare items or services, a 
physician or non-physician practitioner must meet the requirements 
specified in paragraph (d) of this section except for paragraphs 
(2)(iii)(B), (2)(iv), (3)(ii), (5), (6), and (9).
     In Sec.  424.521, we are revising paragraph (a) to include 
ambulance suppliers.
     In Sec.  424.530 we are making the following revisions:
    ++ Revising Sec.  424.530(a)(3).
    ++ In Sec.  424.530(a)(5), we are changing ``requirements'' to 
``requirement.''
    --Paragraph (a)(6)(ii)(A) we are revising the sentence to state 
that the owner left the provider or supplier with the Medicare debt 
within 1 year before or after that provider or supplier's voluntary 
termination, involuntary termination or revocation.
    --In paragraph (a)(6)(ii)(C)--
    --Adding additional language to the introductory text, a second 
sentence that reads: In making this determination, we consider the 
following factors.
    --Adding new paragraphs (a)(6)(ii)(C)(1) through (5)
    --In Sec.  424.530(a)(6)(iii), we are making the following changes:
    --Combining proposed paragraphs (A) and (B)(1)
    --Redesignating proposed paragraph (a)(6)(iii) as new paragraph 
(B)(2).
     In Sec.  424.535 we are making the following revisions:
    ++ Revising paragraph (a)(3).
    ++ In Sec.  424.535(a)(5), we are changing ``requirements'' to 
``requirement.''
    ++ Adding paragraphs A through F to paragraph (a)(8)(ii).

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-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. We are soliciting public comment on each of these issues 
for the following sections of this document that contain information 
collection requirements (ICRs):

A. ICRs Regarding the Definition of Enrollment (Sec.  424.502, Sec.  
424.505, and Sec.  424.510)

    Our revisions to Sec.  424.502, Sec.  424.505, and Sec.  424.510 
reflect the existing usage of the CMS-855O (OMB Approval number 0938-
0685) and, as such, will not impose any additional information 
collection burden. Consistent with Sec.  424.507, an individual who 
wishes to enroll in Medicare for the sole purpose of ordering or 
certifying items or services for Medicare beneficiaries can become 
eligible to do so by completing the CMS-855O. Use of the CMS-855O 
commenced in July 2011, and OMB at that time approved the information 
collection burden associated with its use. The CMS-855O is approved 
under

[[Page 72527]]

OMB control number 0938-1135 and expires August 31, 2015.

B. ICRs Regarding the Debts to Medicare (Sec.  424.530(a)(6))

    Our revisions to Sec.  424.530(a)(6) will likely result in an 
increase in application denials. While these revisions will 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 possible denials 
because we do not have data available that can support such an 
estimate. Accordingly, we cannot project the potential information 
collection burden that could arise from an increased number of: (1) 
Appeals of denials; or (2) resubmitted enrollment applications from the 
denied providers and suppliers.

C. ICRs Regarding the Felony Convictions (Sec. Sec.  424.530(a)(3) and 
424.535(a)(3))

    Although our revisions to Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) do not directly impose paperwork burdens, they will 
likely result in an increase in application denials and revocations, 
respectively. Yet we cannot estimate the potential increase in denials 
and revocations based on these changes, for we do not have data 
available that can support such an estimate. Therefore, we are unable 
to project the potential information collection burden that may result 
from an increased number of appeals of denials and revocations.

D. ICRs Regarding the Abuse of Billing Privileges (Sec.  
424.535(a)(8)(ii))

    Our addition of Sec.  424.535(a)(8)(ii) will likely lead to an 
increase in the information collection burden because there will 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 help us make such an estimate, for each 
situation will have to be reviewed and addressed on a case-by-case 
basis.

E. ICRs Regarding the Post-Revocation Submission of Claims (Sec.  
424.535(h))

    We do not believe that our revisions to Sec.  424.535(h) will 
result in a change in the information collection burden. While the 
claims in question will need to be submitted within a shorter timeframe 
(60 days), they will likely be submitted regardless of the applicable 
submission period. The shorter timeframe will, in general, neither 
increase nor decrease the number of claims submitted.

F. ICRs Regarding the Effective Date of Billing Privileges (Sec.  
424.520(d))

    Our revisions to Sec.  424.520(d) will most likely result in a 
decrease in the information collection burden because fewer claims will 
be eligible for submission under this change. Yet we are unable to 
project the extent of the decrease in the number of claims because we 
do not have data available to support such an estimate. Therefore, we 
cannot estimate the decrease in the information collection burden.

G. ICRs Regarding the Effective Date of Re-Enrollment Bar (Sec.  
424.535(c))

    We believe that our revisions to Sec.  424.535(c) will neither 
increase nor decrease the information collection burden. With or 
without this revision, the provider will still need to submit the 
applicable CMS-855 application (based on the provider or supplier type 
involved) after the expiration of the re-enrollment bar in order to 
enroll again in Medicare.

H. ICRs Regarding the Corrective Action Plans (Sec.  405.809)

    Our revisions to Sec.  405.809 will result in a decrease in the 
information collection burden because there will be a reduction in the 
number of CAPs submitted. However, we are unable to project the extent 
of the decrease in submitted CAPs because we do not have sufficient 
data to support such an estimate.

I. ICRs Regarding the Revisions to Sec.  424.530(a)(5) and Sec.  
424.535(a)(5)

    Our revisions to Sec. Sec.  424.530(a)(5) and 424.535(a)(5) will 
not result in a change to the information collection burden, for we do 
not believe there will be any change in the number of denials or 
revocations, respectively. We note that Sec.  424.530(a)(5) already 
permits revocation based upon a site review ``or other reliable 
evidence.'' Thus, we do not foresee any change in the number of: (1) 
Appeals of denials, or (2) resubmitted enrollment applications from 
denied providers and suppliers. As for Sec.  424.535(a)(5), the ``or 
other reliable evidence'' standard is not in the current version of 
that paragraph. But we note that Sec.  424.535(a)(1) permits revocation 
if the provider or supplier is determined not to be in compliance with 
the enrollment requirements in this section, or in the enrollment 
application that is applicable to its provider or supplier type. 
Therefore, the authority to revoke based on reliable evidence of non-
compliance is largely similar to the reasons for revocation stated in 
Sec.  424.535(a)(1). Hence, we do not believe there will be any change 
in the number of: (1) Appeals of revocations; or (2) resubmitted 
enrollment applications from revoked providers and suppliers.
    The aforementioned burden projections for our provider enrollment 
revisions are identical to those we proposed and on which we solicited 
comments. We received no comments on these estimates.

V. Regulatory Impact Analysis

A. Statement of Need

    This final rule is necessary to make important revisions to certain 
Medicare provider enrollment requirements in order to strengthen our 
program integrity efforts and to help ensure that fraudulent parties 
neither enroll in nor maintain their enrollment in the Medicare 
program.

B. Overview

    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 explained in more detail later in this section, we encountered 
several uncertainties in estimating the economic impact of many of our 
final provisions. We could not estimate the number of denials and 
revocations that might stem from the finalized 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 finalized revisions. However, we estimate that our 
change to Sec.  424.520(d) will result in an annual transfer of more 
than $100 million from providers and suppliers to the federal 
government. Therefore, we have

[[Page 72528]]

prepared an RIA because this is a major rule.
    The RFA requires agencies to analyze options for regulatory relief 
for 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 below 
Small Business Administration thresholds that range from $7 million and 
$35.5 million per year. Individuals and states are not included in the 
definition of a small entity.
    As we stated in the proposed rule, several provisions will have at 
least some effect on certain small entities. These include: (1) The 
changes at Sec.  424.520(d) to the effective date of billing privileges 
for ambulance suppliers; (2) the changes at Sec.  424.530(a)(6) 
regarding Medicare debt; (3) the addition of Sec.  424.535(a)(8)(ii) 
concerning patterns or practices of non-compliant claim submissions; 
(4) the revision of Sec.  424.535(h) regarding the submission of claims 
after revocation; and (5) the revision of Sec.  405.809 concerning the 
reinstatement of provider or supplier billing privileges following 
corrective action. Yet as discussed later in this section, we do not 
believe that this final rule will have a significant economic impact on 
a substantial number of small entities.
    Section 424.520(d), which changes the effective date of billing 
privileges for ambulance suppliers, will only impact newly-enrolling 
ambulance suppliers. Each year, new ambulance providers constitute only 
a very small addition to the overall universe of the roughly 1.4 
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 will not affect their ability 
to bill for services furnished after the later of the two events 
specified in Sec.  424.520(d)(1) and (2).
    Denials and revocations under, respectively, Sec.  424.530(a)(6) 
and Sec.  424.535(a)(8), will not occur until after a 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 anticipate an increase in some denials and 
revocations under these two provisions, we do not believe they will 
impact a substantial number of small entities.
    Our revisions to Sec.  424.535(h) will 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 will likely be submitted regardless of 
the shorter submission period.
    Our revisions to Sec.  405.809 will impact the ability of some 
small entities to submit CAPs in response to a revocation. However, 
these entities will still be able to file a request for 
reconsideration. The overall effect of this change will thus 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 will not be affected by 
most of the provisions in this 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 604 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 final rule will 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 2014, this 
is approximately $141 million. We believe that this final rule will 
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

    We indicated in section IV. of this final rule that there may be an 
ICR burden associated with several of our provider enrollment 
provisions but that the burden cannot be estimated. The following 
sections discuss other potential costs--as well as savings--associated 
with our enrollment changes.
1. Definition of Enrollment
    As stated earlier, use of the CMS-855O commenced in July 2011. Our 
revisions to Sec. Sec.  424.502, 424.505, and 424.510 are intended to 
clarify that the CMS-855O does not convey billing privileges. As such, 
these changes will not result in any additional costs or savings.
2. Debts to Medicare
    Our revisions to Sec.  424.530(a)(6) will likely result in 
additional application denials. Yet we are unable to estimate the 
number of potential denials because we do not have data available to 
support such an estimate. Therefore, we cannot project any costs in 
possible lost billings to providers and suppliers or any associated 
potential savings to the government.
    While there may be an increase in costs to the federal government 
from identifying and making available to enrollment contractors 
information about individuals that were associated with a revoked 
entity with an unpaid Medicare debt, we are unable to estimate the 
magnitude of any such increase. We also anticipate that an increase in 
costs will be offset by savings to the government--(1) in preventing 
billing by such providers and suppliers, and (2) the repayment of debt 
by these providers and suppliers.
3. Felony Convictions
    As stated in section IV.B. of this final rule, our revisions to 
Sec.  424.530(a)(3) and Sec.  424.535(a)(3) will likely result in 
additional application denials and revocations, respectively. However, 
we are unable to estimate the potential increase in denials and 
revocations and associated appeals, for we do not have sufficient 
information to support such a projection. Thus, we cannot project the 
potential costs to providers and suppliers in lost billings or the 
potential costs or savings to the government arising from these 
revisions.
4. Abuse of Billing Privileges
    Our addition of Sec.  424.535(a)(8)(ii) will likely result in an 
increase in revocations. Yet we are unable to project the number of 
providers and suppliers that might be revoked based on this change 
because we do not have data

[[Page 72529]]

available to help us make such an estimate. Thus, we cannot forecast 
the potential costs to providers and suppliers in lost billings or the 
possible costs or savings to the government arising from this 
provision.
5. Post-Revocation Submission of Claims
    Our revision to Sec.  424.535(h) is unlikely to increase or 
decrease the number of claims submitted. While the revoked provider or 
supplier's claims will need to be submitted within a shorter timeframe, 
we believe that the vast majority of claims will still be submitted. 
Therefore, we project only a negligible change in costs to providers 
and suppliers in their claim submissions.
6. Effective Date of Billing Privileges
    The revisions to Sec.  424.520(d) will likely result in a decrease 
in claims submitted to Medicare. Rather than being able to bill for 
Medicare services furnished up to 12 months prior to enrollment, newly 
enrolling ambulance suppliers will 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 revisions, these suppliers could lose up to 10 months in potential 
Medicare billings for services furnished prior to the later of the two 
events cited in Sec.  424.520(d).
    Based on our data, the average ambulance supplier receives 
approximately $581,000 in Medicare payments per year, though this of 
course varies by individual supplier. Ten-twelfths of this amount (that 
is, 10 months divided by 12 months) is $484,167. Thus, we estimate that 
up to $545.7 million each year (or $484,167 x 1,127) in savings to the 
federal government could accrue as a result of this change.
    We emphasize that our $545.7 million estimate is a high-end 
estimate. There may be new ambulance suppliers that, absent our change 
to Sec.  424.520(d), would have met our requirements less than 10 
months prior to enrollment. For instance, if the average newly 
enrolling ambulance supplier would have met our requirements 3 months 
prior to enrollment, the potential savings would be roughly $163.7 
million (or $581,000 x 3/12 x 1,127). If the average figure is 6 
months, our projection 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) prior to enrollment. Therefore, we will use these three 
timeframes as, respectively, high-end, primary, and low-end estimates 
in the accounting statement.
7. Effective Date of Re-Enrollment Bar
    Our revisions to Sec.  424.535(c) will result in a longer re-
enrollment bar than that which currently exists in cases where 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 re-enroll in Medicare may result in lost billings 
to the provider or supplier. This may also lead to savings to the 
government because a provider or supplier that may have been billing 
Medicare will not be eligible to do so as soon as would otherwise be 
the case. However, we are unable to project the possible costs to 
providers and suppliers or the savings to the federal government 
because we do not have data available to support such estimates. We 
also cannot estimate: (1) How many providers and suppliers will be 
affected by this proposed change; or (2) the specific types of 
providers and suppliers that will be affected.
8. Corrective Action Plans
    Our revisions to Sec.  405.809 will result in a reduction in the 
number of CAPs submitted, as noted in the ICR. This may result in lost 
billings to the provider or supplier in cases where CMS' acceptance of 
a CAP has occurred 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 will probably 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 will impact; or (2) the specific types of providers and 
suppliers that will be affected.
9. Revisions to Sec.  424.530(a)(5) and Sec.  424.535(a)(5)
    We stated earlier that we do not believe there will be any change 
in the total number of denials or revocations based on our revisions to 
Sec. Sec.  424.530(a)(5) and 424.535(a)(5). Therefore, we do not 
anticipate any resultant change in overall costs or savings.
10. Technical Changes
    As these are simply technical revisions, there are no costs or 
savings associated with these provisions.

D. Comments Received and Conclusion

    While we were unable--and remain unable--to furnish detailed cost 
and savings estimates for many of our enrollment revisions, we 
solicited comments from the public regarding their views as to the 
potential burdens and costs of our proposals as well as the possible 
savings. We received several comments, which are summarized and 
accompanied by our responses as follows:
    Comment: With respect to our savings estimates for the proposed 
change to Sec.  424.520(d), a few commenters believed that our 
projections were inflated and that actual data (as opposed to 
estimates) should be used. One of the commenters suggested that CMS use 
data regarding Medicare payments made for services furnished prior to 
the submission of the CMS-855B. The other commenter recommended that 
CMS calculate the actual payments made to new ambulance suppliers after 
January 1, 2011, for this is the date on which CMS began limiting 
payments to suppliers to 12 months from the date of service per Sec.  
424.520(d).
    Response: We indeed based our estimates on actual data--
specifically, the actual average amount of payments a Medicare-enrolled 
ambulance supplier receives per year. As we indicated in the proposed 
rule, we cannot predict the number of ambulance suppliers that would 
have met CMS's requirements at various points (for example, 3 months; 
10 months) prior to enrollment. Therefore, we can only furnish high-
end, primary, and low-end estimates. Despite the commenters' request 
for greater monetary specificity, we believe that our estimates are 
reasonable.
    Comment: A commenter expressed concern that CMS did not furnish 
more detailed monetary estimates of the rule's potential impact on 
providers and beneficiaries.
    Response: As we explained in both sections III. and IV. of the 
proposed rule, we were unable to formulate

[[Page 72530]]

detailed workload, cost, or savings projections for many of our 
provisions because--(1) the necessary background data were not 
available; and (2) future behavior often cannot be predicted. Thus, we 
solicited feedback from the public that could perhaps assist us in 
developing quantifiable, numerical estimates, though we received very 
few comments in response to our request. Therefore, we are finalizing 
our proposed projections while reiterating our inability to develop 
estimates with respect to other provisions.
    In light of these comments, we are finalizing the estimates as 
previously outlined.

E. Accounting Statement and Table

    As required by OMB Circular A-4 (available at link http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), we have prepared an accounting 
statement.
    The ``transfer'' category in Table 2 reflects the application of a 
7 percent and 3 percent annualized rate to the high-end, primary, and 
low-end estimates referred to in section IV.C.2.f. of this final rule 
and involving our change to Sec.  424.520(d).
    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 previously 
discussed that may result in a cost or savings that nevertheless cannot 
be estimated.

                                     Table 2--Accounting Statement and Table
                                                  [In millions]
----------------------------------------------------------------------------------------------------------------
                                      Primary        Low          High         Year       Discount      Period
             Category                estimates    estimates    estimates     dollars        rate       covered
----------------------------------------------------------------------------------------------------------------
Transfers:
    Resulting from the change in          327.4        163.7        545.7         2013           7%    2014-2023
     the effective date of billing        327.4        163.7        545.7         2013           3%    2014-2023
     privileges for ambulance
     suppliers....................
                                   -----------------------------------------------------------------------------
    From Whom to Whom.............            Transfers from Ambulance Suppliers to Federal Government.
----------------------------------------------------------------------------------------------------------------
* Rounded to the nearest hundred-thousandth.

F. Alternatives Considered

    As stated, our provider enrollment provisions are needed to help 
ensure that fraudulent parties do not enroll in or maintain their 
enrollment in the Medicare program. Nonetheless, we did consider four 
alternatives when preparing our enrollment provisions.
    First, with respect to Sec.  424.530(a)(6)(i) and (ii), we 
considered and elected to propose and finalize an exception to these 
denial 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 scope of Sec.  424.520(d) to 
include all certified providers and certified suppliers. Yet as we 
explained previously, there already: (1) Is an exhaustive and extensive 
review process for certified providers and certified suppliers, and (2) 
are limitations posed by Sec.  489.13 on the ability of such providers 
and suppliers to ``backbill'' for services.
    Third, we contemplated eliminating CAPs altogether, as the existing 
appeals process affords providers and suppliers adequate due process 
rights. In the interests of fairness and efficiency, we elected to 
retain the CAP process for revocations based on Sec.  424.535(a)(1). We 
believe this will continue to give certain providers and suppliers an 
additional opportunity to remedy inadvertent or minor errors without 
subjecting all parties to the lengthier appeals process, although we 
continue to believe that eliminating the CAP process for all other 
revocation reasons is warranted.

G. Impact on Beneficiary Access

    We do not believe that our finalized provisions will impact 
beneficiary access. While some providers and suppliers may have their 
Medicare enrollment applications denied or their Medicare billing 
privileges revoked as a result of these provisions, we believe this 
number will be small.
    In accordance with the provisions of Executive Order 12866, this 
final 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 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 of this final rule, the 
Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as 
follows:

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

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

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

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

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

    (a) General rule. A provider or supplier--
    (1) May only submit a corrective action plan for a revocation for

[[Page 72531]]

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

PART 424--CONDITIONS FOR MEDICARE PAYMENT

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

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

0
4. In Sec.  424.502, the definition of ``Enroll/Enrollment'' is amended 
by revising the introductory text and paragraphs (2) and (4) to read as 
follows:

Sec.  424.502  Definitions

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

Sec.  424.505  [Amended]

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

0
6. Section 424.510 is amended by revising paragraph (a) to read as 
follows:

Sec.  424.510  Requirements for enrolling in the Medicare program.

    (a)(1) Providers and suppliers must submit enrollment information 
on the applicable enrollment application. Once the provider or supplier 
successfully completes the enrollment process, including, if 
applicable, a State survey and certification or accreditation process, 
CMS enrolls the provider or supplier into the Medicare program.
    (2) To be enrolled to furnish Medicare-covered items and services, 
a provider or supplier must meet the requirements specified in 
paragraphs (d) and (e) of this section.
    (3) To be enrolled solely to order and certify Medicare items or 
services, a physician or non-physician practitioner must meet the 
requirements specified in paragraph (d) of this section except for 
paragraphs (d)(2)(iii)(B), (d)(2)(iv), (d)(3)(ii), and (d)(5), (6), and 
(9) of this section.
* * * * *

0
7. Section 424.520 is amended by revising paragraph (d) to read as 
follows:

Sec.  424.520  Effective date of Medicare billing privileges.

* * * * *
    (d) Physicians, non-physician practitioners, physician and non-
physician practitioner organizations, and ambulance suppliers. The 
effective date for billing privileges for physicians, non-physician 
practitioners, physician and non-physician practitioner organizations, 
and ambulance suppliers is the later of--
    (1) The date of filing of a Medicare enrollment application that 
was subsequently approved by a Medicare contractor; or
    (2) The date that the supplier first began furnishing services at a 
new practice location.
0
8. Section 424.521 is revised to read as follows:

Sec.  424.521  Request for payment by physicians, non-physician 
practitioners, physician and non-physician organizations, and ambulance 
suppliers.

    (a) Physicians, non-physician practitioners, physician and non-
physician practitioner organizations, and ambulance suppliers may 
retrospectively bill for services when the physician, non-physician 
practitioner, physician or non-physician organization, and ambulance 
supplier has met all program requirements, including State licensure 
requirements, and services were provided at the enrolled practice 
location for up to--
    (1) Thirty days prior to their effective date if circumstances 
precluded enrollment in advance of providing services to Medicare 
beneficiaries; or
    (2) Ninety days prior to their effective date if a Presidentially-
declared disaster under the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act, 42 U.S.C. 5121-5206 (Stafford Act) precluded 
enrollment in advance of providing services to Medicare beneficiaries.
    (b) [Reserved]

0
9. Section 424.530 is amended by revising paragraphs (a)(1), (a)(3) 
introductory text and (a)(3)(i), and (a)(5) and (6) to read as follows:

Sec.  424.530  Denial of enrollment in the Medicare program

    (a) * * *
    (1) Noncompliance. The provider or supplier is determined to not be 
in compliance with the enrollment requirements in this subpart P or in 
the enrollment application applicable for its provider or supplier 
type, and has not submitted a plan of corrective action as outlined in 
part 488 of this chapter.
* * * * *
    (3) Felonies. The provider, supplier, or any owner or managing 
employee of the provider or supplier was, within the preceding 10 
years, convicted (as that term is defined in 42 CFR 1001.2) of a 
Federal or State felony offense that CMS determines is detrimental to 
the best interests of the Medicare program and its beneficiaries.
    (i) Offenses include, but are not limited in scope or severity to--
    (A) 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.
    (B) Financial crimes, such as extortion, embezzlement, income tax

[[Page 72532]]

evasion, insurance fraud and other similar crimes for which the 
individual was convicted, including guilty pleas and adjudicated 
pretrial diversions.
    (C) 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.
    (D) Any felonies that would result in mandatory exclusion under 
section 1128(a) of the Act.
* * * * *
    (5) On-site review. Upon on-site review or other reliable evidence, 
CMS determines that the provider or supplier:
    (i) Is not operational to furnish Medicare-covered items or 
services; or
    (ii) Otherwise fails to satisfy any Medicare enrollment 
requirement.
    (6) Medicare debt. (i) The enrolling provider, supplier, or owner 
thereof (as defined in Sec.  424.502), has an existing Medicare debt.
    (ii) The enrolling provider, supplier, or owner (as defined in 
Sec.  424.502) thereof was previously the owner (as defined in Sec.  
424.502) of a provider or supplier that had a Medicare debt that 
existed when the latter's enrollment was voluntarily terminated, 
involuntarily terminated, or revoked, and all of the following criteria 
are met:
    (A) The owner left the provider or supplier with the Medicare debt 
within 1 year before or after 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. In making this determination, CMS considers the 
following factors:
    (1) The amount of the Medicare debt.
    (2) The length and timeframe that the enrolling provider, supplier, 
or owner thereof was an owner of the prior entity.
    (3) The percentage of the enrolling provider, supplier, or owner's 
ownership of the prior entity.
    (4) Whether the Medicare debt is currently being appealed.
    (5) Whether the enrolling provider, supplier, or owner thereof was 
an owner of the prior entity at the time the Medicare debt was 
incurred.
    (iii) A denial of Medicare enrollment under this paragraph (a)(6) 
can be avoided if the enrolling provider, supplier or owner thereof 
does either of the following:
    (A)(1) Satisfies the criteria set forth in Sec.  401.607; and
    (2) Agrees to a CMS-approved extended repayment schedule for the 
entire outstanding Medicare debt.
    (B) Repays the debt in full.
* * * * *

0
10. Section 424.535 is amended by revising paragraphs (a)(1) 
introductory text, (a)(3), (a)(5), (a)(8), (c), and (h) to read as 
follows:

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

* * * * *
    (a) * * *
    (1) Noncompliance. The provider or supplier is determined to not 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 determines is detrimental to 
the best interests of the Medicare program and its beneficiaries.
    (ii) Offenses include, but are not limited in scope or severity 
to--
    (A) 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.
    (B) 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.
    (C) 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.
    (D) Any felonies that would result in mandatory exclusion under 
section 1128(a) of the Act.
    (iii) 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 
requirement.
* * * * *
    (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 that fail to meet Medicare requirements. 
In making this determination, CMS considers, as appropriate or 
applicable, the following:
    (A) The percentage of submitted claims that were denied.
    (B) The reason(s) for the claim denials.
    (C) Whether the provider or supplier has any history of final 
adverse actions (as that term is defined under Sec.  424.502) and the 
nature of any such actions.
    (D) The length of time over which the pattern has continued.
    (E) How long the provider or supplier has been enrolled in 
Medicare.
    (F) Any other information regarding the provider or supplier's 
specific circumstances that CMS deems relevant to its determination as 
to whether the provider or supplier has or has not engaged in the 
pattern or practice described in this paragraph.
* * * * *
    (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)

[[Page 72533]]

Except for HHAs as described in paragraph (h)(1)(ii) of this section, a 
revoked provider or supplier must, within 60 calendar days after the 
effective date of revocation, submit all claims for items and services 
furnished before the date of the revocation letter.
    (ii) A revoked HHA must submit all claims for items and services 
within 60 days after the later of the following:
    (A) The effective date of the revocation.
    (B) The date that the HHA's last payable episode ends.
    (2) Nothing in this paragraph (h) impacts the requirements of Sec.  
424.44 regarding the timely filing of claims.

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

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

    Authority:  Secs. 1102, 1128I and 1871 of the Social Security 
Act (42 U.S.C. 1302, 1320a-7j, and 1395hh).

Sec.  498.5  [Amended]

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

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

    Dated: August 8, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: November 20, 2014.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-28505 Filed 12-3-14; 8:45 am]
BILLING CODE 4120-01-P
```