58204 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405, 424, 438, 447, 455, 

457, 498, and 1007 

[CMS–6028–P] 

RIN 0938–AQ20 

Medicare, Medicaid, and Children’s 

Health Insurance Programs; Additional 

Screening Requirements, Application 

Fees, Temporary Enrollment Moratoria, 

Payment Suspensions and Compliance 

Plans for Providers and Suppliers 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

implement provisions of the Affordable 

Care Act that establish: Procedures 

under which screening is conducted for 

providers of medical or other services 

and suppliers in the Medicare program, 

providers in the Medicaid program, and 

providers in the Children’s Health 

Insurance Program (CHIP); an 

application fee to be imposed on 

providers and suppliers; temporary 

moratoria that may be imposed if 

necessary to prevent or combat fraud, 

waste, and abuse under the Medicare 

and Medicaid programs, and CHIP; 

guidance for States regarding 

termination of providers from Medicaid 

and CHIP if terminated by Medicare or 

another Medicaid State plan or CHIP; 

guidance regarding the termination of 

providers and suppliers from Medicare 

if terminated by a Medicaid State 

agency; and requirements for 

suspension of payments pending 

credible allegations of fraud in the 

Medicare and Medicaid programs. This 

proposed rule would also present an 

approach and request comments on the 

provisions of the Affordable Care Act 

that require providers of medical or 

other items or services or suppliers 

within a particular industry sector or 

category to establish compliance 

programs. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on November 16, 2010. 

ADDRESSES: In commenting, please refer 

to file code CMS–6028–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address only: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–6028– 

P, P.O. Box 8020, Baltimore, MD 21244– 

8020. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address only: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–6028– 

P, Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

9994 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by following 

the instructions at the end of the 

‘‘Collection of Information 

Requirements’’ section in this document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Patricia Peyton (410) 786–1812 for 

Medicare enrollment issues. Claudia 

Simonson (312) 353–2115 for Medicaid 

and CHIP enrollment and Medicaid 

payment suspension issues. 

Joseph Strazzire (410) 786–2775 for 

Medicare payment suspension issues. 

Laura Minassian-Kiefel (410) 786– 

4641 for compliance program issues. 

SUPPLEMENTARY INFORMATION: Inspection 

of Public Comments: All comments 

received before the close of the 

comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

I. Background 

The Medicare program (title XVIII of 

the Social Security Act (the Act)) is the 

primary payer of health care for 45 

million enrolled beneficiaries. Under 

section 1802 of the Act, a beneficiary 

may obtain health services from an 

individual or an organization qualified 

to participate in the Medicare program. 

Qualifications to participate are 

specified in statute and in regulations 

(see, for example, sections 1814, 1815, 

1819, 1833, 1834, 1842, 1861, 1866, and 

1891 of the Act; and 42 CFR chapter IV, 

subchapter G, which concerns standards 

and certification requirements). 

Providers and suppliers furnishing 

services must comply with the Medicare 

requirements stipulated in the Act and 

in our regulations. These requirements 

are meant to ensure compliance with 

applicable statutes, as well as to 

promote the furnishing of high quality 

care. As Medicare program expenditures 

have grown, we have increased our 

efforts to ensure that only qualified 

individuals and organizations are 

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Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 58205 

1We believe that the reference to section 

1886(j)(2) of the Act in section 6401(b)(1) of the 

Affordable Care Act is a scrivener’s error. We 

believe the Congress intended to refer to section 

1866(j)(2) of the Act, which, as amended by section 

6401(a) of the Affordable Care Act, requires the 

Secretary to establish a process for screening 

providers and suppliers. Because the drafting error 

is apparent, and a literal reading of the reference to 

section 1886(j)(2) of the Act would produce absurd 

results, we propose to interpret the cross-reference 

Continued 

allowed to enroll or maintain their 

Medicare billing privileges. 

The Medicaid program (title XIX of 

the Act) is a joint Federal and State 

health care program for eligible lowincome individuals. States have 

considerable flexibility in how they 

administer their Medicaid programs 

within a broad Federal framework and 

programs vary from State to State. 

The Children’s Health Insurance 

Program (CHIP) (title XXI of the Act) is 

a joint Federal and State health care 

program that provides health care 

coverage to more than 7.7 million 

otherwise uninsured children. 

Historically, States, in operating 

Medicaid and CHIP, have permitted the 

enrollment of providers who meet the 

State requirements for program 

enrollment. 

The Patient Protection and Affordable 

Care Act (Pub. L. 111–148), as amended 

by the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152) (collectively known as the 

Affordable Care Act) (the ACA) makes a 

number of changes to the Medicare and 

Medicaid programs and CHIP that 

enhance the provider and supplier 

enrollment process to improve the 

integrity of the programs to reduce 

fraud, waste, and abuse in the programs. 

A. Statutory Authority 

The following is an overview of some 

of the statutory authority relevant to 

enrollment in Medicare, Medicaid, and 

CHIP: 

• Sections 1102 and 1871 of the Act 

provide general authority for the 

Secretary of Health and Human Services 

(the Secretary) to prescribe regulations 

for the efficient administration of the 

Medicare program. Section 1102 of the 

Act also provides general authority for 

the Secretary to prescribe regulations for 

the efficient administration of the 

Medicaid program and CHIP. 

• Section 4313 of the Balanced 

Budget Act of 1997 (BBA) (Pub. L. 105– 

33) amended sections 1124(a)(1) and 

1124A of the Act to require disclosure 

of both the Employer Identification 

Number (EIN) and Social Security 

Number (SSN) of each provider or 

supplier, each person with ownership or 

control interest in the provider or 

supplier, any subcontractor in which 

the provider or supplier directly or 

indirectly has a 5 percent or more 

ownership interest, and any managing 

employees including directors and 

officers of corporations and non-profit 

organizations and charities. The ‘‘Report 

to Congress on Steps Taken to Assure 

Confidentiality of Social Security 

Account Numbers as required by the 

Balanced Budget Act’’ was signed by the 

Secretary and sent to the Congress on 

January 26, 1999. This report outlines 

the provisions of a mandatory collection 

of SSNs and EINs effective on or after 

April 26, 1999. 

• Section 936(a)(2) of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173) amended the Act to require 

the Secretary to establish a process for 

the enrollment of providers of services 

and suppliers. We are authorized to 

collect information on the Medicare 

enrollment application (that is, the 

CMS–855, (Office of Management and 

Budget (OMB) approval number 0938– 

0685)) to ensure that correct payments 

are made to providers and suppliers 

under the Medicare program as 

established by title XVIII of the Act. 

• Section 1902(a)(27) of the Act 

provides general authority for the 

Secretary to require provider agreements 

under the Medicaid State Plans with 

every person or institution providing 

services under the State plan. Under 

these agreements, the Secretary may 

require information regarding any 

payments claimed by such person or 

institution for providing services under 

the State plan. 

• Section 2107(e) of the Act, which 

provides that certain title XIX and title 

XI provisions apply to States under title 

XXI, including 1902(a)(4)(C) of the Act, 

relating to conflict of interest standards. 

• Section 1903(i)(2) of the Act 

relating to limitations on payment. 

• Section 1124 of the Act relating to 

disclosure of ownership and related 

information. 

• Sections 6401, 6402, 6501,10603, 

and 1304 of the ACA amended the Act 

by establishing: (1) Procedures under 

which screening is conducted for 

providers of medical or other services 

and suppliers in the Medicare program, 

providers in the Medicaid program, and 

providers in the CHIP; (2) an application 

fee to be imposed on providers and 

suppliers; (3) temporary moratoria that 

the Secretary may impose if necessary to 

prevent or combat fraud, waste, and 

abuse under the Medicare and Medicaid 

programs and CHIP; (4) procedures to 

terminate providers if terminated by 

Medicare or another State plan; (5) 

requirements for suspensions of 

payments pending credible allegations 

of fraud in both the Medicare and 

Medicaid programs. 

II. Provisions of the Proposed 

Regulations 

A. Provider Screening Under Medicare, 

Medicaid, and CHIP 

1. Statutory Changes 

Section 6401(a) of the ACA, as 

amended by section 10603 of the ACA, 

amends section 1866(j) of the Act to add 

a new paragraph, paragraph ‘‘(2) 

Provider Screening.’’ Section 

1866(j)(2)(A) of the Act requires the 

Secretary, in consultation with the 

Department of Health of Human 

Services’ Office of the Inspector General 

(HHS OIG), to establish procedures 

under which screening is conducted 

with respect to providers of medical or 

other items or services and suppliers 

under Medicare, Medicaid, and CHIP. 

Section 1866(j)(2)(B) of the Act requires 

the Secretary to determine the level of 

screening to be conducted according to 

the risk of fraud, waste, and abuse with 

respect to the category of provider of 

medical or other items or services or 

supplier. The provision states that the 

screening shall include a licensure 

check, which may include such checks 

across State lines; and the screening 

may, as the Secretary determines 

appropriate based on the risk of fraud, 

waste, and abuse, include a criminal 

background check; fingerprinting; 

unscheduled or unannounced site visits, 

including pre-enrollment site visits; 

database checks, including such checks 

across State lines; and such other 

screening as the Secretary determines 

appropriate. Section 1866(j)(2)(C) of the 

Act requires the Secretary to impose a 

fee on each institutional provider of 

medical or other items or services or 

supplier that would be used by the 

Secretary for program integrity efforts 

including to cover the cost of screening 

and to carry out the provisions of 

sections 1866(j) and 1128J of the Act. 

We discuss the fee in section II.B. of this 

proposed rule. 

Section 6401(b) of the ACA amends 

section 1902 of the Act to add new 

paragraphs (a)(77)(i) and (ii), which 

require States to comply with the 

process for screening providers and 

suppliers as established by the Secretary 

under 1866(j)(2) of the Act.1

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58206 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 

to section 1886(j)(2) in the new section 1902(ii) of 

the Act as if the reference were to section 1866(j)(2). 

We note that the statute uses the 

terms ‘‘providers of medical or other 

items or services,’’ ‘‘institutional 

providers,’’ and ‘‘suppliers.’’ The 

Medicare program enrolls a variety of 

providers and suppliers, some of which 

are referred to as ‘‘providers of services,’’ 

‘‘institutional providers,’’ ‘‘certified 

providers,’’ ‘‘certified suppliers,’’ and 

‘‘suppliers.’’ In Medicare, the term 

‘‘providers of services’’ under section 

1861(u) of the Act means health care 

entities that furnish services primarily 

payable under Part A of Medicare, such 

as hospitals, home health agencies 

(including home health agencies 

providing services under Part B), 

hospices, and skilled nursing facilities. 

The term ‘‘suppliers’’ defined in section 

1861(d) of the Act refers to health care 

entities that furnish services primarily 

payable under Part B of Medicare, such 

as independent diagnostic testing 

facilities (IDTFs), durable medical 

equipment prosthetics, orthotics, and 

supplies (DMEPOS) suppliers, and 

eligible professionals, which refers to 

health care suppliers who are 

individuals, that is, physicians and the 

other professionals listed in section 

1848(k)(3)(B) of the Act. For Medicaid 

and CHIP, we use the terms ‘‘providers’’ 

or ‘‘Medicaid providers’’ or ‘‘CHIP 

providers’’ when referring to all 

Medicaid or CHIP health care providers, 

including individual practitioners, 

institutional providers, and providers of 

medical equipment or goods related to 

care. The term ‘‘supplier’’ has no 

meaning in the Medicaid program or 

CHIP. 

Section 424.502 contains additional 

definitions that apply to these and other 

terms used throughout this proposed 

rule including the following: 

• Authorized official means an 

appointed official (for example, chief 

executive officer, chief financial officer, 

general partner, chairman of the board, 

or direct owner) to whom the 

organization has granted the legal 

authority to enroll it in the Medicare 

program, to make changes or updates to 

the organization’s status in the Medicare 

program, and to commit the 

organization to fully abide by the 

statutes, regulations, and program 

instructions of the Medicare program. 

• Delegated official means an 

individual who is delegated by the 

‘‘Authorized Official,’’ the authority to 

report changes and updates to the 

enrollment record. The delegated 

official must be an individual with 

ownership or control interest in, or be 

a W–2 managing employee of the 

provider or supplier. 

• Managing employee means a 

general manager, business manager, 

administrator, director, or other 

individual that exercises operational or 

managerial control over, or who directly 

or indirectly conducts, the day-to-day 

operation of the provider or supplier, 

either under contract or through some 

other arrangement, whether or not the 

individual is a W–2 employee of the 

provider or supplier. 

• Owner means any individual or 

entity that has any partnership interest 

in, or that has 5 percent or more direct 

or indirect ownership of the provider or 

supplier as defined in sections 1124 and 

1124A(A) of the Act. 

• Physician or nonphysician 

practitioner organization means any 

physician or nonphysician practitioner 

entity that enrolls in the Medicare 

program as a sole proprietorship or 

organizational entity. 

The new screening procedures 

implemented pursuant to new section 

1866(j)(2) of the Act would be 

applicable to newly enrolling providers 

and suppliers, including eligible 

professionals, beginning on March 23, 

2011. These new procedures would be 

applicable to currently enrolled 

Medicare, Medicaid, and CHIP 

providers, suppliers, and eligible 

professionals beginning on March 23, 

2012. These new screening procedures 

implemented pursuant to new section 

1866(j)(2) of the Act would be 

applicable beginning on March 23, 2011 

for those providers and suppliers 

currently enrolled in Medicare, 

Medicaid, and CHIP who revalidate 

their enrollment information. Within 

Medicare, the March 23, 2011 

implementation date will impact those 

current providers and suppliers whose 

5-year revalidation cycle (or 3-year 

revalidation cycle for DMEPOS 

suppliers) results in revalidation 

occurring on or after March 23, 2011 

and before March 23, 2012. 

2. Summary of Existing Screening 

Measures 

Before we outline the new measures 

we are proposing under the ACA, it may 

be helpful to provide a summary of 

some of the screening measures already 

being utilized in Medicare, Medicaid, 

and CHIP. Pursuant to other authority, 

but with the notable exceptions of 

criminal background checks and 

fingerprinting, Medicare, generally 

through private contractors, already 

employs a number of the screening 

practices described in section 

1866(j)(2)(B) of the Act to determine if 

a provider or supplier is in compliance 

with Federal and State requirements to 

enroll or to maintain enrollment in the 

Medicare program. 

a. Licensure Requirements—Medicare 

and Medicaid 

Over the past several years, we have 

taken a number of steps to strengthen 

our ability to deny or revoke Medicare 

billing privileges when providers or 

suppliers do not have or do not 

maintain the applicable State licensure 

requirements for their provider or 

supplier type or profession. We 

established reporting responsibilities for 

all providers, suppliers, and eligible 

professionals in earlier regulations at 

§ 424.516(b) through (e). Today, to 

ensure that only qualified providers and 

suppliers remain in the Medicare feefor-service (FFS) program, we require 

that Medicare contractors review State 

licensing board data on a monthly basis 

to determine if providers and suppliers 

remain in compliance with State 

licensure requirements. Medicare billing 

privileges would be revoked for those 

providers and suppliers who do not 

report a final adverse action (for 

example, license revocation or 

suspension, felony conviction) within 

the applicable reporting period, as 

required in § 424.516(b) through (e). 

Medicare suppliers of DMEPOS and 

IDTFs are already subject to similar 

provisions in § 424.57(c) and 

§ 410.33(g), respectively. DMEPOS 

suppliers are also subject to additional 

requirements including accreditation 

and surety bonding, pursuant to 42 CFR 

424.57(c)(22) through (26) and 42 CFR 

424.57(d). 

Medicare Advantage organizations 

(MAOs) are required to verify licensure 

of providers and suppliers, including 

physicians and other health care 

professionals, in accordance with 

§ 422.204. 

For Medicaid and CHIP, most States 

do some checking of in-State provider 

licenses. For example, in some States, 

the existence of the license may be 

verified, but little attention might be 

given to any restrictions on the license. 

b. Site Visits—Medicare 

Pursuant to § 424.517, Medicare 

conducts the following site visits and 

takes the following actions, generally 

through private contractors under CMS 

direction: 

• The National Supplier 

Clearinghouse (NSC) Medicare 

Administrative Contractor (the Medicare 

contractor that processes enrollment 

applications for suppliers of DMEPOS) 

conducts pre-enrollment site visits to 

DMEPOS suppliers that are not 

associated with a chain supplier of 

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Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 58207 

DMEPOS (a chain supplier of DMEPOS 

is a supplier with 25 or more distinct 

practice locations.) 

• The NSC also conducts 

unannounced post-enrollment site visits 

to DMEPOS suppliers for which CMS or 

the NSC believes there is a likelihood of 

fraudulent or abusive activities to 

ensure those DMEPOS suppliers remain 

in compliance with the supplier 

standards found at § 424.57(c). 

• CMS at times exercises its right to— 

• Have the NSC conduct ad hoc preand post-enrollment site visits to any 

DMEPOS supplier; 

• Have Medicare contractors conduct 

pre-enrollment site visits to all IDTFs; 

and 

• Conduct ad hoc pre-and post 

enrollment site visits to any prospective 

Medicare provider and supplier or any 

enrolled Medicare provider or supplier. 

In addition, under 42 CFR parts 488 

and 489, a State survey agency or an 

approved national accreditation 

organization with deeming authority 

conducts pre-enrollment surveys for 

certified providers and suppliers to 

determine whether they meet the 

applicable Federal conditions and 

requirements for their provider or 

supplier type before they can participate 

in the Medicare program. 

We believe these efforts need to be 

expanded to include additional site 

visits and site visits to additional 

provider and supplier types in order to 

protect the Medicare FFS program from 

unscrupulous or potentially fraudulent 

providers and suppliers. 

We note that the site visits discussed 

here and elsewhere within this 

preamble and the proposed regulations 

are separate and apart from the site 

visits that are conducted pursuant to the 

Clinical Laboratory Improvement 

Amendments (CLIA). We intend to work 

with our State survey agency partners in 

coordinating these site visits so as to 

avoid duplication and burden on 

providers. 

c. Database Checks—Medicare 

Today, Medicare contractors employ 

database checks of eligible 

professionals, owners, authorized 

officials, delegated officials, managing 

employees, medical directors, and 

supervising physicians (at IDTFs and 

laboratories) as part of the Medicare 

provider and supplier enrollment 

process. These include database checks 

with the Social Security Administration 

(SSA) (to verify an individual’s SSN), 

the National Plan and Provider 

Enumeration System (NPPES) to verify 

the National Provider Identifier (NPI) of 

an eligible professional, and State 

licensing board checks to determine if 

an eligible professional is appropriately 

licensed to furnish medical services 

within a given State. These checks also 

include checking a provider or supplier 

against the HHS OIG’s List of Excluded 

Individuals/Entities (LEIE) and the 

General Service Administration’s 

Excluded Parties List System (EPLS). 

All of the database checks are used to 

assess the eligibility and qualifications 

of providers and suppliers to enroll in 

the Medicare program, to confirm the 

identity of an eligible professional to 

ensure that he or she may be considered 

for enrollment in the Medicare program. 

Also, on a monthly basis, CMS’ 

Medicare contractors systematically 

compare enrolled providers, suppliers, 

and eligible professionals against the 

information in the Medicare Exclusions 

Database. The Medicare Exclusions 

Database identifies providers, suppliers, 

and eligible professionals who have 

been excluded from the Medicare and 

Medicaid programs by the HHS OIG. 

When a match is found, the HHS OIG 

exclusion information is systematically 

noted in the Medicare enrollment record 

of the provider, supplier, or eligible 

professional. In the Medicare program 

today, we deny or revoke the billing 

privileges of providers, suppliers, and 

eligible professionals who have been 

excluded by the HHS OIG. If the HHS 

OIG lifts the exclusion, the provider, 

supplier or eligible professional must 

reapply for enrollment in the Medicare 

program. In addition, Medicare 

contractors also review State licensure 

Web sites on a monthly basis to ensure 

that eligible professionals continue to 

meet State licensing requirements. 

In addition, since January 2009, we 

have compared date of death 

information obtained from the Social 

Security Administration Death Master 

File (SSA DMF) with the information 

maintained in the National Plan and 

Provider Enumeration System (NPPES), 

the system that assigns a NPI to 

individual and organizations. Based on 

this comparison and the subsequent 

verification, we have deactivated the 

NPIs of more than 11,500 individuals 

who were previously assigned a type 1 

(individual) NPI. We automatically 

transfer this information from NPPES to 

the Provider Enrollment, Chain, and 

Ownership System (PECOS), CMS’ 

national Medicare enrollment repository 

to deactivate a deceased individual’s 

Medicare billing privileges. In addition, 

Medicare contractors are required to 

review and act upon monthly files that 

contain a list of nonpractitioner 

individuals enrolled in the Medicare 

program who have been reported to the 

SSA as deceased. These individuals 

include: Owners, authorized officials, 

and delegated officials. 

MAOs, as required by § 422.204, 

generally use database checks to verify 

licensure and licensure sanctions and 

limitations with State licensing boards 

and the Federation of State Medical 

Boards, DEA certificates with the 

National Technical Information Service 

(NTIS), history of adverse professional 

review actions and malpractice from the 

National Practitioner Data Bank (NPDB), 

accreditation status of institutional 

providers and suppliers with national 

accrediting boards, such as The Joint 

Commission (TJC), and search for HHS 

OIG exclusions using the HHS OIG Web 

site http://www.oig.hhs.gov/fraud/ 

exclusions/list of excluded.html. 

d. Criminal Background Checks— 

Medicare 

As described in § 424.530(a) and 

§ 424.535(a), CMS or its designated 

Medicare contractor may deny or revoke 

the Medicare billing privileges of the 

owner of a provider or supplier, a 

physician or nonphysician practitioner, 

and terminate any corresponding 

provider or supplier agreement for a 

number of reasons, including an 

exclusion from the Medicare, Medicaid, 

and any other Federal health care 

program, a felony within the preceding 

10 years that is considered detrimental 

to the Medicare program, and/or 

submission of false or misleading 

information on the Medicare enrollment 

application. While we currently require 

our Medicare contractors to verify data 

submitted on, and as part of, the 

Medicare provider/supplier enrollment 

application, our contractors are not able 

to verify information that may have 

been purposefully omitted or changed 

in a manner to obfuscate any previous 

criminal activity. In addition, criminal 

background checks are not routinely 

used in the FFS Medicare screening 

process. 

e. Medicare MAO Requirements 

As mentioned earlier in this section, 

MAOs already employ a number of 

screening procedures in accordance 

with regulations and CMS manual 

instructions. Specifically, under 

§ 422.204(b)(3) in the case of providers 

meeting the definition of ‘‘provider of 

services’’ in section 1861(u) of the Act, 

basic benefits may only be provided 

through providers if they have a 

provider agreement with CMS 

permitting them to furnish services 

under original Medicare. With respect to 

other entities like suppliers, 

§ 422.204(b)(3) requires that they ‘‘meet 

the applicable requirements of title 

XVIII and Part A of title XI of the Act.’’ 

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58208 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 

2For purposes of this preamble and the proposed 

regulations, ‘‘managed care entity’’ and ‘‘MCE’’ will 

have the meaning Medicaid managed care 

organization (MCO), primary care case manager 

(PCCM), prepaid inpatient health plan (PIHP), 

prepaid ambulatory health plan (PAHP), and health 

insuring organization (HIO). This definition differs 

from the meaning in section 1932(a)(1)(B) of the 

Social Security Act, which limits MCEs to Medicaid 

MCOs and PCCMs. We propose a more inclusive 

definition for the regulation so that all those entities 

in States’ managed care programs will provide 

disclosure information. 

3We note that under section 408 of the 

reauthorized Indian Health Care Improvement Act, 

‘‘[a]ny requirement for participation as a provider of 

health care services under a Federal health care 

program that an entity be licensed or recognized 

under the State or local law where the entity is 

located to furnish health care services shall be 

deemed to have been met in the case of an entity 

operated by the [Indian Health] Service, an Indian 

tribe, tribal organization, or urban Indian 

organization if the entity meets all the applicable 

standards for such licensure or recognition, 

regardless of whether the entity obtains a license or 

other documentation under such State or local law.’’ 

Given these requirements we are 

considering to what extent MAOs 

should be required to apply the 

identical screening requirements we are 

proposing for the original Medicare 

program or whether substantively 

similar alternative approaches adopted 

by MAOs would be acceptable. 

Accordingly, we solicit public 

comments on whether or to what extent 

MAOs should be required to implement 

the same enhanced screening 

requirements for providers, suppliers 

and physicians that we are proposing 

for the original Medicare program. 

f. Fingerprinting—Medicare 

We do not currently use 

fingerprinting in the Medicare screening 

process. 

g. Screening—Medicaid and CHIP 

States vary in the degree to which 

they employ screening methods such as 

unscheduled and unannounced site 

visits and database checks, including 

such checks across State lines, criminal 

background checks, and fingerprinting. 

However, there are at least a few States 

that utilize each of those methods. 

States also vary in what they require 

their managed care entities (MCEs) 2 to 

do in terms of screening network-level 

providers that are not also enrolled in 

the Medicaid program as FFS providers. 

We are considering to what extent States 

must require their MCEs to apply the 

identical screening requirements we are 

proposing for the States or whether 

substantively similar alternative 

approaches adopted by MCEs would be 

acceptable. Accordingly, we solicit 

public comments on whether or to what 

extent MCEs should be required to 

implement the same enhanced 

screening requirements for Medicaid 

and CHIP providers that we are 

proposing for State Medicaid and CHIP 

programs. 

3. Proposed Screening Requirements 

a. Medicare 

Section 1866(j)(2)(B) of the Act 

requires the Secretary to determine the 

level of screening applicable to 

providers and suppliers according to the 

risk of fraud, waste, and abuse the 

Secretary determines is posed by 

particular categories of providers and 

suppliers. 

In considering how to establish 

consistent screening standards, we are 

proposing to designate provider and 

supplier categories that would be 

subject to certain screening procedures 

based on CMS’ assessment of fraud, 

waste and abuse risk of the provider or 

supplier category, taking into 

consideration a variety of factors 

including studies conducted by the HHS 

OIG and the GAO and other sources. We 

would designate categories of providers 

or suppliers (for example, ‘‘newly 

enrolling DME suppliers’’ or ‘‘currently 

enrolled home health agencies’’) that 

would be subject to screening 

procedures in each category based on 

our assessment of the level of risk 

presented by the category of provider. 

There will be 3 levels of risk: ‘‘limited,’’ 

‘‘moderate’’ and ‘‘high,’’ and each 

provider/supplier category will be 

assigned to one of these 3 levels. The 

screening procedures applicable to each 

risk level will be set by us and are 

included in this proposed rule. The 

categories described below and 

associated risk levels assigned are 

designed to identify those categories of 

providers and suppliers that pose a risk 

of fraud, waste, and abuse. 

Under this proposed approach, the 

relevant Medicare contractor (for 

example, fiscal intermediary, regional 

home health intermediary, carriers, Part 

A or Part B Medicare Administrative 

Contractor (A/B MAC), or the NSC 

Administrative Contractor) would 

utilize the screening tools mandated by 

us for the risk level assigned to a 

particular provider or supplier category. 

We are soliciting comments on the 

proposed assignment of specific 

provider and supplier types to 

established risk levels, including what 

criteria should be considered in making 

such assignments, whether such 

assignments should be released 

publicly, whether they should be 

subject to agency review and updated 

according to an established schedule 

(that is, annually, bi-annually), and the 

extent to which they should be updated 

according to evolving risks. We are also 

soliciting comments on any additional 

database checks that we should consider 

as a type of screening. 

Based on the level of risk assigned, we 

propose that the Medicare contractors 

would establish and conduct the 

following categorical screenings. 

TABLE 1—CATEGORY OF RISK AND REQUIRED SCREENING FOR MEDICARE PHYSICIANS, NON-PHYSICIAN PRACTITIONERS, 

PROVIDERS, AND SUPPLIERS

Type of screening required Limited Moderate High 

Verification of any provider/supplier-specific requirements established by Medicare .......................... X X X 

Conduct license verifications, (may include licensure checks across States) ...................................... X X X 

Database Checks (to verify Social Security Number (SSN), the National Provider Identifier (NPI), 

the National Practitioner Data Bank (NPDB) licensure, an OIG exclusion, taxpayer identification 

number, tax delinquency, death of individual practitioner, owner, authorized official, delegated official, or supervising physician) .......................................................................................................... X X X 

Unscheduled or Unannounced Site Visits ............................................................................................. .................... X X 

Criminal Background Check .................................................................................................................. .................... ...................... X 

Fingerprinting ......................................................................................................................................... .................... ...................... X 

As described above, we already 

require Medicare contractors to ensure 

that every provider or supplier meets 

any applicable Federal regulations or 

State requirements, including applicable 

licensure requirements 3 for the provider 

or supplier type prior to making an 

enrollment determination. In addition, 

we also require that Medicare 

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contractors conduct monthly reviews of 

State licensing board actions to 

determine if an individual practitioner, 

such as a physician or non-physician 

practitioner continues to meet State 

licensing requirements. In the case of 

organizational entities, we also require 

our Medicare contractors to conduct 

monthly or periodic checks to 

determine if an organizational entity 

continues to meet the Federal and State 

requirements for its provider or supplier 

type. Such verifications help ensure that 

a prospective provider or supplier is 

eligible to participate in the Medicare 

program or that an existing provider or 

supplier is eligible to maintain its 

Medicare billing privileges. 

Currently in the Medicare program, 

DMEPOS suppliers are required to reenroll every 3 years, and other providers 

are required to revalidate their 

enrollment every 5 years. The terms 

revalidation and re-enrollment are often 

used interchangeably, but are actually 

specific to these provider types. To 

eliminate any confusion about which 

term applies to which provider or 

supplier, we are proposing language at 

42 CFR 424.57(e) to change all 

references to re-enroll or re-enrollment 

to revalidate or revalidation. In 

addition, the ACA requires that no 

provider or supplier shall be allowed to 

enroll in Medicare or revalidate its 

enrollment in Medicare after March 23, 

2013 without being screened pursuant 

to the authorities covered by this 

proposed rule. To assist CMS in 

assuring that the statutory effective date 

is met, we are proposing at 42 CFR 

424.515 to permit CMS to require that 

a provider or supplier revalidate its 

enrollment at any time. After the 

revalidation, the current cycle for 

revalidation (3 years for DMEPOS, and 

5 years for all other providers) would 

apply. 

(1) Limited 

In general, we consider physicians, 

nonphysician practitioners, and medical 

clinics and group practices to pose 

limited risk because these professionals 

are State licensed and we are not aware 

of any recent studies or other evidence 

that indicates that these suppliers, as a 

category, pose an elevated risk to the 

Medicare program. 

Similarly, we believe that a provider 

or supplier that is publicly traded on the 

New York Stock Exchange (NYSE) or 

the National Association of Securities 

Dealers Automated Quotation System 

(NASDAQ) poses a limited risk because 

of the financial oversight provided by 

investors, corporate boards of directors, 

and the Security and Exchange 

Commission. Finally, based on our own 

data analysis including analysis of 

historical trends and CMS’s own 

experience with provider screening and 

enrollment we believe that the following 

providers and suppliers currently pose 

a limited risk to the Medicare program: 

Ambulatory surgical centers (ASCs); 

end-stage renal disease (ERSD) facilities; 

Federally qualified health centers 

(FQHCs); histocompatibility 

laboratories; hospitals, including critical 

access hospitals (CAHs); Indian Health 

Service (IHS) facilities; mammography 

screening centers; organ procurement 

organizations (OPOs); mass 

immunization roster billers, portable 

x-ray suppliers; religious nonmedical 

health care institutions (RNHCIs); rural 

health clinics (RHCs); radiation therapy 

centers; public or government owned or 

affiliated ambulance services suppliers 

(defined as an ambulance supplier 

owned in whole or in part by a State or 

local government), and skilled nursing 

facilities (SNFs). Accordingly, we 

propose to include the categories of 

providers and suppliers listed above 

within the ‘‘limited’’ level of risk. We 

think the additional government 

oversight of ‘‘government owned or 

affiliated’’ ambulance service providers 

justifies placing these providers in the 

limited category. 

In § 424.518(a), we propose that the 

following screening tools will apply to 

providers and suppliers in categories 

designated as ‘‘limited’’ risk: (1) 

Verification that a provider or supplier 

meets any applicable Federal 

regulations, or State requirements for 

the provider or supplier type prior to 

making an enrollment determination; (2) 

verification that a provider or supplier 

meets applicable licensure 

requirements; and (3) database checks 

on a pre- and post-enrollment basis to 

ensure that providers and suppliers 

continue to meet the enrollment criteria 

for their provider/supplier type. 

To assist readers in understanding the 

type of providers and suppliers that we 

propose to include in the ‘‘limited’’ risk 

level, we are providing the following 

table. 

TABLE 2—MEDICARE PROVIDERS AND SUPPLIERS DESIGNATED AS A ‘‘LIMITED’’ CATEGORICAL RISK FOR SCREENING

PURPOSES

Provider/supplier category 

Physician or non-physician practitioners and medical groups or clinics. 

Providers or suppliers that are publicly traded on the NYSE or NASDAQ. 

Ambulatory surgical centers, end-stage renal disease facilities, Federally qualified health centers, histocompatibility laboratories, hospitals, including critical access hospitals, Indian Health Service facilities, mammography screening centers, organ procurement organizations, mass 

immunization roster billers, portable x-ray supplier, religious non-medical health care institutions, rural health clinics, radiation therapy centers, 

public or government owned or affiliated ambulance services suppliers, and skilled nursing facilities. 

(2) Moderate 

For those provider and supplier 

categories with a ‘‘moderate’’ level of 

risk, we propose that Medicare 

contractors will conduct unannounced 

pre- and/or post-enrollment site visits in 

addition to those screening tools 

applicable to the ‘‘limited’’ level of risk. 

Based on the success of pre- and/or 

post-enrollment site visits conducted by 

the NSC during the enrollment process 

for suppliers of DMEPOS and a similar 

process established by carriers and A/B 

MACs during the enrollment of IDTFs, 

we believe that unscheduled and 

unannounced pre- and post-enrollment 

site visits help ensure that suppliers are 

operational and meet applicable 

supplier standards or performance 

standards. In addition, we believe that 

unscheduled and unannounced pre- and 

post-enrollment site visits are an 

essential tool in determining whether a 

provider or supplier is in compliance 

with its reporting responsibilities, 

including the requirement in § 424.516 

to notify the Medicare contractor of any 

change of practice location. 

Moreover, § 424.530(a)(5) and 

§ 424.535(a)(5) give CMS and its 

Medicare contractors the authority to 

deny or revoke Medicare billing 

privileges for providers and suppliers 

respectively if the provider or supplier 

is not operational or the provider does 

not maintain the established provider or 

supplier performance standards. And 

while we do not believe that 

unscheduled or unannounced site visits 

are necessary for all providers and 

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suppliers, we do believe that a number 

of businesses, like the ones mentioned 

below, pose an increased risk to the 

Medicare program, due at least in part 

to the lack of individual professional 

licensure. 

Moreover, as discussed below, we 

have found that certain types of 

providers and suppliers that easily enter 

a line or business without clinical or 

business experience, for example by 

leasing minimal office space and 

equipment, present a higher risk of 

possible fraud to our programs. As such, 

we believe that because these types of 

providers pose an increased risk of 

fraud they should be subject to 

substantial scrutiny before being 

permitted to enroll and bill Medicare, 

Medicaid, or CHIP. This type of preenrollment scrutiny will help us move 

away from the ‘‘pay and chase’’ 

approach. With the exception of 

providers and suppliers that are 

publicly traded on the NYSE or 

NASDAQ and therefore considered 

‘‘limited’’ risk, we propose that the 

following prospective provider and 

supplier types be considered a 

‘‘moderate’’ risk for the purpose of 

determining the appropriate level of 

screening: nonpublic, non-government 

owned or affiliated ambulance service 

suppliers, community mental health 

centers (CMHCs), comprehensive 

outpatient rehabilitation facilities 

(CORFs), hospice organizations, IDTFs, 

and independent clinical laboratories. 

Most of these provider and supplier 

types are generally highly dependent on 

Medicare, Medicaid, or CHIP to pay 

their salaries and other operating 

expenses and are subject to less 

additional other government or 

professional oversight than the 

providers and suppliers in the limited 

risk category. Accordingly, we believe it 

is appropriate and necessary to conduct 

unscheduled and unannounced preenrollment site visits to ensure that 

these prospective providers and 

suppliers meet CMS’ enrollment 

requirements prior to enrolling in the 

Medicare program. Moreover, we 

believe that post-enrollment site visits 

are also important to ensure that the 

enrolled provider or supplier remains a 

viable health care provider or supplier 

in the Medicare program. 

Accordingly, we propose in 

§ 424.518(b)(i) that in addition to the 

categorical screening tools used with 

respect to limited risk providers and 

suppliers that Medicare contractors 

shall conduct unannounced and 

unscheduled site visits prior to 

enrolling the following prospective 

providers and suppliers with the 

exception of providers and suppliers 

that are publicly traded on the NYSE or 

NASDAQ and therefore considered 

‘‘limited’’ risk: Nonpublic, 

nongovernment owned or affiliated 

ambulance services suppliers, CMHCs, 

CORFs, hospice organizations, IDTFs, 

and independent clinical laboratories. 

In addition, we propose that the 

following currently enrolled Medicare 

providers should be categorized as 

‘‘moderate’’: Currently enrolled 

(revalidating) home health agencies or 

suppliers of DMEPOS. (Except that any 

such provider that is publicly traded on 

the NYSE or NASDAQ is considered 

‘‘limited’’ risk.) 

We believe that the providers and 

suppliers described above have the 

similar risk level as suppliers of 

DMEPOS and IDTFs, for both of which 

we already require a pre-enrollment site 

visit prior to completing the enrollment 

process. 

We are also proposing in 

§ 424.518(b)(ii) that the Medicare 

contractor shall conduct an 

unannounced and unscheduled preenrollment and/or post-enrollment onsite visit for the following providers and 

suppliers that are not publicly traded on 

the NYSE or NASDAQ during the 

revalidation process: non-public, nongovernment owned or affiliated 

ambulance services suppliers; CMHCs, 

CORFs, DMEPOS suppliers, HHAs, 

hospice organizations, IDTFs, and 

independent clinical laboratories. For 

the same reasons that we believe that a 

Medicare contractor should conduct a 

pre-enrollment site visit, we believe that 

Medicare contractors should conduct 

post-enrollment site visits during the 

revalidation process for the provider 

and supplier types described above. 

HHS OIG and GAO have issued 

studies indicating that several of the 

provider and supplier types cited above 

have an elevated risk. In an October 

2007 report titled, ‘‘Growth in Advanced 

Imaging Paid under the Medicare 

Physician Fee Schedule’’ (OEI–01–06– 

00260), the HHS OIG recommended that 

CMS consider conducting site visits to 

monitor IDTFs’ compliance with 

Medicare requirements.’’ In addition, in 

an April 2007 report titled, ‘‘Medicare 

Hospices: Certification and Centers for 

Medicare & Medicaid Services 

Oversight’’ (OEI–06–05–00260), the HHS 

OIG recommended that CMS seek 

legislation to establish additional 

enforcement remedies for poor hospice 

performance. In response to this 

recommendation, CMS stated that it was 

considering whether to pursue new 

enforcement remedies for poor hospice 

performance. While the Medicare 

enrollment process is not designed to 

verify the conditions of participation, 

we do believe that more frequent onsite 

visits may help identify those hospice 

organizations that are no longer 

operational at the practice location 

identified on the Medicare enrollment 

application. 

In a January 2006 report titled, 

‘‘Medicare Payments for Ambulance 

Transports’’ (OEI–05–02–000590), the 

HHS OIG found that ‘‘twenty-five 

percent of ambulance transports did not 

meet Medicare’s program requirements, 

resulting in an estimated $402 million 

in improper payments.’’ 

In an August 2004 report titled, 

‘‘Comprehensive Outpatient 

Rehabilitation Facilities: High Medicare 

Payments in Florida Raise Program 

Integrity Concerns’’ (GAO–04–709), the 

GAO concluded that, ‘‘[s]izeable 

disparities between Medicare therapy 

payments per patient to Florida CORFs 

and other facility-based outpatient 

therapy providers in 2002—with no 

clear indication of differences in patient 

needs—raise questions about the 

appropriateness of CORF billing 

practices. After finding high rates of 

medically unnecessary therapy services 

to CORFs, CMS’s claims administration 

contractor for Florida took steps to 

ensure appropriate claim payments for a 

small, targeted group of CORF patients. 

Despite its limited success, billing 

irregularities continued among some 

CORFs and many CORFs continued to 

receive relatively high payments the 

following year. This suggests that the 

contractor’s efforts were too limited in 

scope to be effective with all CORF 

providers.’’ 

In addition to GAO and HHS OIG 

studies and reports, a number of Zone 

Program Integrity Contractors (ZPIC) 

and Program Safeguard Contractors 

(PSC), organizations used by CMS in 

helping to fight fraud in Medicare, have 

taken a number of administrative 

actions including payment suspensions 

and increased medical review, for the 

provider and supplier types shown 

above. For example, the Zone 7 ZPIC 

contractor in South Florida has 

conducted onsite reviews at 62 CORFs 

since January 2010 and recommended 

revocation for 51 CORFs, or 82 percent 

of the CORFS in the area. The same 

contractor has conducted an onsite 

reviews at 38 CMHCs located in Dade, 

Broward and Palm Beach County since 

January 2010, and recommended that 30 

CMHCs be revoked for noncompliance 

(79 percent of the CMHCs in the area). 

In each instance where the ZPIC 

requested a revocation, the CMHC was 

also placed on prepay review. We have 

also conducted an analysis of IDTF 

licensure requirements and have found 

several circumstances that indicate 

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irregularity and potential risk of fraud. 

Although independent clinical 

laboratories are subject to survey against 

CLIA requirements, there are 

nonetheless a number of potentials for 

fraud, not the least of which is the sheer 

volume of service and associated billing 

generated by these entities. 

Also, while we believe that 

prospective suppliers of DMEPOS that 

are not publicly-traded on the NYSE or 

NASDAQ are a ‘‘high’’ categorical risk 

(see discussion below), we believe that 

there is ample evidence to support the 

use of post-enrollment site visits as a 

reliable and effective tool to ensure that 

a current supplier of DMEPOS remains 

operational and continues to meet the 

supplier standards found in § 424.57(c). 

In a March 2007 report titled, ‘‘Medical 

Equipment Suppliers Compliance with 

Medicare Enrollment Requirements’’ 

(OEI–04–05–00380), the HHS OIG 

concluded that, ‘‘By helping to ensure 

the legitimacy of DMEPOS suppliers, 

out-of cycle site visits may help to 

prevent fraud, waste, and abuse in the 

Medicare program. CMS may want to 

consider the findings of our study as 

they determine how and to what extent 

out-of-cycle site visits of DMEPOS 

suppliers will occur.’’ Today, the NSC 

MAC utilizes on post-enrollment site 

visits as the primary screening to 

determine ongoing compliance with the 

enrollment criteria set forth in 

§ 424.57(c). Therefore, we have included 

currently enrolled DMEPOS suppliers in 

the ‘‘moderate’’ category. 

We also note that, in addition to the 

new screening measures being proposed 

in this rule, under the existing 

regulation at § 424.517, a Medicare 

contractor may conduct an 

unannounced or unscheduled site visit 

at any time for any provider or supplier 

type prior to enrolling a prospective 

provider or supplier or for any existing 

provider or supplier enrolled in the 

Medicare program. While the primary 

purpose of an unannounced and 

unscheduled site visit is to ensure that 

a provider or supplier is operational at 

the practice location found on the 

Medicare enrollment application, a 

Medicare contractor may also verify 

established supplier standards or 

performance standards other than 

conditions of participation (CoP) subject 

to survey and certification by the State 

Survey agency, where applicable, to 

ensure that the supplier remains in 

compliance with program requirements. 

To assist readers in understanding the 

type of providers and suppliers that we 

propose to include in the ‘‘moderate’’ 

risk level, we are providing the 

following table. 

TABLE 3—MEDICARE PROVIDERS AND SUPPLIERS DESIGNATED AS A ‘‘MODERATE’’ CATEGORICAL RISK FOR SCREENING

PURPOSES

Provider/supplier category 

Community mental health centers; Comprehensive outpatient rehabilitation facilities; Hospice organizations; Independent diagnostic testing facilities; Independent clinical laboratories; and Nonpublic, Nongovernment owned or affiliated ambulance services suppliers. (Except that any 

such provider or supplier that is publicly traded on the NYSE or NASDAQ is considered ‘‘limited’’ risk.) 

Currently enrolled (revalidating) home health agencies. (Except that any such provider that is publicly traded on the NYSE or NASDAQ is considered ‘‘limited’’ risk.) 

Currently enrolled (re-validating) suppliers of DMEPOS.(Except that any such supplier that is publicly traded on the NYSE or NASDAQ is considered ‘‘limited’’ risk.) 

(3) High 

For those provider and supplier 

categories within the ‘‘high’’ level of risk, 

we propose that, in addition to the 

screening tools applicable to the 

‘‘limited’’ and ‘‘moderate’’ levels of risk, 

Medicare contractors would use the 

following screening tools in the 

enrollment process: (1) Criminal 

background check; and (2) submission 

of fingerprints using the FD–258 

standard fingerprint card. (The FD–258 

fingerprint card is recognized nationally 

and can be found at local, county or 

State law enforcement agencies where, 

for a fee, agencies will supply the card 

and take the fingerprints.) We propose 

that these tools would be applied to 

owners, authorized or delegated officials 

or managing employees of any provider 

or supplier within the ‘‘high’’ level of 

risk. We believe that criminal 

background checks will assist CMS in 

determining if an individual, such as an 

owner, authorized official, or delegated 

official, or managing employee of a 

high-risk provider or supplier type, 

submitted a complete and truthful 

Medicare enrollment application and 

whether an individual is eligible to 

enroll in the Medicare program or 

maintain Medicare billing privileges. 

We also believe that use of 

fingerprinting will help in verification 

of an individual’s identity and help 

resolve issues associated with identity 

theft as discussed below. We believe 

that this position is supported by 

testimony of the GAO before the 

subcommittees for Health and Oversight 

and Ways and Means within the House 

of Representatives on June 15, 2010, 

stating in part that ‘‘[c]hecking the 

background of providers at the time they 

apply to become Medicare providers is 

a crucial step to reduce the risk of 

enrolling providers intent on defrauding 

or abusing the program. In particular, 

we have recommended stricter scrutiny 

of enrollment processes for two types of 

providers whose services and items 

CMS has identified as especially 

vulnerable to improper payments— 

home health agencies (HHAs) and 

suppliers of durable medical equipment, 

prosthetics, orthotics, and supplies 

(DMEPOS).’’ 

In § 424.518(c)(1), we are proposing 

that, unless they are publicly traded on 

the NYSE or NASDAQ, newly enrolling 

HHAs and suppliers of DMEPOS are 

within the ‘‘high’’ risk level. Based on 

our experience and on work conducted 

by the HHS OIG and the GAO, and 

because we do not have the monitoring 

experience with newly enrolling 

DMEPOS suppliers or HHAs that we 

have with those currently enrolled, we 

have placed these providers and 

suppliers in the ‘‘high’’ risk category. We 

are especially concerned about newly 

enrolling HHAs and suppliers of 

DMEPOS because of the high number of 

HHAs and suppliers of DMEPOS 

already enrolled in the Medicare 

program and program vulnerabilities 

that these entities pose to the Medicare 

program. Below is a list of HHS OIG and 

GAO reports identifying home health 

agencies and suppliers of DMEPOS as 

posing an elevated risk to the Medicare 

program. 

• In a December 2009 report titled, 

‘‘Aberrant Medicare Home Health 

Outlier Payment Patterns in MiamiDade County and Other Geographic 

Areas in 2008’’ (OEI–04–08–00570), the 

HHS OIG recommended that CMS 

continue with efforts to strengthen 

enrollment standards for home health 

providers to prevent illegitimate HHAs 

from obtaining billing privileges. 

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• In a February 2009 report titled, 

‘‘Medicare: Improvements Needed to 

Address Improper Payments in Home 

Health’’ (GAO–09–185), the GAO 

concluded that the Medicare enrollment 

process does not routinely include 

verification of the criminal history of 

applicants, and without this information 

individuals and businesses that 

misrepresent their criminal histories or 

have a history of relevant convictions, 

such as for fraud, could be allowed to 

enter the Medicare program. In addition, 

the GAO recommended that CMS assess 

the feasibility of verifying the criminal 

history of all key officials named on the 

Medicare enrollment application. 

• In a February 2008 report titled, 

‘‘Los Angeles County Suppliers’ 

Compliance with Medicare Standards: 

Results from Unannounced Visits’’ 

(OEI–09–07–00550) and in a March 

2007 report titled, ‘‘South Florida 

Suppliers’ Compliance with Medicare 

Standards: Results from Unannounced 

Visits (OEI–03–07–00150), the HHS OIG 

recommended that CMS strengthen the 

Medicare DMEPOS supplier enrollment 

process and ensure that suppliers meet 

Medicare supplier standards. The HHS 

OIG provided several options to 

implement this recommendation 

including: (1) Conducting more 

unannounced site visits to suppliers; 

(2) performing more rigorous 

background checks on applicants; (3) 

assessing the fraud risk of suppliers; and 

(4) targeting, monitoring, and 

enforcement of high-risk suppliers. 

• In a September 2005 report titled, 

‘‘Medicare: More Effective Screening 

and Stronger Enrollment Standards 

Needed for Medical Equipment 

Suppliers’’ (GAO–05–656), the GAO 

concluded that, 

CMS is responsible for assuring that 

Medicare beneficiaries have access to the 

equipment, supplies, and services they need, 

and at the same time, for protecting the 

program from abusive billing and fraud. The 

supplier standards and NSC’s gate keeping 

activities were intended to provide assurance 

that potential suppliers are qualified and 

would comply with Medicare rules. 

However, there is overwhelming evidence— 

in the form of criminal convictions, 

revocations, and recoveries—that the 

enrollment processes and the standards are 

not strong enough to thoroughly protect the 

program from fraudulent entities. We believe 

that CMS must focus on strengthening the 

standards and overseeing the supplier 

enrollment process. It needs to better focus 

on ways to scrutinize suppliers to ensure that 

they are responsible businesses, analogous to 

Federal standards for evaluating potential 

contractors. 

We recognize that there may also be 

circumstances where a particular 

provider or supplier or group of 

providers and suppliers may pose a 

higher risk of fraud, waste, and abuse 

than the level identified for their 

category generally. Therefore, in 

§ 424.518(c)(3), we are proposing 

specific criteria that we would use to 

adjust the classification of a provider or 

supplier into a higher risk level than 

would generally apply to the category of 

provider or supplier, in order to address 

specific program vulnerabilities. We are 

soliciting comments on specific 

additional circumstances that might 

justify shifting a provider or supplier 

into a higher risk level than would 

generally apply to its category. We are 

also soliciting comment on the criteria 

that we could use to shift the risk level 

back down. 

In § 424.518(c)(3)(i), we are proposing 

to adjust a provider or supplier from the 

‘‘limited’’ or ‘‘moderate’’ risk level to the 

‘‘high’’ risk level when CMS has 

evidence from or concerning a 

physician or nonphysician practitioner 

that another individual is using their 

identity within the Medicare program. 

While our Medicare contractors have 

implemented procedures to reduce the 

possibility of identity theft and use of 

physician’s identity for the purposes of 

enrolling and fraudulently billing the 

Medicare program, we believe that we 

have a responsibility to all individuals 

participating in the Medicare program to 

take the necessary steps to investigate 

and resolve any allegations of identity 

theft. We do not intend to fingerprint 

the individual physician or other 

eligible professional who has been the 

victim of identity or provider number 

theft. 

In § 424.518(c)(3), we are proposing to 

adjust a provider or supplier from the 

‘‘limited’’ or ‘‘moderate’’ level of risk to 

the ‘‘high’’ level of risk based on: the 

provider or supplier having been placed 

on a previous payment suspension; or 

the provider or supplier has been 

excluded by the HHS OIG or had its 

Medicare billing privileges denied or 

revoked by a Medicare contractor within 

the previous 10 years and is attempting 

to establish additional Medicare billing 

privileges for a new practice location or 

by enrolling as a new provider or 

supplier. In addition, we believe that 

providers that have been terminated or 

otherwise precluded from billing 

Medicaid should be adjusted from the 

‘‘limited’’ or ‘‘moderate’’ category to the 

‘‘high’’ category. We believe that such 

providers or suppliers pose an elevated 

level of risk to the Medicare program. 

In § 424.518(c)(3)(iv), we are 

proposing to adjust providers or 

suppliers from the ‘‘limited’’ or 

‘‘moderate’’ level of risk to the ‘‘high’’ 

level of risk for 6 months after CMS lifts 

a temporary moratorium (see section 

II.C. of this proposed rule) applicable to 

such providers or suppliers. This would 

include providers and suppliers 

revalidating their enrollment if the 

moratorium is applicable to the provider 

or supplier type. We are seeking 

comments on criteria that would justify 

recategorization of providers or 

suppliers from the ‘‘limited’’ or 

‘‘moderate’’ category to the ‘‘high’’ 

category. We are also seeking comment 

on criteria appropriate to the 

recategorization from ‘‘high’’ to 

‘‘moderate’’ or ‘‘limited.’’ We are seeking 

comment on the applicability of 

geographical circumstances as a 

possible criterion for adjusting 

providers or suppliers from one risk 

level to another. We are also seeking 

comments on whether non-practitionerowned facilities and suppliers should be 

subject to a higher level of screening 

than their practitioner-owned 

counterparts or, whether there is an 

appropriate corresponding trigger for 

non-practitioner owned facilities and 

suppliers. We are seeking comment on 

whether providers and suppliers should 

be subject to higher levels of screening 

when the provider specialty does not 

match clinic type on an enrollment 

application. We are seeking comment on 

what objective conditions might support 

a broad category of circumstances or 

factors that would allow us to determine 

that provider screening levels of risk 

should be based on ‘‘other conditions or 

factors that CMS determines are 

necessary to combat fraud, waste, and 

abuse.’’ 

We are seeking public comment on 

the appropriateness of using criminal 

background checks in the provider 

enrollment screening process, including 

the instances when such background 

checks might be appropriate, the 

process of notifying a provider, supplier 

or individual that a criminal 

background check is to be performed, 

and the frequency of such checks. 

We are also seeking comment on the 

use of fingerprinting as a screening 

measure in our programs. We recognize 

that requesting, collecting, analyzing, 

and checking fingerprints from 

providers and suppliers are complex 

and sensitive undertakings that place 

certain burdens on affected individuals. 

There are privacy concerns and 

operational concerns about how to 

assure individual privacy, how to check 

fingerprints against appropriate law 

enforcement fingerprint databases, and 

how to store the results of the query of 

the data bases and also how to handle 

the subsequent analysis of the results. 

As a result, we are soliciting comments 

on how CMS or an approved contractor 

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4As noted previously, we believe that the 

reference to section 1886(j)(2) of the Act in section 

6401(b)(1) of the Affordable Care Act is a scrivener’s 

error, and that the Congress intended to refer 

instead to section 1866(j)(2) of the Act. 

should maintain and store fingerprints, 

what security processes and measures 

are needed to protect the privacy of 

individuals, and any other issues related 

to the use of fingerprints in the 

enrollment screening process. As 

indicated in other portions of the 

document, we think fingerprints would 

be useful in situations where a 

provider’s identity has been 

compromised or potentially 

compromised. We are interested in 

comments on this and other possible 

circumstances in which fingerprinting 

would be potentially useful in provider 

screening or other fraud prevention 

efforts. Our proposed screening 

approach contemplates requesting 

fingerprints from providers and 

suppliers categorized as presenting a 

‘‘high’’ risk of fraud. We are seeking 

comment on this requirement, the 

circumstances under which it is 

appropriate, limitations on its use and 

any alternatives to the proposed 

approach regarding fingerprints. Our 

proposed approach would allow denial 

of billing privileges to newly enrolled 

providers and suppliers and revocation 

of billing privileges for revalidating 

providers and suppliers if owners or 

officials of providers or suppliers refuse 

to submit fingerprints when requested 

to do so. We are seeking comments on 

this proposal including its 

appropriateness and utility as a fraud 

prevention tool. In addition, we are also 

seeking comment on the applicability 

and appropriateness of using, in 

addition to or in lieu of fingerprinting, 

other enhanced identification 

techniques and secure forms of 

identification including but not limited 

to other biological or biometric 

techniques, passports, United States 

Military identification, or Real ID 

drivers licenses. As technology and 

secure identification techniques change, 

the tools we use may change to reflect 

improvements or shifts in technology or 

in risk identification. We are seeking 

comment on the appropriate uses of 

these techniques 

We note that any physician or nonphysician practitioner or organizational 

provider or supplier that is denied 

enrollment into the Medicare program 

or whose Medicare billing privileges are 

revoked is afforded due process rights 

under § 405.874. 

To assist readers in understanding the 

type of providers and suppliers that we 

propose to include in the ‘‘high’’ risk 

level, we are providing the following 

table. 

TABLE 4—MEDICARE PROVIDERS AND SUPPLIERS DESIGNATED AS A ‘‘HIGH’’ CATEGORICAL RISK FOR SCREENING

PURPOSES

Provider/supplier category 

Prospective (newly enrolling) home health agencies and suppliers of DMEPOS. (Except that any such provider or supplier that is publicly traded 

on the NYSE or NASDAQ is considered ‘‘limited’’ risk.) 

The new screening procedures 

implemented pursuant to new section 

1866(j)(2) of the Act would be 

applicable to newly enrolling providers 

and suppliers, beginning on March 23, 

2011. These new screening procedures 

would also be applicable beginning on 

March 23, 2011 for those providers and 

suppliers currently enrolled in 

Medicare, Medicaid, and CHIP who 

revalidate their enrollment information. 

For Medicare, this will impact those 

providers and suppliers whose 

revalidation cycle results in revalidation 

occurring between March 23, 2011 and 

March 23, 2012. Finally, these new 

procedures would be applicable to 

currently enrolled Medicare, Medicaid, 

and CHIP providers and suppliers 

beginning on March 23, 2012, in 

accordance with section 1866(j)(2)(ii) of 

the Act. As such, some providers and 

suppliers may be required to revalidate 

their enrollment outside of their regular 

revalidation cycle. 

b. General Screening of Providers— 

Medicaid and CHIP 

Section 1902(ii)(1) of the Act requires 

that States comply with the process for 

screening providers established by the 

Secretary under section 1866(j)(2) of the 

Act 4. Section 2107(e)(1) of the Act 

provides that all provisions that apply 

to Medicaid under sections 1902(a)(77) 

and 1902(ii) of the Act apply to CHIP. 

We propose in new regulation § 457.990 

that all the provider screening, provider 

application, and moratorium regulations 

that apply to Medicaid providers will 

apply to providers that participate in 

CHIP. In addition, in this proposed rule, 

we refer to State Medicaid agencies as 

responsible for screening Medicaid-only 

providers. CHIP is often not 

administered by the Medicaid agency. 

Throughout this proposed rule, with 

respect to those instances, ‘‘State 

Medicaid agency’’ should be read as 

‘‘Children’s Health Insurance Program 

agency.’’ 

Because it would be inefficient and 

costly to require States to conduct the 

same screening activities that Medicare 

contractors perform for dually-enrolled 

providers, we are proposing that a State 

may rely on the results of the screening 

conducted by a Medicare contractor to 

meet the provider screening 

requirements under Medicaid and CHIP. 

Similarly, we propose in § 455.410 that 

State Medicaid agencies may rely on the 

results of the provider screening 

performed by their sister State Medicaid 

programs and CHIP. For Medicaid-only 

providers or CHIP-only providers, we 

are proposing that States follow the 

same screening procedures that CMS or 

its contractors follow with respect to 

Medicare providers and suppliers. 

As noted above, section 1902(ii)(1) of 

the Act requires that State screening 

methods follow those performed under 

the Medicare program. For the sake of 

brevity, we will not restate those 

methods verbatim. We propose that 

States follow the rationale that we have 

set forth for Medicare in section II.A.3. 

of this proposed rule, and that we use 

as the basis for § 455.450. For the types 

of providers that are recognized as a 

provider or supplier under the Medicare 

program, States will use the same risk 

level that is assigned to that category of 

provider by Medicare. For those 

Medicaid and CHIP provider types that 

are not recognized by Medicare, States 

will assess the risk posed by a particular 

provider or provider type. States should 

examine their programs to identify 

specific providers or provider types that 

may present increased risks of fraud, 

waste or abuse to their Medicaid 

programs or CHIP. States are uniquely 

qualified to understand issues involved 

with balancing beneficiaries’ access to 

medical assistance and ensuring the 

fiscal integrity of the Medicaid programs 

and CHIP. However, where applicable, 

we expect that States will assess the risk 

of fraud, waste, and abuse using similar 

criteria to those used in Medicare. For 

example, physicians and non-physician 

practitioners, medical groups and 

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clinics that are State-licensed or Stateregulated would generally be 

categorized as limited risk, as would 

providers publicly traded on the NYSE 

or NASDAQ. Those provider types that 

are generally highly dependent on 

Medicare, Medicaid and CHIP to pay 

salaries and other operating expenses 

and which are not subject to additional 

government or professional oversight 

would be considered moderate risk, and 

those provider types identified by the 

State as being especially vulnerable to 

improper payments would be 

considered high risk. States will then 

screen the provider using the screening 

tools applicable to that risk assigned. 

However, we are not proposing to limit 

or otherwise preclude the ability of 

States to engage in provider screening 

activities beyond those required under 

section 1866(j)(2) of the Act, including, 

but not limited to, assigning a particular 

provider type to a higher risk level than 

the level assigned by Medicare. 

As with the proposed screening 

provisions for Medicare, we are 

soliciting comments on the applicability 

of these proposals for Medicaid as well. 

We are seeking comment on the 

proposed assignment of specific 

provider types to established risk 

categories, including whether such 

assignments should be released 

publicly, whether they should be 

reconsidered and updated according to 

an established schedule, and what 

criteria should be considered in making 

such assignments. 

Based on the level of risk assigned to 

a provider or provider type, we propose 

that States conduct the following 

screenings: 

TABLE 5—CATEGORY OF RISK AND REQUIRED SCREENING FOR MEDICAID AND CHIP PROVIDERS

Type of Screening Required Limited Moderate High 

Verification of any provider/supplier-specific requirements established by Medicaid/CHIP ................... X X X 

Conduct license verifications (may include licensure checks across State lines) .................................. X X X 

Database Checks (to verify SSN and NPI, the NPDB, licensure, a HHS OIG exclusion, taxpayer 

identification number, tax delinquency, death of individual practitioner, and persons with an ownership or control interest or who are agents or managing employees of the provider) ......................... X X X 

Unscheduled or Unannounced Site Visits ............................................................................................... .................... X X 

Criminal Background Check .................................................................................................................... .................... .................... X 

Fingerprinting ........................................................................................................................................... .................... .................... X 

All States do not routinely require 

persons with an ownership or control 

interest or who are agents or managing 

employees of the provider to submit 

SSNs or dates of birth (DOBs). Without 

such critical personal identifiers, it is 

difficult to be certain of the identity of 

persons with an ownership or control 

interest or who are agents or managing 

employees of the provider, and it may 

be difficult for States to conduct the 

screening proposed under this rule. 

Accordingly, and to be consistent with 

Medicare requirements, pursuant to our 

general rulemaking authority under 

section 1102 of the Act, we propose in 

§ 455.104 to require that States will 

require submission of SSNs and DOBs 

for all persons with an ownership or 

control interest in a provider. In 

addition to the amendment to § 455.104, 

we are proposing to revise that section 

for the sake of clarity both for the 

disclosing entities’ provision and the 

States’ collection of the disclosures. We 

recognize that there may be privacy 

concerns raised by the submission of 

this personally identifiable information 

as well as concerns about how the States 

will assure individual privacy as 

appropriate; however, we believe this 

personally identifiable information is 

necessary for States to adequately 

conduct the provider screening 

activities under this proposed rule. We 

are seeking comment specifically on this 

issue. 

Although the level of screening may 

vary depending on the risk of fraud, 

waste or abuse the provider represents 

to the Medicaid program or CHIP, under 

section 1866(j)(2)(B)(i) of the Act, all 

providers would be subject to licensure 

checks. Therefore, we are proposing that 

States be required to verify the status of 

a provider’s license by the State of 

issuance and whether there are any 

current limitations on that license. 

As stated above, pursuant to section 

2107(e)(1) of the Act, all provisions that 

apply to Medicaid under sections 

1902(a)(77) and 1902(ii) of the Act apply 

to CHIP. Because we are proposing a 

new regulation in Part 457 under which 

all provider screening requirements that 

apply to Medicaid providers will apply 

to providers that participate in CHIP, 

these requirements for provider 

screening and assigning of categories of 

risk of fraud, waste, or abuse, as well as 

verification of licensure, under 

§ 455.412 and § 455.450 will apply in 

CHIP. 

1. Database Checks—Medicaid and 

CHIP 

States employ several database 

checks, including database checks with 

the Social Security Administration and 

the NPPES, to confirm the identity of an 

individual or to ensure that a person 

with an ownership or control interest is 

eligible to participate in the Medicaid 

program. 

A critical element of Medicaid 

program integrity is the assurance that 

persons with an ownership or control 

interest or who are agents or managing 

employees of the provider do not 

receive payments when excluded or 

debarred from such payments. 

Accordingly, in § 455.436, we propose 

that States be required to screen all 

persons disclosed under § 455.104 

against the OIG’s LEIE and the General 

Services Administration’s EPLS. We 

propose that States be required to 

conduct such screenings upon initial 

enrollment and monthly thereafter for as 

long as that provider is enrolled in the 

Medicaid program. 

We also propose at § 455.450, as well 

as § 455.436, that database checks be 

conducted on all providers on a preand post-enrollment basis to ensure that 

providers continue to meet the 

enrollment criteria for their provider 

type. 

As stated above, pursuant to section 

2107(e)(1) of the Act, all provisions that 

apply to Medicaid under sections 

1902(a)(77) and 1902(ii) of the Act apply 

to CHIP. Because we are proposing a 

new regulation in Part 457 under which 

all provider screening requirements that 

apply to Medicaid providers will apply 

to providers that participate in CHIP, 

this requirement for database checks 

under § 455.436 will apply in CHIP. 

2. Unscheduled and Unannounced Site 

Visits—Medicaid and CHIP 

Section 1866(j)(2)(B)(ii)(III) of the Act 

states that the Secretary, based on the 

level of fraud, waste, and abuse, may 

conduct unscheduled and unannounced 

site visits, including pre-enrollment site 

visits, for prospective providers and 

those providers already enrolled in the 

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Medicare and Medicaid programs and 

CHIP. 

Some States already require site visits, 

often for provider categories at 

increased risk of fraud, waste or abuse 

such as home health and nonemergency transportation. According to 

FY 08 State Program Integrity 

Assessment (SPIA) data, at least 16 

States report that they perform some 

type of site visits. However, such efforts 

vary widely across the country and are 

subject to budget shortfalls. 

We are also proposing to require in 

§ 455.432 and § 455.450(b) that States 

must conduct pre-enrollment and postenrollment site visits for those 

categories of providers the State 

designates as being in the ‘‘moderate’’ or 

‘‘high’’ level of risk. 

Further, in § 455.432, pursuant to our 

general rulemaking authority under 

section 1102 of the Act, we are 

proposing that any enrolled provider 

must permit the State Medicaid agency 

and CMS, including CMS’ agents or its 

designated contractors, to conduct 

unannounced on-site inspections to 

ensure that the provider is operational 

at any and all provider locations. 

We maintain that site visits are 

essential in determining whether a 

provider is operational at the practice 

location found on the Medicaid 

enrollment agreement. We expect these 

requirements to increase the number of 

both pre-enrollment and postenrollment site visits for those provider 

types that pose an increased financial 

risk of fraud, waste, or abuse to the 

Medicaid program. 

We propose that failure to permit 

access for site visits would be a basis for 

denial or termination of Medicaid 

enrollment as specified in § 455.416. 

As stated above, pursuant to section 

2107(e)(1) of the Act, all provisions that 

apply to Medicaid under sections 

1902(a)(77) and 1902(ii) of the Act apply 

to CHIP. Because we are proposing a 

new regulation in Part 457 under which 

all provider screening requirements that 

apply to Medicaid providers will apply 

to providers that participate in CHIP, 

this requirement for site visits under 

§ 455.432 will apply in CHIP. 

3. Provider Enrollment and Provider 

Termination—Medicaid and CHIP 

States may refuse to enroll or may 

terminate the enrollment agreement of 

providers for a number of reasons 

related to a provider’s status or history, 

including an exclusion from Medicare, 

Medicaid, or any other Federal health 

care program, conviction of a criminal 

offense related to Medicare or Medicaid, 

or submission of false or misleading 

information on the Medicaid enrollment 

application. Failure to provide 

disclosures is another reason for 

termination from participation in the 

Medicaid program. 

Federal regulations beginning at 

§ 455.100 require certain disclosures by 

providers to States before enrollment. 

States require additional disclosures 

prior to enrollment. Some States require 

periodic re-enrollment and disclosure at 

that time. However, States vary in the 

frequency of such re-disclosures. 

Providers are also inconsistent in 

keeping their enrollment information 

current, including items as elementary 

as their address. 

We are proposing, at § 455.414, 

pursuant to our general rulemaking 

authority under section 1102 of the Act, 

that all providers undergo screening 

pursuant to the procedures outlined 

herein at least once every 5 years, 

consistent with current Medicare 

requirements for revalidation. 

In § 455.416, we propose to establish 

termination provisions, requiring States 

to deny or terminate the enrollment of 

providers: (1) Where any person with an 

ownership or control interest or who is 

an agent or managing employee of the 

provider does not submit timely and 

accurate disclosure information or fails 

to cooperate with all required screening 

methods; (2) that are terminated on or 

after January 1, 2011 by Medicare or any 

other Medicaid program or CHIP (see 

section II.F. of this proposed rule); and 

(3) where the provider or any person 

with an ownership or control interest or 

who is an agent or managing employee 

of the provider fails to submit sets of 

fingerprints within 30 days of a State 

agency or CMS request. We propose to 

permit States to deny enrollment to a 

provider if the provider has falsified any 

information on an application if CMS or 

the State cannot verify the identity of 

the applicant. We also propose to 

require States to deny enrollment to 

providers, unless States determine in 

writing that denial of enrollment is not 

in the best interests of the State’s 

Medicaid program, in these 

circumstances: (1) The provider or a 

person with an ownership or control 

interest or who is an agent or managing 

employee of the provider fails to 

provide accurate information; (2) the 

provider fails to provide access to the 

provider’s locations for site visits, or (3) 

the provider, or any person with an 

ownership or control interest, or who is 

an agent or managing employee of the 

provider has been convicted of a 

criminal offense related to that person’s 

involvement in Medicare, Medicaid, or 

CHIP in the last ten years. We believe 

that providers can significantly reduce 

the likelihood of fraud, waste or abuse 

by providing and maintaining timely 

and accurate Medicaid enrollment 

information. We believe the Medicaid 

program will be better protected by not 

allowing persons with serious criminal 

offenses related to Medicare, Medicaid, 

and CHIP to serve as providers. 

We propose at § 455.416 that the State 

be allowed to deny an initial enrollment 

application or agreement submitted by a 

provider or terminate the Medicaid 

enrollment of a provider, including an 

individual physician or non-physician 

practitioner, if CMS or the State is not 

able to verify an individual’s identity, 

eligibility to participate in the Medicaid 

program, or determines that information 

on the Medicaid enrollment application 

was falsified. 

In § 455.420, we propose to require 

that any providers whose enrollment 

has been denied or terminated must 

undergo screening and pay all 

appropriate application fees again to 

enroll or re-enroll as a Medicaid 

provider. 

We propose at § 455.422 that in the 

event of termination under § 455.416, 

the State Medicaid agency must give a 

provider any appeal rights available 

under State law or rule. 

As stated above, pursuant to section 

2107(e)(1) of the Act, all provisions that 

apply to Medicaid under sections 

1902(a)(77) and 1902(ii) of the Act apply 

to CHIP. Because we are proposing a 

new regulation in Part 457 under which 

all provider screening requirements that 

apply to Medicaid providers will apply 

to providers that participate in CHIP, 

these requirements for provider 

enrollment, provider termination, and 

provider appeal rights under §§ 455.414, 

455.416, 455.420, and 455.422 will 

apply in CHIP. 

4. Criminal Background Checks and 

Fingerprinting—Medicaid and CHIP 

Section 1866(j)(2)(B)(ii)(II) of the Act 

allows the Secretary to use 

fingerprinting during the screening 

process; and while several States have 

implemented procedures to require 

fingerprinting of physicians and nonphysician practitioners as a condition of 

licensure, we maintain that if a State 

designates a provider as within the 

‘‘high’’ level of risk as described 

previously, each person with an 

ownership or control interest of that 

provider or who is an agent or managing 

employee of the provider should be 

subject to fingerprinting. 

We maintain that adding 

fingerprinting to State screening 

processes for those providers that pose 

the greatest risk to the Medicaid 

program will allow CMS and the State 

to: (1) Verify The individual’s identity; 

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(2) determine whether the individual is 

eligible is participate in the Medicaid 

program; (3) ensure the validity of 

information collected during the 

Medicaid enrollment process; and (4) 

prevent and detect identity theft. 

Ensuring the identity of ‘‘high’’ risk 

Medicaid providers through 

fingerprinting protects both the 

Medicaid program and providers whose 

identities might otherwise be stolen as 

part of a scheme to defraud Medicaid. 

In addition, while § 455.106 requires 

providers to submit information to the 

Medicaid agency on criminal 

convictions related to Medicare and 

Medicaid and title XX, current 

regulations do not require States to 

verify data submitted as part of the 

Medicaid enrollment application and 

they are sometimes not able to verify 

information that was purposefully 

omitted or changed in a manner to 

obfuscate any previous criminal 

activity. According to fiscal year (FY) 

2008 SPIA data, at least 20 States report 

that they conduct some type of criminal 

background check as part of their 

Medicaid enrollment practices. 

Elements of a robust criminal 

background check could include, but 

are not necessarily limited to: (1) 

Conducting national and State criminal 

records checks; and (2) requiring 

submission of fingerprints to be used for 

conducting the criminal records check 

and verification of identity. 

We are proposing in § 455.434 and 

§ 455.450 for those categories of 

providers that a State Medicaid agency 

determines is within the ‘‘high’’ level of 

risk, the State must: (1) Conduct a 

criminal background check of each 

person with an ownership or control 

interest or who is an agent or managing 

employee of the provider, and (2) 

require that each person with an 

ownership or control interest or who is 

an agent or managing employee of the 

provider to submit his or her 

fingerprints. While the FD–258 

fingerprint card is recognized nationally 

and can be found at local, county, or 

State law enforcement agencies where, 

for a fee, agencies will supply the card 

and take the fingerprints, the State 

Medicaid agency has the discretion to 

determine the form and manner of 

submission of fingerprints. 

At § 455.434, we propose that the 

State Medicaid agency must require 

providers or any person with an 

ownership or control interest or who is 

an agent or managing employee of the 

provider to submit fingerprints in 

response to a State’s or CMS’ request. 

We are seeking public comment on 

the appropriateness of using criminal 

background checks in the provider 

enrollment screening process, including 

the instances when such background 

checks might be appropriate, the 

process of notifying a provider or 

individual that a criminal background 

check is to be performed, and the 

frequency of such checks. 

We are also seeking comment on the 

use of fingerprinting as a screening 

measure. We recognize that requesting, 

collecting, analyzing, and checking 

fingerprints from providers are complex 

and sensitive undertakings that place 

certain burdens on affected individuals. 

There are privacy concerns and 

operational concerns about how to 

assure individual privacy, how to check 

fingerprints against appropriate law 

enforcement fingerprint databases, and 

how to store the results of the query of 

the databases and also how to handle 

the subsequent analysis of the results. 

As a result, we are soliciting comments 

on how CMS or a State Medicaid agency 

should maintain and store fingerprints, 

what security processes and measures 

are needed to protect the privacy of 

individuals, and any other issues related 

to the use of fingerprints in the 

enrollment screening process. As 

indicated in other portions of the 

document, we think fingerprints would 

be useful in situations where a 

provider’s identity has been 

compromised or potentially 

compromised. We are interested in 

comments on this and other possible 

circumstances in which fingerprinting 

would be potentially useful in provider 

screening or other fraud prevention 

efforts. Our proposed screening 

approach contemplates requesting 

fingerprints from providers categorized 

as presenting a ‘‘high’’ risk of fraud. We 

are seeking comment on whether this is 

an appropriate requirement, the 

circumstances under which it might be 

appropriate or inappropriate, and any 

alternatives to the proposed approach 

regarding fingerprints. Our proposed 

approach would allow States to deny 

enrollment to newly-enrolling providers 

and to terminate existing providers if 

individuals who have an ownership or 

control interest in the provider or who 

are agents or managing employees of the 

provider refuse to submit fingerprints 

when requested to do so. We are seeking 

comments on this proposal including its 

appropriateness and utility as a fraud 

prevention tool. 

In addition, we are also seeking 

comment on the applicability and 

appropriateness of using, in addition to 

or in lieu of fingerprinting, other 

enhanced identification techniques and 

secure forms of identification including 

but not limited to passports, United 

States Military identification, or Real ID 

drivers licenses. As technology and 

secure identification techniques change, 

the tools we or State Medicaid agencies 

use may change to reflect changes in 

technology or in risk identification. We 

are seeking comment on the appropriate 

uses of these techniques and the ways 

in which we should notify the public 

about any tools CMS or State Medicaid 

agencies would adopt. We also welcome 

comments on whether there should be 

differences allowed between Federal 

and State techniques, or among States, 

and if so, on what basis. 

As stated above, pursuant to section 

2107(e)(1) of the Act, all provisions that 

apply to Medicaid under sections 

1902(a)(77) and 1902(ii) of the Act apply 

to CHIP. Because we are proposing a 

new regulation in Part 457 under which 

all provider screening requirements that 

apply to Medicaid providers will apply 

to providers that participate in CHIP, 

these requirements for criminal 

background checks and fingerprinting 

under § 455.434 will apply in CHIP. 

5. Deactivation and Reactivation of 

Provider Enrollment—Medicaid and 

CHIP 

Section 1902(ii)(1) of the Act requires 

the screening of Medicaid providers to 

ensure they are eligible to provide 

services and receive payments. While 

the ACA does not specifically require it, 

we maintain that it is important to the 

protection of the Medicaid program and 

consistent with longstanding Medicare 

requirements to identify and deactivate 

the enrollment of inactive Medicaid 

providers. 

Accordingly, in § 455.418, we propose 

that any Medicaid provider that has not 

submitted any claims or made a referral 

that resulted in a Medicaid claim for a 

period of 12 consecutive months must 

have its Medicaid provider enrollment 

deactivated. Further, we propose that 

any such provider wishing to be 

reinstated to the Medicaid program 

must first undergo all disclosures and 

screening required of any other 

applicant. In addition, the provider 

must pay any associated application 

fees under § 455.426. 

As stated above, pursuant to section 

2107(e)(1) of the Act, all provisions that 

apply to Medicaid under sections 

1902(a)(77) and 1902(ii) of the Act apply 

to CHIP. Because we are proposing a 

new regulation in Part 457 under which 

all provider screening requirements that 

apply to Medicaid providers will apply 

to providers that participate in CHIP, 

this requirement for deactivation of 

provider enrollment under § 455.418 

will apply in CHIP. 

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6. Enrollment and NPI of Ordering or 

Referring Providers—Medicaid and 

CHIP 

Section 1902(ii)(7) of the Act provides 

that States must require all ordering or 

referring physicians or other 

professionals to be enrolled under a 

Medicaid State plan or waiver of the 

plan as a participating provider. 

Further, the NPI of such ordering or 

referring provider or other professional 

must be on any Medicaid claim for 

payment based on an order or referral 

from that physician or other 

professional. 

Providers and suppliers under 

Medicare and providers in the Medicaid 

program are already subject to the 

requirement that the NPI be on 

applications to enroll and on all claims 

for payment, pursuant to section 6402(a) 

of the ACA, amending section 1128J of 

the Act, and under § 424.506, § 424.507, 

and § 431.107, as amended by the May 

5, 2010 interim final rule with comment 

(75 FR 24437). 

In § 455.410, we propose that any 

physician or other professional ordering 

or referring services for Medicaid 

beneficiaries must be enrolled as a 

participating provider by the State in 

the Medicaid program. This applies 

equally to fee-for-service providers or 

MCE network-level providers. 

Additionally, we propose to amend 

§ 438.6 to require that States must 

include in their contracts with MCEs a 

requirement that all ordering and 

referring network-level MCE providers 

be enrolled in the Medicaid program, as 

are fee-for-service providers, and thus 

are screened directly by the State. 

Although the NPI requirements in 

section 6402(a) of the ACA did not 

extend to CHIP providers, section 6401 

of the ACA does apply equally to CHIP, 

and the proposed requirement herein for 

ordering and referring physicians or 

other professionals under the Medicaid 

program would apply equally under 

CHIP. 

In addition, in § 455.440, we propose 

that all claims for payment for services 

ordered or referred by such a physician 

or other professional must include the 

NPI of the ordering or referring 

physician or other professional. This 

applies equally to fee-for-service 

providers or MCE network-level 

providers. 

It is essential that all such claims have 

the ordering or referring NPI and that 

the State has properly screened the 

ordering or referring physician or other 

professional. Without such assurances, 

it is difficult for CMS or the State to 

determine the validity of individual 

claims for payment or to conduct 

effective data mining to identify 

patterns of fraud, waste, and abuse. 

As stated above, pursuant to section 

2107(e)(1) of the Act, all provisions that 

apply to Medicaid under sections 

1902(a)(77) and 1902(ii) of the Act apply 

to CHIP. Because we are proposing a 

new regulation in Part 457 under which 

all provider screening requirements that 

apply to Medicaid providers will apply 

to providers that participate in CHIP, 

these requirements for provider 

enrollment and NPI under §§ 455.410 

and 455.440 will apply in CHIP. 

7. Other State Screening—Medicaid and 

CHIP 

Section 1902(ii)(8) of the Act 

establishes that States are not limited in 

their abilities to engage in provider 

screening beyond those required by the 

Secretary. Accordingly, in § 455.452, we 

propose that States may utilize 

additional screening methods, in 

accordance with their approved State 

plan. 

As stated above, pursuant to section 

2107(e)(1) of the Act, all provisions that 

apply to Medicaid under sections 

1902(a)(77) and 1902(ii) of the Act apply 

to CHIP. Because we are proposing a 

new regulation in Part 457 under which 

all provider screening requirements that 

apply to Medicaid providers will apply 

to providers that participate in CHIP, 

this requirement for other State 

screening under § 455.452 will apply in 

CHIP. 

B. Application Fee—Medicare, 

Medicaid, and CHIP 

1. Statutory Changes 

Section 6401(a) of the ACA, as 

amended by section 10603 of the ACA, 

amended section 1866(j) of the Act and 

requires the Secretary of DHHS to 

impose a fee on each ‘‘institutional 

provider of medical or other items or 

services or supplier,’’ The fee would be 

used by the Secretary to cover the cost 

of screening and to carry out the 

screening and other program integrity 

efforts under section 1866(j) and section 

1128J of the Act. Since section 10603 of 

the ACA excludes eligible professionals, 

such as physicians and nurse 

practitioners, from paying an enrollment 

application fee, we maintain that an 

‘‘institutional provider of medical or 

other items or services or supplier’’ 

would be any health care provider that 

bills Medicare, Medicaid, or CHIP on a 

fee-for-service basis, with the exception 

of Part B medical groups or clinics and 

physician and nonphysician 

practitioners who submit the CMS 855I 

to enroll in Medicare. 

Section 1866(j)(2)(D)(i) of the Act 

states that the new screening procedures 

implemented pursuant to section 6401 

of the ACA would be applicable to 

newly enrolling providers, suppliers, 

and eligible professionals who are not 

enrolled in Medicare, Medicaid, or CHIP 

by March 23, 2011. Accordingly, the 

enrollment application fees for newly 

enrolling institutional providers and 

suppliers would be applicable on that 

date as well. 

Section 1866(j)(2)(D)(ii) of the Act 

states that the new screening procedures 

will apply to currently enrolled 

Medicare, Medicaid, and CHIP 

providers, suppliers, and eligible 

professionals beginning on March 23, 

2012. However, because the new 

procedures will be applicable beginning 

on March 23, 2011 for those providers, 

suppliers, (and eligible professionals) 

currently enrolled in Medicare, 

Medicaid and CHIP that revalidate their 

enrollment information, we will begin 

collecting the application fee for those 

revalidating entities for all revalidation 

activities beginning after March 23, 

2011. 

Section 1866(j)(2)(C)(ii) of the Act 

permits the Secretary, acting through 

CMS, to, on a case-by-case basis, exempt 

a provider or supplier from the 

imposition of an application fee if CMS 

determines that the imposition of the 

enrollment application fee would result 

in a hardship. It also permits the 

Secretary to waive the enrollment 

application fee for Medicaid providers 

for whom the State demonstrates that 

imposition of the fee would impede 

Medicaid beneficiaries’ access to care. 

Section 1866(j)(2)(C)(i)(I) of the Act 

establishes a $500 application fee for 

providers and suppliers in 2010. For 

2011 and each subsequent year, the 

amount of the fee would be the amount 

for the preceding year, adjusted by the 

percentage change in the consumer 

price index for all urban consumers (all 

items; United States city average), (CPI– 

U) for the 12-month period ending with 

June of the previous year. To ease the 

administration of the fee, if the 

adjustment sets the fee at an uneven 

dollar amount, CMS will round the fee 

to the nearest whole dollar amount. 

2. Proposed Provisions 

In § 424.502, we also propose to 

establish a definition for an 

‘‘institutional provider’’ as it relates to 

the submission of an application fee. We 

propose that an ‘‘institutional provider’’ 

means any provider or supplier that 

submits a paper Medicare enrollment 

application using the CMS–855A, CMS– 

855B (but not physician and 

nonphysician practitioner 

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organizations), or CMS–855S or 

associated Internet-based PECOS 

enrollment application. 

For purposes of Medicare, Medicaid, 

and CHIP, we interpret the statutory 

reference to ‘‘institutional provider[s] of 

medical or other items or services or 

supplier’’ to include, but not be limited 

to: the range of ambulance service 

suppliers; ASCs; CMHCs; CORFs; 

DMEPOS suppliers; ESRD facilities; 

FQHCs; histocompatibility laboratories; 

HHAs; hospices; hospitals, including 

but not limited to acute inpatient 

facilities, inpatient psychiatric facilities 

(IPFs), inpatient rehabilitation facilities 

(IRFs), and physician-owned specialty 

hospitals; CAHs; independent clinical 

laboratories; IDTFs; mammography 

centers; mass immunizers (roster 

billers); OPOs; outpatient physical 

therapy/occupational therapy/speech 

pathology services, portable x-ray 

suppliers; SNFs; slide preparation 

facilities; radiation therapy centers; 

RNHCIs; and RHCs. 

In addition to the providers and 

suppliers listed above, for purposes of 

Medicaid and CHIP, we propose that a 

State may impose the application fee on 

any institutional entity that bills the 

State Medicaid program or CHIP on a 

fee-for-service basis, such as: Personal 

care agencies, non-emergency 

transportation providers, and residential 

treatment centers, in accordance with 

the approved Medicaid or CHIP State 

plan. 

We propose that an application fee 

will not be required from an eligible 

professional who reassigns Medicare 

benefits to another individual or 

organization, since it would not create 

a new enrollment of an institutional 

provider or supplier that would result in 

an application fee. In addition, we 

propose that in no case would the 

application fee be required from any 

individual physician or Part B medical 

group/clinic. 

We propose that an application fee 

will be required with the submission of 

an initial enrollment application, the 

application to establish a new practice 

location, as a part of revalidation, or in 

response to a Medicare contractor 

revalidation request. 

We are proposing that prospective 

institutional providers and suppliers as 

well as currently enrolled providers 

who are re-enrolling or revalidating 

their enrollment in Medicare must 

submit the applicable application fee or 

submit a request for a hardship 

exception to the application fee at the 

time of filing a Medicare enrollment 

application on or after March 23, 2011 

in the case of prospective providers or 

suppliers, and in the case of 

revalidations. We believe that it is 

essential that a Medicare contractor be 

able to receive and deposit the 

application fee or consider the 

institutional provider’s request for a 

hardship exception prior to initiating an 

application review. Therefore, Medicare 

contractors would not begin processing 

an application for either a new provider 

or supplier, or for a provider or supplier 

that is currently enrolled, until the 

enrollment application fee is received 

and is credited to the United States 

Treasury. 

The fee would accompany the 

certification statement that the provider 

or supplier signs, dates, and mails to the 

Medicare contractor if the provider or 

supplier uses Internet-based PECOS to 

enroll or revalidate. The fee would 

accompany the paper CMS–855 

provider enrollment application if the 

provider or supplier enrolls or 

revalidates by paper. Because the 

statutory provisions are effective for 

newly enrolling providers and suppliers 

effective March 23, 2011 institutional 

providers and suppliers will not be 

required to furnish the application fee 

with applications submitted before that 

date. However, because the ACA 

provides that the new procedures will 

be applicable beginning on March 23, 

2011 for those providers and suppliers, 

(and eligible professionals) currently 

enrolled in Medicare, Medicaid, and 

CHIP that revalidate their enrollment 

information, CMS will begin collecting 

the application fee for those revalidating 

entities for all revalidation activities 

beginning after March 23, 2011. We will 

not collect the fee from individual 

physicians and eligible professionals. 

We propose that the Medicare 

contractor reject and return to the 

provider or supplier an initial 

enrollment application submitted by a 

provider or supplier, without further 

review as to whether the provider or 

supplier qualifies to enroll in the 

Medicare program, when the Medicare 

enrollment application or the 

Certification Statement is received by 

the Medicare contractor and the 

provider or supplier did not include a 

request for hardship exception to the 

application fee, did not include the 

application fee or the appropriate 

number of application fees, if 

applicable. We do not believe that it is 

appropriate for a Medicare contractor to 

begin the application review process 

without first having received the 

application fee. 

We propose that the Medicare 

contractor reject any initial enrollment 

applications submitted after March 23, 

2011, if a provider or a supplier did not 

furnish the application fee at the time of 

filing, using § 424.525(a)(3) as the legal 

basis for the rejection. 

In § 424.525(a)(3), we propose adding 

a new reason why a Medicare contractor 

could reject an initial enrollment 

application or an application to 

establish a new practice location. 

Specifically, we are proposing a new 

§ 424.525(a)(3) to state, ‘‘The prospective 

institutional provider or supplier does 

not submit an application fee in the 

appropriate amount or a hardship 

exception request with the Medicare 

enrollment application at the time of 

filing.’’ 

We also believe that a Medicare 

contractor should be allowed to reject 

an initial enrollment application 

received from a provider or supplier on 

or after March 23, 2011, using 

§ 424.525(a)(1) as the legal basis, if, for 

any reason, CMS or the Medicare 

contractor is not able to deposit the full 

application amount into a governmentowned account and credited to the U.S. 

Treasury. In the case where a provider 

or supplier did not submit the 

application fee because they requested a 

hardship exception that is not granted, 

a provider or supplier has 30 days from 

the date on which the contractor sends 

notice of the rejection of the hardship 

exception request to send in the 

required application fee and application 

forms. 

In § 424.535, we propose adding a 

new reason why a Medicare contractor 

can revoke Medicare billing privileges. 

Specifically, we are proposing a new 

§ 424.535(a)(6)(i) to state that billing 

privileges may be revoked if ‘‘An 

institutional provider does not submit 

an application fee or hardship exception 

request that meets the requirements set 

forth in § 424.514 with the Medicare 

revalidation application or the hardship 

exception is not granted.’’ 

In addition, in § 424.535, we are 

proposing a new § 424.535(a)(6)(ii) to 

state that billing privileges shall be 

revoked if ‘‘The Medicare contractor is 

not able to deposit the full application 

amount into a government-owned 

account or the funds are not able to be 

credited to the U.S. Treasury.’’ 

In § 424.514(b), we are proposing that 

currently enrolled institutional 

providers and suppliers that are subject 

to CMS revalidation efforts must submit 

the applicable application fee or submit 

a request for a hardship exception to the 

application fee at the time of filing a 

Medicare enrollment application on or 

after March 23, 2011. 

In § 424.514(d)(2)(iii), we propose that 

institutional providers and suppliers 

submit the application fee with each 

initial application, application to 

establish a new practice location, or 

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with the submission of an application in 

response to a Medicare contractor 

revalidation request. 

In § 424.514(d)(2), we propose that the 

application fee be based on the amount 

calculated by CMS using the CPI–U as 

of June 30 of the previous year and 

adjusted annually to be effective January 

1st of the following year. The 

application fee for a given year will be 

effective from January 1 to December 31 

of a calendar year. 

In § 424.514(d)(2)(v), we propose that 

the application fee be non-refundable. 

Neither the Federal government, its 

Medicare contractors, State Medicaid 

agencies or CHIP should be liable for 

reimbursement of the application fee to 

the provider or supplier if the 

application fee has been received by the 

Medicare contractor and deposited into 

a Government-owned account and, later, 

during the course of verifying, 

validating, and processing the 

information in the enrollment 

application, CMS or its Medicare 

contractor appropriately denies the 

enrollment application. Appropriate 

denial requires a substantive reason and 

applications will not be denied over 

inconsequential errors or omissions or 

over errors or omissions corrected 

timely. 

In § 424.514(d)(4)(vi), we propose that 

a provider or supplier must submit a 

new application fee if the provider or 

supplier resubmits a Medicare 

enrollment application because a 

previously-submitted enrollment 

application was appropriately denied or 

rejected. In some cases, a rejected 

application would be returned to the 

provider or supplier along with the 

application fee; in other cases, the 

application would be denied and the 

application fee retained by the Federal 

government because the processing of 

the application would have already 

begun. In those latter cases, CMS funds 

would have been expended for some or 

all of the required screening involved in 

processing the application. For example, 

if a home health agency enrollment 

application is rejected because the 

enrollment application, or the 

certification statement generated by 

Internet-based PECOS, was not signed, 

the enrollment application would be 

rejected and it and the check for the 

application fee would both be returned 

to the home health agency. If a home 

health agency enrollment application is 

denied based on non-compliance with a 

provider enrollment requirement or 

because the HHA did not meet the 

conditions of participation for its 

provider type, the enrollment would be 

denied and the application fee would be 

retained by the Federal government. If 

the HHA wishes to send a new 

enrollment application, it would have to 

include another application fee with 

that new enrollment application. 

Similarly, we propose that a provider or 

supplier would be required to submit to 

the Medicare contractor a new 

application fee with a subsequent 

enrollment application if, among other 

things, the previous enrollment 

application was rejected because the 

provider or supplier did not timely 

furnish the Medicare contractor with the 

applicable supporting documentation or 

information necessary to complete its 

review and verification of the previous 

enrollment application. 

In § 424.514(d)(6)(vii), we propose 

that the application fee must be able to 

be deposited into a government-owned 

account. 

Because we are proposing that a State 

may rely on the results of the screening 

conducted by the Medicare contractor to 

meet the screening requirements for 

participation in a State Medicaid 

program or CHIP, we propose that, for 

dually participating providers, the 

application fee would be imposed at the 

time of the Medicare enrollment 

application, consistent with the 

procedures described above. 

Additionally, because the purpose of the 

application fee is to, in part, cover the 

costs of conducting the provider and 

supplier screening activities, we 

propose that a provider or supplier 

enrolled in more than one program (that 

is, Medicare and Medicaid or CHIP, or 

all three programs) would only be 

subject to the application fee under 

Medicare and that the fee would cover 

screening activities for enrollment in all 

programs. 

Section 1866(j)(2)(C)(iii) of the Act 

also permits the Secretary to grant, on 

a case-by-case basis, exceptions to the 

application fee for institutional 

providers and suppliers enrolled in the 

Medicare and Medicaid programs and 

CHIP if the Secretary determines that 

imposition of the fee would result in a 

hardship. One instance that might 

support a request for hardship exception 

is in the event of a national public 

health emergency where a provider or 

supplier is enrolling for purposes of 

furnishing services required as a result 

of the national public health emergency 

situation. Such requests will be 

considered on a case-by-case basis, as 

required by the statute. In addition, we 

are soliciting comments on the 

appropriate objective criteria that 

should be used in making a hardship 

determination and if there are any other 

circumstances in which such 

exemptions should be allowed. We are 

also seeking comment on the kinds of 

documents to be submitted to CMS or 

its contractor to exhibit hardship, 

including any comments on the 

financial or legal records that might be 

needed to make a determination of 

hardship. Section 1866(j)(2)(C)(iii) of the 

Act also permits the Secretary to waive 

the application fee for providers 

enrolled in a State Medicaid program for 

whom the State demonstrates that 

imposition of the fee would impede 

beneficiary access to care. We are 

soliciting comments on how waivers 

from the application fee should be 

implemented for Medicaid-only or 

dually-participating Medicare and 

Medicaid providers and suppliers 

specifically those seeking to furnish 

services where beneficiary access issues 

are prevalent, either geographically or in 

the provision of the services. 

We are committed to assuring access 

to care for program beneficiaries. We are 

in the process of undertaking a review 

of promising practices related to 

ensuring access in the Medicaid 

program and CHIP. We will incorporate 

information from that review into 

developing appropriate access criteria 

for purposes of the required fee. We are 

also soliciting comments on the 

appropriate criteria that we should 

consider. We are particularly interested 

in hearing from States, providers, 

advocates, and other stakeholders 

relating to concrete examples based on 

experiences in using specific access 

criteria. 

Based on the statutory requirements 

for calculating the application fee, we 

offer the following example for purely 

illustrative purposes. The initial 

application fee beginning in 2010 is 

established by law at $500. However, for 

the following year, when the annual 

Consumer Price Index (CPI–U) is 

calculated for the period ending June 

2010, we would recalculate the 

application fee using the CPI–U. Thus, 

if the CPI increased by 2.34 percent for 

the 12-month period ending June 2010, 

the application fee would be calculated 

by multiplying the fee for the year by 

the CPI–U. The $500 application fee 

established by law in 2010 would be 

multiplied by 1.0234 to give $511.70. 

We would then round to the nearest 

dollar amount of $512.00. This would 

be the amount of the fee in effect for 

2011, and would apply to applications 

received after the effective date of the 

statute—March 23, 2011 for newly 

enrolling providers and suppliers and 

for revalidating providers and suppliers. 

A similar process, based on the CPI–U 

for the period of July 1, 2010 through 

June 30, 2011 would be used to 

calculate the fee that would become 

effective on January 1, 2012, and that 

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would apply to new and currently 

enrolled providers or suppliers that 

submit applications on or after March 

23, 2012. In § 424.514(d)(2), we propose 

that the annually recalculated 

application fee amount would be 

effective for the calendar year during 

which the application for enrollment is 

being submitted. 

The amount of the application fee that 

is required of enrolling providers or 

suppliers, would be the amount that is 

in effect on the day the provider or 

supplier mails an enrollment 

application or Certification Statement, 

postmarked by the USPS, or if mailed 

through a private mail service, the date 

of receipt by the Medicare contractor. 

Because the application fee will become 

an integral part of the enrollment 

process, we believe that it is essential 

that we notify State Medicaid agencies 

and the public about any changes in the 

application fee prior to implementing a 

change in the fee. Accordingly, we 

would afford States and the public with 

at least 30 days’ notice of any 

impending change in the application 

fee. We will make such notification 

annually in the Federal Register and by 

issuing guidance to the State Medicaid 

and CHIP Directors, issuing CMS 

provider and supplier listserv messages, 

making announcements at CMS Open 

Door Forums, and placing information 

on the CMS Provider/Supplier 

Enrollment Web page (http:// 

www.cms.gov/ 

MedicareProviderSupEnroll). 

We are proposing that a provider or 

supplier that believes it is entitled to a 

hardship exception from the application 

fee enclose a letter with the enrollment 

application or, if using Internet-based 

PECOS, with the Certification 

Statement, explaining the nature of the 

hardship. Further, we propose that we 

would not begin to process an 

enrollment application submitted with a 

letter requesting a hardship exception 

from the application fee until it makes 

a decision on whether to grant the 

exception. Further, we are proposing 

that we make a hardship exception 

determination within 60 days from 

receipt of the request from an 

institutional provider and CMS 

contractor notify the applicant or 

enrolled institutional provider or 

supplier by letter approving or denying 

the request for a hardship exception. 

Moreover, if we deny the request for 

hardship exception, we would provide 

our reason(s) for denying the hardship 

exception. 

In § 424.530(a)(8), we propose adding 

a new reason why a Medicare contractor 

can deny Medicare billing privileges. 

Specifically, we are proposing a new 

§ 424.530(a)(8) to state, ‘‘An institutional 

provider’s or supplier’s ‘hardship 

exception’ request is not granted.’’ 

In 424.535(a)(6)(i), we propose adding 

a new reason why a Medicare contractor 

can revoke Medicare billing privileges. 

Specifically, we are proposing a new 

§ 424.535(a)(6)(i) to state, ‘‘An 

institutional provider does not submit 

an application fee or ‘hardship 

exception’ request that meets the 

requirements set forth in § 424.514 with 

the Medicare revalidation application or 

the hardship exception request is not 

granted and the institutional provider or 

supplier does not submit the required 

application fee within 30 days of being 

notified that the exception request was 

not approved. 

We are also proposing that an 

institutional provider may appeal the 

determination not to grant a hardship 

exception from the application fee using 

the provider enrollment appeals process 

established in § 405.874 and found in 

1866(j)(2) of the Act. 

In § 455.460, we are proposing that, 

for those providers who do not 

participate in Medicare, the State may 

collect the fee established by the 

Secretary as outlined above as the State 

will be responsible for conducting the 

provider screening activities for these 

providers. Total fees collected will be 

used to offset the cost of the Medicaid 

and CHIP screening programs. The fees 

represent an applicable credit under 

OMB Circular A–87, entitled ‘‘Cost 

Principles for State, Local, and Indian 

Tribal Governments’’ (August 31, 2005 

(70 FR 51910)), codified at 2 CFR part 

225, and made applicable to States by 

45 CFR 92.22(b). The cost principles 

require that the costs a State claims 

must be reduced by ‘‘applicable credits,’’ 

or ‘‘those receipts or reduction of 

expenditure-type transactions that offset 

or reduce expense items allocable to 

Federal awards as direct or indirect 

costs’’, (Paragraphs C.1.i., C.4.a. and D.1. 

of Appendix A to 2 CFR part 225). If the 

fees collected by a State agency exceed 

the cost of the screening program, the 

State agency must return that portion of 

the fees to the Federal Government. 

CMS will direct these fees to support 

program integrity efforts as permitted by 

the ACA. 

C. Temporary Moratoria on Enrollment 

of Medicare Providers and Suppliers, 

Medicaid and CHIP Providers 

1. Statutory Changes 

Section 6401(a) of the ACA amended 

section 1866(j) of the Act by adding a 

new section 1866(j)(7) of the Act, which 

provides that the Secretary may impose 

temporary moratoria on the enrollment 

of new Medicare, Medicaid, or CHIP 

providers and suppliers, including 

categories of providers and suppliers, if 

the Secretary determines such moratoria 

are necessary to prevent or combat 

fraud, waste, or abuse under the 

programs. 

Section 6401(b)(1) of the Act adds 

specific moratorium language applicable 

to Medicaid at section 1902(ii)(4) of the 

Act, requiring States to comply with any 

temporary moratorium imposed by the 

Secretary unless the State determines 

that the imposition of such moratorium 

would adversely affect Medicaid 

beneficiaries’ access to care. Section 

1902(ii)(4)(B) of the Act further permits 

States to impose temporary enrollment 

moratoria, numerical caps, or other 

limits, for providers identified by the 

Secretary as being at high risk for fraud, 

waste, or abuse, if the State determines 

that the imposition of such moratorium, 

cap, or other limits would not adversely 

impact Medicaid beneficiaries’ access to 

care. 

Section 1866(j)(7) of the Act uses the 

term ‘‘providers of services and 

suppliers.’’ Although, as noted above, 

the Medicaid program does not use the 

term ‘‘suppliers,’’ section 1902(ii)(4) of 

the Act refers to ‘‘providers and 

suppliers.’’ In this regulation, for 

uniformity with sections II A. and B. of 

the proposed rule, we are using the term 

‘‘providers and suppliers’’ in lieu of the 

term ‘‘provider of services and 

suppliers.’’ We will use the term 

‘‘provider’’ or ‘‘Medicaid provider’’ or 

‘‘CHIP provider’’ in lieu of the term 

‘‘provider or supplier’’ when referring to 

all Medicaid or CHIP health care 

providers, including, but not limited to, 

providers and suppliers of Medicaid 

items or services, individual 

practitioners, and institutional 

providers. 

2. Proposed Requirements 

a. Medicare 

We propose at § 424.570(a) that CMS 

may impose a moratorium on the 

enrollment of new Medicare providers 

and suppliers in 6- month increments in 

situations where—(1) CMS, based on its 

review of existing data, without 

limitation, indentifies a trend that 

appears to be associated with a high risk 

of fraud, waste or abuse, such as highly 

disproportionate number of providers or 

suppliers in a category relative to the 

number of beneficiaries or a rapid 

increase in enrollment applications 

within a category determines that there 

is a significant potential for fraud, waste 

or abuse with respect to a particular 

provider or supplier type or particular 

geographic area or both; (2) a State has 

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imposed a moratorium on enrollment in 

a particular geographic area or on a 

particular provider of supplier type or 

both; or (3) CMS, in consultation with 

the HHS OIG or the Department of 

Justice (DOJ) or both identifies either or 

both of the following as having a 

significant potential for fraud, waste or 

abuse in the Medicare program: 

• A particular provider or supplier 

type. 

• Any particular geographic area. 

As part of the CMS decision-making 

process, we will consider any 

recommendation from the DOJ, HHS 

OIG, or the GAO to impose a temporary 

moratorium for a specific provider or 

supplier type in a specific geographic 

area. 

We believe that imposing moratoria 

will, among other things, allow us to 

review and consider additional 

programmatic initiatives, including the 

development of additional regulatory 

and subregulatory provisions to ensure 

that Medicare providers and suppliers 

are meeting program requirements, 

beneficiaries receive quality care, and 

that an adequate number of providers of 

suppliers exists to furnish services to 

Medicare beneficiaries. 

We also propose that enrollment 

moratoria be limited to: (1) Newly 

enrolling providers and suppliers (that 

is., initial enrollment applications); and 

(2) the establishment of new practice 

locations, not to a change of practice 

locations. The temporary moratoria 

would not apply to existing providers or 

suppliers of services unless they were 

attempting to expand operations to new 

practice locations where a temporary 

moratorium was imposed. Moreover, the 

temporary moratoria would not apply in 

situations involving changes in 

ownership of existing providers or 

suppliers, mergers, or consolidations. 

We also propose at § 424.570(b) that a 

moratorium would be imposed for a 

period of 6 months, and such 

moratorium could be extended by CMS 

in 6-month increments if CMS 

continues to believe that a moratorium 

is needed to prevent or combat fraud, 

waste, or abuse. The Secretary will reevaluate whether a moratorium should 

continue prior to each 6 month 

expiration date. 

We also propose at § 424.570(c) that 

CMS will deny enrollment applications 

received from providers or suppliers 

covered by an existing moratorium. We 

note that denial of Medicare billing 

privileges is subject to the 

administrative review process 

established in § 405.874. Accordingly, 

we believe that denial of Medicare 

billing privileges is also afforded the 

right to appeal a Medicare contractor 

determination to deny enrollment into 

the Medicare program. 

In § 424.530(a)(9), we propose adding 

a new reason why CMS can deny 

Medicare billing privileges. Specifically, 

we are proposing a new § 424.530(a)(9) 

to state, ‘‘A provider or supplier submits 

an enrollment application for a practice 

location in a geographic area where 

CMS has imposed a temporary 

moratorium.’’ Further, in § 498.5(l)(4), 

we propose that the scope of review for 

appeals of denials under § 424.530(a)(9) 

based upon a provider or supplier being 

subject to a temporary moratorium will 

be limited to whether the temporary 

moratoria applies to that particular 

provider or supplier. 

We note that section 1866(j)(7) of the 

Act provides that there shall be no 

judicial review of a temporary 

moratorium. Accordingly, we propose 

that a provider or supplier may 

administratively appeal an adverse 

determination based on the imposition 

of a temporary moratorium up to and 

including the Department Appeal Board 

(DAB) level of review. 

Finally, we propose at § 424.570(d) 

that we may lift a moratorium in the 

following circumstances: (1) In the case 

of a Presidentially- declared disaster 

under the Robert T. Stafford Disaster 

Relief and Emergency Assistance Act, 

42 U.S.C. 5121 through 5206 (Stafford 

Act); (2) circumstances warranting the 

imposition of a moratorium have abated 

or CMS has implemented program 

safeguards to address any program 

vulnerability that was the basis for the 

moratorium; or (3) in the judgment of 

the Secretary, the moratorium is no 

longer needed. 

We also recognize that in a limited 

number of circumstances a State 

Medicaid agency may enroll a provider 

or supplier into Medicaid during the 

temporary moratorium period 

established by Medicare. If this occurs 

and the prospective Medicare provider 

or supplier applies to enroll in the 

Medicare program after the temporary 

moratorium is lifted, we would use the 

screening tools described in section II.A. 

of this proposed rule. 

We are also seeking public comment 

on specific exemptions to the temporary 

moratoria criteria proposed above. Prior 

to imposing a moratorium, we would 

assess Medicare beneficiary access to 

the type(s) of services that are furnished 

by the provider or supplier type and/or 

within the geographic area to which the 

moratorium would apply. 

We would announce the 

implementation of a moratorium at any 

time. The announcement would be 

made in the Federal Register and we 

would also address it in other methods 

or forums, such as Press Releases, at 

CMS Provider Open Door Forums, in 

CMS provider listservs, and on the CMS 

Provider/Supplier Enrollment Web page 

(http://www.cms.gov/ 

MedicareProviderSupEnroll). We would 

also require our Medicare contractors to 

post the moratorium announcement or 

note the expiration of a moratorium on 

their Web sites. Our Federal Register 

announcement would explain in detail 

the rationale for the moratorium and the 

rationale for the geographic area(s) in 

which it would apply. 

b. Medicaid and CHIP 

Pursuant to section 1902(ii)(4)(A) of 

the Act, we are proposing at 

§ 455.470(a)(2) and (3) that a State 

Medicaid agency will comply with a 

temporary moratorium imposed by the 

Secretary unless it determines that the 

imposition of such a moratorium would 

adversely affect beneficiaries’ access to 

medical assistance. 

Where the Secretary has imposed a 

temporary moratorium in accordance 

with § 424.570, and the State has 

determined that compliance with such a 

moratorium would adversely impact 

Medicaid beneficiaries’, or CHIP 

participants’, as the case may be, access 

to medical assistance, section 

1902(ii)(4)(A)(ii) of the Act creates an 

exception for the State from complying 

with the moratorium. We propose that 

the State provide the Secretary with 

written details of the moratorium’s 

adverse impact on Medicaid 

beneficiaries. Prior to the Secretary 

imposing such a moratorium in any 

State, we propose at § 455.470(a)(1) that 

the Secretary consult with the State, so 

that the State may have an opportunity 

to seek an exception from the 

moratorium. 

Pursuant to section 1902(ii)(4)(B) of 

the Act, States have authority to impose 

moratoria, numerical caps, or other 

limits for providers that are identified 

by the Secretary as being at ‘‘high’’ risk 

for fraud, waste, or abuse. We propose 

that where the State identifies a category 

of providers as posing a significant risk 

of fraud, waste, or abuse, the State must 

seek CMS’ concurrence with that 

determination and provide CMS with 

written details of the proposed 

moratorium, including the anticipated 

duration, and with a substantial 

justification explaining why disallowing 

newly enrolling providers would reduce 

the risk of fraud. We propose at 

§ 455.470 that States’ moratoria would 

be imposed for a period of 6 months and 

may be extended in 6-month 

increments. 

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58222 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 

Section 2107(e)(1) of the Act provides 

that all provisions that apply to 

Medicaid under sections 1902(a)(77) 

and 1902(ii) of the Act apply to CHIP. 

Accordingly, we propose in new 

regulation § 457.990 that all the 

provider screening, provider 

application, and moratorium regulations 

that apply to Medicaid providers will 

apply in providers that participate in 

CHIP. 

D. Suspension of Payments 

1. Medicare 

a. Background 

In section 6402(h) of the ACA, 

Congress amended section 1862 of the 

Social Security Act by adding a new 

paragraph (o), under which the 

Secretary may suspend payments to a 

provider or supplier pending an 

investigation of a credible allegation of 

fraud unless the Secretary determines 

that there is good cause not to suspend 

payments. This section requires that the 

Secretary consult with the HHS OIG in 

determining whether there is a credible 

allegation of fraud against a provider or 

supplier. 

b. Current Medicare Regulations 

We have long been authorized to 

suspend payments in cases of suspected 

fraudulent activity. On December 2, 

1996, we finalized regulations § 405.370 

through § 405.379 that provides for 

suspension of payments to providers 

and suppliers for several scenarios, 

including when we possess reliable 

information that fraud or willful 

misrepresentation exists. The rule 

provides that we may suspend 

payments to a provider or supplier in 

whole or in part based upon possession 

of reliable information that an 

overpayment or fraud or willful 

misrepresentation exists or that the 

payments to be made may not be 

correct, although additional evidence 

may be needed for a determination. 

The existing rule provides that a 

suspension of payments is limited to 

180 days, unless it meets one of several 

exceptions. A Medicare contractor may 

request a one-time-only extension of the 

suspension period for up to 180 

additional days if it is unable to 

complete its examination of the 

information that serves as the basis for 

the suspension. Also, OIG or a law 

enforcement agency may request a onetime-only extension for up to 180 

additional days to complete its 

investigation in cases of fraud and 

willful misrepresentation. The rule 

provides that these time limits do not 

apply if the case has been referred to 

and is being considered by the OIG for 

administrative action, such as civil 

monetary penalties. We may also grant 

an extension beyond the 180 additional 

days if DOJ requests that the suspension 

of payments be continued based on the 

ongoing investigation and anticipated 

filing of criminal or civil actions. The 

DOJ extension is limited to the amount 

of time needed to implement the 

criminal or civil proceedings. 

c. Proposed Requirements 

Section 6402(h) of the ACA requires 

that the Secretary consult with the OIG 

in determining whether there is a 

credible allegation of fraud against a 

provider or supplier. If a credible 

allegation of fraud exists, the Secretary 

may impose a suspension of payments 

pending an investigation of the 

allegations, unless the Secretary 

determines that there is good cause not 

to suspend payments. We are proposing 

to revise § 405.370 to add a definition of 

what constitutes a ‘‘credible allegation of 

fraud,’’ to include an allegation from any 

source, including but not limited to 

fraud hotline complaints, claims data 

mining, patterns identified through 

provider audits, civil false claims cases, 

and law enforcement investigations. 

Allegations are considered to be 

credible when they have an indicia of 

reliability. Many issues related to this 

definition will need to be determined on 

a case-by-case basis by looking at all the 

factors, circumstances and issues at 

hand. We continue to believe that CMS 

or its contractors must review all 

allegations, facts, and information 

carefully and act judiciously on a caseby-case basis when contemplating a 

payment suspension, mindful of the 

impact that payment suspension may 

have upon a provider. 

We additionally propose modifying 

the existing § 405.370 to add a 

definition for ‘‘resolution of an 

investigation.’’ The ACA provides for 

the suspension of payments pending the 

investigation of a credible allegation of 

fraud, and we believe that this provision 

necessitates defining when an 

investigation has concluded and the 

basis for the suspension of payments no 

longer exists. The definition proposed 

here is that a resolution of an 

investigation occurs when legal action is 

terminated by settlement, judgment, or 

dismissal, or when the case is closed or 

dropped because of insufficient 

evidence. We are seeking comments on 

an alternative definition of the term 

‘‘resolution of an investigation’’ which is 

that it occurs when a legal action is 

initiated or the case is closed or 

dropped because of insufficient 

evidence to support the allegations of 

fraud. 

We propose modifying the existing 

§ 405.371(a) to differentiate between 

suspensions based on either reliable 

information that an overpayment exists 

or that payments to be made may not be 

correct, and suspensions based upon a 

credible allegation of fraud. As required 

by the ACA, we propose in this section 

that CMS or its contractor must consult 

with the OIG, and as appropriate, the 

Department of Justice (DOJ) in 

determining whether a credible 

allegation of fraud exists prior to 

suspending payments on the basis of 

alleged fraud. 

We also propose in accordance with 

the ACA that CMS retains discretion 

regarding whether or not to impose a 

suspension or continue a suspension, as 

there may be good cause not to suspend 

payments or not to continue to suspend 

payments to providers or suppliers in 

certain circumstances. We propose to 

add a new § 405.371(b) to describe 

circumstances that may qualify as good 

cause not to suspend payments or not to 

continue to suspend payments despite 

credible allegations of fraud. 

In paragraph (b)(1), we propose a good 

cause exception based upon specific 

requests by law enforcement that CMS 

not suspend payments. There are 

numerous reasons for which law 

enforcement personnel might make such 

a request, including that imposing a 

payment suspension might alert a 

potential perpetrator to an investigation 

at an inopportune or particularly 

sensitive time, jeopardize an undercover 

investigation, or potentially expose 

whistleblowers or confidential sources. 

In paragraph (b)(2), we propose a good 

cause exception not to suspend 

payments if CMS determines that 

beneficiary access to necessary items or 

services may be jeopardized. We 

envision there may be scenarios in 

which a payment suspension to a 

provider might jeopardize a provider’s 

ability to continue rendering services to 

Medicare beneficiaries whose access to 

items or services would be so 

jeopardized as to cause a danger to life 

or health. 

In paragraph (b)(3), we propose a good 

cause exception not to suspend 

payments if CMS determines that other 

available remedies implemented by or 

on behalf of CMS more effectively or 

quickly protect Medicare funds than 

would implementing a payment 

suspension. For example, law 

enforcement personnel might request 

that a court immediately enjoin 

potentially unlawful conduct or prevent 

the withdrawal, removal, transfer, 

disposal, or dissipation of assets, either 

or both of which might protect Medicare 

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Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 58223 

funds more fully or quickly than would 

imposition of a payment suspension. 

More generally, in paragraph (b)(4), 

we propose a good cause exception 

based upon a determination by CMS 

that a payment suspension or 

continuation of a payment suspension is 

not in the best interests of the Medicare 

program. We further propose that CMS 

will conduct an evaluation of whether 

there is good cause not to continue a 

suspension every 180 days after the 

initiation of a suspension based on 

credible allegations of fraud. We believe 

that circumstances surrounding a 

specific case may change as an 

investigation progresses, and it may 

become in the best of interests of the 

Medicare program to terminate a 

payment suspension prior to the 

resolution of an investigation. As part of 

this ongoing evaluation, CMS will 

request a certification from the OIG or 

other law enforcement agency as to 

whether that agency continues to 

investigate the matter. 

We are considering additional specific 

circumstances and scenarios that may 

qualify as good cause not to continue a 

payment suspension prior to the 

resolution of an investigation, and 

solicit comments on this approach. For 

example, one scenario that we are 

considering as additional good cause 

not to continue a suspension is when a 

suspension has been in place for a 

specific length of time, such as 2 years 

or 3 years, and the investigation has not 

been resolved. We anticipate that on a 

case by case basis, CMS will evaluate 

the status of a particular investigation 

and the nature of the alleged fraud in 

determining whether keeping a payment 

suspension in effect beyond a certain 

length of time may not be in the best 

interests of the Medicare program. We 

have chosen not to propose specific 

language on duration in the regulatory 

text. However, we solicit comment on 

this approach. 

We propose modifying the existing 

§ 405.372 to reflect the changes made in 

§ 405.371 which divides the payment 

suspension authority into situations 

involving overpayments and situations 

involving allegations of fraud. In 

§ 405.372(c) we clarify the subsequent 

action requirements to distinguish 

between suspensions based on credible 

allegations of fraud and those that are 

based on other factors, such as 

overpayments. For suspensions that are 

not based on credible allegations of 

fraud, CMS and its contractors will 

continue to take timely action to obtain 

additional information needed to make 

an overpayment determination and 

make all reasonable efforts to expedite 

the determination. Once the 

determination is made, notice of the 

determination will be given to the 

provider or supplier and the payment 

suspension will be terminated. If the 

payment suspension is based on 

credible allegations of fraud, CMS and 

its contractors will take subsequent 

action to determine if an overpayment 

exists or if the payments may be made, 

however the termination of the 

suspension and the issuance of a final 

determination notice to the provider or 

supplier may be delayed until 

resolution of the investigation. At the 

end of the fraud investigation, it is 

possible that the Medicare contractor 

will not have completed its 

overpayment determination, but will 

have reliable evidence of an 

overpayment or will have evidence that 

the payments to be made may not be 

correct. This typically occurs when a 

law enforcement investigation results in 

civil or criminal resolution prior to the 

Medicare contractor having had 

sufficient time to complete its 

overpayment determination. In such a 

situation, we would allow the 

suspension to continue as an 

overpayment suspension. 

We propose modifying the existing 

§ 405.372(d) concerning the duration of 

suspension of payment. In 

§ 405.372(d)(3) we except suspensions 

based on credible allegations of fraud 

from the established time limits 

specified in paragraphs (d)(1) and (d)(2). 

We believe the strict time constraints 

found in paragraphs (d)(1) and (d)(2) 

should only be applied to suspensions 

based on reliable information of an 

overpayment or where payments to be 

made may not be correct both of which 

require a speedy overpayment 

determination. When credible 

allegations of fraud are present, we 

believe that CMS should have the 

flexibility to maintain a suspension 

beyond these established time limits in 

order for an investigation to be 

completed or the matter to be resolved. 

However, we note that by excepting 

suspensions based on credible 

allegations of fraud from these 

previously established timeframes, we 

do not intend to suspend payments to 

providers and suppliers indefinitely. We 

will be actively evaluating the progress 

of any investigation to determine if good 

cause exists to no longer continue the 

suspension of payments, as suspensions 

are designed to be a temporary measure. 

As part of this recurring evaluation, 

CMS will request a certification from 

the OIG or other law enforcement 

agency that the matter continues to be 

under investigation. 

We also propose eliminating the two 

other existing scenarios in paragraph 

(d)(3) for extending payment 

suspensions beyond the time limits in 

paragraphs (d)(1) and (d)(2), which are 

when the OIG is considering 

administrative action such as civil 

monetary penalties and also when the 

DOJ requests an extension based on an 

ongoing investigation and the 

anticipated filing of criminal and/or 

civil actions. We believe that both of 

these reasons under the existing rule for 

extending suspensions will be captured 

in the new rule which will allow for 

payment suspensions to extend until the 

resolution of an investigation and are 

unnecessary given the other proposed 

changes. 

2. Medicaid 

a. Background 

In section 6402(h) of the ACA, the 

Congress amended section 1903(i)(2) of 

the Act to provide that Federal 

Financial Participation (FFP) in the 

Medicaid program shall not be made 

with respect to any amount expended 

for items or services (other than an 

emergency item or service, not 

including items or services furnished in 

an emergency room of a hospital) 

furnished by an individual or entity to 

whom a State has failed to suspend 

payments under the plan during any 

period when there is pending an 

investigation of a credible allegation of 

fraud against the individual or entity as 

determined by the State in accordance 

with these regulations, unless the State 

determines in accordance with these 

regulations that good cause exists not to 

suspend such payments. 

b. Current Medicaid Regulations 

State Medicaid agencies have long 

been authorized to withhold payments 

in cases of fraud or willful 

misrepresentation. On December 28, 

1987, DHHS finalized regulations at 

§ 455.23 that they described as 

specifically encouraging State Medicaid 

agencies to withhold program payments 

to providers without first granting 

administrative review where the State 

agency has reliable evidence of 

fraudulent activity by the provider. The 

regulations were issued by the HHS OIG 

based on a concern that State 

administrative hearings could interfere 

with investigations conducted by HHS 

OIG’s Office of Investigations or by the 

State’s Medicaid fraud control unit 

(MFCU). The requirements of an 

administrative hearing could jeopardize 

criminal cases and investigators were 

reluctant to agree to a State’s 

withholding payment, thus risking 

additional overpayments. (See the 

December 28, 1987 final rule (52 FR 

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58224 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 

48814)). The December 28, 1987 final 

rule remains in effect and has remained 

unchanged since it was promulgated. 

At the time the rule was proposed, the 

Department was in the process of 

reorganizing its fraud and abuse 

regulations to reflect authorities 

transferred to HHS OIG in 1983, as well 

as those retained by CMS. HHS OIG 

authorities were transferred to a new 42 

CFR chapter V, while CMS’ Medicaid 

program integrity authorities were 

retained at 42 CFR part 455. (See the 

September 30, 1986 final rule (51 FR 

34764)). 

This current rule provides that a State 

Medicaid agency may withhold 

payments to a provider in whole or in 

part based upon receipt of reliable 

evidence that the need for withholding 

payments involves fraud or willful 

misrepresentation under the Medicaid 

program. At the time this rule was 

published, commenters questioned what 

constituted ‘‘reliable evidence of fraud.’’ 

The HHS OIG declined to provide a 

specific definition, noting that what 

constitutes ‘‘reliable evidence’’ is not 

easily and readily definable. The HHS 

OIG noted that while the existence of an 

ongoing criminal or civil investigation 

against a provider may be a factor in 

determining whether reliable evidence 

exists, that reliable evidence should be 

determined on a case-by-case basis with 

the State agency looking at all the 

factors, circumstances, and issues at 

hand, and acting judiciously on this 

information. 

The 1987 regulations also permitted 

payments to be suspended in whole or 

in part. Commenters had suggested that 

‘‘clean claims’’ continue to be processed 

without delay, and that any withholding 

ought be targeted to only the type of 

Medicaid claims under investigation. 

The HHS OIG responded that it is 

usually difficult to determine which 

claims are ‘‘clean’’ until after an 

investigation has been completed, but 

noted that where an investigation is 

solely and definitively centered upon a 

specific type of claim that a State could, 

at its discretion, withhold payments on 

just those types of claims. The HHS OIG 

also agreed to commenters’ requests to 

clarify that the withholding provisions 

apply only to alleged fraud or willful 

misrepresentation related to improperly 

received Medicaid payments and not to 

ancillary unrelated matters such as 

deceptive advertising. 

c. Proposed Requirements 

The current regulation at § 455.23 

forms the framework for these proposed 

regulations. State Medicaid agencies 

have long had the authority to withhold 

payments in cases of alleged fraud or 

willful misrepresentation. Section 

6402(h)(2) of the ACA now mandates 

that States not receive FFP in cases 

where they fail to suspend Medicaid 

payments during any period when there 

is pending an investigation of a credible 

allegation of fraud against an individual 

or entity as determined by the State in 

accordance with these proposed 

regulations unless the State determines 

that good cause exists for a State not to 

suspend such payments. To conform the 

existing regulation to the terminology of 

the ACA, we propose to change the 

phrase ‘‘withhold payments’’ to 

‘‘suspend payments,’’ a change we 

believe is merely semantic. 

We propose to implement section 

6402(h)(2) of the ACA by modifying the 

existing § 455.23(a) to make payment 

suspensions mandatory where an 

investigation of a credible allegation of 

fraud under the Medicaid program 

exists. Based on the ACA’s use of just 

the term ‘‘fraud,’’ we do not propose to 

retain the existing term ‘‘willful 

misrepresentation.’’ We believe that 

fraud and willful misrepresentation are 

largely indistinguishable, thus we do 

not believe this proposal represents a 

substantive change nor do we intend it 

to have a substantive effect insofar as 

reducing or limiting a State’s authority 

to suspend Medicaid payments. We 

solicit comments on this approach. 

To conform the proposed regulation 

to the requirements of the ACA, we 

propose to modify terminology in the 

existing § 455.23(a) that now refers to 

‘‘receipt of reliable evidence’’ to instead 

refer to a ‘‘pending investigation of a 

credible allegation of fraud.’’ In contrast 

to the semantic change from ‘‘withhold 

payments’’ to ‘‘suspend payments,’’ in 

this case we believe that there is a 

substantive difference between the 

threshold level of certainty or proof 

necessary to identify a ‘‘credible 

allegation’’ versus the heightened 

requirement of ‘‘reliable evidence’’ in the 

current regulation. 

We do not believe that the phrase 

‘‘when there is pending an investigation 

of a credible allegation of fraud’’ 

necessarily demands that an 

investigation originate in or with a law 

enforcement agency. Rather, State 

Medicaid agencies have program 

integrity units that, in the normal course 

of business, receive, and conduct 

investigations based upon, tips alleging 

fraud, and which also conduct proactive 

investigations based upon internal data 

analyses and other fraud detection 

techniques. We believe that State agency 

investigations, though they may be 

preliminary in the sense that they lead 

to a referral to a law enforcement agency 

for continued investigation, are 

adequate vehicles by which it may be 

determined that a credible allegation of 

fraud exists sufficient to trigger a 

payment suspension to protect 

Medicaid funds. 

This threshold by which a State 

agency investigation may give rise to a 

payment suspension is a somewhat 

lesser threshold than that in the current 

regulation. The preamble to the current 

regulation specified that it was 

anticipated the State agency would 

confer with, and receive the 

concurrence of, investigative or 

prosecuting authorities prior to 

imposing a withholding action. 

However, that preamble also stated that 

it was establishing mere minimum 

requirements, and that States could 

exercise broader power where State law 

or regulation so provided. Most States 

have availed themselves of the existing 

Federal authority (or broader state 

authority) to withhold payments, and 

we believe that experience over the past 

20 years offers no indication this 

authority has been misused against 

providers. Moreover, we believe this 

proposed threshold is consistent with 

the phrase ‘‘investigation of a credible 

allegation of fraud’’ of the ACA. We do 

anticipate that payment suspension 

authority will be used more frequently 

because the ACA dictates that where 

there is a pending investigation of 

credible allegations of fraud against a 

provider, a State that fails to suspend 

payments to that provider will not 

receive FFP with respect to such 

payments unless good cause exists not 

to suspend them. 

We propose to adopt at § 455.2 the 

same broad definition of ‘‘credible 

allegation’’ proposed above in the 

context of the Medicare program. In 

many cases, what constitutes a ‘‘credible 

allegation’’ must be determined on a 

case-by-case basis with the State agency 

looking at all the factors, circumstances, 

and issues at hand. Guided by the 

experience of more than 20 years, we 

are aware that States have been able to 

identify ‘‘reliable evidence’’ through a 

variety of means including, but not 

limited to, fraud hotline complaints, 

Medicaid claims data mining, and 

patterns identified through provider 

audits, along with the appropriate level 

of additional investigation that 

accompanies each of these. Moreover, 

States have received referrals from State 

MFCUs, other law enforcement 

agencies, and other State benefits 

program investigative units. We 

continue to believe that State agencies 

must review all allegations, facts, and 

evidence carefully and act judiciously 

on a case-by-case basis when 

contemplating a payment suspension, 

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mindful of the impact that payment 

suspension may have upon a provider. 

In paragraph (b), we propose that the 

State agency notify a provider of a 

payment suspension in a way very 

similar to the mechanism currently 

specified in regulation by which the 

State agency is required to notify a 

provider, specifying certain details, 

within 5 days of taking such action. 

However, we do propose to provide for 

a 30-day period, renewable in writing 

up to twice for a total not to exceed 90 

days, by which law enforcement may, in 

writing, request the State agency to 

delay notification to a provider. We 

propose this because we believe that 

occasionally an investigation may be at 

a sensitive stage, perhaps involving 

undercover personnel or a confidential 

informant, where required notification 

to the provider at a particular time 

might jeopardize the investigation. We 

do not believe we should extend the 

delay notification beyond 90 days out of 

fairness to a provider and, in any event, 

a provider deriving any significant 

revenue stream from Medicaid is likely 

to itself discern the fact of a payment 

suspension well in advance of 90 days. 

We are proposing only minor changes 

to the current provisions in § 455.23(c) 

on the duration of a suspension. To 

comport with the ACA, we change the 

term ‘‘withholding’’ to ‘‘suspension’’; this 

is a semantic change that, as noted 

above, has been made throughout. In the 

proposed new § 455.23(c)(2), we 

propose to require a State to notify a 

provider of the termination of a 

payment suspension and, where 

applicable, to specify the availability to 

a provider of any appeal rights under 

State law and regulation. 

Substantively, we do not propose 

significant change to the existing 

duration provisions, which specify that 

withholding (now, suspension) will be 

temporary and will not continue after: 

(1) Authorities discern that there is 

insufficient evidence of fraud upon 

which to base a legal action; or (2) legal 

proceedings related to the alleged fraud 

are completed. 

We believe that maintaining the 

existing duration provisions is 

consistent with the ACA that requires 

that FFP not be made when a State fails 

to suspend payments ‘‘during any period 

when there is pending an investigation 

of a credible allegation of fraud against 

an individual or entity.’’ We further 

recognize that the Act applies a very 

similar standard to the Medicare 

program. We solicit comments on our 

proposal to maintain the existing 

duration provisions. 

In paragraph (d), we propose to 

require a State to make a formal, written 

suspected fraud referral to its MFCU or, 

where a State does not have a MFCU to 

an appropriate law enforcement agency, 

for each instance of payment suspension 

as the result of a State agency’s 

preliminary investigation of a credible 

allegation of fraud. This will ensure that 

an appropriate full investigation by a 

law enforcement agency timely ensues. 

If the MFCU or other law enforcement 

agency declines to accept the referral, 

we propose to require the State to 

immediately release the payment 

suspension unless the State refers the 

matter to another law enforcement 

entity or unless the State has alternative 

Federal or State authority by which it 

may impose a suspension. In the latter 

case, the requirements of that alternative 

authority, including any notice and due 

process or other safeguards, would be 

applicable. 

We propose to require that a State’s 

formal, written suspected fraud referral 

meets fraud referral performance 

standards issued by the Secretary. The 

currently applicable fraud referral 

performance standards were issued by 

CMS on September 30, 2008. In a 

January 2007 report entitled ‘‘Suspected 

Medicaid Fraud Referrals,’’ (OEI 07–04– 

00181) the HHS OIG expressed concern 

with the lack of CMS criteria specific to 

the referral of suspected fraud issues 

from State Medicaid agencies to MFCUs 

such that it was unable to determine the 

adequacy of State Medicaid agencies’ 

performance. CMS agreed in response to 

that report to work towards the 

establishment of fraud referral 

performance standards (which it has 

now issued) to which States will be 

required to conform in making referrals 

under this regulation. 

In paragraph (d)(3), we propose that 

on a quarterly basis a State must request 

a certification from the MFCU or other 

law enforcement agency that any matter 

accepted on the basis of a referral 

continues to be under investigation or in 

the course of enforcement proceedings 

warranting continuation of the payment 

suspension. We recognize that due to 

various constraints, law enforcement 

agencies may not be able to provide 

specific updates on matters under 

investigation. In recognition of the fact 

that payment suspensions are only 

temporary, however, we propose to 

require such quarterly certifications to 

ensure, for example, that a suspension 

will not be continued long after a law 

enforcement agency has closed an 

investigation but neglected to alert a 

State agency of that fact. To maximize 

State flexibility to implement this 

requirement, we are not prescribing the 

precise format such certifications must 

take. 

Consistent with the new Affordable 

Care Act provision, we also propose to 

create several ‘‘good cause’’ exceptions 

by which States may determine good 

cause exists not to suspend payments or 

to suspend payments only in part. In 

new paragraph (e) we have included 

several circumstances that we believe 

constitute ‘‘good cause’’ for a State to 

determine not to suspend payments, or 

not to continue a payment suspension 

previously imposed, to an individual or 

entity despite a pending investigation of 

a credible allegation of fraud. In 

paragraph (e)(1), we propose a good 

cause exception based upon specific 

requests by law enforcement that State 

officials not suspend (or continue to 

suspend) payment. There are numerous 

reasons for which law enforcement 

personnel might make such a request, 

including that imposing a payment 

suspension might alert a potential 

perpetrator to an investigation at an 

inopportune or particularly sensitive 

time, jeopardize an undercover 

investigation, or potentially expose 

whistleblowers or confidential sources. 

In paragraph (e)(2), we propose a good 

cause exception if a State determines 

that other available remedies 

implemented by the State could more 

effectively or quickly protect Medicaid 

funds than would implementing (or 

continuing) a payment suspension. For 

example, law enforcement personnel 

might request that a court immediately 

enjoin potentially unlawful conduct or 

prevent the withdrawal, removal, 

transfer, disposal, or dissipation of 

assets, either or both of which might 

protect Medicaid funds more fully or 

quickly than would imposition of a 

payment suspension. 

Paragraph (e)(3) proposes a good 

cause exception based upon a 

determination by the State agency that 

a payment suspension is not in the best 

interests of the Medicaid program. It is 

conceivable that a State may, in rare 

situations, face exigent circumstances 

with respect to a suspension situation 

not addressed by the other good cause 

exceptions specified here but where it 

otherwise determines suspension would 

not be in the State Medicaid’s programs 

best interests. This broad standard is 

intended to reflect that payment 

suspension is a very serious action that 

can potentially lead to dire 

consequences, but that it is impossible 

to specify detailed contingencies with 

respect to every possible scenario that 

might arise. We do not anticipate that 

States will frequently make use of this 

exception; however where this 

exception is utilized we do require that 

States document their use of this 

exception, and will closely monitor its 

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implementation to determine whether 

further regulation is necessary. We 

solicit comments on this approach. 

In paragraph (e)(4), we propose a good 

cause exception based upon a 

determination by the State of an adverse 

effect of the suspension on beneficiary 

access to necessary items or services. 

We envision there may be scenarios in 

which a payment suspension to a 

provider might jeopardize a provider’s 

ability to continue rendering services to 

Medicaid beneficiaries, thus threatening 

Medicaid beneficiaries’ access to care. 

Utilizing a standard identical to that 

which CMS and the HHS OIG apply in 

assessing requests for waivers of 

exclusion at Parts 402 and 1001 of Title 

42, for example, we posit one basis for 

a good cause exception from payment 

suspension is if a provider under 

investigation is a sole community 

physician or the sole source of 

specialized services available in a 

community. Likewise, in Federallydesignated medically underserved areas 

the potential impact of a payment 

suspension upon a large provider might 

equally threaten recipient access, thus 

this underlies a second access 

exception. We welcome comments on 

this approach, including comments with 

respect to other metrics by which to 

assess potential beneficiary jeopardy in 

terms of access to necessary items or 

services. 

Finally, in paragraph (e)(5) we 

propose a good cause exception that 

would permit (but not require) a State 

to discontinue an existing suspension to 

the extent law enforcement declines to 

cooperate in certifying under the 

requirements of paragraph (d)(3) that a 

matter continues to be under 

investigation and therefore warrants 

continuing the suspension. 

We do not interpret the new provision 

in the ACA as mandating that a State 

must always suspend payments in toto 

in cases of an investigation of a credible 

allegation of fraud. In general, we 

continue to believe a payment 

suspension should apply to all claims 

consistent with the HHS OIG’s 

responses to comments in the 1987 

regulations that it is usually difficult to 

determine which claims are clean 

claims until after an investigation is 

completed, and one purpose of payment 

suspension is to build a type of escrow 

account out of which any overpayments 

can be deducted when an investigation 

is concluded. 

With certain new constraints, we have 

chosen to continue to allow States the 

flexibility to suspend payments in part. 

For example, as stated in the preamble 

to the current regulation, there may be 

times where an investigation is solely 

and definitively centered on only a 

specific type of claim in which case a 

State may determine it is appropriate to 

impose a payment suspension on only 

that type of claim. Likewise, a State 

might determine that an investigation of 

a credible allegation of fraud is limited 

to a particular business unit or 

component of a provider such that a 

suspension need not apply to certain 

business units or components of a 

provider. 

Balancing these approaches, we 

propose to allow States to implement a 

partial payment suspension, or, where 

appropriate, to convert a previously 

imposed full payment suspension to a 

partial payment suspension, if justified 

via a good cause exception. The good 

cause exceptions for partial suspension 

at paragraphs (f)(1) and (2) mirror those 

at paragraphs (e)(4) and (3), 

respectively, and allow the State to 

adopt a partial payment suspension 

where suspension in whole would so 

jeopardize a recipient’s access to items 

or services as to endanger the recipient’s 

life or health, or where the State deems 

it in the best interests of the Medicaid 

program. At paragraph (f)(3), we 

propose that a State may avail itself of 

the good cause exception to suspend 

payments only in part if the nature of 

the credible allegation is focused solely 

and definitively on only a specific type 

of claim or arises from only a specific 

business unit of a provider, and the 

State determines and documents in 

writing that a payment suspension in 

part would effectively ensure that 

potentially fraudulent claims were not 

continuing to be paid. Many such cases 

will still demand suspension in full, but 

this provision, which we anticipate 

States would exercise sparingly, gives 

States flexibility to act otherwise in 

those limited circumstances where 

appropriate. Finally, at paragraph (f)(4), 

we propose that a State may avail itself 

of the good cause exception to convert 

a payment suspension in whole to one 

only in part to the extent law 

enforcement declines to cooperate in 

certifying under the requirements of 

paragraph (d)(3) that a matter continues 

to be under investigation. We solicit 

comment on these proposed 

approaches. 

We propose in new paragraph (g) to 

add several reporting and document 

retention guidelines to § 455.23. 

Payment suspension authority is 

critically important to protect Medicaid 

funds, but payment suspension can 

have dire consequences to a provider. 

Payment suspension authority, 

including a State’s exercise of a good 

cause exception to otherwise address a 

suspension situation, must be exercised 

responsibly by a State at all stages, from 

the inception to the termination of the 

suspension. Through, among other 

things, its State Program Integrity 

Reviews, we expect to maintain close 

oversight of State utilization of 

suspension authority. However, to be 

clear, we expressly and explicitly do not 

expect State compliance (or 

noncompliance) with these 

documentation or retention provisions 

to give rise to any enforceable right of 

a provider aggrieved by any real or 

perceived failures with respect to these 

requirements to seek any form of redress 

(administratively, judicially, or 

otherwise). 

Under these proposed reporting and 

retention guidelines, States are required 

to maintain for a minimum of 5 years 

from the date of issuance all materials 

documenting the life cycle of a payment 

suspension that is imposed, including: 

(1) All notices of suspension of payment 

in whole or part; (2) all fraud referrals 

to MFCUs or other law enforcement 

agencies; (3) all quarterly certifications 

by law enforcement that a matter 

continues to be under investigation; and 

(4) all notices documenting the 

termination of a suspension. Likewise, 

we propose to require States to maintain 

for the same period all documentation 

justifying the exercise of the good cause 

exceptions. Finally, we propose to 

require States to annually report to the 

Secretary information regarding the life 

cycle of each payment suspension 

imposed and any determinations to 

exercise the good cause exceptions not 

to suspend payment, to suspend 

payment only in part, or to discontinue 

a payment suspension. 

To effectuate section 6402(h)(2) of the 

ACA’s prohibition on expenditure of 

FFP where a State fails to suspend 

payments that should, by virtue of the 

ACA standard and this proposed rule, 

have been suspended, we propose to 

add a new § 447.90 that contains both 

the general rule and which refers to the 

exceptions found in § 455.23 for ‘‘good 

cause.’’ Paragraph (a) specifies the basis 

and purpose for the new provision. 

Paragraph (b) specifies the general rule 

that FFP would not be available with 

respect to items or services furnished by 

an individual or entity to whom the 

State has failed to suspend Medicaid 

payments during any period where 

there is pending an investigation of a 

credible allegation of fraud against the 

individual or entity except in specified 

circumstances that include certain 

emergency circumstances, or if good 

cause exists as specified at § 455.23(e) or 

(f). 

As mentioned, we anticipate that 

CMS’ enforcement and monitoring of 

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these provisions will largely be 

accomplished through measures such as 

State Program Integrity reviews 

conducted by CMS. Such reviews will, 

among other things, evaluate States’ 

complaint intake and investigation 

efforts, and assess whether States have 

an effective process to move matters 

where there are found to be credible 

allegations of fraud to the point where 

they are evaluated for payment 

suspension. However, we do not believe 

it is viable to require States to report 

and document to CMS every instance of 

where any allegation of fraud arises and 

further qualify which ones rise to the 

level of credible allegation. We want to 

foster effective and efficient State 

program integrity efforts with respect to 

which payment suspension is an 

integral component, but we do not want 

to create a system so procedurally 

onerous that it overwhelms a State’s 

ability to substantively perform this 

critical work. Nevertheless, we will 

thoroughly investigate and act by, 

among other things, deferring and/or 

disallowing FFP in accordance with 

§ 430.40 and § 430.42, if program 

integrity reviews or other methods of 

ensuring State compliance with 

Medicaid program requirements reveal a 

State is failing to suspend payments (or 

inappropriately applying a good cause 

exception) where pending investigations 

of credible allegations of fraud do exist. 

A State may not claim (on its Form 

CMS–64) FFP for payments that are 

suspended. Any State that does not 

suspend payments, or that suspends 

payments but continues to claim FFP 

with respect to what would have been 

paid had no suspension been in place, 

puts that FFP at risk. In such cases, we 

would pursue a deferral and/or 

disallowance to reclaim the Federal 

portion of such payment. We solicit 

comments on CMS’ proposed oversight 

approach. 

Finally, three provisions are proposed 

to be added to the regulations at 

§ 1007.9 that specify the State MFCU’s 

relationship to, and agreement with, the 

State Medicaid agency. These proposed 

revisions are necessary to effectuate the 

proposed revisions under § 455.23. The 

regulations at 42 CFR part 1007 are 

enforced by HHS OIG as part of its 

delegated authority to certify and fund 

the State MFCUs. (See August 15, 1979 

final rule (44 FR 47811)). However, we 

are including amendments to part 1007 

here to ensure a comprehensive 

regulatory package that sets forth in one 

location the Department’s 

implementation of the suspension 

provisions of section 6402(h) of the 

ACA. 

The first of these provisions proposes 

to add a new paragraph (e) to § 1007.9 

that specifies that the MFCU may refer 

to the State agency any provider against 

which there is pending an investigation 

of a credible allegation of fraud for 

purposes of payment suspension in 

accord with § 455.23. Allegations of 

potential fraud may first be identified by 

the MFCU rather than by the State 

agency, so this provision merely 

formalizes a path from the MFCU to the 

State agency so a payment suspension 

may be implemented where appropriate. 

This provision also proposes that any 

referral to the State agency for 

consideration of a payment suspension 

be in writing. The written referral need 

not be extensive, but must include 

information adequate to enable the State 

agency to identify the provider and a 

brief explanation of the credible 

allegations forming the grounds for the 

payment suspension. The second 

proposed addition to § 1007.9 proposes 

to add a new paragraph (f) providing 

that any request by the unit to the State 

agency to delay notification of 

suspension to a provider pursuant to the 

provisions of the proposed 

§ 455.23(b)(1)(ii) come in writing. 

Proposing to require that such requests 

need be made in writing (which could 

take the form of an e-mail) provides for 

an audit trail to ensure that proper 

procedures are followed. However, we 

expressly do not intend for this 

requirement to create any substantive 

right upon which a provider might 

lodge objection or other legal challenge 

to the extent the proper procedures were 

not followed. Last, a new paragraph (g) 

is proposed to require the unit to notify 

the State agency in writing when it has 

accepted or declined a case referred by 

the State agency. Aside from also 

creating an audit trail, this proposed 

provision would be important in that it 

would alert the State agency as to the 

status of a referral, which would shape 

how the State agency would handle a 

suspension under the proposed 

revisions to § 455.23. 

E. Proposed Approach and Solicitation 

of Comments for Sections 6102 and 

6401(a) of the ACA—Ethics and 

Compliance Program 

Under section 6102 of the ACA which 

established new section 1128I of the 

Act, a nursing facility (NF) or SNF shall 

have in operation a compliance and 

ethics program that is effective in 

preventing and detecting criminal, civil, 

and administrative violations and in 

promoting quality of care, consistent 

with regulations developed by the 

Secretary, working jointly with the HHS 

OIG. The regulations to establish the 

compliance and ethics program for 

operating organizations may include a 

model compliance program. The statute 

requires that in the case of an 

organization that has five or more 

facilities, the formality or specific 

elements of the program vary with the 

size of the organization. The statute also 

requires that not later than 3 years after 

the effective date of the regulations, the 

Secretary shall complete an evaluation 

of the programs to determine if such 

programs led to changes in deficiency 

citations, changes in quality 

performance, or changes in the quality 

of resident care. The Secretary shall 

submit to Congress a report on such 

evaluation with recommendations for 

changes in the requirements, as the 

Secretary deems appropriate. 

Similarly, under section 6401(a) of the 

ACA, which established a new section 

1866(j)(8) of the Act, a provider of 

medical or other items or services or a 

supplier shall, as a condition of 

enrollment in Medicare, Medicaid or 

CHIP, establish a compliance program 

that contains certain ‘‘core elements.’’ 

The statute requires the Secretary, in 

consultation with the HHS OIG, to 

establish the core elements for providers 

or suppliers within a particular industry 

or category. The statute allows the 

Secretary to determine the date that 

providers and suppliers need to 

establish the required core elements as 

a condition of enrollment in Medicare, 

Medicaid, and CHIP. The statute 

requires the Secretary to consider the 

extent to which the adoption of 

compliance programs by providers or 

suppliers is widespread in a particular 

industry sector or particular provider or 

supplier category. Please note, NFs and 

SNFs are subject to both compliance 

plan requirements under sections 6102 

and 6401(a) since section 6401(a) of the 

ACA includes all providers and 

suppliers enrolling into Medicare, 

Medicaid and CHIP. We intend to 

establish compliance program core 

elements per section 6401(a) of the ACA 

for NFs and SNFs that closely match the 

required components of a compliance 

program per section 6102 of the ACA. 

In order to consider the views of 

industry stakeholders, we are soliciting 

comments on compliance program 

requirements included in the ACA. We 

do not intend to finalize compliance 

plan requirements when the other 

proposals in this proposed rule are 

finalized; rather, we intend to do further 

rulemaking on compliance plan 

requirements and will advance specific 

proposals at some point in the future. 

We are most interested in receiving 

comments on the following: 

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58228 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 

The use of the seven elements of an 

effective compliance and ethics program 

as described in Chapter 8 of the U.S. 

Federal Sentencing Guidelines Manual 

(http://www.ussc.gov/2010guid/

20100503_Reader_Friendly_Proposed_

Amendments.pdf, pp. 31–35) as the 

basis for the core elements of the 

required compliance programs for 

Medicare, Medicaid and CHIP 

enrollment. These elements instill a 

commitment to prevent, detect and 

correct inappropriate behavior and 

ensure compliance with all applicable 

laws, regulations and requirements, and 

include— 

• The development and distribution 

of written policies, procedures and 

standards of conduct to prevent and 

detect inappropriate behavior; 

• The designation of a chief 

compliance officer and other 

appropriate bodies (for example a 

corporate compliance committee) 

charged with the responsibility of 

operating and monitoring the 

compliance program and who report 

directly to high-level personnel and the 

governing body; 

• The use of reasonable efforts not to 

include any individual in the 

substantial authority personnel whom 

the organization knew, or should have 

known, has engaged in illegal activities 

or other conduct inconsistent with an 

effective compliance and ethics 

program; 

• The development and 

implementation of regular, effective 

education and training programs for the 

governing body, all employees, 

including high-level personnel, and, as 

appropriate, the organization’s agents; 

• The maintenance of a process, such 

as a hotline, to receive complaints and 

the adoption of procedures to protect 

the anonymity of complainants and to 

protect whistleblowers from retaliation; 

• The development of a system to 

respond to allegations of improper 

conduct and the enforcement of 

appropriate disciplinary action against 

employees who have violated internal 

compliance policies, applicable statutes, 

regulations or Federal health care 

program requirements; 

• The use of audits and/or other 

evaluation techniques to monitor 

compliance and assist in the reduction 

of identified problem areas; and 

• The investigation and remediation 

of identified systemic problems 

including making any necessary 

modifications to the organization’s 

compliance and ethics program. 

In addition, we are particularly 

interested in comments about the 

following: 

• The extent to which, and the 

manner in which, providers and 

suppliers already incorporate each of 

the seven U.S. Federal Sentencing 

Guidelines elements into their 

compliance programs or business 

operations. We are interested in how 

and to what degree each element has 

been incorporated effectively into the 

compliance programs of different types 

of providers and suppliers considering 

their risk areas, business model and 

industry sector or particular provider or 

supplier category. 

• Any other suggestions for 

compliance program elements beyond, 

or related to, the seven elements 

referenced above considering provider 

or supplier risk areas, business model 

and industry sector or particular 

provider or supplier category including 

whether external and/or internal quality 

monitoring should be a required for 

hospitals and long-term care facilities. 

• The costs and benefits of 

compliance programs or operations 

including aggregate or component costs 

and benefits of implementing particular 

elements and how these costs and 

benefits were measured. 

• The types of systems necessary for 

effective compliance, the costs 

associated with these systems and the 

degree to which providers and suppliers 

already have these systems including, 

but not limited to, tracking systems, 

data capturing systems and electronic 

claims submission systems. We 

anticipate having providers and 

suppliers evaluate the effectiveness of 

their compliance plans using electronic 

data. 

• The existence of and experience 

with state or other compliance 

requirements for various providers and 

suppliers and foreseeable conflicts or 

duplication from multiple requirements. 

• The criteria we should consider 

when determining whether, and if so, 

how to divide providers and suppliers 

into groupings that would be subject to 

similar compliance requirements 

including whether individuals should 

have different compliance obligations 

from corporations. 

• Available research or individual 

experience regarding the current rate of 

adoption and level of sophistication of 

compliance programs for providers or 

suppliers based on their business model 

and industry sector or particular 

provider or supplier category. 

• How effective compliance programs 

have been for varied providers and 

suppliers and how the level of 

effectiveness was measured. 

• The extent to which providers and 

suppliers currently use third party 

resources, such as consultants, review 

organizations, and auditors, in their 

compliance efforts. 

• The extent to which providers and 

suppliers have already identified staff 

responsible for compliance and, for 

those who already have staff responsible 

for compliance, the positions of these 

staff. 

• A reasonable timeline for 

establishment of a required compliance 

program for various types and sizes of 

providers and suppliers, assuming the 

compliance program core elements were 

based on the aforementioned U.S. 

Federal Sentencing Guidelines’ seven 

elements of an effective compliance and 

ethics program, considering business 

model and industry sector or particular 

provider or supplier category. 

We welcome any information 

concerning how the industry views 

compliance program elements and how 

we can establish required compliance 

program elements to protect Medicare, 

Medicaid, and CHIP from fraud and 

abuse. 

F. Termination of Provider Participation 

Under the Medicaid Program and CHIP 

if Terminated Under the Medicare 

Program or Another State Medicaid 

Program or CHIP 

1. Discussion 

Effective provider screening prevents 

excluded providers from enrolling in 

government health care programs and 

being paid with Federal and State funds. 

Providers barred from participating 

because of effective screening cannot 

abuse Medicare, Medicaid, or CHIP. 

When a State terminates a provider 

but does not share that information with 

any other State, all other States become 

vulnerable to potential fraud, waste, and 

abuse committed by that provider. 

Similarly, a provider, supplier, or 

eligible professional that has been 

terminated from Medicare or has had 

Medicare billing privileges revoked may 

enroll with a State Medicaid program or 

with CHIP when a State is not aware of 

the Medicare termination or revocation. 

We may terminate or revoke the billing 

privileges of a provider, supplier, or 

eligible professional under Medicare for 

a number of reasons, as set forth at 

§ 424.535, including exclusion from 

health care programs, government-wide 

debarment, and conviction of violent 

felonies and financial crimes. 

Section 6501 Affordable Care Act 

requires a State’s Medicaid program to 

terminate an individual or entity’s 

participation in the program (subject to 

certain limitations on exclusions in 

sections 1128(c)(2)(B) and 1128(d)(2)(B) 

of the Act), if the individual or entity 

has been terminated under Medicare or 

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another State’s Medicaid program. 

Although the term ‘‘termination’’ only 

applies to providers under Medicare 

whose billing privileges have been 

revoked (and does not apply to 

Medicare suppliers or eligible 

professionals), we believe it was the 

intent of the Congress that this 

requirement also be applicable to 

suppliers and eligible professionals that 

have had their billing privileges under 

Medicare revoked as well. Therefore, we 

are proposing that ‘‘termination’’ be 

inclusive of situations where an 

individual’s or entity’s billing privileges 

have been revoked. The requirement for 

States to terminate would only apply in 

cases where providers, suppliers, or 

eligible professionals were terminated 

or had their billing privileges revoked 

for cause, for example, for reasons based 

upon fraud, integrity or quality, and not 

in cases where the providers, suppliers, 

or eligible professionals were 

terminated or had their billing 

privileges revoked based upon a failure 

to submit claims over a period of 12 

months or more, or any other voluntary 

action taken by the provider to end its 

participation in the program, except 

where that voluntary action is taken to 

avoid a sanction. 

In addition, State Medicaid programs 

would terminate a provider only after 

the provider had exhausted all available 

appeal rights in the State that originally 

terminated the provider. 

Section 6501 of the ACA builds upon 

the requirements in section 6401(b)(2) of 

the ACA, which requires that CMS 

establish a process to make available 

Medicare provider, supplier, and 

eligible professional and CHIP provider 

termination information to State 

Medicaid programs. Section 1902(ii)(6) 

of the Act also requires States to report 

adverse provider actions to CMS, 

including criminal convictions, 

sanctions, and negative licensure 

actions. 

When States are apprised of the 

terminations or revocations of billing 

privileges, as the case may be, of 

providers, suppliers, and eligible 

professionals that have occurred in 

other State Medicaid programs, CHIP, or 

in Medicare, States have the information 

they need to protect their programs. 

2. Statutory Change 

Section 6501 of the ACA amends 

section 1902(a)(39) of the Act to require 

a State Medicaid program to terminate 

any provider, be it an individual or 

entity, participating in that program, 

subject to the limitations on exclusions 

in sections 1128(c)(2)(B) and 

1128(d)(2)(B) of the Act, if the 

provider’s participation has been 

terminated under title XVIII of the Act 

or another State’s Medicaid program. 

3. Proposed Requirements 

We propose at 42 CFR 455.416 that a 

State Medicaid program must deny 

enrollment or terminate the enrollment 

of a provider that is terminated on or 

after January 1, 2011 under Medicare, or 

has had its billing privileges revoked, or 

is terminated on or after January 1, 2011 

under any other State’s Medicaid 

program or CHIP. 

While section 6501 of the ACA does 

not expressly require that individuals or 

entities that have been terminated under 

Medicare or Medicaid also be 

terminated from CHIP, we also propose, 

under our general rulemaking authority 

pursuant to section 1102 of the Act, to 

require in CHIP regulations that CHIP 

take similar action to terminate a 

provider terminated or revoked under 

Medicare, or terminated under any other 

State’s Medicaid program or CHIP. 

We also propose to add a definition at 

§ 455.101 for termination for purposes 

of this section. That definition 

distinguishes between Medicaid 

providers and Medicare providers, 

suppliers, and eligible professionals and 

specifies that termination means a State 

Medicaid program or the Medicare 

program has taken action to revoke the 

Medicaid provider’s or Medicare 

provider, supplier or eligible 

professional’s billing privileges and the 

provider, supplier or eligible 

professional has exhausted all 

applicable appeal rights. There is no 

expectation on the part of the provider, 

supplier, or eligible professional or the 

State or Medicare program that the 

termination or revocation is temporary. 

The provider, supplier or eligible 

professional would be required to 

reenroll with the applicable program if 

they wish billing privileges to be 

reinstated. 

G. Additional Medicare Provider 

Enrollment Provisions 

In § 424.535(a)(11), we propose 

allowing CMS or its designated 

Medicare contractor to revoke Medicare 

billing privileges when a State Medicaid 

agency terminates, revokes, or suspends 

a provider or supplier’s Medicaid 

enrollment or billing privileges. We 

believe that this approach works in 

tandem with section 6501 of the ACA 

which requires States to terminate a 

provider or supplier under the Medicaid 

program when the provider or supplier 

has been terminated by Medicare or by 

another State’s Medicaid program. 

Moreover, we believe that providers and 

suppliers whose enrollment has been 

terminated by a State Medicaid program 

pose an increased risk to the Medicare 

program. 

III. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

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 Application Fee 

Hardship Exception (§ 424.514) 

Proposed § 424.514(e) states that a 

provider or supplier that believes it has 

a hardship that justifies a waiver 

exception of the application fee must 

include with its enrollment application 

a letter that describes the hardship and 

why the hardship justifies a waiver 

exception. The burden associated with 

this proposed requirement would be the 

time and effort necessary to submit a 

Medicare enrollment application, which 

is required currently of any individual 

or entity enrolling in Medicare. In 

addition to the enrollment application, 

a provider or supplier would have the 

new burden of drafting and submitting 

a letter to justify its hardship waiver 

request should it choose to submit one. 

The burden associated with submitting 

Medicare enrollment applications is 

approved under both 0938–0685 and 

0938–1056, the CMS Forms 855–A, B, 

and the CMS–855–S (or their associated 

Internet-based PECOS enrolment 

application), respectively. Although we 

have no way of knowing for certain how 

many entities will actually submit an 

application with a letter requesting a 

waiver, we know that initially there are 

likely to be more such requests in the 

early years of implementation than in 

later years. We estimate that in the first 

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year, 12,000 providers or suppliers –or 

slightly over 50 percent of the total 

number of providers and suppliers that 

we believe (as discussed in the section 

V. of this proposed rule) will be subject 

to the application fee—will submit 

waiver request letters as part of their 

application packages. We also estimate 

that it will take each provider or 

supplier 1 hour to develop the letter. 

The total estimated annual burden 

associated with this requirement is 

therefore 12,000 hours at a cost of 

$600,000, or $50.00 per waiver request. 

B. ICRs Regarding Fingerprinting 

(§ 424.518 and § 455.434) 

Proposed § 424.518(c) which reads: 

‘‘In addition to the ‘‘limited’’ and 

‘‘moderate’’ screening requirements 

described in (a) and (b) above, the 

Medicare enrollment contractor shall 

conduct a criminal background check or 

require the submission of set of 

fingerprints using the FD–258 standard 

fingerprint card when a prospective 

home health agency or supplier of 

DMEPOS is enrolling into the Medicare 

program or is establishing a new 

practice location and is not publiclytraded on the NYSE or NASDAQ,’’ 

would allow CMS, its agents or its 

designated contractors to require the 

submission of a set of fingerprints using 

the FD–258 standard fingerprint card. 

Similarly, proposed § 424.518(d) which 

reads in part: ‘‘An individual must 

submit a set of fingerprints using the 

FD–258 standard fingerprint card with 

the Medicare enrollment application or 

within 30 days of a Medicare contractor 

request. An individual who does not 

submit a set of fingerprints using the 

FD–258 standard fingerprint card with 

the Medicare enrollment revalidation or 

revalidation application or within 30 

days of a Medicare contractor request, 

may have his/her Medicare billing 

privileges denied,’’ would allow CMS, 

its agents or its designated contractors to 

require that each owner, authorized 

official, delegated official, and managing 

employee, of a provider or supplier to 

submit a set of fingerprints using the 

FD–258 standard fingerprint card. We 

estimate that CMS or its designated 

contractors will make 7,000 such 

requests per year. This is predicated on 

our projection that—based on 2009 

statistics—roughly 7,000 DMEPOS 

suppliers and HHAs will annually 

enroll in Medicare. For purposes of this 

ICR statement only, and to ensure that 

we do not underestimate the possible 

burden, we will estimate that all of 

these providers and suppliers will be 

required to submit the standard 

fingerprint card. We further estimate 

that an average of five individuals per 

provider or supplier will be required to 

comply with this request, though we do 

seek comments—for purposes of this 

ICR and the RIA below—on whether the 

estimate of 5 individuals per applicant 

is accurate. Additionally, we estimate 

that it will take each of the 35,000 

respondents (7,000 × 5) a total of 2 

hours to obtain a set of fingerprints 

using the FD–258 standard fingerprint 

card and to submit the card to CMS or 

its designated contractor. Consequently, 

the total estimated annual burden 

associated with this requirement is 

70,000 hours (35,000 respondents × 2 

hours) at a cost of $3.5 million (70,000 

hours × an estimated per hour cost of 

$50). 

Similarly, proposed § 424.518(c)(3)(iv) 

(new providers in ‘‘high’’ risk category 

after lifting of moratoria) would allow 

CMS, its agents or its designated 

contractors to require that each owner, 

authorized official, delegated official, 

and managing employee, of a provider 

or supplier to submit a set of 

fingerprints using the FD–258 standard 

fingerprint card. The burden associated 

with the proposed requirement is the 

time and effort necessary for the owner, 

authorized official, delegated official, 

and managing employee of a provider or 

supplier to submit the required 

information upon request. We estimate 

that CMS or its designated contractors 

will make 2,000 requests per year. This 

is based on the number of providers and 

suppliers that we estimate will attempt 

to enroll in Medicare after the lifting of 

a moratorium for their respective 

provider or supplier type. This estimate 

of course, cannot be conclusively 

quantified because it is impossible for 

us to say with certainty which provider 

and supplier types will be subject to a 

moratorium. To ensure that we do not 

underestimate the potential burden, we 

will calculate projections should 5,000 

or even 10,000 requests be made. 

We estimate that an average of five 

individuals per provider or supplier 

will be required to comply with this 

request. We further project that it will 

take each of the 10,000 respondents 

(2,000 × 5) a total of 2 hours to obtain 

a set of fingerprints using the FD–258 

standard fingerprint card and to submit 

the card to CMS or its designated feefor-service contractor. The estimate 

annual burden associated with this 

requirement, based on 2000 requests, is 

20,000 hours (10,000 respondents × 2 

hours) at a cost of $1 million (20,000 × 

$50 per hour). If 5,000 requests are 

made, the burden is 50,000 hours at a 

cost of $2.5 million (5,000 × 5 

respondents × 2 hours × $50 per hour.) 

If 10,000 requests are made, the burden 

is 100,000 hours at a cost of $5 million 

(10,000 × 5 respondents × 2 hours × $50 

per hour). 

In addition, there are some limited 

circumstances when CMS could ask a 

physician to submit fingerprints. For 

example, a provider or supplier that is 

being enrolled in Medicare after the 

lifting of a temporary moratorium could 

automatically be classified as ‘‘high’’ risk 

and as such would be subject to 

criminal background checks and 

fingerprinting of owners and other 

officials in the company. If a physician 

were to be the owner or other official of 

the company, CMS would have the 

authority to request fingerprints from 

the company official. Other 

circumstances where physicians might 

be subject to a request for finger printing 

are when the physician is an official of 

an entity in the ‘‘high’’ risk category, or 

if CMS or its agent(s) determine that a 

particular provider or supplier in the 

‘‘high’’ risk category is possibly engaged 

in fraud. We estimate that CMS or its 

designated contractors will make 500 

such requests for finger prints per year. 

We further estimate that it will take 

each of the 500 respondents a total of 2 

hours to obtain a set of fingerprints 

using the FD–258 standard fingerprint 

card and to submit the card to CMS or 

its contractor. The total estimate annual 

burden associated with this requirement 

is 1,000 hours (500 respondents × 2 

hours) at a cost of $50,000 (1,000 hours 

× $50 per hour). 

Assuming that 2,000 post-moratorium 

requests for fingerprints are made, the 

total estimated annual burden 

associated with the requirements in this 

ICR is 103,000 hours at a cost of 

$5,150,000. If 5,000 post-moratorium 

requests are made, the estimated annual 

burden is 133,000 hours at a cost of 

$6,650,000. If 10,000 post-moratorium 

requests are made, the estimated annual 

burden is 183,000 hours at a cost of 

$9,150,000. 

Proposed § 455.434 states that when a 

State Medicaid agency determines that a 

provider is ‘‘high’’ risk, the State 

Medicaid agency will require that 

provider to submit fingerprints. We 

anticipate that States will be collecting 

fingerprints on a significantly smaller 

number of providers. However, as with 

our estimate on potential burden 

discussed for Medicare, we prefer to 

overestimate the potential burden rather 

than underestimate it. Therefore, we 

anticipate that States may require an 

additional 26,000 individuals to submit 

fingerprints prior to enrolling in a 

State’s Medicaid program or CHIP. The 

total estimate annual burden associated 

with this requirement for Medicaid and 

CHIP is 52,000 hours (26,000 

respondents × 2 hours) at a cost of 

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$2,600,000 (52,000 hours × $50 per 

hour). 

C. ICRs Regarding Suspension of 

Payments in Cases of Fraud or Willful 

Misrepresentation (§ 455.23) 

As stated in proposed § 455.23(a), a 

State Medicaid agency shall suspend all 

Medicaid payments to a provider when 

there is pending an investigation of a 

credible allegation of fraud under the 

Medicaid program against an individual 

or entity unless it has good cause to not 

suspend payments or to suspend 

payment only in part. The State 

Medicaid agency may suspend 

payments without first notifying the 

provider of its intention to suspend 

such payments. A provider may request, 

and must be granted, administrative 

review where State law so requires. 

The burden associated with this 

requirement is the time and effort 

necessary for a provider to request 

administrative review were State law so 

requires. While this requirement is 

subject to the PRA, we believe the 

associated burden is exempt in 

accordance with 5 CFR 1320.4; 

information collected subsequent to an 

administrative action is not subject. 

D. ICRs Regarding Collection of SSNs 

and DOBs for Medicaid and CHIP 

Providers (§ 455.104) 

As stated in proposed § 455.104(b)(1), 

the State Medicaid agency must require 

that all persons with an ownership or 

control interest in a provider submit 

their SSN and DOB. The burden 

associated with the Medicaid 

requirements in § 455.104(b)(1) is the 

time and effort necessary for a provider 

to report the SSN and DOB for all 

persons with an ownership or control 

interest in a provider. 

Although our data on Medicaid 

provider enrollment at the national level 

is very limited, we do collect annual 

data on State Medicaid program 

integrity activities. This annual data 

collection, known as the State Program 

Integrity Assessment (SPIA) program 

approved, under OCN 0938–1033, 

consists of self-reported data by States 

regarding a variety of program integrity 

related activities. The information is 

self-reported and has not been 

independently verified by CMS, and it 

undoubtedly represents some unknown 

degree of duplication among providers 

across States. Consequently, the 

estimated number of Medicaid 

providers nationally is likely overstated. 

According to SPIA data for FFYs 2007 

and 2008, there has been an average of 

1,855,070 existing Medicaid providers 

nationally over the 2-year period of FFY 

2007 and FFY 2008. We estimate that 

one-fifth, or 371,014 (1,855,070 × 20 

percent) of existing Medicaid providers 

would be required to re-enroll each 

year. Additionally, we estimate that 

there will be 56,250 newly enrolling 

Medicaid providers each year, for a total 

of 427,264 Medicaid providers that will 

be subject to the SSN and DOB reporting 

requirements each year. We further 

estimate that it will take each provider 

an average of 2 minutes to report the 

SSN and DOB for all persons with an 

ownership or control interest. Thus, the 

estimate annual burden associated with 

this requirement for Medicaid providers 

is 14,242 hours (427,264 × 2 minutes, 

divided by 60 minutes per hr) at a cost 

of $712,100 (14,242 hours × $50 per 

hour). 

E. ICRs Regarding Site Visits for 

Medicaid-Only or CHIP-Only Providers 

(§ 455.450) 

As stated in proposed in § 455.450(b), 

a State Medicaid agency must conduct 

on-site visits for providers it determines 

to be ‘‘moderate’’ or ‘‘high’’ categorical 

risk. We anticipate that Medicare 

contractors will perform the screening 

activities for the overwhelming majority 

of providers that are dually enrolled in 

both Medicare and Medicaid, and thus, 

we estimate that State Medicaid 

agencies will conduct approximately 

5,000 site visits for Medicaid-only 

providers nationally per year. We 

further estimate that it will take one 

individual 8 hours to perform each onsite visit (including travel time). Thus, 

the total estimate annual burden 

associated with this requirement for 

Medicaid is 40,000 hours (5,000 site 

visits × 8 hours) at a cost of $2,000,000 

(40,000 hours × $50 per hour). 

F. ICRs Regarding the Rescreening of 

Medicaid Providers Every 5 Years 

(§ 455.414) 

As stated in proposed § 455.414, a 

State Medicaid agency must screen all 

providers at least every 5 years. This 

requirement is consistent with the 

Medicare requirement that providers, 

suppliers, and eligible professionals 

must re-enroll at least every 5 years 

(more often for certain types of 

suppliers). The burden associated with 

this proposed requirement would be the 

time and effort necessary for Medicaidonly providers to re-enroll in Medicaid, 

and the time and effort necessary for a 

State to conduct the provider screening, 

Although our data on Medicaid 

provider enrollment at the national level 

is very limited, we do collect annual 

data on State Medicaid program 

integrity activities. This annual data 

collection, known as the State Program 

Integrity Assessment (SPIA) program, 

consists of self-reported data by States 

regarding a variety of program integrity 

related activities. The information is 

self-reported and has not been 

independently verified by CMS, and it 

undoubtedly represents some unknown 

degree of duplication among providers 

across States. Consequently, the 

estimated number of Medicaid 

providers nationally is likely overstated. 

According to SPIA data for FFYs 2007 

and 2008, there has been an average of 

1,855,070 existing Medicaid providers 

nationally over the 2-year period of FFY 

2007 and FFY 2008. We estimate that 

one-fifth, or 371,014 (1,855,070 × 20 

percent) of existing Medicaid provider 

would be required to re-enroll each 

year, Although provider enrollment 

requirements vary by State, we further 

estimate that it will take each provider 

an average of 2 hours to complete the 

Medicaid re-enrollment requirements. 

Thus, the estimate annual burden 

associated with this requirement for 

Medicaid providers is 742,028 hours 

(371,014 × 2 hours) at a cost of 

$37,101,400 (742,028 hours × $50 per 

hour). 

We estimate that 80 percent of 

Medicaid providers also participate in 

Medicare, and thus would have 

provider screening activities performed 

by the Medicare contractors. Thus, we 

estimate that States would be required 

to conduct provider screening activities 

for 74,203 (371,014 × 20 percent) reenrolling Medicaid-only providers each 

year. We further estimate that it will 

take States, on average, 4 hours to 

perform the required provider screening 

activities—noting that currently 

enrolled providers would generally be 

categorized as lower risk than newlyenrolling providers. The estimated 

burden associated with this requirement 

for State Medicaid agencies is 296,812 

hours (74,203 × 4 hours) at a cost of 

$14,840,600 (296,812 hours × $50 per 

hour). We believe that the burden on 

States will be in large part offset by the 

application fees collected and by the 

Federal share for the amounts not 

covered by the application fee. 

The total estimate annual burden 

associated with this requirement is 

1,038,840 hours at a cost of $51,942,000. 

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TABLE 6—ESTIMATED ANNUAL REPORTING/RECORDKEEPING BURDEN

Regulation section(s) 

OMB 

Control 

No. 

Respondents Responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

Total 

labor 

cost of 

reporting 

($) 

Total capital/ 

maintenance 

costs 

($) 

Total cost 

($) 

§ 424.514(e)** ............... 0938–0685; 

0938– 

1056.

12,000 12,000 1 12,000 50 600,000 0 600,000 

§ 424.518(c)(2)(b) and 

(d).

0938–New .. 35,000 35,000 2 70,000 50 3,500,000 0 3,500,000 

§ 424.518(c)(3)(iv) and 

(d).

0938–New .. 10,500 10,500 2 21,000 50 1,050,000 0 1,050,000 

§ 455.434 ...................... 0938–New .. 26,000 26,000 2 52,000 50 2,600,000 0 2,600,000 

§ 455.104 ...................... 0938–New .. 427,264 427,264 .033 14,242 50 712,100 0 712,100 

§ 455.450 ...................... 0938–New .. 5,000 5,000 8 40,000 50 2,000,000 0 2,000,000 

§ 455.414 (Providers) ... 0938–New .. 371,014 371,014 2 742,028 50 37,101,400 0 37,101,400 

§ 455.414 (State Medicaid Agencies).0938–New .. 74,203 74,203 4 296,812 50 14,840,600 ........................ 14,840,600 

Total ....................... .................... 960,981 960,981 .................... 1,248,082 .................... ...................... ........................ 62,404,100 

** Denotes that we will be submitting revisions of the currently approved information collection requests for OMB review and approval. 

IV. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Regulatory Impact Analysis 

A. Overall Impact 

We have examined the impact of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 1993), 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 (Pub. L. 

104–4), Executive Order 13132 on 

Federalism (August 4, 1999), and the 

Congressional Review Act (U.S.C. 

804(s). 

Executive Order 12866 directs 

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 

rules with economically significant 

effects ($100 million or more in any 1 

year). This rule does reach the economic 

threshold and thus is considered an 

economically significant rule. 

The RFA requires agencies to analyze 

options for regulatory relief for small 

businesses. Under the RFA, we must 

either prepare an Initial Regulatory 

Flexibility Analysis or certify that the 

proposed rule will not have a significant 

impact on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and 

government agencies. Most hospitals 

and most other providers and suppliers 

are small entities, either by nonprofit 

status or by having revenues of less than 

$7.0 to $34.5 million (depending on 

provider type) in any one year. 

Individuals and States are not included 

in the definition of a small entity. HHS 

practice is to assume that all providers 

affected by our rules are small entities, 

since we know that the vast majority 

meet the criteria used under the RFA. 

We do not believe that our application 

fees will have a significant impact on 

any small entities. Likewise, we do not 

believe that other screening provisions, 

such as the provision of fingerprints or 

accommodating unannounced visits, 

will have a significant impact on any 

small entities. We think this proposed 

rule could have significant impact on a 

relatively small proportion of small 

businesses in terms of restrictions on 

Federal health monies paid to small 

businesses participating in the Medicare 

or Medicaid programs or CHIP. Clearly, 

imposition of an enrollment moratorium 

would have an impact on a small 

business that is attempting to do 

business with any of the Federal health 

programs. Similarly, suspension of 

payments to any small entity could 

create a significant impact on that 

entity. We have, however, no basis for 

estimating how many entities might be 

affected by these provisions. Finally, we 

believe that this proposed rule will 

reduce fraud and abuse among potential 

providers. Clearly, there will be a 

significant impact on their ability to 

defraud the taxpayer in several ways. 

First, closer screening of certain highrisk providers and suppliers will better 

enable CMS to detect those individuals 

and entities that pose a risk to the 

Medicare program. Preventing 

unqualified providers and suppliers 

from enrolling in Medicare will protect 

the Medicare Trust Fund and save the 

taxpayers millions of dollars. Second, 

an application fee will help reduce the 

costs of administering the Medicare 

program. Third, the temporary 

moratoria provisions will enable CMS to 

restrict the entry of certain providers 

and suppliers into Medicare in order to 

prevent or combat fraud, waste, and 

abuse, thus, again, saving millions of 

Federal dollars. While we cannot 

quantify with exactitude the amount of 

money that the Medicare program will 

save as a result of these measures, we do 

believe that the figure will exceed the 

costs outlined in this RIA. We are 

seeking comment on the overall 

proposed screening processes described 

in section II.A. of this proposed rule, 

including how the risk of fraud is 

determined, the administrative 

interventions proposed to address the 

risk, and the criteria for exceptions to 

the enrollment application fee and any 

temporary enrollment moratoria. We ask 

small businesses to comment on these 

provisions and offer suggestions about 

how to mitigate what they might see as 

adverse administrative or financial 

impacts. This RIA, taken together with 

the remainder of the preamble, 

constitutes an Initial Regulatory 

Flexibility Analysis under the RFA. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

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as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. We are not 

preparing an analysis for section 1102(b) 

of the Act because we have determined 

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 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditure in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $135 million. This rule 

does mandate expenditures by State and 

local governments, in order to enforce 

the Medicaid-related provisions, but we 

believe that those expenditures will be 

relatively minor. The mandated costs on 

providers—primarily for application 

fees—may approach or exceed the 

threshold for the private sector. 

Accordingly, this RIA constitutes the 

required assessment of costs and 

benefits under UMRA. 

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 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Since this proposed rule would not 

impose any substantial direct 

requirement costs on State or local 

governments, preempt State law, or 

otherwise have Federalism implication, 

the requirements of E.O. 13132 are not 

applicable. 

B. Anticipated Effects 

1. Medicare 

a. Enhanced Screening Procedures— 

Medicare 

Based on statistics obtained from 

PECOS and our Medicare contractors, 

there are approximately 400,000 

providers and suppliers currently 

enrolled in the Medicare program. (This 

does not include eligible professionals.) 

This figure includes ambulance service 

suppliers; ambulatory surgical centers; 

community mental health centers; 

comprehensive outpatient rehabilitation 

facilities; suppliers of DMEPOS; endstage renal disease facilities; federally 

qualified health centers; 

histocompatibility laboratories; home 

health agencies; hospices; hospitals, 

including physician-owned specialty 

hospitals; critical access hospitals; 

independent clinical laboratories; 

independent diagnostic testing facilities; 

Indian health service facilities; 

mammography centers; mass 

immunizers (roster billers); medical 

groups/clinics, including single and 

multi-specialty clinics; organ 

procurement organizations; outpatient 

physical therapy/occupational therapy/ 

speech pathology services; portable Xray suppliers; skilled nursing facilities; 

radiation therapy centers; religious nonmedical health care institutions; and 

rural health clinics. We note the 

following in section III. of this proposed 

rule: 

• Based on 2009 experience we 

estimate that there will be 7,000 

DMEPOS suppliers and HHAs that will 

submit an application to become a new 

Medicare enrolled provider in 2011. We 

would require approximately 35,000 

individuals (7,000 providers/suppliers × 

5 individuals per applicant) to undergo 

fingerprinting to participate in the 

Medicare program as an owner, 

authorized official, delegated official, or 

managing employee of an HHA or 

supplier of DMEPOS. We have found 

that the cost of having a set (two prints) 

of fingerprints done through a local law 

enforcement office is approximately 

$50.00 per individual. The cost of this 

fingerprinting requirement would 

therefore be $1.75 million per year 

(35,000 individuals × $50). 

• We estimate that 10,000 individuals 

(2,000 providers or suppliers × 5 

individuals per applicant) would 

undergo fingerprinting following the 

lifting of a moratorium on a particular 

provider or supplier type, at a cost of 

$500,000 per year (10,000 × $50). 

Should requests be made of 5,000 

providers or suppliers, the annual figure 

would be $1,250,000 (5,000 × 5 

individuals per applicant × $50). Should 

requests be made of 10,000 providers or 

suppliers, the annual figure would be 

$2.5 million (10,000 × 5 × $50). 

• We estimate that 500 physicians 

would undergo fingerprinting per year, 

at a cost of $25,000. 

This results in a total cost of the 

fingerprinting requirement of 

$2,275,000 per year ($1,750,000 + 

$500,000 + $25,000), or $11,375,000 

over 5 years. If 5,000 post-moratorium 

requests are made, the annual cost is 

$3,025,000, with a 5-year cost of 

$15,125,000. Should 10,000 postmoratorium requests be made, the 

annual cost is $4,275,000, with a 5-year 

cost of $21,375,000. 

As we believe that 2,000 postmoratorium requests is the most likely 

scenario, we will hereafter use the 

$2,275,000 amount as the annual cost of 

this requirement. This results in an 

estimated 5-year cost of $11,375,000. 

b. Application Fee—Medicare 

The Secretary shall impose an 

application fee on each institutional 

provider. The amount of the fee is $500 

per provider or supplier for 2010. For 

2011 and each subsequent year, the fee 

amount will be determined by the 

statutorily-required formula using the 

consumer price index for all urban 

consumers (CPI–U). The enrollment 

application fee does not apply to 

individual eligible professionals (for 

example, physicians). The fee is to be 

paid by institutional providers only. 

The new screening provisions are 

applicable to new and revalidating 

providers and suppliers effective March 

23, 2011, and to currently enrolled 

providers and suppliers as of March 23, 

2012. We intend to begin collecting the 

enrollment application fee for new 

providers and suppliers and for 

currently enrolled providers 

revalidating enrollment effective March 

23, 2011. 

c. General Enrollment Framework 

(1) New Enrollment 

Medicare contractors report that over 

the last several years, approximately 

32,000 is the annual number of newly 

enrolling providers and suppliers that 

would—without accounting for the 

possible granting of waivers—be subject 

to the enrollment application fee— 

(approximately 20,000 for Medicare Part 

B, approximately 7,000 DMEPOS 

suppliers and HHAs (as explained in the 

Collection of Information section 

above), and approximately 5,000 nonHHA Medicare Part A providers). 

We assume that no more than 2.5 

percent of these 32,000 providers and 

suppliers—or 800—will receive a 

hardship exception; as indicated earlier, 

exceptions will only be approved 

infrequently. 

In FY 2011, we reduced the estimate 

number of institutional providers 

subject to the application fee by 25 

percent because the application fee will 

not begin until March 23, 2011. 

Accordingly, the number of institutional 

providers that we anticipate paying the 

application fee will be 23,400 (or 31,200 

X .75) in FY 2011. In FY 2011, we 

reduced the estimate number of 

institutional providers subject to the 

application fee by 25 percent because 

the application fee will not begin until 

March 23, 2011. Accordingly, the 

number of institutional providers that 

we anticipate paying the application fee 

will be 24,000 in FY 2011. 

Therefore, the impacts of the 

enrollment application fee are as 

follows. If we use 23,400 as the number 

of newly enrolling providers and 

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58234 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 

suppliers in 2011, multiply this number 

by the $500 application fee, we get 

$11,700,000 collected for the first year 

(that is, CY 2011). If we assume that the 

number of newly enrolling providers 

and suppliers will remain constant at 

31,200 for years 2012 through 2015, 

then the cost to the number of newly 

enrolling providers and suppliers would 

be approximately $78.87 million. These 

estimates are displayed in the table 

below, and account for a projected 

annual CPI–U rate increase of 3 percent 

from FY 2012 to FY 2015—knowing, of 

course, that this figure could fluctuate 

significantly based on national 

economic conditions. 

Although we have no way to predict 

that the number of new enrollments will 

change in future years, it is possible that 

the number of enrolling providers and 

suppliers vary from what has been the 

norm. If our estimate of the number of 

newly enrolling providers is inaccurate 

and we enroll a different number of 

providers and suppliers after the 

effective date of the new screening and 

other provisions contained in the ACA, 

we estimate based on the $500 

enrollment application fee—a rough 

difference of $1 million for each 

increment of 2000 new enrollments, 

whether fewer or greater. 

TABLE 7—CUMULATIVE APPLICATION FEES FOR NEWLY ENROLLING MEDICARE PROVIDERS AND SUPPLIERS FOR THE FIRST

5 YEARS OF THE PROVISION

Year 

Newly 

enrolling 

institutional 

providers and 

suppliers 

Newly 

enrolling 

institutional 

providers and 

suppliers 

paying the application fee 

(based on a 

2.5% hardship 

exception rate) 

Consumer 

price index 

adjusted fee 

in dollars 

(estimated 3% 

annual increase in CPI) 

Total fees for 

each year in 

dollars 

Cumulative 

fees in dollars 

2011 ..................................................................................... 24,000 23,400 $500 $11,700,000 $11,700,000 

2012 ..................................................................................... 32,000 31,200 515 16,068,000 27,768,000 

2013 ..................................................................................... 32,000 31,200 530 16,536,000 44,304,000 

2014 ..................................................................................... 32,000 31,200 546 17,035,200 61,339,200 

2015 ..................................................................................... 32,000 31,200 562 17,534,400 78,873,600 

Total .............................................................................. ........................ ........................ ........................ 78,873,600 78,873,600 

(2) Revalidation 

There are approximately 100,000 

currently enrolled suppliers of DMEPOS 

who are required to revalidate their 

enrollment every 3 years and 300,000 

additional providers and suppliers that 

do not provide DMEPOS that are 

required to revalidate their enrollment 

every 5 years. On a yearly basis, we 

estimate that approximately 33,000 

DMEPOS suppliers (one-third of the 

total) and 60,000 other, non-DMEPOS 

providers/suppliers (one-fifth of the 

total) would revalidate their enrollment 

in Medicare, for an annual total of 

93,000. Since, as explained earlier, we 

estimate that no more than 2.5 percent 

of these providers and suppliers will 

receive a waiver from the application 

fee, we project that 90,675 such 

providers and suppliers will be subject 

to the fee. 

This proposed rule contemplates 

collecting the application fee for 

currently enrolled providers that 

revalidate their enrollment on or after 

March 23, 2011—almost 3 months into 

CY 2011. Therefore, we have adjusted 

the number of existing Medicare 

institutional providers subject to an 

application fee by 25 percent, from 

90.675 to 68.006 (or 90.675 × .75) in FY 

2011. Further accounting for: (1) A 

projected annual CPI–U rate increase of 

3 percent, as stated above; and (2) our 

assumption that the number of 

revalidating providers and suppliers 

will remain at 90,675 between CY 2012 

and 2015, the cost associated with these 

fees for revalidating providers and 

suppliers would be approximately 

$183,548,740 over the first 5 years that 

the ACA provisions are in effect, as 

shown in Table 8 below. 

TABLE 8—CUMULATIVE APPLICATION FEES FOR REVALIDATING MEDICARE PROVIDERS AND SUPPLIERS FOR THE FIRST 5 

YEARS OF THE PROVISION

Year 

Revalidating 

institutional 

providers and 

suppliers 

Revalidating 

institutional 

providers & 

suppliers paying application 

fee 

(based on 

2.5% hardship 

exception rate) 

Consumer 

price index 

adjusted fee 

in dollars 

(estimated 3% 

annual increase in CPI) 

Total fees for 

each year 

(in dollars) 

Cumulative fees 

(in dollars) 

2011 ................................................................................. 69,750 68,006 $500 $34,003,000 $34,003,000

2012 ................................................................................. 93,000 90,675 515 46,697,625 80,700,625 

2013 ................................................................................. 93,000 90,675 530 48,057,750 128.758,375 

2014 ................................................................................. 93,000 90,675 546 49,508,550 178,266,925 

2015 ................................................................................. 93,000 90,675 562 50,959,350 229,226,275 

Total .......................................................................... ........................ ........................ ........................ 229,226,275 229,226,275 

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Therefore, we estimate that the total 

impact of the proposed provisions for 

the application fee to be approximately 

$308,099,875 over the next 5 years. This 

number was approximated by adding 

the cumulative application fees for 

newly enrolling providers and suppliers 

($78,873,600 as shown in Table 6) to the 

cumulative application fees for 

revalidating providers and suppliers 

($229,226,275). 

2. Medicaid 

a. Enhanced Screening Procedures 

Although our data on Medicaid 

provider enrollment at the national level 

is very limited, we do collect annual 

data on State Medicaid program 

integrity activities. This annual data 

collection, known as the State Program 

Integrity Assessment (SPIA) program, 

consists of self-reported data by States 

regarding a variety of program integrity 

related activities. The information is 

self-reported and has not been 

independently verified by CMS, and it 

undoubtedly represents some unknown 

degree of duplication among providers 

across States. Consequently, the 

estimated number of Medicaid 

providers nationally is likely overstated. 

According to SPIA data for FFYs 2007 

and 2008, there has been an average of 

1,855,070 existing Medicaid providers 

nationally over the 2-year period of FFY 

2007 and FFY 2008. This universe of 

Medicaid providers includes all 

provider types, both institutional 

providers and individual practitioners. 

In the Medicare program, eligible 

practitioners make up approximately 70 

percent of the total universe of 

providers, suppliers, and eligible 

practitioners. Because we do not have 

detailed information regarding the 

breakdown of Medicaid providers by 

type nationally, we will apply the same 

ratio to determine the percentage of 

institutional Medicaid providers. 

Therefore, we estimate that there are 

approximately 556,521 Medicaid-only 

providers nationally that are not 

individual practitioners. 

We also estimate almost all CHIP 

providers are also Medicaid providers. 

So, for purposes of this section, we are 

considering CHIP providers to also be 

Medicaid providers and will 

subsequently refer to them only as 

Medicaid providers. 

As previously stated in the Medicare 

section of the analysis, we estimate that 

we would require the following: 

• Approximately 35,000 individuals 

will undergo fingerprinting to enroll in 

the Medicare program as owners, 

authorized officials, delegated officials, 

or managing employees of a home 

health agency or supplier of DMEPOS. 

Based on data collected as part of the 

State survey and certification activities 

for home health agencies, less than 1 

percent of home health agencies are 

Medicaid-only. And, although there is 

no data available on the number of 

Medicaid-only suppliers of DMEPOS, 

we estimate that the number is minimal 

as well, as a number of States require 

suppliers of DMEPOS to be enrolled in 

Medicare prior to enrolling in Medicaid. 

Therefore, we estimate that States may 

require approximately 1,000 additional 

individuals with ownership or control 

interests in the suppliers of DMEPOS, or 

home health agencies, or persons who 

are agents of or managing employees of 

the suppliers of DMEPOS, or home 

health agencies, to undergo 

fingerprinting for enrollment in the 

Medicaid program. The cost of this 

fingerprinting requirement would be 

approximately $50,000 (1,000 × $50 = 

$50,000), though we seek comments on 

the accuracy of this figure. 

• We anticipate that Medicare 

contractors will perform the screening 

activities for the overwhelming majority 

of providers following the lifting of a 

Secretary-imposed temporary 

moratorium and for the limited 

circumstances in which physicians may 

be fingerprinted. However, given that 

States may also classify certain 

Medicaid-only providers as ‘‘high’’ 

categorical risks, we are estimating that 

States may require approximately 

25,000 additional individuals to 

undergo fingerprinting prior to enrolling 

in a State’s Medicaid program, at a cost 

of $1,250,000 (25,000 × $50 = 

$1,250,000). 

Consequently, we estimate that 

fingerprinting individuals for purposes 

of Medicaid enrollment will cost 

$1,300,000. 

When averaged across 50 States, the 

District of Columbia and Puerto Rico, 

the annual cost of fingerprinting per 

State will be $26,000. 

b. Application Fee—Medicaid 

For those providers not screened by 

Medicare, the State may impose a fee on 

each institutional provider being 

screened. The amount of the fee is $500 

per provider for 2010. For 2011 and 

each subsequent year, the amount will 

be determined by the statutorilyrequired formula using the consumer 

price index for all urban consumers 

(CPI–U). 

c. General Enrollment Framework 

For purposes of this section, we 

assume that 80 percent of institutional 

Medicaid providers will be dually 

participating in both Medicare and 

Medicaid, and thus will be subject to 

the application fee as part of the 

Medicare screening and enrollment. 

Therefore we estimate that 20 percent, 

or 111,304 (556,521 × 20 percent), of the 

institutional Medicaid-only providers 

will not be screened by Medicare and 

thus will be subject to the application 

fee under Medicaid. We project that a 

significant number of existing and 

future Medicaid providers will request a 

hardship exception, or that a State will 

request a waiver of the application fee 

for certain Medicaid provider types of 

the application fee on the basis of 

ensuring access to care. For purposes of 

this section, although we have no way 

to estimate the exact number of 

providers that will ultimately request 

and be approved for a hardship 

exception, or the number of States that 

will request a waiver of the fee for 

certain Medicaid provider types, we 

predict that 25 percent of all Medicaid 

providers subject to the fee will receive 

the hardship exception or be granted a 

waiver of the fee on the basis of 

ensuring beneficiary access to care. We 

recognize that this 25 percent figure is 

significantly higher than the 2.5 percent 

waiver rate we are using for Medicare 

application fees. Yet we believe the 

difference is justified because of the 

greater access to care issues that may 

arise in Medicaid. Consequently, we 

estimate that 83,478 existing Medicaid 

providers will be required to pay the 

application fee (111,304 existing 

Medicaid providers that are not dually 

enrolled less 25 percent or 27,826 

existing providers). 

(1) New Enrollments 

We apply the 80 percent rate for 

newly-enrolling Medicaid institutional 

providers that will be dually 

participating in both Medicare and 

Medicaid and thus not subject to the fee 

under Medicaid, and 25 percent 

hardship exception rate to the annual 

number of newly-enrolling Medicaid 

institutional providers not dually 

enrolled. The 45,000 newly-enrolling 

Medicare institutional providers 

annually represent 80 percent of the 

total newly-enrolling Medicaid 

institutional providers annually. 

Therefore, we estimate that there will be 

11,250 newly-enrolling Medicaid 

institutional providers annually that are 

subject to the application fee under 

Medicaid (45,000 providers divided by 

80 percent, ¥45,000 = 11,250). We 

project another 25 percent will be 

exempted for hardship or be granted a 

waiver of the fee on the basis of 

ensuring beneficiary access to care, 

resulting in 8,438 newly-enrolling 

Medicaid institutional providers being 

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5After the first year, the CPI–U is applied to the 

base fee of $500. 

subject to the application fee each year 

nationally. 

Consistent with the Medicare 

analysis, in FY 2011, we reduced the 

estimated number of institutional 

providers subject to the application fee 

by 25 percent because the application 

fee will not begin until March 23, 2011. 

Accordingly, the number of institutional 

providers that we anticipate paying the 

application fee will be 6,329 in FY 2011. 

Consequently, we project the dollars 

due from application fees for newlyenrolling Medicaid institutional 

providers who are not dually enrolled to 

be $21,331,514 for the first 5 years in 

total. When averaged across 50 States, 

the District of Columbia and Puerto 

Rico, the total application fees for the 

5 years in total per State will be 

approximately $410,221. 

TABLE 9—CUMULATIVE APPLICATION FEES FOR NEWLY ENROLLED MEDICAID PROVIDERS FOR THE FIRST 5 YEARS OF THE

PROVISION

Fiscal year 

New Medicaid 

providers not 

exempted from 

the application 

fee 

Consumer 

Price Index 

adjusted fee 5

(in dollars) 

(estimated 3 

percent annual 

increase in 

CPI) 

Total fees for 

each year 

(in dollars) 

Cumulative 

fees 

(in dollars) 

2011 ................................................................................................................. 6,329 500 3,164,500 3,164,500 

2012 ................................................................................................................. 8,438 515 4,345,570 7,510,070 

2013 ................................................................................................................. 8,438 530 4,472,140 11,982,210 

2014 ................................................................................................................. 8,438 546 4,607,148 16,589,358 

2015 ................................................................................................................. 8,438 562 4,742,156 21,331,514 

Total .......................................................................................................... ........................ ........................ 21,331,514 21,331,514 

(2) Re-Enrollment 

This proposed rule contemplates that 

States would require Medicaid 

providers to re-enroll every 5 years. On 

a yearly basis, we estimate that 

approximately 16,696 Medicaid 

institutional providers (one fifth of the 

total) would re-enroll with the State 

Medicaid agency. 

We contemplate collecting the 

application fee for currently enrolled 

providers beginning on March 24, 2011. 

States would not collect an application 

fee with any re-enrollments until that 

time—almost 3 months into CY 2011. 

Therefore, we have adjusted the number 

of existing Medicaid institutional 

providers subject to an application fee 

by 25 percent, from 16,696 to 12,522 in 

FY 2011. Consequently, we project the 

dollars due from application fees for 

currently-enrolled Medicaid 

institutional providers who are not 

dually enrolled is $42,207,488 for the 

first 5 years in total. When averaged 

across 50 States, the District of 

Columbia and Puerto Rico, the total 

application fees for the 5 years in total 

per State will be approximately 

$811,682. 

TABLE 10—CUMULATIVE APPLICATION FEES FOR RE-ENROLLING MEDICAID PROVIDERS FOR THE FIRST 5 YEARS OF THE

PROVISION

Year 

Existing 

Medicaid 

providers not 

exempted from 

the application 

fee 

Consumer 

Price index 

adjusted fee 

(in dollars) 

(Estimated 3 

percent annual 

increase in 

CPI) 

Total fees for 

each year 

(in dollars) 

Cumulative 

fees 

(in dollars) 

2011 ................................................................................................................. 12,522 0 6,261,000 6,261,000 

2012 ................................................................................................................. 16,696 515 8,598,440 14,859,440 

2013 ................................................................................................................. 16,696 530 8,848,880 23,708,320 

2014 ................................................................................................................. 16,696 546 9,116,016 32,824,336 

2015 ................................................................................................................. 16,696 562 9,383,152 42,207,488 

Total .......................................................................................................... ........................ ........................ 42,207,488 42,207,488 

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Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 58237 

3. Medicare and Medicaid 

a. Moratoria on Enrollment of New 

Medicare Providers and Suppliers and 

Medicaid Providers 

Although we have no way of 

predicting the exact cost savings 

associated with enrollment moratoria, 

we expect there will be program savings 

achieved by implementation of this 

section. As stated previously, these 

provisions will enable CMS to restrict 

the entry of certain providers and 

suppliers into Medicare in order to 

prevent or combat fraud, waste, and 

abuse. However, there are no cost 

burdens to the public or to the provider 

community. Therefore, we have not 

estimated the cost impacts of this 

provision. 

b. Suspension of Payments in Medicare 

and Medicaid 

As with payment moratoria, although 

we have no way of predicting the exact 

cost savings to Medicare and Medicaid 

associated with implementation of the 

provisions contained in this proposed 

rule, we certainly expect that there will 

be program savings that result from 

implementation of this provision. CMS 

and its law enforcement partners 

already have a process for payment 

suspension when possible fraud is 

involved. The changes proposed in this 

rule will strengthen the existing process 

and its applicability to Medicaid, but it 

will not create any different impact or 

burden on the provider community in 

circumstances of payment suspension. 

There are no new cost burdens to the 

public or the provider community 

associated with this provision. 

C. Accounting Statement and Table 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/sites/default/files/ 

omb/assets/omb/circulars/a004/ 

a4.pdf), we have prepared an 

accounting statement. This statement 

only addresses: (1) The costs of the 

fingerprinting requirement, and (2) the 

monetary transfer associated with the 

application fee. It does not address the 

potential financial benefits of these two 

requirements from the standpoint of 

their possible effectiveness in deterring 

certain unscrupulous providers and 

suppliers from enrolling in or 

maintaining their enrollment in 

Medicare and Medicaid. This is because 

it is impossible for us to quantify these 

benefits in monetary terms. Moreover, 

we cannot predict how many potentially 

fraudulent providers and suppliers will 

be kept out of the Medicare and 

Medicaid programs due to these 

proposed requirements. 

1. Medicare 

As stated previously, we estimate a 

total cost of the fingerprinting 

requirement of $2,275,000 per year 

($1,750,000 + $500,000 + $25,000), or 

$11,375,000 over 5 years, if 2,000 postmoratorium requests are made. If 5,000 

post-moratorium requests are made, the 

annual cost is $3,025,000, with a 5-year 

cost of $15,125,000. Should 10,000 postmoratorium requests be made, the 

annual cost is $4,275,000, with a 5-year 

cost of $21,375,000. We also stated in 

the RIA that the expected total 

application fees: 

• For newly enrolling providers and 

suppliers would be $11.7 million in 

2011, $16,068,000 in 2012, $16,536,000 

in 2013, $17,035,200 in 2014, and 

$17,534,400 in 2015. This results in a 

5-year total of $78,873,600. 

• For revalidating providers and 

suppliers would be $34,003,000 in 2011, 

$46,697,625 in 2012, $48,057,750 in 

2013, $49,508,550 in 2014, and 

$50,959,350 in 2015. This results in a 5- 

year total of $229,226,275. 

The accounting statement reflects the: 

(1) Annual cost of the fingerprinting 

requirement, and (2) the application of 

the 3 percent and 7 percent discount 

rate to the combined amounts of the 

application fees for FY 2015—that is, 

$17,534,400 plus $50,959,350 

(revalidations), for a total of 

$68,493,750; this constitutes a transfer 

of funds to the Federal government. We 

chose the FY 2015 figures so as to reflect 

the maximum amount of transferred 

funds in a given year during the initial5 year period. 

2. Medicaid 

As stated in the RIA, we estimate that 

the annual cost of the fingerprint 

requirement for Medicaid will be 

$1,300,000, or $6,500,000 over a 5-year 

period. We also stated in the RIA that 

the expected total application fees: 

• For newly enrolling providers and 

suppliers would be $3,164,500 in 2011, 

$4,345,570 in 2012, $4,472,140 in 2013, 

$4,607,148 in 2014, and $4,742,156 in 

2015. This results in a 5-year total of 

$21,331,514. For revalidating providers 

and suppliers would be $0 in 2011; 

$6,448,830 in 2012; $8,448,880 in 2013; 

$9,116,016 in 2014; and $9,383,152 in 

2015. This results in a 5-year total of 

$33,796,878. 

The accounting statement reflects: (1) 

The annual cost of the fingerprinting 

requirement, and (2) the application of 

the 3 percent and 7 percent discount 

rate to the combined amounts of the 

application fees for FY 2015— 

specifically, $4,742,156 (new 

applicants) plus $9,383,152 

(revalidations), for a total of 

$14,125,308. This constitutes a transfer 

of funds to the Federal government. As 

with the Medicare figures, we chose to 

use those from FY 2015 for Medicaid so 

as to reflect the maximum amount of 

transferred funds in a given year during 

the initial-5 year period. 

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58238 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 

ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES AND COSTS FROM FY 2011 TO FY 2015 

[In millions] 

Medicare Fingerprint Requirement COSTS 

3 percent Discount Rate 7 percent Discount Rate 

Annualized Monetized Costs 

(2,000 post-moratorium requests) $2.275 $2.275 

Annualized Monetized Costs 

(5,000 post-moratorium requests) $3.025 $3.025 

Annualized Monetized Costs 

(10,000 post-moratorium requests) $4.275 $4.275 

Who is Affected? Providers and Suppliers 

Medicare Application Fee TRANSFERS 

3 percent Discount Rate 7 percent Discount Rate 

Annualized Monetized Transfers $48.2 $47.3 

From Whom to Whom? Providers and Suppliers to Federal Government 

Medicaid Fingerprint Requirement COSTS 

3 percent Discount Rate 7 percent Discount Rate 

Annualized Monetized Costs $1.3 $1.3 

Who is Affected? Providers and Suppliers 

Medicaid Application Fee TRANSFERS 

3 percent Discount Rate 7 percent Discount Rate 

Annualized Monetized Costs $10.1 $10.0 

From Whom to Whom? Providers and Suppliers to Federal Government 

BENEFITS 

Qualitative: The above-referenced requirements will: (1) Allow CMS to more closely screen providers and suppliers that pose risks to the Medicare and Medicaid programs, and (2) help offset the costs of administering the Medicare and Medicaid programs. We believe these and other 

financial benefits outlined in this proposed rule will exceed the costs outlined above. 

D. Conclusion 

This proposed rule contains 

provisions that are of critical 

importance in the transition of CMS’ 

antifraud activities from ‘‘pay and 

chase’’ to fraud prevention. ‘‘Pay and 

chase’’ refers to the traditional approach 

under which CMS met its obligations to 

provide beneficiaries access to qualified 

providers and suppliers and to pay 

claims quickly by making it relatively 

easy for providers to sign up to bill 

Medicare, Medicaid or CHIP, paying 

their claims rapidly, and then detecting 

overpayments or fraudulent bills and 

pursuing recoveries of overpayments 

after the fact. That system functions 

reasonably well when the problems 

arise with legitimate providers and 

suppliers that will be solvent and in 

business when CMS seeks to recover 

overpayments or law enforcement 

pursues civil or criminal penalties. It is 

not adequate when the fraud is 

committed by sham operations that 

provide no services or supplies and 

exist simply to steal from Medicare or 

Medicaid and thrive on stealing or 

subverting the identities of beneficiaries 

and providers. 

This proposed rule strikes a balance 

that will permit CMS to continue to 

assure that eligible beneficiaries receive 

appropriate services from qualified 

providers whose claims are paid on a 

timely basis while implementing 

enhanced measures to prevent outright 

fraud. The new and strengthened 

provisions in the ACA that are the 

subject of this proposed rule will help 

assure that only legitimate providers 

and suppliers are enrolled in Medicare, 

Medicaid, and CHIP, and that only 

legitimate claims will be paid. These 

provisions are applied according to the 

level of risk of fraud, waste, and abuse 

posed by different provider and supplier 

types. CMS will use screening tools for 

a particular provider or supplier type 

based on 3 distinct categories of risk: (1) 

Limited; (2) moderate; and (3) high. 

Limited risk providers will have 

enrollment requirements, license and 

database verifications; moderate risk 

will have those verifications plus 

unscheduled site visits; high risk will 

have verifications, unscheduled site 

visits, criminal background check and 

fingerprinting. CMS and the States will 

impose moratoria on the enrollment of 

new providers in situations when doing 

so is necessary to protect against a high 

risk of fraud. Working in conjunction 

with the OIG, CMS, and States will 

suspend payments pending an 

investigation of a credible allegation of 

fraud. And legitimate providers will be 

assisted in avoiding problems by 

implementing effective compliance 

programs. 

This proposed rule is an essential tool 

in protecting public resources and 

assuring that they are devoted to 

providing health care rather than 

enriching fraudulent actors. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

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Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 58239 

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, 

and Reporting and recordkeeping 

requirements. 

42 CFR Part 438 

Grant programs—health, Medicaid, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 447 

Accounting, Administrative practice 

and procedure, Drugs, Grant programs— 

health, Health facilities, Health 

professions, Medicaid, Reporting and 

recordkeeping requirements, and Rural 

areas. 

42 CFR Part 455 

Fraud, Grant programs—health, 

Health facilities, Health professions, 

Investigations, Medicaid, and Reporting 

and recordkeeping requirements. 

42 CFR Part 457 

Administrative practice and 

procedure, Grant programs—health, 

Health insurance, and Reporting and 

recordkeeping requirements. 

42 CFR Part 498 

Administrative practice and 

procedure, Health facilities, Health 

professions, Medicare, Reporting and 

recordkeeping requirements. 

42 CFR Part 1007 

Administrative practice and 

procedure, Fraud, Grant programs— 

health, Medicaid, and Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapters IV and V as set forth 

below: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

1. The authority citation 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). 

Subpart C—Suspension of Payment, 

Recovery of Overpayments, and 

Repayment of Scholarships and Loans 

2. The authority citation for subpart C 

is revised to read as follows: 

Authority: Secs. 1102, 1815, 1833, 1842, 

1862, 1866, 1870, 1871, 1879 and 1892 of the 

Social Security Act (42 U.S.C. 1302, 1395g, 

1395l, 1395u, 1395y, 1395cc, 1395gg, 

1395hh, 1395pp and 1395ccc) and 31 U.S.C. 

3711. 

3. In subpart C, remove the phrase 

‘‘intermediary or carrier’’ and add the 

phrase ‘‘Medicare contractor’’ in its 

place. 

4. Section 405.370 is amended as 

follows: 

A. In paragraph (a), adding the 

definitions of ‘‘Credible allegation of 

fraud,’’ ‘‘Medicare contractor,’’ and 

‘‘Resolution of an investigation’’ in 

alphabetical order. 

B. In paragraph (a), revising the 

definitions of ‘‘Offset,’’ ‘‘Recoupment,’’ 

and ‘‘Suspension of payment’’. 

The additions and revisions read as 

follows: 

§ 405.370 Definitions. 

(a) * * * 

Credible allegation of fraud. A 

credible allegation of fraud is an 

allegation from any source, including 

but not limited to the following: 

(1) Fraud hotline complaints. 

(2) Claims data mining. 

(3) Patterns identified through 

provider audits, civil false claims cases, 

and law enforcement investigations. 

Allegations are considered to be 

credible when they have indicia of 

reliability. 

Medicare contractor. Unless the 

context otherwise requires, includes, 

but is not limited to the any of 

following: 

(1) A fiscal intermediary. 

(2) A carrier. 

(3) Program safeguard contractor. 

(4) Zone program integrity contractor. 

(5) Part A/Part B Medicare 

administrative contractor. 

Offset. The recovery by Medicare of a 

non-Medicare debt by reducing present 

or future Medicare payments and 

applying the amount withheld to the 

indebtedness. (Examples are Public 

Health Service debts or Medicaid debts 

recovered by HCFA). 

Recoupment. The recovery by 

Medicare of any outstanding Medicare 

debt by reducing present or future 

Medicare payments and applying the 

amount withheld to the indebtedness. 

Resolution of an investigation. An 

investigation of credible allegations of 

fraud will be considered resolved when 

legal action is terminated by settlement, 

judgment, or dismissal, or when the 

case is closed or dropped because of 

insufficient evidence to support the 

allegations of fraud. 

Suspension of payment. The 

withholding of payment by a Medicare 

contractor from a provider or supplier of 

an approved Medicare payment amount 

before a determination of the amount of 

the overpayment exists, or until the 

resolution of an investigation of a 

credible allegation of fraud. 

5. Section 405.371 is revised to read 

as follows: 

§ 405.371 Suspension, offset, and 

recoupment of Medicare payments to 

providers and suppliers of services. 

(a) General rules. Medicare payments 

to providers and suppliers, as 

authorized under this subchapter 

(excluding payments to beneficiaries), 

may be— 

(1) Suspended, in whole or in part, by 

CMS or a Medicare contractor if CMS or 

the Medicare contractor possesses 

reliable information that an 

overpayment exists or that the payments 

to be made may not be correct, although 

additional information may be needed 

for a determination; 

(2) In cases of suspected fraud, 

suspended, in whole or in part, by CMS 

or a Medicare contractor if CMS or the 

Medicare contractor has consulted with 

the OIG, and, as appropriate, the 

Department of Justice, and determined 

that a credible allegation of fraud exists 

against a provider or supplier, unless 

there is good cause not to suspend 

payments; or 

(3) Offset or recouped, in whole or in 

part, by a Medicare contractor if the 

Medicare contractor or CMS has 

determined that the provider or supplier 

to whom payments are to be made has 

been overpaid. 

(b) Good cause not to suspend 

payments. CMS may find that good 

cause exists not to suspend payments or 

not to continue to suspend payments to 

an individual or entity against which 

there are credible allegations of fraud 

if— 

(1) OIG or other law enforcement 

agency has specifically requested that a 

payment suspension not be imposed 

because such a payment suspension 

may compromise or jeopardize an 

investigation; 

(2) It is determined that beneficiary 

access to items or services would be so 

jeopardized by a payment suspension in 

whole or part as to cause a danger to life 

or health; 

(3) It is determined that other 

available remedies implemented by 

CMS or a Medicare contractor more 

effectively or quickly protect Medicare 

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funds than would implementing a 

payment suspension; or 

(4) CMS determines that a payment 

suspension or a continuation of a 

payment suspension is not in the best 

interests of the Medicare program. CMS 

will— 

(i) Evaluate whether there is good 

cause not to continue a suspension of 

payments under this section every 180 

days after the initiation of a suspension 

based on credible allegations of fraud; 

and 

(ii) Request a certification from the 

OIG or other law enforcement agency 

that the matter continues to be under 

investigation warranting continuation of 

the suspension. 

(c) Steps necessary for suspension of 

payment, offset, and recoupment. 

(1) Except as provided in paragraph 

(d) of this section, CMS or the Medicare 

contractor suspends payments only after 

it has complied with the procedural 

requirements set forth at § 405.372. 

(2) The Medicare contractor offsets or 

recoups payments only after it has 

complied with the procedural 

requirements set forth at § 405.373. 

(d) Suspension of payment in the case 

of unfiled cost reports. (1) If a provider 

has failed to timely file an acceptable 

cost report, payment to the provider is 

immediately suspended in whole or in 

part until a cost report is filed and 

determined by the Medicare contractor 

to be acceptable. 

(2) In the case of an unfiled cost 

report, the provisions of § 405.372 do 

not apply. (See § 405.372(a)(2) 

concerning failure to furnish other 

information.) 

6. Section 405.372 is amended as 

follows: 

A. Remove the phrase ‘‘intermediary, 

carrier’’ wherever it appears and adding 

the phrase ‘‘Medicare contractor’’ in its 

place. 

B. Revising paragraphs (a)(4) and 

(d)(3). 

C. In paragraph (e), removing the 

cross-reference ‘‘§ 405.371(b)’’ and 

adding the cross-reference 

‘‘§ 405.371(a)’’. 

§ 405.372 Proceeding for suspension of 

payment. 

(a) * * * 

(4) Fraud. If the intended suspension 

of payment involves credible allegations 

of fraud under § 405.371(a)(2), CMS— 

(i) In consultation with OIG and, as 

appropriate, the Department of Justice, 

determines whether to impose the 

suspension and if prior notice is 

appropriate; 

(ii) Directs the Medicare contractor as 

to the timing and content of the 

notification to the provider or supplier; 

and 

(iii) Is the real party in interest and is 

responsible for the decision. 

* * * * * 

(d) * * * 

(3) Exceptions to the time limits. (i) 

The time limits specified in paragraphs 

(d)(1) and (d)(2) of this section do not 

apply if the suspension of payments is 

based upon credible allegations of fraud 

under § 405.371(a)(2). 

(ii) Although the time limits specified 

in (d)(1) and (d)(2) do not apply to 

suspensions based on credible 

allegations of fraud, all suspensions of 

payment in accordance with 

§ 405.371(a)(2) will be temporary and 

will not continue after the resolution of 

an investigation, unless a suspension is 

warranted because of reliable evidence 

of an overpayment or that the payments 

to be made may not be correct, as 

specified in § 405.371(a)(1). 

* * * * * 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

7. The authority of citation 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). 

8. Section 424.57 is amended by 

revising paragraph (e) to read as follows: 

§ 424.57 Special payment rules for items 

furnished by DMEPOS suppliers and 

issuance of DMEPOS supplier billing 

privileges. 

* * * * * 

(e) Revalidation of billing privileges. A 

supplier must revalidate its application 

for billing privileges every 3 years after 

the billing privileges are first granted. 

(Each supplier must complete a new 

application for billing privileges 3 years 

after its last revalidation.) 

* * * * * 

9. Section 424.502 is amended by 

adding the definition of ‘‘Institutional 

provider’’ in alphabetical order to read 

as follows: 

§ 424.502 Definitions. 

* * * * * 

Institutional provider means any 

provider or supplier that submits a 

paper Medicare enrollment application 

using the CMS–855A, CMS–855B (not 

including physician and nonphysician 

practitioner organizations), CMS–855S 

or associated Internet-based PECOS 

enrollment application. 

* * * * * 

10. Section 424.514 is added to read 

as follows: 

§ 424.514 Application fee. 

(a) Application fee requirements for 

prospective institutional providers. 

Beginning on or after March 23, 2011, 

prospective institutional providers who 

are submitting an initial application or 

an application to establish a new 

practice location must submit either of 

the following: 

(1) The applicable application fee. 

(2) A request for a hardship exception 

to the application fee at the time of 

filing a Medicare enrollment 

application. 

(b) Application fee requirements for 

revalidating institutional providers. 

Beginning March 23, 2011, institutional 

providers that are subject to CMS 

revalidation efforts must submit either 

of the following: 

(1) The applicable application fee. 

(2) A request for a hardship exception 

to the application fee at the time of 

filing a Medicare enrollment 

application. 

(c) Hardship exception for disaster 

areas. CMS will assess on a case-by-case 

basis whether institutional providers 

enrolling in a geographic area that is a 

Presidentially-declared disaster under 

the Robert T. Stafford Disaster Relief 

and Emergency Assistance Act, 42 

U.S.C. 5121–5206 (Stafford Act) should 

receive an exception to the application 

fee. 

(d) Application fee. The application 

fee and associated requirements are as 

follows: 

(1) For 2010, $500.00. 

(2) For 2011 and subsequent years— 

(i) Is adjusted by the percentage 

change in the consumer price index for 

all urban consumers (all items; United 

States city average) for the 12-month 

period ending with June of the previous 

year; 

(ii) Is effective from January 1 to 

December 31 of a calendar year; 

(iii) Is based on the submission of an 

initial application, application to 

establish a new practice location or the 

submission of an application in 

response to a Medicare contractor 

revalidation request; 

(iv) Must be in the amount calculated 

by CMS in effect for the year during 

which the application for enrollment is 

being submitted; 

(v) Is nonrefundable; 

(vi) Must be resubmitted with an 

enrollment application that was 

previously denied or rejected; and 

(vii) Must be able to be deposited into 

a Government-owned account and 

credited to the United States Treasury. 

(e) Denial or revocation based on 

application fee. A Medicare contractor 

may deny or revoke Medicare billing 

privileges of a provider or supplier 

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based on noncompliance if, in the 

absence of a written request for a 

hardship exception from the application 

fee that accompanies a Medicare 

enrollment application the bank account 

on which the check that is submitted 

with the enrollment application is 

drawn does not contain sufficient funds 

to pay the application fee. 

(f) Information needed for submission 

of a hardship exception request. A 

provider or supplier requesting an 

exception from the application fee must 

include with its enrollment application 

a letter that describes the hardship and 

why the hardship justifies an exception. 

(g) Failure to submit application fee 

or hardship exception request. A 

Medicare contractor must— 

(1) Reject an enrollment application 

from a provider or supplier that, with 

the exceptions described in 

§ 424.514(b), is not accompanied by the 

application fee or by a letter requesting 

a hardship exception from the 

application fee. 

(2) Revoke the billing privileges of a 

currently enrolled provider or supplier 

or deny the application to enroll and 

establish billing privileges in the case of 

providers or suppliers not currently 

enrolled, with the exceptions noted in 

§ 424.514(b), if an enrollment 

application, including revalidation, is 

received that is not accompanied by the 

application fee or by a letter requesting 

a hardship exception from the 

application fee. 

(h) Consideration of hardship 

exception request. CMS has 60 days in 

which to approve or disapprove a 

hardship exception request. 

(1) A Medicare contractor does not— 

(i) Begin processing an enrollment 

application that is accompanied by a 

hardship exception request until CMS 

has made a decision to approve or 

disapprove the hardship exception 

request; and 

(ii) Deny an enrollment application 

that is accompanied by a hardship 

exception request unless the hardship 

exception request is denied by CMS and 

the provider or supplier fails to submit 

the required application fee within 30 

days of being notified that the request 

for a hardship exception was denied. 

(2) A hardship exception 

determination made by CMS is 

appealable using § 405.874. 

11. Section 424.515 is amended by 

adding a new paragraph (e) to read as 

follows: 

§ 424.515 Requirements for reporting 

changes and updates to, and the periodic 

revalidation of Medicare enrollment 

information. 

* * * * * 

(e) Additional off-cycle revalidation. 

On or after March 23, 2012, Medicare 

providers and suppliers, including 

DMEPOS suppliers, may be required to 

revalidate their enrollment outside the 

routine 5-year revalidation cycle (3-year 

DMEPOS supplier revalidation cycle). 

(1) CMS will contact providers or 

suppliers to revalidate their enrollment 

for off-cycle revalidation. 

(2) As with all revalidations, 

revalidations described in this 

paragraph are conducted in accordance 

with the screening procedures specified 

at § 424.518. 

12. Section 424.518 is added to read 

as follows: 

§ 424.518 Screening categories for 

Medicare providers and suppliers. 

A Medicare contractor is required to 

screen all initial applications, including 

applications for a new practice location, 

and any applications received in 

response to a revalidation request based 

on a CMS categorical risk level of 

‘‘limited,’’ ‘‘moderate,’’ or ‘‘high.’’ 

(a) Limited categorical risk—(1) 

Limited categorical risk: Provider and 

supplier types. CMS has designated the 

following providers and suppliers as 

‘‘limited’’ categorical risk: 

(i) Physician or nonphysician 

practitioners and medical groups or 

clinics. 

(ii) Ambulatory surgical centers. 

(iii) End-stage renal disease facilities. 

(iv) Federally qualified health centers. 

(v) Histocompatibility laboratories. 

(vi) Hospitals including critical access 

hospitals. 

(vii) Indian Health Service facilities. 

(viii) Mammography screening 

centers. 

(ix) Organ procurement organizations. 

(x) Mass immunization roster billers. 

(xi) Portable x-ray suppliers. 

(xii) Religious non-medical health 

care institutions. 

(xiii) Rural health clinics. 

(xiv) Radiation therapy centers. 

(xv) Public or government-owned or 

-affiliated ambulance services suppliers. 

(xvi) Skilled nursing facilities. 

(2) Limited categorical risk: Screening 

requirements. When CMS designates a 

provider or supplier as a ‘‘limited’’ 

categorical level of risk or the provider 

or supplier is publicly traded on the 

New York Stock Exchange (NYSE) or 

the National Association of Securities 

Dealers Automated Quotation System 

(NASDAQ), the Medicare contractor 

does all of the following: 

(i) Verifies that a provider or supplier 

meets any applicable Federal 

regulations, or State requirement for the 

provider or supplier type prior to 

making an enrollment determination. 

(ii) Conducts license verifications, 

including licensure verifications across 

State lines for physicians or 

nonphysician practitioners and 

providers and suppliers that obtain or 

maintain Medicare billing privileges as 

a result of State licensure, including 

State licensure in State other than where 

the provider or supplier is enrolling. 

(iii) Conducts database checks on a 

pre- and post-enrollment basis to ensure 

that providers and suppliers continue to 

meet the enrollment criteria for their 

provider/supplier type. 

(b) Moderate categorical risk—(1) 

Moderate categorical risk: Provider and 

supplier types. CMS has designated the 

following providers and suppliers as 

‘‘moderate’’ categorical risk: 

(i) The following prospective 

providers and suppliers that are not 

publicly-traded on the NYSE or 

NASDAQ: 

(A) Community mental health centers. 

(B) Comprehensive outpatient 

rehabilitation facilities. 

(C) Hospice organizations. 

(D) Independent diagnostic testing 

facilities. 

(E) Nongovernment-owned or 

-affiliated ambulance service suppliers. 

(F) Independent clinical laboratories. 

(ii) The following revalidating 

providers and suppliers that are not 

publicly-traded on the NYSE or 

NASDAQ: 

(A) Community mental health centers. 

(B) Comprehensive outpatient 

rehabilitation facilities. 

(C) Home health agencies. 

(D) Hospice organizations. 

(E) Independent diagnostic testing 

facilities. 

(F) Nongovernment-owned or 

-affiliated ambulance service suppliers. 

(G) Independent clinical laboratories. 

(iii) Re-enrolling suppliers of 

DMEPOS that are not publicly-traded on 

the NYSE or NASDAQ. 

(2) Moderate categorical risk: 

Screening requirements. When CMS 

designates a provider or supplier as a 

‘‘moderate’’ categorical level of risk, the 

Medicare contractor does all of the 

following: 

(i) Performs the ‘‘limited’’ screening 

requirements described in paragraph 

(a)(2) of this section. 

(ii) Conducts an on-site visit. 

(c) High categorical risk—(1) High 

categorical risk: Provider and supplier 

types. CMS has designated home health 

agencies or suppliers of DMEPOS that 

are not publicly-traded on the NYSE or 

NASDAQ as ‘‘high’’ categorical risk: 

(A) Prospective providers or suppliers 

enrolling in the Medicare program. 

(B) Providers or suppliers establishing 

a new practice location. 

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(2) High categorical risk: Screening 

requirements. When CMS designates a 

provider or supplier as a ‘‘high’’ 

categorical level of risk, the Medicare 

contractor does all of the following: 

(i) Performs the ‘‘limited’’ and 

‘‘moderate’’ screening requirements 

described in paragraphs (a)(2) and (b)(2) 

of this section. 

(ii)(A) Conducts a criminal 

background check; and 

(B) Requires the submission of sets of 

fingerprints using the FD–258 standard 

fingerprint card. 

(3) Adjustment in the categorical risk. 

CMS adjusts the categorical risk level 

from ‘‘limited’’ or ‘‘moderate’’ to ‘‘high’’ if 

any of the following occur: 

(i) CMS or its Medicare contractor has 

information from a physician or 

nonphysician practitioner that another 

individual is using their identity within 

the Medicare program. 

(ii) CMS imposes a payment 

suspension on a provider or supplier. 

(iii) The provider or supplier— 

(A) Has been excluded from Medicare 

by the OIG; or 

(B) Had its billing privileges denied or 

revoked by a Medicare contractor within 

the previous 10 years and is attempting 

to establish additional Medicare billing 

privileges by— 

(1) Enrolling as a new provider or 

supplier; or 

(2) Billing privileges for a new 

practice location. 

(C) Has been terminated or is 

otherwise precluded from billing 

Medicaid. 

(iv) CMS lifts a temporary moratorium 

for a particular provider or supplier 

type. 

(d) Fingerprinting requirements. An 

individual subject to the fingerprints 

requirements specified in paragraph 

(c)(2)(ii)(B) of this section— 

(1) Must submit a set of fingerprints 

using the FD–258 standard fingerprint 

card— 

(i) With the Medicare enrollment 

application; or 

(ii) Within 30 days of a Medicare 

contractor request. 

(2) Who does not submit a set of 

fingerprints in accordance with 

paragraph (d)(1) of this section will have 

his or her Medicare billing privileges— 

(i) Denied under § 424.530(a)(1); or 

(ii) Revoked under § 424.535(a)(1). 

13. Section 424.525 is amended by 

revising paragraph (a) as follows: 

A. Revising paragraph (a) introductory 

text. 

B. Adding a new paragraph (a)(3). 

The revision and addition read as 

follows: 

§ 424.525 Rejection of a provider or 

supplier’s enrollment application for 

Medicare enrollment. 

(a) Reasons for rejection. CMS may 

reject a provider or supplier’s 

enrollment application for any of the 

following reasons: 

* * * * * 

(3) The prospective institutional 

provider or supplier does not submit the 

application fee in the designated 

amount or a hardship waiver request 

with the Medicare enrollment 

application at the time of filing. 

* * * * * 

14. Section 424.530 is amended by 

adding new paragraphs (a)(8) and (a)(9) 

to read as follows: 

§ 424.530 Denial of enrollment in the 

Medicare program. 

(a) * * * 

(8) Application fee/hardship 

exception. An institutional provider or 

supplier’s ‘‘hardship exception’’ request 

is not granted. 

(9) Temporary moratorium. A 

provider or supplier submits an 

enrollment application for a practice 

location in a geographic area where 

CMS has imposed a temporary 

moratorium. 

* * * * * 

15. Section 424.535 is amended as 

follows: 

A. Revising paragraph (a)(6). 

B. Adding a new paragraph (a)(11). 

C. Revising paragraph (c). 

§ 424.535 Revocation of enrollment billing 

and billing privileges in the Medicare 

program. 

(a) * * * 

(6) Grounds related to provider and 

supplier screening requirements. (i)(A) 

An institutional provider does not 

submit an application fee or ‘‘hardship 

exception’’ request that meets the 

requirements set forth in § 424.514 with 

the Medicare revalidation application; 

or 

(B) The ‘‘hardship exception’’ is not 

granted and the institutional provider 

does not submit the applicable 

application form or application fee 

within 30 days of being notified that the 

hardship exception request was denied. 

(ii)(A) The Medicare contractor is not 

able to either of the following: 

(1) Deposit the full application 

amount into a government-owned 

account. 

(2) The funds are not able to be 

credited to the U.S. Treasury. 

(B) The provider or supplier lacks 

sufficient funds in the account at the 

banking institution whose name is 

imprinted on the check or other banking 

instrument to pay the application fee; or 

(C) There is any other reason why 

CMS or its Medicare contractor is 

unable to deposit the application fee 

into a government-owned account. 

* * * * * 

(11) Medicaid termination. Medicaid 

billing privileges are terminated or 

revoked by a State Medicaid Agency, 

not withstanding anything to the 

contrary in this section, must not apply 

unless and until a provider or supplier 

has exhausted all applicable appeal 

rights. 

* * * * * 

(c) Reapplying after revocation. (1) 

After a provider, supplier, delegated 

official, or authorizing official has had 

their billing privileges revoked, they are 

barred from participating in the 

Medicare program from the effective 

date of the revocation until the end of 

the re-enrollment bar. 

(2) 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. 

(3) CMS may waive the re-enrollment 

bar if it has revoked a provider or 

supplier under § 424.535(a)(6)(i) based 

upon the failure of the provider or 

supplier to submit an application fee or 

a hardship exception request with an 

enrollment application upon 

revalidation. 

* * * * * 

16. A new § 424.570 is added to read 

as follows: 

§ 424.570 Moratoria on newly enrolling 

Medicare providers and suppliers. 

(a) Temporary moratoria. CMS may 

impose a moratorium on the enrollment 

of new Medicare providers and 

suppliers of a particular type or the 

establishment of new practice locations 

of a particular type in a particular 

geographic area or nationally if— 

(1) CMS determines that there is a 

significant potential for fraud, waste or 

abuse with respect to a particular 

provider or supplier type or particular 

geographic area or both. CMS’s 

determination is based on its review of 

existing data, and without limitation, 

identifies a trend that appears to be 

associated with a high risk of fraud, 

waste or abuse, such as a— 

(i) Highly disproportionate number of 

providers or suppliers in a category 

relative to the number of beneficiaries; 

or 

(ii) Rapid increase in enrollment 

applications within a category; 

(2) A State Medicaid program has 

imposed a moratorium on a group of 

Medicaid providers or suppliers that are 

also eligible to enroll in the Medicare 

program; 

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(3) A State has imposed a moratorium 

on enrollment in a particular geographic 

area or on a particular provider or 

supplier type or both; or 

(4) CMS, in consultation the HHS OIG 

or the Department of Justice or both and 

with the approval of the CMS 

Administrator identifies either or both 

of the following as having a significant 

potential for fraud, waste or abuse in the 

Medicare program: 

(i) A particular provider or supplier 

type. 

(ii) Any particular geographic area. 

(b) Duration of moratoria. A 

moratorium under this section may be 

imposed for a period of 6 months and, 

if deemed necessary by CMS, may be 

extended in 6-month increments. 

(c) Denial of enrollment: Moratoria. A 

Medicare contractor denies the 

enrollment application of a provider or 

supplier if the provider or supplier is 

subject to a moratorium as specified in 

paragraph (a) of this section. 

(d) Lifting moratoria. CMS may lift a 

temporary moratorium in a specific 

geographic area or nationally if— 

(1) The President declares an area a 

disaster under the Robert T. Stafford 

Disaster Relief and Emergency 

Assistance Act, 42 U.S.C. 5121–5206 

(Stafford Act); or 

(2) Circumstances warranting the 

imposition of a moratorium have abated 

or CMS has implemented program 

safeguards to address the program 

vulnerability; 

(3) In the judgment of the Secretary, 

the moratorium is no longer needed. 

PART 438—MANAGED CARE 

17. The authority for part 438 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

18. Section 438.6 is amended by 

adding new paragraph (c)(5)(vi). 

§ 438.6 Contract requirements. 

* * * * * 

(c) * * * 

(5) * * * 

(vi) Contracts with MCOs, PIHPs, and 

PAHPs must require all ordering or 

referring network providers to be 

enrolled as participating providers with 

the Medicaid program. 

* * * * * 

PART 447—PAYMENT FOR SERVICES 

19. The authority citation for part 447 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

20. A new § 447.90 is added to read 

as follows: 

§ 447.90 FFP: Conditions related to 

pending investigations of credible 

allegations of fraud against the Medicaid 

program. 

(a) Basis and purpose. This section 

implements section 1903(i)(2)(C) of the 

Act which prohibits payment of FFP 

with respect to items or services 

furnished by an individual or entity 

with respect to which there is pending 

an investigation of a credible allegation 

of fraud except under specified 

circumstances. 

(b) Denial of FFP. No FFP is available 

with respect to any amount expended 

for an item or service furnished by any 

individual or entity to whom a State has 

failed to suspend payments in whole or 

part as required by § 455.23 unless: 

(1) The item or service is furnished as 

an emergency item or service, but not 

including items or services furnished in 

an emergency room of a hospital; or 

(2) The State determines and 

documents that good cause as specified 

at § 455.23(e) or (f) exists not to suspend 

such payments, to suspend payments 

only in part, or to discontinue a 

previously imposed payment 

suspension. 

PART 455—PROGRAM INTEGRITY: 

MEDICAID 

21. The authority citation for part 455 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

22. Section 455.2 is amended by 

adding the definition of ‘‘Credible 

allegation of fraud’’ to read as follows: 

§ 455.2 Definitions. 

* * * * * 

Credible allegation of fraud. A 

credible allegation of fraud is an 

allegation from any source, including 

but not limited to the following: 

(1) Fraud hotline complaints. 

(2) Claims data mining. 

(3) Patterns identified through 

provider audits, civil false claims cases, 

and law enforcement investigations. 

Allegations are considered to be 

credible when they have indicia of 

reliability. 

* * * * * 

23. Section 455.23 is revised to read 

as follows: 

§ 455.23 Suspension of payments in cases 

of fraud. 

(a) Basis for suspension. (1) The State 

Medicaid agency must suspend all 

Medicaid payments to a provider when 

there is pending an investigation of a 

credible allegation of fraud under the 

Medicaid program against an individual 

or entity unless it has good cause to not 

suspend payments or to suspend 

payment only in part. 

(2) The State Medicaid agency may 

suspend payments without first 

notifying the provider of its intention to 

suspend such payments. 

(3) A provider may request, and must 

be granted, administrative review where 

State law so requires. 

(b) Notice of suspension. (1) The State 

agency must send notice of its 

suspension of program payments within 

the following timeframes: 

(i) Five days of taking such action 

unless requested in writing by a law 

enforcement agency to temporarily 

withhold such notice. 

(ii) Thirty days if requested by law 

enforcement in writing to delay sending 

such notice, which request for delay 

may be renewed in writing up to twice 

and in no event may exceed 90 days. 

(2) The notice must include or 

address all of the following: 

(i) State that payments are being 

suspended in accordance with this 

provision. 

(ii) Set forth the general allegations as 

to the nature of the suspension action, 

but need not disclose any specific 

information concerning an ongoing 

investigation. 

(iii) State that the suspension is for a 

temporary period, as stated in paragraph 

(c) of this section, and cite the 

circumstances under which suspension 

will be terminated. 

(iv) Specify, when applicable, to 

which type or types of Medicaid claims 

or business units of a provider 

suspension is effective. 

(v) Inform the provider of the right to 

submit written evidence for 

consideration by State Medicaid 

Agency. 

(c) Duration of suspension. (1) All 

suspension of payment actions under 

this section will be temporary and will 

not continue after either of the 

following: 

(i) The agency or the prosecuting 

authorities determine that there is 

insufficient evidence of fraud by the 

provider. 

(ii) Legal proceedings related to the 

provider’s alleged fraud are completed. 

(2) A State must document in writing 

the termination of a suspension 

including, where applicable and 

appropriate, any appeal rights available 

to a provider. 

(d) Referrals to the Medicaid fraud 

control unit. (1) Whenever a State 

Medicaid agency investigation leads to 

the initiation of a payment suspension 

in whole or part, the State Medicaid 

Agency must make a fraud referral to 

either of the following: 

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(i) To a Medicaid fraud control unit 

established and certified under part 

1007 of this Title; or 

(ii) In States with no certified 

Medicaid fraud control unit, to an 

appropriate law enforcement agency. 

(2) The fraud referral made under 

paragraph (d)(1) of this section must 

meet all of the following requirements: 

(i) Be made in writing and provided 

to the Medicaid fraud control unit not 

later than the next business day after the 

suspension is enacted. 

(ii) Conform to fraud referral 

performance standards issued by the 

Secretary. 

(3)(i) If the Medicaid fraud control 

unit or other law enforcement agency 

accepts the fraud referral for 

investigation, the payment suspension 

may be continued until such time as the 

investigation and any associated 

enforcement proceedings are completed. 

(ii) On a quarterly basis, the State 

must request a certification from the 

Medicaid fraud control unit or other law 

enforcement agency that any matter 

accepted on the basis of a referral 

continues to be under investigation thus 

warranting continuation of the 

suspension. 

(4) If the Medicaid fraud control unit 

or other law enforcement agency 

declines to accept the fraud referral for 

investigation the payment suspension 

must be discontinued unless the State 

Medicaid agency makes a fraud referral 

to another law enforcement agency. In 

that situation, the provisions of 

paragraph (d)(3) of this section apply 

equally to that referral as well. 

(5) A State’s decision to exercise the 

good cause exceptions in paragraphs (e) 

or (f) of this section not to suspend 

payments or to suspend payments only 

in part does not relieve the State of the 

obligation to refer any credible 

allegation of fraud as provided in 

paragraph (d)(1) of this section. 

(e) Good cause not to suspend 

payments. A State may find that good 

cause exists not to suspend payments, 

or not to continue a payment 

suspension previously imposed, to an 

individual or entity against which there 

is an investigation of a credible 

allegation of fraud if any of the 

following are applicable: 

(1) Law enforcement officials have 

specifically requested that a payment 

suspension not be imposed because 

such a payment suspension may 

compromise or jeopardize an 

investigation. 

(2) Other available remedies 

implemented by the State more 

effectively or quickly protect Medicaid 

funds. 

(3) The State determines that payment 

suspension is not in the best interests of 

the Medicaid program. 

(4) Recipient access to items or 

services would be jeopardized by a 

payment suspension because of either of 

the following: 

(i) An individual or entity is the sole 

community physician or the sole source 

of essential specialized services in a 

community. 

(ii) The individual or entity serves a 

large number of recipients within a 

HRSA-designated medically 

underserved area. 

(5) Law enforcement declines to 

certify that a matter continues to be 

under investigation per the 

requirements of paragraph (d)(3) of this 

section. 

(f) Good cause to suspend payment 

only in part. A State may find that good 

cause exists to suspend payments in 

part, or to convert a payment 

suspension previously imposed in 

whole to one only in part, to an 

individual or entity against which there 

is an investigation of a credible 

allegation of fraud if any of the 

following are applicable: 

(1) Recipient access to items or 

services would be jeopardized by a 

payment suspension in whole or part 

because of either of the following: 

(i) An individual or entity is the sole 

community physician or the sole source 

of essential specialized services in a 

community. 

(ii) The individual or entity serves a 

large number of recipients within a 

HRSA-designated medically 

underserved area; 

(2) The State determines that payment 

suspension only in part is in the best 

interests of the Medicaid program. 

(3)(i) The credible allegation focuses 

solely and definitively on only a 

specific type of claim or arises from 

only a specific business unit of a 

provider; and 

(ii) The State determines and 

documents in writing that a payment 

suspension in part would effectively 

ensure that potentially fraudulent 

claims were not continuing to be paid. 

(4) Law enforcement declines to 

certify that a matter continues to be 

under investigation per the 

requirements of paragraph (d)(3) of this 

section. 

(g) Documentation and record 

retention. State Medicaid agencies must 

meet the following requirements: 

(1) Maintain for a minimum of 5 years 

from the date of issuance all materials 

documenting the life cycle of a payment 

suspension that was imposed in whole 

or part, including the following: 

(i) All notices of suspension of 

payment in whole or part. 

(ii) All fraud referrals to the Medicaid 

fraud control unit or other law 

enforcement agency. 

(iii) All quarterly certifications of 

continuing investigation status by law 

enforcement. 

(iv) All notices documenting the 

termination of a suspension. 

(2)(i) Maintain for a minimum of 5 

years from the date of issuance all 

materials documenting each instance 

where a payment suspension was not 

imposed, imposed only in part, or 

discontinued for good cause. 

(ii) This type of documentation must 

include, at a minimum, detailed 

information on the basis for the 

existence of the good cause not to 

suspend payments, to suspend 

payments only in part, or to discontinue 

a payment suspension and, where 

applicable, must specify how long the 

State anticipates such good cause will 

exist. 

(3) Annually report to the Secretary 

summary information on each of 

following: 

(i) Suspension of payment, including 

the nature of the suspected fraud, the 

basis for suspension, and the outcome of 

the suspension. 

(ii) Situation in which the State 

determined good cause existed to not 

suspend payments, to suspend 

payments only in part, or to discontinue 

a payment suspension as described in 

this section, including describing the 

nature of the suspected fraud and the 

nature of the good cause. 

24. Section 455.101 is amended as 

follows: 

A. Adding introductory text. 

B. Adding the definitions of ‘‘Health 

insuring organization (HIO),’’ ‘‘Managed 

care entity (MCE),’’ ‘‘Prepaid ambulatory 

health plan (PAHP),’’ ‘‘Primary care case 

manager (PCCM),’’ ‘‘Prepaid inpatient 

health plan (PIHP),’’ and ‘‘Termination’’ 

in alphabetical order to read as follows: 

§ 455.101 Definitions. 

For the purposes of this part— 

* * * * * 

Health insuring organization (HIO) 

has the meaning specified in § 438.2. 

Managed care entity (MCE) means 

managed care organizations (MCOs), 

PIHPs, PAHPs, PCCMs, and HIOs. 

* * * * * 

Prepaid ambulatory health plan 

(PAHP) has the meaning specified in 

§ 438.2. 

Primary care case manager (PCCM) 

has the meaning specified in § 438.2. 

Prepaid inpatient health plan (PIHP) 

has the meaning specified in § 438.2. 

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Termination means— 

(1) For a— 

(i) Medicaid provider, a State 

Medicaid program has taken an action 

to revoke the provider’s billing 

privileges, and the provider has 

exhausted all applicable appeal rights; 

and 

(ii) Medicare provider, supplier or 

eligible professional, the Medicare 

program has revoked the provider or 

supplier’s billing privileges. 

(2)(i) In both programs, there is no 

expectation on the part of the provider 

or supplier or the State or Medicare 

program that the revocation is 

temporary. 

(ii) The provider, supplier, or eligible 

professional will be required to reenroll 

with the applicable program if they 

wish billing privileges to be reinstated. 

25. Section 455.104 is revised to read 

as follows: 

§ 455.104 Disclosure by Medicaid 

providers and fiscal agents: Information on 

ownership and control. 

(a) Who must provide disclosures. The 

Medicaid agency must obtain 

disclosures from disclosing entities, 

fiscal agents, and managed care entities. 

(b) What disclosures must be 

provided. The Medicaid agency must 

require that disclosing entities, fiscal 

agents, and managed care entities 

provide the following disclosures: 

(1)(i) The name and address of any 

person (individual or corporation). 

(ii) Date of birth and social security 

number (in the case of an individual). 

(iii) Other tax identification number 

(in the case of a corporation) with an 

ownership or control interest in the 

disclosing entity (or fiscal agent or 

managed care entity) or in any 

subcontractor in which the disclosing 

entity (or fiscal agent or managed care 

entity) has a 5 percent or more interest. 

(2) Whether the person (individual or 

corporation) with ownership or control 

interest in the disclosing entity (or fiscal 

agent or managed care entity) or in any 

subcontractor in which the disclosing 

entity (or fiscal agent or managed care 

entity) has a 5 percent or more interest 

is related to another as a spouse, parent, 

child, or sibling. 

(3) The name of any other disclosing 

entity (or fiscal agent or managed care 

entity) in which an owner of the 

disclosing entity (or fiscal agent or 

managed care entity) has an ownership 

or control interest. 

(4) The name and address of any 

managing employee of the disclosing 

entity (or fiscal agent or managed care 

entity). 

(c) When the disclosures must be 

provided—(1) Disclosures from 

providers. Disclosure from any provider 

is due at any of the following times: 

(i) Submits the provider application. 

(ii) Executes the provider agreement. 

(iii) Re-enrolls under § 455.12. 

(iv) Within 35 days after any change 

in ownership of the disclosing entity. 

(2) Disclosures from fiscal agents. 

Disclosures from fiscal agents are due at 

any of the following times: 

(i) That the fiscal agent submits the 

proposal in accordance with the State’s 

procurement process. 

(ii) The fiscal agent executes the 

contract with the State 

(iii) Upon renewal or extension of the 

contract. 

(iv) Within 35 days after any change 

in ownership of the fiscal agent. 

(3) Disclosures from managed care 

entities. Disclosures from managed care 

entities (MCOs, PIHPs, PAHPs, and 

HIOs), except PCCMs are due at any of 

the following times: 

(i) The managed care entity submits 

the proposal in accordance with the 

State’s procurement process. 

(ii) The managed care entity executes 

the contract with the State. 

(iii) Upon renewal or extension of the 

contract. 

(iv) Within 35 days after any change 

in ownership of the managed care 

entity. 

(4) Disclosures from PCCMs. PCCMs 

will comply with disclosure 

requirements under (c)(1) of this 

section. 

(d) To whom must the disclosures be 

provided. All disclosures must be 

provided to the Medicaid agency. 

(e) Consequences for failure to 

provide required disclosures. Federal 

financial participation (FFP) is not 

available in payments made to a 

disclosing entity that fails to disclose 

ownership or control information as 

required by this section. 

26. A new subpart E is added to part 

455 to read as follows: 

Subpart E—Provider Screening and 

Enrollment 

Sec. 

455.400 Purpose. 

455.405 State plan requirements. 

455.410 Enrollment and screening of 

providers. 

455.412 Verification of provider licenses. 

455.414 Reenrollment. 

455.416 Termination or denial of 

enrollment. 

455.418 Deactivation of provider 

enrollment. 

455.420 Reactivation of provider 

enrollment. 

455.422 Appeal rights. 

455.432 Site visits. 

455.434 Criminal background checks. 

455.436 Federal database checks. 

455.440 National Provider Identifier. 

455.450 Screening categories for Medicaid 

providers. 

455.452 Other State screening methods. 

455.460 Application fee. 

455.470 Temporary moratoria. 

Subpart E—Provider Screening and 

Enrollment 

§ 455.400 Purpose. 

This subpart implements sections 

1866(j), 1902(a)(39), 1902(a)(77), and 

1902(a)(78) of the Social Security Act. It 

sets forth State plan requirements 

regarding the following: 

(a) Provider screening and enrollment 

requirements. 

(b) Fees associated with provider 

screening. 

(c) Temporary moratoria on 

enrollment of providers. 

§ 455.405 State plan requirements. 

A State plan must provide that the 

requirements of § 455.410 through 

§ 455.450 and § 455.470 are met. 

§ 455.410 Enrollment and screening of 

providers. 

(a) The State Medicaid agency must 

require all enrolled providers to be 

screened under to this subpart. 

(b) The State Medicaid agency must 

require all ordering or referring 

physicians or other professionals 

providing services under the State plan 

or under a waiver of the plan to be 

enrolled as participating providers. 

(c) The State Medicaid agency may 

rely on the results of the provider 

screening performed by any of the 

following: 

(1) Medicare contractors. 

(2) Medicaid agencies or Children’s 

Health Insurance Programs of other 

States. 

§ 455.412 Verification of provider licenses. 

The State Medicaid agency must— 

(a) Have a method for verifying that 

any provider purporting to be licensed 

in accordance with the laws of any State 

is licensed by such State. 

(b) Confirm that the provider’s license 

has not expired and that there are no 

current limitations on the provider’s 

license. 

§ 455.414 Reenrollment. 

The State Medicaid agency must 

screen all providers regardless of 

provider type at least every 5 years. 

§ 455.416 Termination or denial of 

enrollment. 

The State Medicaid agency— 

(a) Must terminate the enrollment of 

any provider where any person with an 

ownership or control interest or who is 

an agent or managing employee of the 

provider did not submit timely and 

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accurate information and cooperate with 

any screening methods required under 

this subpart. 

(b) Must deny enrollment or terminate 

the enrollment of any provider where 

any person with an ownership or 

control interest or who is an agent or 

managing employee of the provider has 

been convicted of a criminal offense 

related to that person’s involvement 

with the Medicare, Medicaid, or title 

XXI program in the last 10 years, unless 

the State Medicaid agency determines 

that denial or termination of enrollment 

is not in the best interests of the 

Medicaid program and the State 

Medicaid agency documents that 

determination in writing. 

(c) Must deny enrollment or terminate 

the enrollment of any provider that is 

terminated on or after January 1, 2011, 

under title XVIII of the Act or under the 

Medicaid program or CHIP of any other 

State. 

(d) Must terminate the provider’s 

enrollment or deny enrollment of the 

provider if the provider or a person with 

an ownership or control interest or who 

is an agent or managing employee of the 

provider fails to submit timely or 

accurate information, unless the State 

Medicaid agency determines that 

termination or denial of enrollment is 

not in the best interests of the Medicaid 

program and the State Medicaid agency 

documents that determination in 

writing. 

(e) Must terminate or deny enrollment 

if the provider, or any person with an 

ownership or control interest or who is 

an agent or managing employee of the 

provider, fails to submit sets of 

fingerprints in a form and manner to be 

determined by the Medicaid agency 

within 30 days of a CMS or a State 

Medicaid agency request, unless the 

State Medicaid agency determines that 

termination or denial of enrollment is 

not in the best interests of the Medicaid 

program and the State Medicaid agency 

documents that determination in 

writing. 

(f) Must terminate or deny enrollment 

if the provider fails to permit access to 

provider locations for any site visits 

under § 455.432, unless the State 

Medicaid agency determines that 

termination or denial of enrollment is 

not in the best interests of the Medicaid 

program and the State Medicaid agency 

documents that determination in 

writing. 

(g) May terminate or deny the 

provider’s enrollment if CMS or the 

State Medicaid agency— 

(1) Determines that the provider has 

falsified any information provided on 

the application; or 

(2) Cannot verify the identity of any 

provider applicant. 

§ 455.418 Deactivation of provider 

enrollment. 

The State Medicaid Agency must 

deactivate any provider enrollment 

number that has been inactive as a 

result of having submitted no claims or 

making no referrals that resulted in 

Medicaid claims for a period of 12 

months. 

§ 455.420 Reactivation of provider 

enrollment. 

After deactivation of a provider 

enrollment number for any reason, 

before the provider’s enrollment may be 

reactivated, the State Medicaid agency 

must re-screen the provider and require 

payment of associated provider 

application fees under § 455.460. 

§ 455.422 Appeal rights. 

The State Medicaid agency must give 

providers terminated under § 455.416, 

and with respect to enrollment, any 

appeal rights available under 

procedures established by State law or 

rule. 

§ 455.432 Site visits. 

The State Medicaid agency— 

(a) Must conduct pre-enrollment and 

post-enrollment site visits of providers 

who are designated as ‘‘moderate’’ or 

‘‘high’’ categorical risks to the Medicaid 

program. The purpose of the site visit 

will be to verify that the information 

submitted to the State Medicaid agency 

is accurate and to determine compliance 

with Federal and State enrollment 

requirements. 

(b) Must require any enrolled provider 

to permit CMS, its agents, its designated 

contractors, or the State Medicaid 

agency to conduct unannounced on-site 

inspections of any and all provider 

locations. 

§ 455.434 Criminal background checks. 

The State Medicaid agency— 

(a) As a condition of enrollment, must 

require providers to consent to criminal 

background checks including 

fingerprinting when required to do so 

under State law or by the level of risk 

determined for that category of provider. 

(b) Must establish categorical risk 

levels for providers and provider types 

who pose an increased financial risk of 

fraud, waste or abuse to the Medicaid 

program. 

(1) Upon the State Medicaid agency 

determining that a provider, or a person 

with an ownership or control interest or 

who is an agent or managing employee 

of the provider, meets the State 

Medicaid agency’s criteria hereunder for 

criminal background checks as a ‘‘high’’ 

risk to the Medicaid program, the State 

Medicaid agency will require that each 

such provider or person submit 

fingerprints. 

(2) The State Medicaid agency must 

require a provider, or any person with 

an ownership or control interest or who 

is an agent or managing employee of the 

provider, to submit two sets of 

fingerprints, in a form and manner to be 

determined by the State Medicaid 

agency, within 30 days upon request 

from CMS or the State Medicaid agency. 

§ 455.436 Federal database checks. 

The State Medicaid agency must do 

all of the following: 

(a) Confirm the identity and 

determine the exclusion status of 

providers and any person with an 

ownership or control interest or who is 

an agent or managing employee of the 

provider through routine checks of 

Federal databases. 

(b) Check applicable databases 

maintained by the Social Security 

Administration, the National Plan and 

Provider Enumeration System (NPPES), 

the List of Excluded Individuals/Entities 

(LEIE), the Excluded Parties List System 

(EPLS), and any such other databases as 

the Secretary may prescribe. 

(c)(1) Consult appropriate databases to 

confirm identity upon enrollment and 

reenrollment; and 

(2) Check the LEIE and EPLS no less 

frequently than monthly. 

§ 455.440 National Provider Identifier. 

The State Medicaid agency must 

require all claims for payment for items 

and services that were ordered or 

referred to contain the National Provider 

Identifier (NPI) of the physician or other 

professional who ordered or referred 

such items or services. 

§ 455.450 Screening categories for 

Medicaid providers. 

A State Medicaid agency must screen 

all initial applications, including 

applications for a new practice location, 

and any applications received in 

response to a re-enrollment request 

based on a categorical risk level of 

‘‘limited,’’ ‘‘moderate,’’ or ‘‘high.’’ If a 

provider could fit within more than one 

risk category described in this section, 

the risk category with the highest level 

of screening is applicable. 

(a) Screening for providers designated 

as limited categorical risk. When the 

State Medicaid agency designates a 

provider as a ‘‘limited’’ categorical risk 

or the provider is publicly traded on the 

New York Stock Exchange (NYSE) or 

National Association of Securities 

Dealers Automated Quotation System 

(NASDAQ), the State Medicaid agency 

must do all of the following: 

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(1) Verify that a provider meets any 

applicable Federal regulations, or State 

requirements for the provider type prior 

to making an enrollment determination. 

(2) Conduct license verifications, 

including State licensure verifications 

in States other than where the provider 

is enrolling, in accordance with 

§ 455.412. 

(3) Conduct database checks on a preand post-enrollment basis to ensure that 

providers continue to meet the 

enrollment criteria for their provider 

type, in accordance with § 455.436. 

(b) Screening for providers designated 

as moderate categorical risk. When the 

State Medicaid agency designates a 

provider as a ‘‘moderate’’ categorical 

risk, a State Medicaid agency must do 

both of the following: 

(1) Perform the ‘‘limited’’ screening 

requirements described in paragraph (a) 

of this section. 

(2) Conduct on-site visits in 

accordance with § 455.432. 

(c) Screening for providers designated 

as high categorical risk. When the State 

Medicaid agency designates a provider 

as a ‘‘high’’ categorical risk, a State 

Medicaid agency must do both of the 

following: 

(1) Perform the ‘‘limited’’ and 

‘‘moderate’’ screening requirements 

described in paragraphs (a) and (b) of 

this section. 

(2)(i) Conduct a criminal background 

check; or 

(ii) Require the submission of set of 

fingerprints in accordance with 

§ 455.434. 

(d) Denial or termination of 

enrollment. A provider, or any person 

with an ownership or control interest or 

who is an agent or managing employee 

of the provider, who is required by the 

State Medicaid agency or CMS to submit 

a set of fingerprints and fails to do so 

may have its— 

(1) Application denied under 

§ 455.434; or 

(2) Enrollment terminated under 

§ 455.416. 

(e) Adjustment of risk level. The State 

agency must adjust the categorical risk 

level from ‘‘limited’’ or ‘‘moderate’’ to 

‘‘high’’ when any of the following 

occurs: 

(1) The State Medicaid agency 

imposes a payment suspension on a 

provider based on credible allegation of 

fraud, waste or abuse, the provider has 

an existing Medicaid overpayment, or 

the provider has been excluded by the 

OIG or another State’s Medicaid 

program within the previous 10 years. 

(2) The State Medicaid agency or CMS 

lifts a temporary moratorium for a 

particular provider type. 

§ 455.452 Other State screening methods. 

Nothing herein must restrict the State 

Medicaid agency from establishing 

provider screening methods in addition 

to or more stringent than those required 

by this subpart. 

§ 455.460 Application fee. 

(a) Beginning on or after March 23, 

2011, States may collect the applicable 

application fee prior to executing a 

provider agreement from prospective or 

re-enrolling providers other than— 

(1) Individual physicians or 

nonphysician practitioners. 

(2) (i) Providers who are enrolled in 

either— 

(A) Title XVIII of the Act; or 

(B) Another State’s title XIX or XXI 

plan. 

(ii) Providers that have paid the 

applicable application fee to— 

(A) A Medicare contractor; or 

(B) Another State. 

(b) If the fees collected by a State 

agency in accordance with paragraph (a) 

of this section exceed the cost of the 

screening program, the State agency 

must return that portion of the fees to 

the Federal government. 

§ 455.470 Temporary moratoria. 

(a)(1) The Secretary consults with any 

affected State Medicaid agency 

regarding imposition of temporary 

moratoria on enrollment of new 

providers or provider types prior to 

imposition of the moratoria, in 

accordance with § 424.570. 

(2) The State Medicaid agency will 

impose temporary moratoria on 

enrollment of new providers or provider 

types identified by the Secretary as 

posing an increased risk to the Medicaid 

program. 

(3)(i) The State Medicaid agency is 

not required to impose such a 

moratorium if the State Medicaid 

agency determines that imposition of a 

temporary moratorium would adversely 

affect beneficiaries’ access to medical 

assistance. 

(ii) If a State Medicaid agency makes 

such a determination, the State 

Medicaid agency must notify the 

Secretary in writing. 

(b)(1) A State Medicaid agency may 

impose temporary moratoria on 

enrollment of new providers, or impose 

numerical caps or other limits that the 

State Medicaid agency identifies as 

having a significant potential for fraud, 

waste, or abuse and that the Secretary 

has identified as being at ‘‘high’’ risk for 

fraud, waste, or abuse. 

(2) Before implementing the 

moratoria, caps, or other limits, the 

State Medicaid agency must determine 

that its action would not adversely 

impact beneficiaries’ access to medical 

assistance. 

(3) The State Medicaid agency must 

notify the Secretary in writing in the 

event the State Medicaid agency 

imposes such moratoria, including all 

details of the moratoria. 

(c)(1) The State Medicaid agency must 

impose the moratorium for an initial 

period of 6 months. 

(2) If the State Medicaid agency 

determines that it is necessary, the State 

Medicaid agency may extend the 

moratorium in 6-month increments. 

(3) Each time, the State Medicaid 

agency must document in writing the 

necessity for extending the moratorium. 

PART 457—ALLOTMENTS AND 

GRANTS TO STATES 

27. The authority for part 457 

continues to read as follows: 

Authority: Section 1102 of the Social 

Security Act (42 U.S.C. 1302). 

28. Section 457.900 is amended by 

adding a new paragraph (a)(2)(x) to read 

as follows: 

§ 457.900 Basis, scope and applicability. 

(a) * * * 

(2) * * * 

(x) Sections 1902(a)(77) and 1902(ii) 

relating to provider and supplier 

screening, oversight, and reporting 

requirements. 

* * * * * 

29. A new § 457.990 is added to 

subpart I to read as follows: 

§ 457.990 Provider and supplier screening, 

oversight and reporting requirements. 

The following provisions and their 

corresponding regulations apply to a 

State under title XXI of the Act, in the 

same manner as these provisions and 

regulations apply to a State under title 

XIX of the Act: 

(a) Part 455 Subpart E of this chapter. 

(b) Sections 1902(a)(77) and 1902(ii) 

of the Act pertaining to provider and 

supplier screening, oversight, and 

reporting requirements. 

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 

30. The authority citation for part 498 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

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58248 Federal Register / Vol. 75, No. 184 / Thursday, September 23, 2010 / Proposed Rules 

31. Section 498.5 is amended by 

adding a new paragraph (l)(4) to read as 

follows: 

* * * * * 

(l) * * * 

(4) Scope of review. For appeals of 

denials based on § 424.530(a)(9) related 

to temporary moratorium, the scope of 

review will be limited to whether the 

temporary moratoria applies to the 

provider or supplier appealing the 

denial. The agency’s basis for imposing 

a temporary moratorium is not subject 

to review. 

PART 1007—STATE MEDICAID FRAUD 

CONTROL UNITS 

32. The authority for part 1007 

continues to read as follows: 

Authority: 42 U.S.C. 1320 and 1395hh. 

33. Section 1007.9 is amended by 

adding paragraphs (e) through (g) to 

read as follows: 

§ 1007.9 Relationship to, and agreement 

with, the Medicaid agency. 

* * * * * 

(e)(1) The unit may refer any provider 

with respect to which there is pending 

an investigation of a credible allegation 

of fraud under the Medicaid program to 

the State Medicaid agency for payment 

suspension in whole or part under 

§ 455.23. 

(2) Referrals may be brief, but must be 

in writing and include sufficient 

information to allow the State Medicaid 

agency to identify the provider and to 

explain the credible allegations forming 

the grounds for the payment 

suspension. 

(f) Any request by the unit to the State 

Medicaid agency to delay notification to 

the provider of a payment suspension 

under § 455.23 of this Title must be in 

writing. 

(g) When the unit accepts or declines 

a case referred by the State Medicaid 

agency, the unit notifies the State 

Medicaid agency in writing of the 

acceptance or declination of the case. 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) (Catalog of Federal Domestic 

Assistance Program No. 93.773, Medicare— 

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: September 13, 2010. 

Donald Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: September 15, 2010. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2010–23579 Filed 9–17–10; 11:15 am] 

BILLING CODE 4120–01–P 

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