72500 Federal Register / Vol. 79, No. 234 / Friday, December 5, 2014 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405, 424, and 498 

[CMS–6045–F] 

RIN 0938–AP01 

Medicare Program; Requirements for 

the Medicare Incentive Reward 

Program and Provider Enrollment 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule implements 

various provider enrollment 

requirements. These include: Expanding 

the instances in which a felony 

conviction can serve as a basis for 

denial or revocation of a provider or 

supplier’s enrollment; if certain criteria 

are met, enabling us to deny enrollment 

if the enrolling provider, supplier, or 

owner thereof had an ownership 

relationship with a previously enrolled 

provider or supplier that had a Medicare 

debt; enabling us to revoke Medicare 

billing privileges if we determine that 

the provider or supplier has a pattern or 

practice of submitting claims that fail to 

meet Medicare requirements; and 

limiting the ability of ambulance 

suppliers to ‘‘backbill’’ for services 

performed prior to enrollment. 

DATES: These regulations are effective 

on February 3, 2015. 

FOR FURTHER INFORMATION CONTACT: 

Frank Whelan, (410) 786–1302. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary and Background 

A. Executive Summary 

1. Purpose 

a. Need for Regulatory Action 

This final rule is necessary to make 

certain changes to the provider 

enrollment provisions in 42 CFR part 

424, subpart P. This final rule will 

strengthen program integrity and help 

ensure that fraudulent entities and 

individuals do not enroll in or maintain 

their enrollment in the Medicare 

program. 

b. Legal Authority 

Sections 1102 and 1871 of the Social 

Security Act provide general authority 

for the Secretary to prescribe regulations 

for the efficient administration of the 

Medicare program. Also, section 1866(j) 

of the Act, codified at 42 U.S.C. 

1395cc(j), provides specific authority 

with respect to the enrollment process 

for providers and suppliers. 

2. Brief Summary of the Major Provider 

Enrollment Provisions 

We are finalizing the following major 

provisions regarding provider 

enrollment: 

• Allowing denial of enrollment if the 

provider, supplier, or owner thereof was 

previously the owner of a provider or 

supplier that had a Medicare debt that 

existed when the latter’s enrollment was 

voluntarily terminated, involuntarily 

terminated or revoked and— 

++ The owner left the provider or 

supplier that had the Medicare debt 

within 1 year of that provider or 

supplier’s voluntary termination, 

involuntary termination, or revocation; 

++ The Medicare debt has not been 

fully repaid; and 

++ We determine that the uncollected 

debt poses an undue risk of fraud, 

waste, or abuse. 

A denial under this provision can be 

averted if the enrolling provider, 

supplier, or owner thereof—(1) satisfies 

the criteria set forth in § 401.607 and 

agrees to a CMS-approved extended 

repayment schedule for the entire 

outstanding Medicare debt; or (2) repays 

the debt in full. 

• Allowing denial of enrollment or 

revocation of Medicare billing privileges 

if, within the preceding 10 years, the 

provider or supplier, or any owner or 

managing employee thereof, was 

convicted of a federal or state felony 

offense that CMS determines to be 

detrimental to the best interests of the 

Medicare program and its beneficiaries. 

(Under the previous regulation, 

enrollment could not be denied or 

revoked based on a managing 

employee’s felony conviction.) 

• Allowing revocation of Medicare 

billing privileges if the provider or 

supplier has a pattern or practice of 

submitting claims that fail to meet 

Medicare requirements. 

• With the exception noted in section 

II.B.5. of this final rule, requiring all 

revoked providers and suppliers 

(regardless of type) to submit all of their 

remaining claims within 60 days after 

the effective date of their revocation. 

• Limiting the ability of ambulance 

companies to ‘‘back bill’’ for services 

furnished prior to enrollment. Under 

§ 424.520(d), physicians, non-physician 

practitioners, and physician and nonphysician practitioner organizations 

currently cannot bill for services 

furnished prior to the later of the date 

the supplier filed a Medicare enrollment 

application that was subsequently 

approved by a Medicare contractor or 

the date the supplier first began 

furnishing services at a new practice 

location. (Independent diagnostic 

testing facilities (IDTFs) and suppliers 

of durable medical equipment, 

prosthetics, orthotics, and supplies 

(DMEPOS) have similar restrictions.) 

We are expanding this to include 

ambulance suppliers. 

• Limiting the ability of revoked 

providers and suppliers to submit a 

corrective action plan (CAP) to 

situations where the revocation was 

based on § 424.535(a)(1). 

3. Incentive Reward Program (IRP) 

We may finalize the provisions 

relating to the IRP in future rulemaking. 

4. Summary of Costs and Benefits 

The following table provides a 

summary of the costs and benefits 

associated with the principal provisions 

of this final rule. 

TABLE 1—SUMMARY OF COSTS AND IMPACTS

Provision description Impacts 

Denial of Enrollment Based on Medicare Debt ........................................ Though a savings to the federal government will accrue from such a 

denial, the monetary amount cannot be quantified. 

Expansion of Ability to Deny or Revoke Medicare Billing Privileges 

Based on Felony Conviction.

Though a savings to the federal government will accrue from such a 

denial or revocation, the monetary amount cannot be quantified. 

Revocation Based on Pattern or Practice of Submitting Claims that Do 

Not Meet Medicare Requirements.

Though a savings to the federal government will accrue from such a 

revocation, the monetary amount cannot be quantified. 

Requirement for Revoked Providers and Suppliers to Submit Remaining Claims within 60 Days after Effective Date of Revocation.Monetary amount cannot be quantified. However, we believe this requirement will—(1) limit the Medicare program’s vulnerability to 

fraudulent claims; and (2) allow more focused medical review. This 

will likely result in some savings to the federal government. 


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TABLE 1—SUMMARY OF COSTS AND IMPACTS—Continued 

Provision description Impacts 

Inclusion of Ambulance Suppliers within § 424.520(d) ............................ Will result in a transfer of $327.4 million per year (primary estimate) 

from ambulance suppliers to the federal government. 

Limitation of Ability to Submit CAP to Situations where Revocation 

based on § 424.535(a)(1).

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

begin billing Medicare again once they submit the correct information. 

B. Background and General Overview 

In the April 21, 2006 Federal Register 

(71 FR 20754), we published a final rule 

titled, ‘‘Medicare Program; 

Requirements for Providers and 

Suppliers to Establish and Maintain 

Medicare Enrollment.’’ The final rule set 

forth requirements in part 424, subpart 

P that providers and suppliers must 

meet in order to obtain and maintain 

Medicare billing privileges. Since its 

publication in April 2006, we have 

updated subpart P to address a number 

of enrollment issues. 

In the April 2006 final rule, we cited 

sections 1102 and 1871 of the Act as 

general authority for our establishment 

of these requirements, which were 

designed for the efficient administration 

of the Medicare program. Pursuant to 

this general rulemaking authority as 

well as to section 1866(j) of the Act, we 

proposed several additional changes to 

our provider enrollment regulations to 

help ensure that Medicare payments are 

only made to qualified providers and 

suppliers. 

In the April 29, 2013 Federal Register 

(78 FR 25013), we published a proposed 

rule that would revise the IRP 

provisions and certain provider 

enrollment requirements in part 424, 

subpart P. 

II. Provisions of the Proposed Rule and 

Analysis of and Responses to Public 

Comments 

A. Incentive Reward Program (IRP) 

We received a number of comments 

regarding our proposed IRP provisions. 

They focused largely on several issues. 

First, a number of commenters stated 

that the significantly increased reward 

amount would lead to many reports 

containing irrelevant or erroneous 

information that would ultimately 

impose a heavy burden on CMS and its 

contractors. Providers would also be 

seriously burdened because they would 

constantly have to fight unwarranted 

complaints, perhaps leaving less time 

for such providers to treat Medicare 

beneficiaries. 

Second, several commenters 

expressed concern regarding our 

proposal to limit reward eligibility to 

the first reporter of information about a 

provider’s actual or potential 

sanctionable conduct. They contended 

that this could create ‘‘shoot first, ask 

questions later’’ situations; such a rush 

to report could also create tension 

between providers and patients. 

Third, several commenters stated that 

our proposal would encourage 

whistleblowers to first report their 

concerns to CMS: (1) Instead of using 

established internal compliance 

reporting methods (such as hotlines) 

created within Medicare provider 

organizations; and (2) without 

undertaking any initial validation of 

facts or discussing the matter with the 

provider. 

Fourth, commenters questioned 

whether CMS has the resources in place 

to handle the enormous influx of tips 

and complaints that our proposal would 

generate. 

Due to the complexity of the 

operational aspects of our proposal, we 

are not finalizing our proposed IRP 

provisions in this rule. We may finalize 

them in future rulemaking. 

B. Provider Enrollment 

As noted previously, in April 2006 we 

published a final rule that set forth 

requirements that providers and 

suppliers must meet in order to obtain 

and maintain Medicare billing 

privileges. Since that rule’s publication, 

we have revised and supplemented 

various provisions in part 424, subpart 

P to address certain payment safeguard 

issues. As discussed in the following 

section, this final rule makes additional 

changes to subpart P. 

1. Definition of Enrollment 

Most physicians and non-physician 

practitioners enroll in Medicare to 

become eligible to receive payment for 

covered services furnished to Medicare 

beneficiaries. However, some physicians 

and non-physician practitioners who are 

not enrolled in Medicare via the Form 

CMS–855I enrollment application may 

wish to enroll for the sole and exclusive 

purpose of ordering or certifying items 

or services for Medicare beneficiaries. 

Consistent with § 424.507, and 

assuming all other applicable 

requirements are met, these individuals 

are eligible to enroll for the sole purpose 

of ordering or certifying Medicare items 

or services by completing the CMS– 

855O application. The CMS–855O 

(OMB Approval #0938–0685), which 

became available for use in July 2011, is 

exclusively designed to allow 

physicians and eligible professionals to 

enroll in Medicare solely to order or 

certify items or services. 

Physicians and non-physician 

practitioners who complete the CMS– 

855O are not eligible to submit claims 

to Medicare for services they provide, 

for they are not granted Medicare billing 

privileges. Because some of our 

regulatory provisions did not clearly 

articulate the difference between 

enrolling in Medicare: (1) To obtain 

Medicare billing privileges; and (2) 

solely to order or certify items or 

services for Medicare beneficiaries, we 

proposed three remedial changes. 

The first change involved the 

definition of ‘‘Enroll/Enrollment’’ in 

§ 424.502, the initial sentence of which 

stated: ‘‘Enroll/Enrollment means the 

process that Medicare uses to establish 

eligibility to submit claims for 

Medicare-covered services and 

supplies.’’ We proposed to change this 

to read: ‘‘Enroll/Enrollment means the 

process that Medicare uses to establish 

eligibility to submit claims for 

Medicare-covered items and services, 

and the process that Medicare uses to 

establish eligibility to order or certify for 

Medicare-covered items and services.’’ 

Our purpose was to clarify that the 

overall enrollment process includes 

enrollment via the CMS–855O. 

The second revision concerned 

paragraph (4) of the definition of 

‘‘Enroll/Enrollment’’ in § 424.502. We 

proposed to change the language in this 

paragraph from ‘‘(g)ranting the provider 

or supplier Medicare billing privileges’’ 

to the following: ‘‘(4) Except for those 

suppliers that complete the CMS–855O 

form or CMS-identified equivalent or 

successor form or process for the sole 

purpose of obtaining eligibility to order 

or certify Medicare-covered items and 

services, granting the Medicare provider 

or supplier Medicare billing privileges.’’ 

This was intended to emphasize that 


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although enrollment via the CMS–855O 

enables the supplier to order or certify 

Medicare-covered items and services, it 

does not convey Medicare billing 

privileges to the supplier. 

The third change involved § 424.505, 

which states in part that a provider or 

supplier, once enrolled, receives 

Medicare billing privileges. We 

proposed to revise the second sentence 

of this section to state: ‘‘Except for those 

suppliers that complete the CMS–855O 

or CMS-identified equivalent or 

successor form or process for the sole 

purpose of obtaining eligibility to order 

or certify Medicare-covered items and 

services, once enrolled the provider or 

supplier receives billing privileges and 

is issued a valid billing number effective 

for the date a claim was submitted for 

an item that was furnished or a service 

that was rendered. (See 45 CFR part 162 

for information on the National Provider 

Identifier and its use as the Medicare 

billing number.)’’ Again, our purpose 

was to clarify that enrollment via the 

CMS–855O enables the supplier to order 

or certify Medicare-covered items and 

services but does not grant Medicare 

billing privileges to the supplier. 

The following is a summary of the 

comments we received on these three 

changes and our responses: 

Comment: Several commenters 

recommended that the CMS–855O be 

modified to require the applicant to 

provide information about his or her 

practice location and medical record 

location. The commenters contended 

that § 424.510(d)(2)(ii) mandates that 

each submitted enrollment application 

include the submission of all 

documentation to uniquely identify a 

provider or supplier—including, but not 

limited to, proof of a practice location 

and medical record storage location. 

Such proof, the commenters stated, can 

help reduce identity theft and other 

forms of Medicare fraud, waste and 

abuse. A commenter recommended that 

CMS deactivate the billing privileges of 

any individual who enrolled in 

Medicare using the CMS–855O because 

the CMS–855O does not collect 

information on practice locations and 

medical record storage locations. 

Another commenter suggested that CMS 

require individuals who have enrolled 

using the CMS–855O to provide practice 

location information. 

Response: These recommended 

changes regarding the CMS–855O are 

outside the scope of this rule, though we 

may consider adding practice location 

information to the CMS–855O at a later 

date. 

Some of the enrollment requirements 

in § 424.510 are applicable only to 

providers and suppliers enrolling in 

Medicare to obtain billing privileges, 

and do not apply to providers and 

suppliers enrolling strictly to order or 

certify items or services for Medicare 

beneficiaries. In order to clarify those 

requirements that apply to all 

enrollments and those that only apply to 

enrollments to obtain billing privileges, 

we are revising § 424.510 as follows: 

• The first two sentences of existing 

paragraph (a) will be designated as new 

paragraph (a)(1). 

• The third sentence of existing 

paragraph (a) will be designated as new 

paragraph (a)(2) and is revised to read: 

‘‘To be enrolled to furnish Medicarecovered items and services, a provider 

or supplier must meet the requirements 

specified in paragraphs (d) and (e) of 

this section.’’ 

• New paragraph (a)(3) will state the 

following: ‘‘To be enrolled solely to 

order and certify Medicare items or 

services, a physician or non-physician 

practitioner must meet the requirements 

specified in paragraph (d) of this section 

except for paragraphs (2)(iii)(B), (2)(iv), 

(3)(ii), (5), (6), and (9).’’ These 

paragraphs only apply to individuals 

enrolling to obtain Medicare billing 

privileges. 

With respect to the commenter’s 

suggestion regarding deactivation, 

enrollment via the CMS–855O does not 

confer billing privileges. Hence, there 

are no billing privileges to deactivate. 

Comment: Several commenters 

disagreed with the use of the CMS– 

855O, arguing that CMS: (1) Lacks the 

statutory and regulatory basis to either 

establish a registration process for 

ordering and certifying physicians and 

non-physician practitioners or to use an 

enrollment application for any purpose 

other than to enroll a provider or 

supplier (including physicians and nonphysician practitioners); and (2) violates 

5 U.S.C. 551 et seq. in its use of the 

CMS–855O without having issued a 

proposed and final regulation. The 

commenters further contended that 

§ 424.500 does not contemplate such a 

registration process and that CMS did 

not solicit comments on revising 

§ 424.500 for such purpose. A 

commenter recommended that CMS: (1) 

Discontinue use of the CMS–855O until 

it completes the notice and comment 

rulemaking process described in section 

1871 of the Act; and (2) furnish the legal 

basis for registering physicians and nonphysician practitioners for the sole 

purpose of ordering or certifying 

Medicare services or items. 

Other commenters expressed concern 

that CMS is using the Paperwork 

Reduction Act of 1995 (PRA) to 

circumvent the notice and comment 

rulemaking requirements of the 

Administrative Procedure Act as a 

means of establishing a new Medicare 

enrollment application—specifically, 

the CMS–855O. A commenter 

contended that CMS essentially used 

the PRA process to prohibit physicians 

from obtaining Medicare billing 

privileges via the CMS–855O. The 

commenter recommended that CMS 

explain its use of the CMS–855O: (1) 

Without having utilized the notice and 

comment rulemaking process; and (2) in 

lieu of using the CMS–855I, which has 

a legal basis, has already been subject to 

rulemaking, and duplicates all of the 

data on the CMS–855O; the commenter 

argued that CMS has already established 

an enrollment application for 

physicians (that is, the CMS–855I) and 

that the CMS–855O is therefore 

duplicative of the CMS–855I. With 

respect to the second suggestion 

regarding CMS using the PRA process to 

prohibit physicians from enrolling to 

obtain billing privileges, the commenter 

added that CMS could modify the CMS– 

855I to accommodate physicians and 

non-physician practitioners seeking 

only to order or certify items or services. 

The commenter stated that this would 

ease the paperwork burden on such 

individuals should they later wish to 

obtain Medicare billing privileges; 

rather than having to complete two 

separate forms (the CMS–855I and 

CMS–855O), the commenter continued, 

the individual would only need to 

submit an updated CMS–855I 

application as part of the enrollment 

process. 

Another commenter stated that the 

Privacy Act Statement for the CMS– 

855O includes various references to 

payments to providers and suppliers. 

Since the CMS–855O is designed for the 

sole purpose of ordering and certifying, 

the commenter requested that CMS 

explain its rationale for including such 

references in the CMS–855O Privacy 

Act Statement. 

Response: As already indicated, 

comments regarding the use or content 

of the CMS–855O are outside the scope 

of this rule. However, we note that 

section 6405 of the Affordable Care Act 

gave us the authority to require the 

Medicare enrollment of physicians and 

non-physician practitioners who order 

or certify certain items or services for 

Medicare beneficiaries. We 

implemented this statutory provision at 

§ 424.507 via a May 5, 2010 interim 

final rule with comment period (75 FR 

24437) and an April 27, 2012 final rule 

(77 FR 25284). These two rules, as well 

as the CMS–855O itself, were subject to 

a notice-and-comment process. (We 

solicited public comments on the CMS– 

855O in two Federal Register notices as 


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mandated by the PRA.) Moreover, we 

disagree with the contention that the 

PRA process was used to prohibit 

physicians from obtaining Medicare 

billing privileges via the CMS–855O. 

The CMS–855O was not designed as a 

prohibition of any kind but instead as 

means of permitting—consistent with 

section 6405 of the Affordable Care 

Act—certain physicians and nonphysician practitioners to enroll in 

Medicare solely to order or certify 

Medicare items or services. We believe 

that completion of an abbreviated form 

such as the CMS–855O, rather than all 

or part of the CMS–855I, has eased the 

burden on the physician and nonphysician practitioner communities. 

Comment: A commenter questioned 

whether physicians who submit the 

CMS–855O are required to revalidate 

their enrollment with the Medicare 

contractor every 5 years. 

Response: We reserve the right to 

require individuals who are enrolled 

solely to order or certify items or 

services to revalidate their enrollment 

information every 5 years. 

Comment: A commenter stated that 

since CMS did not discuss reassignment 

in this proposed rule, it would seem 

that section 1871 of the Act would not 

preclude CMS from barring physicians 

and non-physician practitioners from 

enrolling in Medicare via the CMS– 

855O and reassigning their benefits to a 

medical group. The commenter sought 

clarification as to whether a physician 

can enroll using the CMS–855O and 

reassign payment/benefits to either an 

employer or an entity under contractual 

arrangement. Another commenter 

questioned whether a physician can 

simultaneously submit a CMS–855O 

and CMS–855R if he or she is billing for 

services through a group practice. 

Response: The concept of 

reassignment (as that term is used in 

§ 424.80) does not apply to CMS–855O 

situations because there is no right to 

payment associated with an enrollment 

via the CMS–855O. In other words, a 

physician or non-physician practitioner 

who enrolls via the CMS–855O does not 

have Medicare billing privileges, and 

therefore has no right to payment to 

reassign via the CMS–855R. If he or she 

wishes to enroll in Medicare, bill the 

program for services, and reassign his or 

her benefits to an eligible party, he or 

she must complete both the CMS–855I 

and CMS–855R forms. A CMS–855O 

form cannot be used as a means of 

obtaining Medicare billing privileges. 

Comment: A commenter questioned 

whether a physician or non-physician 

practitioner can use the CMS–855O if he 

or she submits only very few claims to 

Medicare per year or whether he or she 

must use the CMS–855I. 

Response: In the scenario the 

commenter poses, the physician or nonphysician practitioner must use the 

CMS–855I because he or she will be 

billing for Medicare services. As 

discussed previously, the CMS–855O 

may only be used by physicians or other 

eligible practitioners who wish to enroll 

solely to order or certify items or 

services. It cannot be used to obtain 

Medicare billing privileges. 

Comment: A commenter questioned 

whether a Medicare-enrolled physician 

or non-physician practitioner who also 

works part-time at (and only orders 

services from) a rural health clinic 

(RHC) must complete the CMS–855O for 

his or her activities at the RHC. 

Response: The individual need not 

complete a CMS–855O in this scenario, 

for he or she is already enrolled in 

Medicare via the CMS–855I. 

Comment: A commenter stated that if 

suppliers who enroll solely to order or 

certify Medicare items or services are 

not granted Medicare billing privileges, 

the regulatory provisions found in Part 

424, subpart P do not apply and CMS 

does not have the authority to approve, 

deny, deactivate, or revoke individuals 

who have enrolled or seek to enroll in 

Medicare via the CMS–855O solely to 

order and certify. The commenter 

recommended that CMS propose a new 

rule to allow CMS to approve, deny, 

revoke, or deactivate the enrollment of 

a physician or non-physician 

practitioner in such instances. 

Response: The regulations in Part 424, 

subpart P apply to suppliers who are 

enrolled or enrolling in Medicare and 

are not limited to suppliers who have or 

seek Medicare billing privileges. In light 

of our changes to §§ 424.502, 424.505, 

and 424.510, the provisions of subpart 

P apply equally to suppliers who enroll 

in order to obtain Medicare billing 

privileges and those who enroll 

exclusively to order or certify Medicare 

items or services. 

Comment: A commenter requested 

clarification as to whether a physician 

must have a valid enrollment record in 

PECOS to order infusion and nebulizer 

drugs or other Part B drugs. 

Response: We believe this comment is 

outside the scope of this final rule. 

Comment: Several commenters sought 

clarification from CMS concerning the 

difference between the use of the term 

‘‘registration’’ on the CMS–855O and 

the proposed changes to §§ 424.502 and 

424.505, which use the term 

‘‘enrollment.’’ One commenter 

questioned whether these two terms 

have the same meaning. Another 

commenter suggested that CMS 

establish a definition of ‘‘register.’’ 

Response: Our use of the term 

‘‘registration’’ on the CMS–855O was 

designed to clarify the distinction 

between enrolling in Medicare to obtain 

billing privileges and enrolling in 

Medicare solely to order or certify items 

and services. In the latter situation, the 

process is the same irrespective of the 

precise term that is used to describe it. 

For this reason, and because the CMS– 

855O process will now be included 

within the scope of the enrollment 

provisions of §§ 424.502, 424.505, and 

424.510, we do not believe a separate 

definition of ‘‘register’’ is warranted or 

needed. 

Comment: Citing the current 

definition of ‘‘Enroll/Enrollment’’ in 

§ 424.502, a commenter noted that the 

enrollment process includes identifying 

and confirming the provider’s practice 

locations. The commenter contended 

that since the CMS–855O does not 

collect practice location information, 

referencing the CMS–855O in § 424.502 

is inappropriate. The commenter 

suggested that CMS discontinue use of 

the CMS–855O until it proposes 

changes to the definition of ‘‘Enroll/

Enrollment’’ that eliminate the reference 

to practice location data. 

Response: As mentioned earlier, we 

may consider adding practice location 

information to the CMS–855O at a later 

date. Therefore, we do not believe that 

the definition of ‘‘Enroll/Enrollment’’ in 

§ 424.502 should be revised to remove 

the reference to practice locations. 

However, we will modify paragraph (2) 

of the definition of ‘‘Enroll/Enrollment’’ 

in § 424.502 to account for that 

paragraph’s inapplicability to CMS– 

855O applications. The current version 

of paragraph (2) states that the 

enrollment process includes, 

‘‘Validation of the provider’s or 

supplier’s eligibility to provide items or 

services to Medicare beneficiaries.’’ 

Since suppliers who complete the CMS– 

855O are enrolling solely to order or 

certify Medicare items and services, we 

are modifying paragraph (2) to state: 

‘‘Except for those suppliers who 

complete the CMS–855O form, CMSidentified equivalent, successor form or 

process for the sole purpose of obtaining 

eligibility to order or certify Medicarecovered items and services, validating 

the provider or supplier’s eligibility to 

provide items or services to Medicare 

beneficiaries.’’ We note that the new 

language in paragraph (2) is the same as 

that which is being added to paragraph 

(4). 

Comment: Several commenters 

supported our proposed changes to 

§§ 424.502 and 424.505 to reflect that 


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some physicians and non-physician 

practitioners may enroll solely to order 

or certify certain items or services for 

Medicare beneficiaries. However, one 

commenter suggested that the verbiage 

‘‘or CMS-equivalent or successor form 

or process for the sole purpose of 

obtaining eligibility to order or certify 

Medicare-covered items and services’’ is 

too wordy and confusing and should be 

stricken from both sections. 

Response: While we appreciate the 

commenters’ support, we do not believe 

the quoted language should be stricken 

from §§ 424.502 and 424.505. This 

language is necessary to account for the 

possibility that a different process for 

enabling individuals to enroll solely to 

order or certify Medicare items and 

services could be established in the 

future. 

Comment: A commenter believed that 

there remains confusion in the 

physician and non-physician 

practitioner communities regarding the 

difference between enrolling exclusively 

to order and certify Medicare services, 

and enrolling for the purpose of 

participating in and billing Medicare. 

The commenter urged CMS to make this 

distinction clear on the CMS–855O form 

itself and in all applicable CMS 

educational efforts. 

Response: We have undertaken 

extensive educational efforts—including 

close collaboration with various 

professional associations—to clarify for 

the public and the provider community 

the distinction between the two 

processes. We will continue our 

outreach activities on this issue. 

Comment: A commenter questioned 

whether CMS is changing its 

longstanding policy of requiring 

providers and suppliers to submit to 

CMS or its Medicare contractor the 

applicable provider enrollment 

application based on the type of 

provider or supplier enrolling. The 

commenter also requested that CMS 

propose and explain the differences 

between the Medicare enrollment 

process to convey Medicare billing 

privileges and this ostensibly new 

concept of enrolling solely to order and 

certify items and services in the 

Medicare program. 

Response: All providers and 

suppliers, including those suppliers 

submitting the CMS–855O, will 

continue to submit enrollment 

applications based on the provider or 

supplier type involved. As for the 

second comment, we will continue our 

educational efforts to clarify the 

distinction between these two 

processes. 

Comment: A commenter contended 

that §§ 424.507 and 424.510 must be 

revised in order for CMS to establish a 

registration process for physicians and 

non-physician practitioners seeking 

only to order or certify items and 

services. 

Response: Our use of the term 

‘‘registration’’ on the CMS–855O was 

intended to articulate the distinction 

between enrolling in Medicare to obtain 

billing privileges and enrolling in 

Medicare strictly to order or certify 

items and services. In the latter 

situation, the process is the same 

regardless of the precise term that is 

used to describe it. The general 

procedures for completing the CMS– 

855O and the contractor’s processing of 

the application are similar to those used 

for other CMS–855 forms. As such, we 

do not believe that §§ 424.507 and 

424.510 need to be revised to establish 

a unique process for submitting and 

reviewing CMS–855O applications. 

Nevertheless, we have (as explained 

earlier) revised § 424.510 to clarify 

which paragraphs in that section do not 

apply to individuals who enroll solely 

to order or certify items or services. 

Comment: A commenter questioned 

whether a physician who completes the 

CMS–855O can elect to be a 

participating physician even though he 

or she is ordering services in the 

Medicare program. 

Response: A CMS–855O form cannot 

be used as a means of obtaining 

Medicare billing privileges. Medicare 

participation status does not apply in 

situations where the physician or nonphysician practitioner enrolls solely for 

the purpose of ordering or certifying 

items or services. If the individual 

wishes to enroll in Medicare to furnish 

Medicare services, he or she must 

submit a CMS–855I application. 

Comment: A commenter 

recommended that CMS identify 

whether any other federal or state health 

plan or any state Medicaid agency 

permits a physician or non-physician 

practitioner to obtain Medicare billing 

privileges for the sole purpose of 

ordering or certifying services for their 

members. The commenter was unaware 

of any other health plan that permits 

this. 

Response: One cannot obtain 

Medicare billing privileges through any 

state health plan, state Medicaid agency, 

or federal health plan other than 

Medicare. 

Comment: A commenter stated that 

on May 20, 2011, September 30, 2011, 

and April 14, 2012, CMS published a 

summary of the information collection 

for the CMS–855O in the Federal 

Register. The commenter noted that in 

each of these summaries, CMS stated 

that the CMS–855O permits a physician 

to receive a Medicare identification 

number (without being approved for 

billing privileges) for the sole purpose of 

ordering and referring beneficiaries to 

approved Medicare providers and 

suppliers. The commenter indicated 

further that CMS states, in the proposed 

rule on which the commenter is 

commenting, that the CMS–855O is 

exclusively designed to allow 

physicians and eligible professionals to 

enroll in Medicare solely to order or 

certify items or services. The commenter 

requested that CMS explain this 

apparent discrepancy. The commenter 

also requested CMS to outline how 

giving a physician or practitioner a 

Medicare billing number (which is 

already required to be the National 

Provider Identifier) is consistent with 

enrolling in the Medicare program. 

Another commenter questioned why the 

September 30, 2011 and April 14, 2012 

notices refer to the registration of such 

individuals while our proposed rule 

refers to enrollment. This commenter 

also urged CMS to explain why it did 

not choose to solicit public comments 

on changes to regulatory provisions 

found in §§ 424.502 and 424.505 for 

almost 2 years after adopting and using 

the CMS–855O. 

Response: If the commenter is 

referring to the use of the term ‘‘order 

or certify’’ in lieu of the term ‘‘order or 

refer,’’ we replaced ‘‘refer’’ with 

‘‘certify’’ because, as explained in the 

April 27, 2012 final rule: (1) A 

‘‘certifying’’ provider generally means a 

person who orders/certifies home health 

services for a beneficiary, and (2) home 

health services fall within the purview 

of § 424.507. 

The Medicare number referenced in 

the three notices is not a ‘‘billing 

number’’ and is not intended to grant 

billing privileges to the individual; it 

instead serves as an identifier of the 

physician or non-physician practitioner. 

Likewise, our revisions to §§ 424.502 

and 424.505 do not furnish billing 

privileges to an individual who is 

enrolling solely to order or certify items 

or services. 

As explained earlier, our use of the 

term ‘‘registration’’ was intended to 

clarify the difference between enrolling 

in Medicare to obtain billing privileges 

and enrolling in Medicare solely to 

order or certify items and services. 

Comment: A commenter requested 

whether completion of another CMS– 

855O is required if the applicable 

physician or non-physician practitioner 

moves and opens a new practice in 

another contractor jurisdiction. 

Response: At this time, a separate 

CMS–855O is required for each 


tkelley on DSK3SPTVN1PROD with RULES3
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1 Department of Health and Human Services, 

Office of Inspector General (OIG). ‘‘Early Alert 

Memorandum: Payments to Medicare Suppliers and 

Home Health Agencies Associated with ‘Currently 

Not Collectible’ Overpayments (OEI–06–07– 

00080),’’ November 26, 2008, p.1. 

2 Ibid. p.1. 

3 Ibid. p.7. 

4 Ibid. p.2. 

Medicare contractor jurisdiction in 

which the individual practices. 

Comment: Section 1866(j) of the Act 

states that the Secretary shall establish 

by regulation a process for enrolling 

providers and suppliers; such process 

shall include, in part, a screening 

process. A commenter contended that 

CMS has violated section 1866(j) of the 

Act because our proposed rule does not 

establish a screening process for 

physicians and non-physician 

practitioners enrolling solely to order or 

certify items or services. The commenter 

recommended that CMS propose a 

moderate level of risk for such 

physicians and non-physician 

practitioners because CMS cannot link 

an order from such individual to the 

billing by a DMEPOS supplier, imaging 

facility, or clinical laboratory. 

Response: We disagree with the 

commenter. The screening process 

implemented pursuant to section 1866(j) 

of the Act applies to all CMS–855 

applications, including the CMS–855O. 

Regardless of which CMS–855 

enrollment application is used, 

physician and non-physician 

practitioners are designated to the 

limited screening level pursuant to 

§ 424.518(a)(1)(i), unless an adjustment 

applies under § 424.518(c)(3). 

Comment: A commenter 

recommended that CMS provide the 

number of individuals enrolled or 

registered in the Medicare program 

using the CMS–855O since July 2011. 

Response: This comment is outside 

the scope of this rule. 

Comment: A commenter stated that 

contrary to the information found in the 

CMS–855O Privacy Act Notice, CMS 

has not updated the PECOS System of 

Records document to include the CMS– 

855O. The commenter recommended 

that CMS update the System of Records 

document No 09–70–0532 to reflect the 

collection and dissemination of 

information from the CMS–855O. 

Response: This comment is outside 

the scope of this rule. 

Comment: A commenter stated that 

permitting physicians who do not bill 

Medicare to order services for Medicare 

beneficiaries will likely increase 

Medicare fraud and the number of 

improper Medicare payments. The 

commenter recommended that CMS: (1) 

Explain how it will protect the Medicare 

Trust Funds from fraud when it cannot 

verify whether the physician actually 

conducted an exam or treated a 

Medicare beneficiary; and (2) require 

prior authorization for any service 

ordered by a physician or practitioner 

who does not have an associated claim 

for medical services; using prior 

authorization, the commenter believed, 

is the only way that Medicare can verify 

that a physician is treating a patient and 

not merely signing an order for services. 

Response: This comment is outside 

the scope of this rule. 

Comment: A commenter 

recommended that in lieu of using the 

CMS–855O, CMS should exempt 

infrequent billers or physicians who see 

Medicare patients at a rural health clinic 

from deactivation for 3 or 5 years. This 

approach ensures that a physician can 

bill if he/she needs to, but reduces the 

amount of paperwork associated with an 

annual deactivation process. Another 

commenter offered several alternatives 

to the use of the CMS–855O: (1) A 1- 

year deactivation process for physicians 

who accept assignment and bill the 

Medicare program on a regular basis; (2) 

a 5-year deactivation process for 

physicians who bill Medicare as nonparticipating and only bill infrequently; 

and (3) an exception to the 1-year 

deactivation process for certain 

physicians—such as those listed on the 

CMS–855O—who bill the Medicare 

program infrequently. 

Response: These comments are 

outside the scope of this rule. 

After consideration of the comments 

received, we are finalizing the three 

proposed changes to §§ 424.502 and 

424.505. We are also further modifying 

the definition of ‘‘enroll/enrollment’’ in 

§ 424.502 and modifying § 424.510(a) as 

previously discussed. 

2. Debts to Medicare 

Under § 424.530(a)(6), an application 

can be denied if ‘‘[t]he current owner (as 

defined in § 424.502), physician or nonphysician practitioner has an existing 

overpayment at the time of filing of an 

enrollment application.’’ This provision 

was established in large part to address 

situations in which the owner of a 

provider or supplier incurs a substantial 

debt to Medicare, exits the Medicare 

program or shuts down operations 

altogether, and attempts to re-enroll 

through another vehicle or under a new 

business identity. 

As we explained in II.B.2. of the 

proposed rule, such situations were 

discussed in a November 2008 

Department of Health and Human 

Services Office of Inspector General 

(OIG) Early Alert Memorandum entitled, 

‘‘Payments to Medicare Suppliers and 

Home Health Agencies Associated with 

‘Currently Not Collectible’ 

Overpayments’’ (OEI–06–07–00080). 

The memorandum noted that anecdotal 

information from OIG investigators and 

assistant United States Attorneys 

indicated that DMEPOS suppliers with 

outstanding Medicare debts may 

inappropriately receive Medicare 

payments by, among other means, 

operating businesses that are publicly 

fronted by business associates, family 

members, or other individuals posing as 

owners.1 In its study, the OIG selected 

a random sample of 10 DMEPOS 

suppliers in Texas that each had 

Medicare debt of at least $50,000 

deemed currently not collectible (CNC) 

by CMS during 2005 and 2006.2 The 

OIG found that 6 of the 10 reviewed 

DMEPOS suppliers were associated 

with 15 other DMEPOS suppliers or 

HHAs that received Medicare payments 

totaling $58 million during 2002 

through 2007.3 The OIG also found that 

most of the reviewed DMEPOS 

suppliers were connected with their 

associated DMEPOS suppliers and 

HHAs through shared owners or 

managers.4

We have continued to receive reports 

of providers, suppliers, and owners 

thereof accumulating large Medicare 

debts, departing Medicare, and then 

attempting to reenter the program 

through other channels—often to incur 

additional debts. While our current 

authority to deny based on 

§ 424.530(a)(6) enables us to stem this 

practice to a certain extent, it is limited 

to situations where an enrolling 

physician, non-physician practitioner, 

or an owner of the enrolling provider or 

supplier has a current Medicare 

overpayment. It does not apply to 

instances where an enrolling provider or 

supplier entity has a current Medicare 

debt, be it an overpayment or some 

other type of financial obligation to the 

Medicare program. Furthermore, it does 

not address cases where an entity with 

which the enrolling provider, supplier, 

or owner was affiliated had incurred the 

debt. We believed that these latter 

situations were of particular concern to 

the OIG in the 2008 memorandum. 

Therefore, we proposed several changes 

to § 424.530(a)(6). 

First, we proposed to incorporate the 

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

a new paragraph (a)(6)(i) that would 

apply to all enrolling providers, 

suppliers (including physicians and 

non-physician practitioners), and 

owners thereof. We stated that we did 

not believe (a)(6) should be limited to 

individual physicians and nonphysician practitioners. All providers 

and suppliers, regardless of type, are 


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responsible for reimbursing Medicare 

for any debts they owe to the program. 

Permitting them to enroll additional 

provider or supplier sites in Medicare 

when they have existing debts to 

Medicare potentially endangers the 

Trust Funds. If the provider or supplier 

cannot repay its existing Medicare 

debts, this raises questions about its 

ability to pay future debts incurred as 

part of any additional enrollments. 

We proposed that a denial of 

Medicare enrollment under paragraph 

(a)(6)(i) could be avoided if the enrolling 

provider, supplier, or owner thereof 

satisfied the criteria set forth in 

§ 401.607 and agreed to an extended 

CMS-approved repayment schedule for 

the entire outstanding Medicare debt; 

agreement to such a schedule would 

indicate that the provider, supplier, or 

owner is not seeking to avoid its debts 

to Medicare. The provider, supplier, or 

owner thereof could also avoid denial 

by repaying the debt in full. We also 

solicited comment on whether the scope 

of our proposed revision to 

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

include the enrolling provider or 

supplier’s managing employees (as that 

term is defined in § 424.502), corporate 

officers, corporate directors, and/or 

board members. 

Second, we proposed to replace the 

term ‘‘overpayment,’’ as it is currently 

used in § 424.530(a)(6), with ‘‘Medicare 

debt’’ in our regulatory text. We noted 

that ‘‘overpayment’’ more appropriately 

describes the types of debts that are 

subject to (a)(6). We also stated that our 

denial authority under proposed (a)(6) 

should include all forms of debt to 

Medicare, not just overpayments. We 

solicited comments on this proposed 

change as well as on the appropriate 

scope of the term ‘‘Medicare debt’’ for 

purposes of § 424.530(a)(6). 

Third, we proposed to add a new 

paragraph (ii) to § 424.530(a)(6) 

permitting a denial of Medicare 

enrollment if the provider, supplier, or 

current owner (as defined in § 424.502) 

thereof was the owner (as defined in 

§ 424.502) of a provider or supplier that 

had a Medicare debt that existed when 

the latter’s enrollment was voluntarily 

or involuntarily terminated or revoked, 

and the following criteria are met: 

• The owner left the provider or 

supplier that had the Medicare debt 

within 1 year of that provider or 

supplier’s voluntary termination, 

involuntary termination, or revocation. 

• The Medicare debt has not been 

fully repaid. 

• We determine that the uncollected 

debt poses an undue risk of fraud, 

waste, or abuse. 

Similar to proposed § 424.530(a)(6)(i), 

we proposed in § 424.530(a)(6)(iii) that 

the enrolling provider or supplier would 

be able to avoid a denial under 

§ 424.530 (a)(6) if the enrolling provider, 

supplier, or owner thereof satisfies the 

criteria set forth in § 401.607 and agrees 

to an extended repayment schedule for 

the entire outstanding Medicare debt of 

the revoked provider or supplier. We 

noted our belief that this provision is 

warranted because agreement to a 

repayment plan evidences an intention 

to pay back the debt. We also proposed 

in § 424.530(a)(6)(iii) that no denial 

would occur under paragraph (a)(6)(ii) if 

the debt was repaid in full. 

We explained that the difference 

between our proposed § 424.530(a)(6)(ii) 

and the existing language in 

§ 424.530(a)(6) was that the latter 

involved situations in which the current 

owner, physician or non-physician 

practitioner had a Medicare debt. 

Section 424.530(a)(6)(ii), on the other 

hand, would focus on the entity with 

which the enrolling provider, supplier, 

or owner thereof had a prior 

relationship. That is, the ‘‘prior entity’’ 

had a debt to Medicare rather than the 

enrolling provider, supplier, or owner 

thereof. We offered the following 

illustration: Provider X is applying for 

enrollment in Medicare. Y owns 50 

percent of X. Y was also a 20 percent 

owner of Supplier Entity Z, which was 

revoked from Medicare 12 months ago 

and currently has a large outstanding 

Medicare debt. The current version of 

§ 424.530(a)(6) could not be used to 

deny X’s application because X’s 

current owner (Y) does not have a 

Medicare debt. Rather, the entity with 

which Y was affiliated (Z) has the debt. 

However, under proposed 

§ 424.530(a)(6)(ii), and assuming the 

other criteria are met, X’s application 

could be denied because X’s owner was 

an owner of a supplier (Z) that has a 

Medicare debt. We cited section 

1866(j)(5) of the Act, codified at 42 

U.S.C. 1395cc(j)(5) and which was 

established by section 6401(a)(3) of the 

Affordable Care Act, as authority for 

proposed paragraph (ii). 

We proposed the following as factors 

we would consider in determining 

whether an ‘‘undue risk’’ exists under 

paragraph (ii): (1) The amount of the 

Medicare debt; (2) the length and 

timeframe that the enrolling provider, 

supplier, or owner thereof was an owner 

of the prior entity; and (3) the 

percentage of the enrolling provider’s, 

supplier’s, or owner’s ownership of the 

prior entity. We also noted that the 

scope and breadth of ownership 

interests would vary widely (for 

example, the amount of ownership; 

direct versus indirect ownership). For 

this reason, we believed it was 

important that CMS have the flexibility 

to make enrollment decisions under 

§ 424.530(a)(6)(ii) on a case-by-case 

basis, using the factors previously 

outlined. However, we also solicited 

comment on the following issues related 

to these factors: 

• Whether additional factors should 

be considered and, if so, what those 

factors should be. 

• Which, if any, of the proposed 

factors should not be considered. 

• Which, if any, factors should be 

given greater or lesser weight than 

others. 

• Whether a minimum or maximum 

threshold for consideration should be 

established for the ‘‘amount of Medicare 

debt’’ and ‘‘percentage of ownership’’ 

factors. 

We also solicited comments on 

whether paragraph (ii) should apply to 

the enrolling entity’s managing 

employees (as that term is defined in 

§ 424.502), corporate officers, corporate 

directors, and/or board members. 

Many of the comments we received 

regarding our proposed changes to 

§ 424.530(a)(6) were applicable to two or 

more of the proposals. Hence, we have 

summarized and collectively listed all 

of the comments we received on 

§ 424.530(a)(6). Our responses to these 

comments are as follows: 

Comment: Several commenters 

supported CMS’s proposal to use the 

term ‘‘Medicare debt’’ instead of 

‘‘overpayment’’ for the reasons specified 

in the proposed rule, with one 

commenter stating that the term 

‘‘overpayment’’ has long seemed 

inaccurate and, at times, confusing to 

Medicare physicians. One commenter, 

encouraged CMS to more thoroughly 

define ‘‘Medicare debt.’’ Another 

commenter recommended that the term 

‘‘Medicare debt’’ be interpreted 

liberally. 

Response: We appreciate the 

commenters’ support for our proposed 

change. We did not propose a definition 

of ‘‘Medicare debt’’ and do not do so in 

this final rule; rather, we had sought 

comments on the appropriate scope of 

the term for purposes of applying 

§ 424.530(a)(6). 

With respect to § 424.530(a)(6)(i) and 

(ii), we agree that the term ‘‘Medicare 

debt’’ should be interpreted broadly. An 

existing Medicare liability, simply put, 

is an unpaid Medicare debt. As such, an 

existing debt to the Medicare program— 

regardless of its type, or how the debt 

was incurred or discovered—may result 

in the denial of Medicare enrollment 

under § 424.530(a)(6). The only 

exceptions to this would be the 


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situations described in proposed 

§ 424.530(a)(6)(iii) regarding: (1) The 

satisfaction of the criteria set forth in 

§ 401.607 and the agreement to an 

extended repayment schedule for the 

entire outstanding Medicare debt; or (2) 

the repayment of the debt in full. We are 

finalizing these two exceptions. 

We do not believe that specific types 

of Medicare debt should be articulated 

in the text of § 424.530(a)(6). Since the 

particular facts of each case will differ, 

we must retain the flexibility to address 

a variety of situations. We also note that 

our denial authority under 

§ 424.530(a)(6) is discretionary, and 

there may be instances when a denial 

under § 424.530(a)(6) might not be 

warranted. For instance, under 

§ 424.530(a)(6)(ii), our determination as 

to whether the debt poses an undue risk 

to the Medicare program will include 

consideration of the three factors we 

proposed: (1) The amount of the 

Medicare debt; (2) the length and 

timeframe of the ownership interest; 

and (3) the percentage of ownership 

interest—as well as two additional 

factors that we discuss in more detail 

later in this section—specifically; (4) 

whether the Medicare debt is currently 

being appealed; and (5) whether the 

provider was an owner when the debt 

was incurred. (These factors will be 

added at § 424.530(a)(6)(ii)(C).) We will 

make all final determinations regarding 

§ 424.530(a)(6)(i) and (ii), and may 

conclude after reviewing the relevant 

factors that a particular denial under 

§ 424.530(a)(6)(i) is unwarranted. 

Comment: A commenter suggested 

that CMS limit the term ‘‘Medicare 

debt’’ to those debts that have 

undergone and completed the CMS 

appeals process and final administrative 

adjudication; the commenter 

specifically requested that the phrase 

‘‘after final administration adjudication’’ 

be inserted into a definition of 

‘‘Medicare debt.’’ Otherwise, the 

commenter stated, honest and legitimate 

providers and suppliers could be 

prohibited from expanding or selling 

their practices based upon a single 

claim determination. 

Response: We have added at 

§ 424.530(a)(6)(ii)(C)(4) the appeal status 

of the debt as a factor in the 

determination of whether the debt poses 

an undue risk to Medicare. However, we 

are not wholly excluding debts that are 

being appealed from § 424.530(a)(6)’s 

application for two reasons. First, a 

provider or supplier with a Medicare 

debt (particularly a large debt) that 

poses an undue risk to the Medicare 

program should not be given an 

automatic opportunity to incur future 

debts with additional Medicare billing 

privileges simply because the debt is 

being appealed. Second, permitting 

providers and suppliers to obtain 

additional Medicare billing privileges if 

a Medicare debt is being appealed may 

encourage providers and suppliers to 

file meritless appeals simply to avoid 

and circumvent the application of 

§ 424.530(a)(6)(ii). 

Comment: A commenter expressed 

concern that an expansion of the word 

‘‘overpayment’’ to the word ‘‘debt’’ 

could lead to inequitable results, such 

as denials due to debts stemming from— 

(1) coordination of benefits issues with 

secondary payers; and (2) meaningful 

use audits. The commenter urged CMS 

to strictly narrow the scope of whatever 

term it finalizes to ensure that 

physicians do not unreasonably 

experience enrollment denials. 

Response: As alluded to earlier, we 

believe that any type of Medicare debt— 

regardless of how it was incurred or 

discovered—is of concern to us. It is for 

this reason that we are not excluding 

particular types of debts (such as those 

to which the commenter refers) from 

§ 424.530(a)(6)’s scope. Nevertheless, we 

do not believe that our intended use of 

the term ‘‘Medicare debt’’ will lead to 

inequitable results, for we will only 

exercise our discretion under 

§ 424.530(a)(6) in a careful and 

consistent manner. 

Comment: Several commenters did 

not support expanding § 424.530(a)(6)’s 

purview to include the enrolling entity’s 

current managing employees, corporate 

officers, directors, or board members. 

They contended that such an expansion 

would be excessively broad and 

unnecessarily complicated. 

Response: We disagree that such an 

expansion would be overly broad and 

complex. To nonetheless ensure that we 

can focus on the implementation of our 

revisions to § 424.530(a)(6), we have 

decided not to include the enrolling 

entity’s current managing employees, 

corporate officers, directors, or board 

members within the scope of 

§ 424.530(a)(6) at this time, although we 

may consider doing so via future 

rulemaking. 

Comment: A commenter expressed 

general support for our proposed 

§ 424.530(a)(6)(ii) and stated that CMS 

identified the appropriate factors to 

consider in this respect. However, the 

commenter did: (1) Suggest that CMS 

also adopt as a factor whether or not the 

person was an owner at the time the 

debt was incurred; and (2) urge CMS to 

exercise its discretion regarding 

§ 424.530(a)(6)(ii) fairly and carefully; 

the commenter, citing an example, 

argued that a 5 percent owner for 6 

months should not be penalized to the 

same extent as someone who has been 

a 50 percent owner for 5 years. 

Response: We appreciate the 

commenter’s support and, as stated, will 

apply § 424.530(a)(6)(ii) in a fair and 

careful manner. We also agree with the 

commenter’s suggestion to include as a 

factor the party’s ownership status at the 

time the debt was incurred. We have 

added this as a factor at 

§ 424.530(a)(6)(C)(5), although a finding 

that the party was not an owner when 

the debt was incurred will not in and of 

itself result in § 424.530(a)(6)(ii)’s nonapplication. All factors and particular 

circumstances will be considered before 

a denial under § 424.530(a)(6)(ii) is 

imposed. 

Comment: A commenter expressed 

concern that a physician group may not 

be aware that an individual physician 

has unpaid Medicare debt related to 

previous affiliations. The commenter 

urged CMS to make such information 

available in an accessible database. 

Response: While we understand the 

commenter’s concern, it is ultimately 

the hiring provider or supplier’s 

responsibility to perform a thorough 

review of the physician’s background, 

including his or her prior affiliations. 

We do not believe that such a review 

should be dependent upon the creation 

of a publicly available database. 

Comment: A commenter disagreed 

with our proposal to add 

§ 424.530(a)(6)(ii), contending that CMS 

did not explain why it—(1) needs this 

new authority; and (2) cannot collect a 

debt through the Federal Payment Levy 

Program. The commenter also requested 

CMS to explain why it did not propose 

revoking existing providers and 

suppliers that have Medicare 

overpayments. 

Response: Our rationale for the 

proposed addition of § 424.530(a)(6)(ii) 

was contained in the preamble of the 

proposed rule and is restated earlier in 

this final rule. While we are aware of 

the authority furnished by the Federal 

Payment Levy Program, the issue is not 

merely the collection of existing 

Medicare debts; it is also the need to 

prevent the accumulation of additional 

Medicare debts. We believe that our 

denial authority under 

§ 424.530(a)(6)(ii) will be an important 

step in this direction. 

We did not propose to incorporate a 

new revocation reason regarding 

Medicare debts that would apply to 

currently enrolled providers (for 

example, via revalidation), for this is a 

different situation than what is being 

described here. However, we may 

consider establishing such a revocation 

reason via future rulemaking. 


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Comment: A commenter supported 

the denial of enrollment of providers 

and suppliers that have existing 

Medicare debts that have not been fully 

repaid or if the provider or supplier is 

not current in its existing repayment 

schedule. Yet the commenter urged 

CMS to exclude from § 424.530(a)(6)’s 

purview debts that: (1) Are currently 

within a CMS-approved appeals 

process; and (2) have not been forgiven 

by CMS due to financial considerations. 

Other commenters, too, suggested that 

debts that are currently being appealed 

or are part of an extended repayment 

plan should be exempt from 

§ 424.530(a)(6)’s application. With 

respect to appeals, one commenter 

contended that the Congress’ passage of 

section 935 of the Medicare 

Modernization Act (MMA) envisioned a 

congressional intent to permit 

physicians to delay repaying an 

overpayment pending the completion of 

the appeals process. 

Response: As explained earlier, we 

will consider a debt’s appeal status in 

our determination of whether the debt 

poses an undue risk to the Medicare 

program under § 424.530(a)(6)(ii). In 

addition, we will exclude from 

§ 424.530(a)(6)(i) and (ii) those 

situations where the enrolling provider, 

supplier, or owner thereof meets the 

criteria of § 401.607 and agrees to an 

extended repayment schedule for the 

entire outstanding Medicare debt. While 

we are unclear as to the commenter’s 

suggestion that debts that CMS has not 

forgiven due to financial considerations 

be excluded from our § 424.530(a)(6) 

determinations, we can assure the 

commenter that we will apply 

§ 424.530(a)(6)(i) and (ii) in a careful 

and judicious manner. 

We do not believe that our revisions 

to § 424.530(a)(6) are inconsistent with 

section 935 of the MMA. Our provisions 

address enrollment denials, not 

recoupment. Nothing in § 424.530(a)(6) 

requires a provider to repay an 

overpayment prior to the completion of 

the appeals process. 

Comment: Several commenters 

opposed our proposed 

§ 424.530(a)(6)(ii), contending that the 

provision would potentially punish 

persons and entities who: (1) Were not 

responsible for the debt; or (2) had only 

a very limited association with the party 

that was responsible for the debt. One 

commenter noted that our proposed 

criteria for denying enrollment under 

§ 424.530(a)(6)(ii) did not take into 

account whether the enrolling provider 

or supplier is actually responsible for 

the debt. Another commenter contended 

that our proposal is overreaching and 

exhibits a lack of understanding of the 

complexities of the new coordinated 

care models that are evolving pursuant 

to payment and delivery reform 

advanced by the Affordable Care Act. 

The commenter stated that denials 

under our proposed provision could be 

frequent because many of today’s 

systems of health care are diverse, 

geographically large, and encompass 

numerous entities and groups. 

Response: We are adopting as a factor 

in our § 424.530(a)(6)(ii) determinations 

whether or not the person was an owner 

at the time the debt was incurred. In 

addition, we will only deny a Medicare 

application under § 424.530(a)(6)(ii) 

after careful review of all the factors 

associated with a particular situation. 

We believe these actions may alleviate 

to some extent the commenters’ 

concerns about § 424.530(a)(6)(ii)’s 

application. 

Comment: A commenter requested 

that CMS furnish evidence that the 

problem of suppliers departing 

Medicare with large, unpaid 

overpayments and then re-enrolling in 

Medicare exists with respect to 

physicians and group practices. 

Response: As explained in the 

proposed rule and earlier in this final 

rule, the OIG’s November 2008 Early 

Alert Memorandum titled ‘‘Payments to 

Medicare Suppliers and Home Health 

Agencies Associated with ‘Currently 

Not Collectible’ Overpayments’’ (OEI– 

06–07–00080) cautioned that DMEPOS 

suppliers with outstanding Medicare 

debts may inappropriately receive 

Medicare payments by, among other 

means, operating businesses that are 

publicly fronted by business associates, 

family members, or other individuals 

posing as owners. We also noted our 

receipt of reports of providers, 

suppliers, and owners thereof 

accumulating large Medicare debts, 

departing Medicare, and then 

attempting to reenter the program 

through other channels. 

Comment: A commenter expressed 

concern with CMS’s publication of 

Transmittal 469, which operationalizes 

the current version of § 424.530(a)(6). 

The commenter contended that CMS 

did not abide by the Administrative 

Procedure Act (APA) in issuing 

Transmittal 469 because it did not use 

the prescribed notice and public 

comment process. Another commenter 

urged CMS to retract Transmittal 469, 

contending that certain policies in the 

transmittal conflict with the contents of 

our proposed rule, thereby causing 

confusion in the provider community. 

Another commenter sought clarification 

as to how Transmittal 469 would 

interact with our proposed revisions to 

§ 424.530(a)(6). As an example, the 

commenter stated that Transmittal 469 

contained a $1,500 threshold—which 

the commenter believed was too low— 

yet the proposed rule contained no such 

threshold and does not define the scope 

of the overpayments that would be 

subject to our proposed provisions. 

Response: The publication of 

Transmittal 469—which has since been 

rescinded and replaced by Transmittal 

479—did not violate the APA. The 

current version of § 424.530(a)(6) was 

subject to public notice and comment 

prior to its enactment. Transmittal 479 

adds guidance regarding existing 

§ 424.530(a)(6) to chapter 15 of our 

Program Integrity Manual (CMS Pub. 

100–08). 

Upon publication of this final rule, we 

will revise CMS Publication 100–08, 

chapter 15, to ensure that the guidance 

to our contractors and the public is 

consistent with our changes to 

§ 424.530(a)(6). 

Comment: A commenter offered 

several suggestions regarding our 

proposed changes to § 424.530(a)(6). 

First, the commenter recommended that 

CMS exclude from § 424.530(a)(6)’s 

scope those debts resulting from 

contractor error or from retroactive 

changes made by CMS or the Congress. 

Second, the commenter suggested that 

CMS establish a debt monetary 

threshold below which § 424.530(a)(6) 

would not apply; the commenter cited 

the $1,500 threshold set forth in the 

aforementioned Transmittal 469 as an 

example. Third, the commenter 

suggested that CMS establish an 

ownership percentage threshold below 

which § 424.530(a)(6) would not apply; 

the commenter recommended 20 

percent. The commenter stated that 

such thresholds would foster 

consistency and assist CMS’s efforts to 

curb fraud and abuse without 

unnecessarily burdening providers and 

suppliers that have small debts. 

Response: We mentioned earlier that 

the amount of the debt and the 

percentage of ownership will be factors 

in our § 424.530(a)(6)(ii) determinations, 

although specific thresholds will not be 

established due to the need to maintain 

flexibility to address various situations. 

In terms of contractor errors, we will be 

including the debt’s appeal status as 

another factor. 

We are not adding retroactive changes 

as a factor because we are unclear as to 

the types of situations to which the 

commenter is referring. 

Comment: A commenter requested 

that CMS identify the enrollment 

applications and types of enrollment 

changes that would be impacted by our 

proposed revisions to § 424.530(a)(6). 


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Response: Initial CMS–855 

applications are the only applications 

subject to § 424.530(a)(6). 

Comment: A commenter expressed 

support for our proposed revisions to 

§ 424.530(a)(6), stating that this will 

lead to increased scrutiny of the 

ownership and leadership of provider 

and supplier organizations. 

Response: We appreciate the 

commenter’s support. 

Comment: A commenter contended 

that our proposed § 424.530(a)(6) 

exceeds the statutory authority granted 

to the Secretary in 42 U.S.C. 

1395cc(j)(5), which provides that the 

Secretary may deny an application 

based on a disclosure of a current or 

previous affiliation, subject to a finding 

of ‘‘undue risk.’’ At a minimum, the 

commenter recommended, CMS should 

revise the proposed regulatory text to: 

(1) Include the criteria for a finding of 

undue risk as described in the proposed 

rule’s preamble; and (2) state that a 

denial of enrollment ‘‘may be 

warranted,’’ rather than ‘‘is warranted’’. 

Response: We agree with the 

commenter’s first recommendation and 

will revise the regulatory text 

accordingly. We note that the second 

recommendation is moot because the 

regulatory text does not contain the 

phrase ‘‘is warranted.’’ 

We disagree with the assertion that 

our changes to § 424.530(a)(6) exceed 

our statutory authority. Our expansion 

of § 424.530(a)(6)(i)—the existing 

version of which has been in effect since 

2009—and our addition of 

§ 424.530(a)(6)(ii) are consistent with 

the authority in section 1866(j)(1) and 

(5) of the Act (42 U.S.C. 1395cc(j)(1) and 

(5)). It is also consistent with our 

general rulemaking authority in sections 

1102 and 1871 of the Act. 

Comment: A commenter supported 

CMS’s proposal to extend 

§ 424.530(a)(6)(i) to other provider and 

supplier entities. The commenter stated 

that since physicians are in the 

‘‘limited’’ screening level in 

§ 424.518(a), it is sensible to include 

higher risk providers and suppliers in 

that category as well. 

Response: We appreciate the 

commenter’s support. 

Comment: A commenter stated that 

CMS proposed § 424.530(a)(6)(ii) is 

based on a false premise that any 

uncollected debt poses an undue risk of 

fraud, waste or abuse and does not take 

into consideration the due process 

rights that should be afforded to 

providers through the appeals process. 

Response: We do not believe that 

every uncollected debt poses an undue 

risk of fraud, waste or abuse. As we 

stated in the proposed rule, we will 

make an individual determination— 

based on the factors set forth at 

§ 424.530(a)(6)(ii)(C)—as to whether the 

debt in question poses an undue risk. If 

the debt, after our analysis, does not 

present such a risk, we will not deny the 

enrollment application under 

§ 424.530(a)(6)(ii). 

Comment: A commenter noted that 

certain DMEPOS suppliers are subject to 

a $50,000 bond requirement. As such, 

there is an existing avenue—outside of 

denying enrollment—to address CMS’s 

concerns regarding uncollected debts. 

Response: Though it is true that 

certain DMEPOS suppliers must obtain 

a surety bond in order to enroll in 

Medicare, there are at least 1.4 million 

other Medicare providers and suppliers 

that do not. Moreover, the presence of 

a surety bond does not in itself 

guarantee that the full amount of a 

Medicare debt will be recovered via the 

bond. Therefore, we need additional 

mechanisms—such as those we are 

finalizing with respect to 

§ 424.530(a)(6)—to help ensure that 

Medicare debts are repaid and that 

providers and suppliers with unpaid 

debts do not incur additional Medicare 

debts through the establishment of 

additional enrollments. 

Given the comments received and the 

preceding discussion, we are finalizing 

our proposed revisions to 

§ 424.530(a)(6), albeit with three 

revisions to § 424.530(a)(6)(ii)(C) and 

one change to § 424.530(a)(6)(iii): 

• We are revising 

§ 424.530(a)(6)(ii)(A) to state: ‘‘The 

owner left the provider or supplier with 

the Medicare debt within 1 year before 

or after that provider or supplier’s 

voluntary termination, involuntary 

termination or revocation.’’ The 

insertion of ‘‘with’’ in lieu of ‘‘that had’’ 

and the insertion of ‘‘before or after’’ are 

merely intended to clarify our original 

intention that the 1-year period applies 

to separations occurring prior to or after 

the provider or supplier’s termination or 

revocation. 

• To § 424.530(a)(6)(ii)(C) will be 

added a second sentence that reads: ‘‘In 

making this determination, we consider 

the following factors:’’ 

• New paragraphs (1) through (5) will 

be added to § 424.530(a)(6)(ii)(C) 

identifying these factors. The 

paragraphs state the following: 

++ The amount of the Medicare debt. 

++ The length and timeframe that the 

enrolling provider, supplier, or owner 

thereof was an owner of the prior entity. 

++ The percentage of the enrolling 

provider’s, supplier’s, or owner’s 

ownership of the prior entity. 

++ Whether the Medicare debt is 

currently being appealed. 

++ Whether the enrolling provider, 

supplier, or owner thereof was an owner 

of the prior entity at the time the 

Medicare debt was incurred. 

• To ensure consistency in 

application, in § 424.530(a)(6)(iii) we are 

combining proposed paragraphs (A) and 

(B)(1) into a revised paragraph (A) that 

will read as follows: ‘‘(1) Satisfies the 

criteria set forth in § 401.607; and (2) 

agrees to a CMS-approved extended 

repayment schedule for the entire 

outstanding Medicare debt.’’ Proposed 

paragraph (B)(2) will be redesignated as 

new paragraph (B) and will read as 

follows: ‘‘Repays the debt in full.’’ 

3. Felony Convictions 

Under § 424.530(a)(3) and 

§ 424.535(a)(3), respectively, a provider 

or supplier’s Medicare enrollment may 

be denied or revoked if the provider or 

supplier—or any owner of the provider 

or supplier—has, within the 10 years 

preceding enrollment or revalidation of 

enrollment, been convicted of a federal 

or state felony offense that CMS has 

determined to be detrimental to the best 

interests of the Medicare program and 

its beneficiaries. Under 

§ 424.535(a)(3)(i), as currently codified, 

such offenses include the following: 

• Felony crimes against persons; such 

as murder, rape, assault, and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

• Financial crimes, such as extortion, 

embezzlement, income tax evasion, 

insurance fraud and other similar 

crimes for which the individual was 

convicted, including guilty pleas and 

adjudicated pretrial diversions. 

• Any felony that placed the 

Medicare program or its beneficiaries at 

immediate risk, such as a malpractice 

suit that results in a conviction of 

criminal neglect or misconduct. 

• Any felonies that would result in 

mandatory exclusion under section 

1128(a) of the Act. 

(Section 424.530(a)(3)(i) mirrors 

§ 424.535(a)(3)(i) with the exception of 

paragraph (D), which uses the phrase: 

‘‘Any felonies outlined in section 1128 

of the Act.’’) 

We proposed several changes to 

§§ 424.530(a)(3) and 424.535(a)(3). 

First, we proposed to modify the list 

of felonies in each section such that any 

felony conviction that we determine to 

be detrimental to the best interests of 

the Medicare program and its 

beneficiaries would constitute a basis 

for denial or revocation. We stated that 

considering the very serious nature of 

any felony conviction, our authority in 

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

should not be restricted to the categories 


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of felonies identified in (a)(3)(i); this 

was especially true considering that the 

types of felony offenses often vary from 

state to state. 

Second, we proposed to expand 

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

include felony convictions against a 

provider or supplier’s ‘‘managing 

employee,’’ as that term is defined in 

§ 424.502. Since certain managing 

employees of a provider or supplier may 

have as much (if not more) day-to-day 

control as an owner, we explained that 

managing employees should be held to 

the same standard as owners. 

Third, we proposed to revise the 

language ‘‘within the 10 years preceding 

enrollment or revalidation of 

enrollment’’ in § 424.530(a)(3) and 

§ 424.535(a)(3) to ‘‘within the preceding 

10 years.’’ The existing language has 

caused confusion as to how the 10-year 

period is calculated. We believe that our 

revised wording clarifies this timeframe. 

Fourth, we proposed to clarify in 

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

the term ‘‘convicted’’—as used in these 

two sections—has the same definition as 

the one set forth in 42 CFR 1001.2. This 

was intended to address the numerous 

inquiries we have received regarding the 

proper interpretation of the term 

‘‘convicted’’ as it relates to 

§§ 424.530(a)(3) and 424.535(a)(3). 

The following is a summary of the 

comments received regarding these four 

proposed changes and our responses 

thereto. 

Comment: A commenter urged CMS 

to retain the current language in 

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

states that CMS will consider the 

severity of the underlying offense before 

denying or revoking enrollment. The 

commenter contended that while some 

felony convictions may bear directly on 

a provider’s ability to care for patients, 

other convictions may be irrelevant to 

patient care—especially those that may 

be as many as 10 years old. In all 

instances, the commenter added, CMS 

should employ its denial and revocation 

authority under §§ 424.530(a)(3) and 

424.535(a)(3) judiciously and should 

use a reasonableness standard in making 

such determinations. 

Response: Regardless of whether the 

‘‘severity of the underlying offense’’ 

language is present in §§ 424.530(a)(3) 

and 424.535(a)(3), we have always 

considered—and will continue to do 

so—the seriousness of the offense in 

determining whether a denial or 

revocation is warranted under 

§§ 424.530(a)(3) and 424.535(a)(3). 

Therefore, we do not believe that 

including the ‘‘severity’’ verbiage in 

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

necessary, for CMS already takes this 

factor into account in such 

determinations. 

Although we did propose to expand 

the categories of felonies that can serve 

as the basis of a denial or revocation, we 

are not suggesting that every felony 

conviction will automatically result in 

such an action. Each case will be 

carefully reviewed on its own merits 

and, as the commenter recommends, we 

will act judiciously and with 

reasonableness in our determinations. 

Comment: Several commenters 

disagreed with CMS’s proposed 

expansion of §§ 424.530(a)(3) and 

424.535(a)(3) to include all felonies. 

They contended that (1) our proposal is 

arbitrary and an abuse of discretion; and 

(2) CMS offered no facts to support its 

proposal. One commenter stated that 

some felonies—such as those related to 

drugs, alcohol, or traffic violations— 

could not reasonably be considered as 

detrimental to the Medicare program, 

yet CMS would have the discretion to 

deny or revoke a provider for such a 

felony. This could lead to unfair results, 

particularly if a sentence of less than 3 

years (which is the maximum reenrollment bar period) is imposed. The 

commenter—as well as several other 

commenters—requested that CMS 

reconsider its proposal and: (1) Furnish 

a definition of ‘‘detrimental to the 

Medicare program or its beneficiaries;’’ 

and (2) exclude felonies related to 

drugs, alcohol, or traffic violations from 

the scope of §§ 424.530(a)(3) and 

424.535(a)(3). 

Response: We disagree that our 

proposal was arbitrary or an abuse of 

discretion. Section 4302 of the Balanced 

Budget Act (BBA) amended section 

1866 of the Act to furnish CMS with 

broad authority to refuse to enter into 

Medicare agreements with individuals 

or entities convicted of felonies that the 

Secretary determines to be detrimental 

to the best interests of the program or 

program beneficiaries. We identified in 

the proposed rule the legal grounds for 

all of our proposed enrollment 

provisions and explained the policy 

rationale for each of them. For instance, 

we indicated the need for flexibility 

with respect to the application of 

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

when considering that categories of 

felony offenses often vary from state to 

state. We do not believe that felonies 

relating to drugs, alcohol, or traffic 

violations cannot be detrimental to the 

best interests of Medicare beneficiaries, 

and thus should be automatically 

excluded from the purview of 

§§ 424.530(a)(3) and 424.535(a)(3). 

While certain felonies carry different, 

potentially more severe penalties than 

others, each case is distinct and state 

law classifications of certain criminal 

actions can vary widely. Therefore, we 

must maintain the flexibility to address 

all potential situations. 

Comment: A commenter supported 

our proposed expansion of 

§§ 424.530(a)(3) and 424.535(a)(3), 

believing it was a step forward in CMS’s 

attempts to prevent Medicare fraud on 

the front end. 

Response: We appreciate the 

commenter’s support. 

Comment: A commenter questioned 

whether CMS will revoke the Medicare 

billing privileges of a physician who is 

convicted of a non-violent firearm 

felony. 

Response: The determination of 

whether a particular conviction will or 

will not result in the revocation or 

denial of Medicare enrollment will 

depend upon the specific facts of each 

individual situation. 

Comment: A commenter expressed 

concern that CMS will deny or revoke 

billing privileges under § 424.530(a)(3) 

or § 424.535(a)(3), respectively, such 

that a physician’s right to participate in 

the Medicaid program will be affected. 

Response: The commenter correctly 

notes that under § 455.416(c), a State 

Medicaid agency must deny enrollment 

or terminate the enrollment of any 

provider whose Medicare enrollment is 

revoked for cause, although there is no 

corresponding requirement in cases 

where a provider is denied enrollment 

in the Medicare program. As noted 

previously, we will only exercise our 

authority under § 424.530(a)(3) or 

§ 424.535(a)(3) after consideration of the 

relative seriousness of the underlying 

offense and all of the circumstances 

surrounding the conviction. 

Comment: A commenter contended 

that our proposed expansions of 

§§ 424.530(a)(3) and 424.535(a)(3) 

violate the principles of federalism 

established in Executive Order 13132 

3(b), 3(c) and 3(d) and diminishes the 

role of state licensing boards across the 

country. The commenter requested that 

CMS furnish justification for expanding 

the role of the federal government into 

matters best resolved by state licensing 

boards. 

Response: We disagree with the 

commenter. As mentioned earlier, 

section 4302 of the BBA (which 

amended section 1866 of the Act) gave 

CMS broad authority to refuse to enter 

into Medicare agreements with 

individuals or entities convicted of 

felonies that the Secretary determines to 

be detrimental to the best interests of 

the program or program beneficiaries. 

Additionally, our changes to 

§§ 424.530(a)(3) and 424.535(a)(3) in no 

way impair or infringe upon a state 


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licensing agency’s ability to take or not 

take action on a provider’s licensure 

status in the event of a criminal 

conviction. Such a decision will—as it 

should—remain within the purview of 

the state. 

Comment: A commenter stated that 

CMS should not deny or revoke a 

supplier’s enrollment based on 

§ 424.530(a)(3) or § 424.535(a)(3) if the 

supplier made a good-faith effort—using 

generally accepted employee screening 

and hiring practices—to ensure that an 

employee did not have a felony 

conviction. The commenter added, if 

CMS desires comprehensive screening 

for felony convictions, it should work 

with other government agencies to 

develop a nationwide database so that 

employers have one reliable source from 

which to screen their employees for 

felony convictions. The commenter 

further stated that recent enforcement 

actions by the United States Equal 

Employment Opportunity Commission 

(EEOC) have targeted companies for 

alleged discrimination against minority 

applicants based on policies to exclude 

people from employment based on a 

criminal record. CMS’s revisions to 

§§ 424.530(a)(3) and 424.535(a)(3) 

should be reconciled with the EEOC’s 

current enforcement position. 

Response: We disagree with the 

commenter. The core issue is not 

whether the organization made a goodfaith effort to determine whether a 

current or prospective owner or 

managing employee has a felony 

conviction. Rather, it is whether the 

owner or managing employee has such 

a conviction and whether the conviction 

poses a risk to the Medicare program or 

its beneficiaries. In other words, it is the 

felony conviction itself—not whether 

the organization screened for such 

convictions—that is the relevant matter. 

We note that there are many resources 

available to help organizations ascertain 

one’s criminal background history; a 

CMS-initiated project to establish a 

single, all-encompassing felony database 

for the use of employers is not 

necessary. We further add that CMS is 

not requiring, through its expansion of 

§ 424.530(a)(3) and § 424.535(a)(3), that 

providers and suppliers perform 

criminal background checks of their 

current or prospective owners or 

managing employees as part of the 

enrollment process. 

We do not believe that the EEOC’s 

recent enforcement actions mandate that 

prospective employers discourage 

taking into account a prospective 

employee’s criminal background 

history. Our principal focus in this rule 

is to protect the Medicare program from 

individuals and entities that could 

threaten its integrity, and we believe our 

expansion of §§ 424.530(a)(3) and 

424.535(a)(3) is an important step 

towards this end. 

Comment: A commenter stated that 

providers seeking to hire physicians or 

managing employees must have clear 

rules as to the types of felonies that 

CMS would consider detrimental to the 

Medicare program. The commenter 

favored retaining the current versions of 

§§ 424.530(a)(3) and 424.535(a)(3) 

because CMS identifies specific felonies 

that fall within the scope of these two 

provisions. If, the commenter added, 

CMS seeks to include additional 

categories of felonies, it should use the 

formal rulemaking process to propose 

these new categories and allow the 

public to comment. Another commenter 

stated that our proposed revisions to 

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

provide adequate notice of the types of 

felony convictions that may lead to a 

denial or revocation of Medicare 

enrollment. 

Response: In light of the differences in 

state laws, it would be impossible to 

identify in our revised §§ 424.530(a)(3) 

and 424.535(a)(3) every felony offense 

that could result in a denial or 

revocation; indeed, if we accepted the 

commenter’s suggestion, hundreds of 

crimes—perhaps even identified on a 

state-by-state basis—might have to be 

listed. Nevertheless, we agree that 

retaining the lists of felonies in the 

current versions of §§ 424.530(a)(3) and 

424.535(a)(3) could prove helpful in 

identifying for the public some of the 

felonies that may serve as a basis for 

denial or revocation, respectively. 

Therefore, we are combining our 

proposed revisions to §§ 424.530(a)(3) 

and 424.535(a)(3) with the existing 

language in both provisions. 

Section 424.530(a)(3) will state that 

the provider, supplier, or any owner or 

managing employee of the provider or 

supplier was, within the preceding 10 

years, convicted (as that term is defined 

in 42 CFR 1001.2) of a Federal or State 

felony offense that CMS determines is 

detrimental to the best interests of the 

Medicare program and its beneficiaries. 

Offenses include, but are not limited in 

scope or severity to— 

++ Felony crimes against persons, 

such as murder, rape, assault, and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

++ Financial crimes, such as 

extortion, embezzlement, income tax 

evasion, insurance fraud and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

++ Any felony that placed the 

Medicare program or its beneficiaries at 

immediate risk, such as a malpractice 

suit that results in a conviction of 

criminal neglect or misconduct. 

++ Any felonies that would result in 

mandatory exclusion under section 

1128(a) of the Act.’’ 

Section 424.535(a)(3) will state that 

the provider, supplier, or any owner or 

managing employee of the provider or 

supplier was, within the preceding 10 

years, convicted (as that term is defined 

in 42 CFR 1001.2) of a federal or state 

felony offense that CMS determines is 

detrimental to the best interests of the 

Medicare program and its beneficiaries. 

Offenses include, but are not limited in 

scope or severity to— 

++ Felony crimes against persons, 

such as murder, rape, assault, and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

++ Financial crimes, such as 

extortion, embezzlement, income tax 

evasion, insurance fraud and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

++ Any felony that placed the 

Medicare program or its beneficiaries at 

immediate risk, such as a malpractice 

suit that results in a conviction of 

criminal neglect or misconduct. 

++ Any felonies that would result in 

mandatory exclusion under section 

1128(a) of the Act. 

(Revocations based on felony 

convictions are for a period to be 

determined by the Secretary, but not 

less than 10 years from the date of 

conviction if the individual has been 

convicted on one previous occasion for 

one or more offenses.) 

Note that the previous revisions 

contain two important changes. First, 

the current language in §§ 424.530(a)(3) 

and 424.535(a)(3) refers to a felony 

offense that CMS ‘‘has determined to be 

detrimental to the best interests of the 

program and its beneficiaries.’’ 

(Emphasis added.) Consistent with our 

proposed revisions to §§ 424.530(a)(3) 

and 424.535(a)(3), we are revising this 

language to include any felony offense 

that CMS ‘‘determines is detrimental to 

the best interests of the Medicare 

program and its beneficiaries.’’ 

(Emphasis added.) This distinction is 

important. The phrase ‘‘has 

determined’’ incorrectly implies that the 

only felonies that may serve as a basis 

for denial or revocation are those 

specifically listed in §§ 424.530(a)(3) 

and 424.535(a)(3). We believe that the 

term ‘‘determines’’ makes clearer that 

the lists of felonies in these two 

provisions are not exhaustive and 


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include other felonies that CMS may 

deem as meeting the ‘‘detrimental’’ 

standard based on the particular facts of 

the case. Second, and to further 

emphasize CMS’ discretion to use 

felonies other than those specified in 

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

grounds for denial or revocation, we 

have included the phrase ‘‘but are not 

limited in scope or severity’’ within 

both provisions. 

However, notwithstanding these 

changes, we again stress that we will 

only exercise our authority under 

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

very careful consideration of the relative 

seriousness of the underlying offense 

and all of the circumstances 

surrounding the conviction. It should in 

no way be assumed that every felony 

conviction will automatically result in a 

denial or revocation. 

Comment: A commenter stated that in 

proposing its expansion of 

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

include all felonies, CMS did not 

comply with section 1(b)(7) of Executive 

Order 12866 and base its proposal on 

reasonably obtainable scientific, 

technical and other information. The 

commenter recommended that CMS 

identify the specific felony reasons in a 

new proposed rule. 

Response: We do not agree that our 

proposed changes to §§ 424.530(a)(3) 

and 424.535(a)(3) violated section 

1(b)(7) of Executive Order 12866. To the 

contrary, the changes were based on a 

careful consideration of the need to 

ensure that individuals and entities 

convicted of a felony offense that is 

detrimental to the best interests of the 

Medicare program and its beneficiaries 

are kept out of the Medicare program. 

For the reasons previously stated, we 

believe it is neither feasible nor 

practical to identify every conceivable 

felony offense that could result in the 

application of §§ 424.530(a)(3) or 

424.535(a)(3). 

Comment: A commenter 

recommended that CMS establish 

protections, such as a knowledge 

threshold, for suppliers that perform 

reasonable due diligence to determine if 

a potential employee has a felony 

record. The commenter stated that CMS 

should work with suppliers that act in 

good-faith to determine if a prospective 

employee has a felony record rather 

than automatically excluding a supplier. 

The commenter specifically suggested 

adding language to §§ 424.530(a)(3) and 

424.535(a)(3) that, in effect, would 

permit a denial or revocation only if: (1) 

The provider or supplier knew or 

should have known about the 

conviction; (2) the provider or supplier 

did not have industry standard hiring 

practices in place; (3) the provider or 

supplier has not submitted a corrective 

action plan; (4) the disruption to 

beneficiaries does not outweigh the 

provider or supplier’s termination due 

to one individual; and (5) CMS has 

already established and implemented a 

comprehensive state and federal 

database that is available to providers 

and suppliers. 

Response: We disagree with the 

commenter’s suggestion. As stated 

earlier, it is the felony conviction itself 

and not the extent of the organization’s 

efforts in performing a criminal 

background check that is the crucial 

consideration. 

Comment: To improve transparency— 

and since the OIG publicly posts 

information about individuals and 

entities excluded from federal health 

care programs—a commenter suggested 

that CMS post on its provider 

enrollment Web page the name and NPI 

(if applicable) of any person who has 

had his or her Medicare billing 

privileges denied or revoked based upon 

a felony conviction; the date of the 

denial or revocation and, if applicable, 

the length of the re-enrollment bar 

should be listed as well. 

Response: We appreciate this 

suggestion and may consider it in a 

future initiative to the extent it is 

consistent with the Privacy Act. 

Comment: A commenter was 

concerned that the expansion of the 

felonies encompassed by § 424.535(a)(3) 

would be applied to providers and 

suppliers whose recently submitted 

revalidation applications were 

approved. The commenter, in other 

words, opposed the retroactive 

application of our proposed 

§ 424.535(a)(3). 

Response: Our changes to 

§ 424.535(a)(3) do not preclude CMS 

from reviewing the enrollment records 

of currently enrolled providers and 

suppliers to determine if the provider, 

supplier, or an owner or managing 

employee thereof has a felony 

conviction that CMS deems detrimental 

to the best interests of the Medicare 

program or its beneficiaries. However, 

we again stress that not every felony 

conviction will necessarily result in a 

denial or revocation. 

Comment: A commenter expressed 

support for our proposed revisions to 

§§ 424.530(a)(3) and 424.535(a)(3). 

Response: We appreciate the 

commenter’s support. 

Comment: A commenter agreed with 

CMS’s proposal to clarify that the 

enrollment bar is for felony convictions 

‘‘within the preceding 10 years’’ but 

suggested that the date be further 

clarified as ‘‘within the 10 years 

preceding the effective date of the 

enrollment application.’’ 

Response: While we appreciate the 

commenter’s support, we disagree with 

the commenter’s suggestion because it 

would be difficult to use a future date— 

that is, a date that could be well after 

the date the application was 

submitted—as the 10-year cut-off point. 

After a careful consideration of the 

comments and in light of the previous 

discussion, we are revising 

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

follows: 

Section § 424.530(a)(3) will state that 

the provider, supplier, or any owner or 

managing employee of the provider or 

supplier was, within the preceding 10 

years, convicted (as that term is defined 

in 42 CFR 1001.2) of a federal or state 

felony offense that CMS determines is 

detrimental to the best interests of the 

Medicare program and its beneficiaries. 

Offenses include, but are not limited in 

scope or severity to— 

++ Felony crimes against persons, 

such as murder, rape, assault, and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

++ Financial crimes, such as 

extortion, embezzlement, income tax 

evasion, insurance fraud and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

++ Any felony that placed the 

Medicare program or its beneficiaries at 

immediate risk, such as a malpractice 

suit that results in a conviction of 

criminal neglect or misconduct. 

++ Any felonies that would result in 

mandatory exclusion under section 

1128(a) of the Act.’’ 

Section 424.535(a)(3) will state that 

the provider, supplier, or any owner or 

managing employee of the provider or 

supplier was, within the preceding 10 

years, convicted (as that term is defined 

in 42 CFR 1001.2) of a federal or state 

felony offense that CMS determines is 

detrimental to the best interests of the 

Medicare program and its beneficiaries. 

Offenses include, but are not limited 

in scope or severity to— 

++ Felony crimes against persons, 

such as murder, rape, assault, and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

++ Financial crimes, such as 

extortion, embezzlement, income tax 

evasion, insurance fraud and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

++ Any felony that placed the 

Medicare program or its beneficiaries at 

immediate risk, such as a malpractice 


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suit that results in a conviction of 

criminal neglect or misconduct. 

++ Any felonies that would result in 

mandatory exclusion under section 

1128(a) of the Act. 

Revocations based on felony 

convictions are for a period to be 

determined by the Secretary, but not 

less than 10 years from the date of 

conviction if the individual has been 

convicted on one previous occasion for 

one or more offenses. 

4. Abuse of Billing Privileges 

Section 424.535(a)(8) currently states 

that a provider or supplier’s Medicare 

billing privileges may be revoked if the 

provider or supplier submits a claim or 

claims for services that could not have 

been furnished to a specific individual 

on the date of service. These instances 

include, but are not limited to, 

situations where the beneficiary is 

deceased, the directing physician or 

beneficiary is not in the state or country 

when the service was provided, or when 

the equipment necessary for testing was 

not present where the testing is said to 

have occurred. 

We proposed to expand this 

revocation reason by adding a new 

paragraph (a)(8)(ii) to § 424.535. The 

existing revocation reason would be 

incorporated into a new paragraph 

(a)(8)(i). Proposed new paragraph 

(a)(8)(ii) would permit revocation if we 

determine that the provider or supplier 

has a pattern or practice of billing for 

services that do not meet Medicare 

requirements such as, but not limited to, 

the requirement that the service be 

reasonable and necessary. We explained 

that a provider or supplier should be 

responsible for submitting valid claims 

at all times and that the provider or 

supplier’s repeated failure to do so 

poses a risk to the Medicare Trust 

Funds. We note that the responsibility 

for submitting valid claims exists 

irrespective of whether the provider or 

supplier itself submits the claims or 

hires a billing agency to perform this 

function; in either case, the claims are 

submitted on behalf of the provider or 

supplier. 

We solicited comment on what 

should qualify as a ‘‘pattern or practice’’ 

under our proposed change. We also 

proposed several factors we would take 

into account when determining whether 

a revocation under § 424.535(a)(8)(ii) is 

warranted including, but not limited to 

the following: 

• The percentage of submitted claims 

that were denied. 

• The total number of claims that 

were denied. 

• The reason(s) for the claim denials. 

• Whether the provider or supplier 

has any history of ‘‘final adverse 

actions’’ (as that term is defined in 

§ 424.502). 

• The length of time over which the 

pattern has continued. 

• How long the provider or supplier 

has been enrolled in Medicare. 

With respect to these factors, we 

solicited comment on the following: 

• Whether additional factors should 

be considered and, if so, what those 

factors should be. 

• Which, if any, of these factors 

should not be considered. 

• Which, if any, of these factors 

should be given greater or lesser weight 

than others. 

• Whether a minimum or maximum 

threshold for consideration should be 

established for the ‘‘percentage of claims 

denied’’ and ‘‘total number of claims 

denied’’ factors. 

We further solicited comment on 

whether there should be a set 

knowledge standard associated with our 

proposed provision—for example, 

whether revocation is warranted only if 

the provider or supplier submitted the 

claims in question with ‘‘reckless 

disregard’’ as to their accuracy or the 

provider ‘‘knew or should have known’’ 

that the claims did not meet Medicare 

requirements. 

The following is summary of the 

comments received regarding 

§ 424.535(a)(8)(ii) and our responses 

thereto: 

Comment: A commenter stated that it 

did not dispute CMS’s right to revoke 

billing privileges if a Medicare provider 

has a pattern of billing for services that 

do not meet Medicare requirements. 

However, the commenter recommended 

that in applying any criteria regarding 

the number of claim denials, CMS 

should take into account the number of 

denials that were overturned on appeal. 

Several other commenters also stated 

that they did not object to CMS’s 

proposal, but urged that results of the 

administrative appeals process be 

considered as a significant factor before 

CMS concludes that a provider has 

engaged in a ‘‘pattern or practice’’ of 

submitting improper claims. Other 

commenters stated that due process 

mandates that claim denials under 

appeal be excluded from any 

measurement that takes into account the 

number or percentage of denied claims. 

Another commenter questioned whether 

an appeal is considered to be successful 

when it is pursued up to and including 

the Administrative Law Judge (ALJ) 

level. 

Response: A provider or supplier’s 

claim denial that has been both—(1) 

fully (rather than partially) overturned 

on appeal; and (2) finally and fully 

adjudicated will be excluded from our 

consideration in determining whether 

the provider or supplier’s Medicare 

billing privileges should be revoked 

under § 424.535(a)(8)(ii). This is 

because, for purposes of 

§ 424.535(a)(8)(ii), the claim denial has 

been effectively negated. Yet we do not 

believe a claim denial that fails to meet 

both of these requirements should be 

excluded from our review for two 

reasons. First, excluding claims that are 

currently being appealed could 

encourage providers and suppliers to 

file meritless appeals simply to 

circumvent the application of 

§ 424.535(a)(8)(ii). Second, merely 

because a claim is under appeal does 

not necessarily mean it will be 

overturned. 

For purposes of this claim denial 

exclusion, the term ‘‘finally and fully 

adjudicated’’ means that—(1) the 

appeals process has been exhausted; or 

(2) the deadline for filing an appeal has 

passed. 

Comment: A number of commenters 

opposed CMS’s proposed 

§ 424.535(a)(8)(ii). They stated that: (1) 

The proposal is arbitrary and subjective 

and grants too much discretion to CMS 

and its contractors; (2) CMS failed to 

include in its proposed rule a thorough 

discussion of the factors that would be 

used in making determinations related 

to § 424.535(a)(8)(ii); (3) did not define 

‘‘pattern or practice’’; and (4) there is 

nothing in the proposed rule that limits 

CMS’s authority under 

§ 424.535(a)(8)(ii). They added that 

despite CMS’s statement in the 

proposed rule’s preamble that it would 

not use this provision to revoke 

providers for isolated and sporadic 

claim denials or innocent billing errors, 

there are no safeguards to prohibit CMS 

or its multiple contractors from doing 

so. The commenters stated that given 

the complexity of Medicare’s billing and 

coding rules and the frequency with 

which they change, Medicare providers 

would inevitably submit claims that fail 

to meet Medicare requirements though 

without any nefarious intent. They 

urged CMS to furnish appropriate, 

consistent, and clear guidelines 

regarding billing, coding, and payment 

policies before implementing 

§ 424.535(a)(8)(ii). Other commenters 

stated that contractor errors, which can 

include a contractor’s misinterpretation 

or misunderstanding of CMS 

requirements, sometimes result in claim 

denials. 

Response: We do not believe that our 

proposal is arbitrary or grants CMS 

unlimited discretion. To the contrary, 

and as the commenters noted, we were 


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very clear in the preamble of the 

proposed rule that sporadic billing 

errors would not result in revocation 

under § 424.535(a)(8)(ii). Although we 

did not define ‘‘pattern or practice’’ to 

maintain flexibility to address a variety 

of factual scenarios, we listed several 

factors that would be considered in our 

§ 424.535(a)(8)(ii) determinations and 

requested feedback regarding other 

potential factors. Additionally, not only 

will CMS (rather than its contractors) 

make all such determinations, but also 

§ 424.535(a)(8)(ii) will be applied only: 

(1) In situations where the behavior 

could not be considered sporadic; and 

(2) after the most careful and thorough 

consideration of the relevant factors. 

These points cannot be stressed enough. 

We recognize that Medicare has many 

rules and requirements regarding billing 

and coding, and that claims are 

occasionally submitted in error due to a 

provider’s misunderstanding of these 

policies or denied incorrectly by the 

contractor. It is not CMS’s intention to 

revoke billing privileges under 

§ 424.535(a)(8)(ii) in such instances. 

However, Medicare billing privileges 

come with a responsibility for the 

provider to diligently seek and obtain 

clarification of Medicare policies should 

there be a misunderstanding or 

confusion. Constant, repeated, and 

systemic claim denials (as opposed to 

sporadic or occasional claim denials) 

can be indicative of the provider’s 

failure to do so. To address such 

situations, we believe that the 

implementation of § 424.535(a)(8)(ii) 

should not be delayed, as some of the 

commenters appeared to suggest we do. 

Comment: Several commenters 

believed that any appeals stemming 

from revocations initiated under 

§ 424.535(a)(8)(ii) should be subject to 

an expedited appeals process. 

Response: Since the impact of a 

revocation is the same regardless of the 

reason involved, we do not believe that 

revocations based on certain reasons 

should be subject to a faster appeals 

process than those predicated on other 

reasons. 

Comment: A commenter contended 

that CMS’s proposed § 424.535(a)(8)(ii) 

will have a chilling effect on the 

practice of medicine because it gives the 

federal government significant authority 

to target honest physicians. The 

commenter requested that CMS remove 

this proposed provision from the final 

rule or at least develop and solicit 

comments on a process for notifying 

providers of their billing issues and 

giving them an opportunity to correct 

the problem prior to revoking billing 

privileges. 

Response: We disagree that our 

proposal will have a chilling effect on 

health care. This rule will not affect 

providers that take seriously their 

responsibilities to submit valid claims 

and to seek clarification when there is 

confusion or disagreement involving 

applicable policies. No payer, public or 

private, should be required to continue 

doing business with a provider or 

supplier that demonstrates the type of 

clear pattern or practice of billing abuse 

that this rule addresses. Moreover, we 

do not believe that any additional 

formal notification to the provider of its 

billing deficiencies prior to the potential 

application of § 424.535(a)(8)(ii) is 

required. Under our current rules and 

practices, by the time CMS would 

revoke a provider or supplier under 

§ 424.535(a)(8)(ii), the provider would 

have received information and 

education about the reasons for the 

claim denials on multiple occasions. 

From the first claim denial, when a 

provider of supplier is notified of the 

reason for the denial, providers receive 

information indicating compliance or 

non-compliance with Medicare rules 

and requirements. It is ultimately the 

provider’s responsibility to review its 

denied claims and to take whatever 

remedial action is necessary. 

Comment: A commenter contended 

that proposed § 424.535(a)(8)(ii) should 

have certain objective measures and 

standards—such as a 50 percent 

benchmark—to ensure that it is not 

applied in an arbitrary manner. 

Response: We solicited and received 

several comments regarding whether 

certain numerical thresholds should be 

established in § 424.535(a)(8)(ii). After 

considering these comments, we have 

concluded that numerical thresholds 

should not be established because we 

need the flexibility to address a myriad 

of scenarios. For example, merely 

because a provider had over 30 percent 

of its claims denied does not 

automatically mean that a 

§ 424.535(a)(8)(ii) revocation should be 

imposed; likewise, an under-30 percent 

denial rate does not mean that a 

§ 424.535(a)(8)(ii) revocation is never 

warranted. Each case must be judged on 

its own specific facts, and establishing 

numerical thresholds would, we 

believe, hinder our ability to do so. 

Comment: A few commenters 

recommended that CMS exclude 

providers from the application of 

§ 424.535(a)(8)(ii) for a period of 1 year 

when Medicare changes the Medicare 

Administrative Contractor for the 

provider’s state, as providers in such 

instances must learn new local coverage 

determination (LCD) policies. 

Response: We disagree with this 

recommendation. While we concede 

that providers in these circumstances 

often need to learn new LCD policies, 

claims can be denied for many reasons 

unrelated to LCDs. We thus believe it 

would be inappropriate to institute a 

blanket 1-year exemption in such cases, 

for we would lose the ability during that 

time to take action to address repeated 

claim denials over a period of time. 

Again, though, and as we have stated 

elsewhere in this preamble, we 

recognize that Medicare has many rules 

and requirements regarding billing and 

coding, and that claims are sometimes 

submitted in error due to a provider’s 

honest misunderstanding of these 

policies. It is not our intention to revoke 

billing privileges under 

§ 424.535(a)(8)(ii) for such occasional 

misinterpretations. 

Comment: A commenter 

recommended that CMS delay 

implementation of § 424.535(a)(8)(ii) for 

2 years after the implementation of the 

ICD–10 standard. The commenter 

believed that ICD–10’s implementation 

will likely lead to the submission of 

incorrect claims for a period of time. 

Response: We do not believe that a 

delay in the implementation of 

§ 424.535(a)(8)(ii) is necessary. Again, 

any delay of the applicability of 

§ 424.535(a)(8)(ii) would deny us the 

ability to address situations (unrelated 

to the ICD–10 implementation) 

involving repeated claim denials. 

Furthermore, as we have already noted, 

we recognize that Medicare has many 

requirements and that in isolated 

instances claims are submitted 

erroneously due to a provider’s 

misinterpretation of these policies. Such 

occasional misunderstandings will 

generally not rise to the level of a 

‘‘pattern or practice’’ of improper 

billing, and thus will not warrant 

revocation under § 424.535(a)(8)(ii). 

Comment: A commenter stated that it 

would be inappropriate for CMS to 

revoke billing privileges under 

§ 424.535(a)(8)(ii) when no finding of 

fraud is involved. The commenter 

recommended that CMS withdraw this 

proposed provision. 

Response: We disagree. Revocation is 

an administrative remedy separate and 

distinct from the government’s other 

remedies for fraudulent behavior, and is 

intended to protect the Medicare 

program and its beneficiaries from 

fraud, waste, and abuse. Indeed, many 

of our existing revocation reasons under 

§ 424.535(a) do not require a finding of 

fraud. For example, § 424.535(a)(1) 

permits revocation of the provider or 

supplier’s Medicare billing privileges if 

the provider or supplier is out of 


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compliance with Medicare enrollment 

requirements. The fact that there has not 

been a legal finding of fraudulent 

conduct does not automatically mean 

the behavior or activity in question is 

compliant with Medicare requirements. 

We maintain that repeated claim denials 

over a period of time raise questions as 

to the provider or supplier’s ability or 

willingness to comply with Medicare’s 

billing and coding requirements and 

procedures. 

Comment: A commenter opposed 

proposed § 424.535(a)(8)(ii), contending 

that: (1) CMS already has the authority 

and tools to revoke the billing privileges 

of unscrupulous actors who defraud or 

abuse the Medicare program; (2) denial 

of payment is the appropriate remedy 

for the submission of an incorrect claim; 

(3) CMS should not assume that 

providers cannot correct their existing 

practices to ensure that accurate claims 

are submitted; and (4) there is no 

guarantee that the determination criteria 

CMS has outlined would not be 

improperly or inconsistently applied. 

Response: We currently do not have 

the ability to revoke a provider or 

supplier’s billing privileges based on a 

pattern or practice of submitting noncompliant claims, hence the need for 

§ 424.535(a)(8)(ii). We agree that a claim 

denial can serve as an adequate remedy 

in many cases. However a repeated 

pattern of submitting non-compliant 

claims indicates that the associated 

claim denials are not altering the 

provider’s behavior. More serious 

remedial action—specifically, the 

revocation of billing privileges under 

§ 424.535(a)(8)(ii)—may thus be 

necessary in some cases. 

We do not assume that providers 

cannot correct their existing practices to 

ensure that they submit compliant 

claims. We believe very strongly that 

they can, which is precisely why a 

failure to do so could warrant a 

revocation under § 424.535(a)(8)(ii). 

CMS, rather than our contractors, will 

make all determinations under 

§ 424.535(a)(8)(ii) and will consistently 

apply the criteria. 

Comment: A commenter stated that 

existing procedures, including audits, 

are more than sufficient to detect 

improper billing and to educate 

providers in complying with Medicare’s 

intricate rules. The commenter believes 

that § 424.535(a)(8)(ii) is in effect 

duplicative of these procedures, and 

would simply impose another layer of 

complexity and financial burden on 

providers. 

Response: We agree with the 

commenter’s premise: our current rules 

and procedures are sufficient to bring 

most providers into compliance when 

mistakes or errors are brought to their 

attention. However, this final rule is 

focused on providers who cannot or will 

not come into compliance with our 

payment requirements after repeated 

claim denials. Despite our audit 

practices and educational activities, we 

continue to see situations where certain 

providers and suppliers regularly 

submit non-compliant claims. Clearly, 

our audit and education activities have 

not been enough to sufficiently stem 

this behavior in all instances, thus 

demonstrating the need for 

§ 424.535(a)(8)(ii). Yet we reiterate that 

not only will we make all 

determinations under § 424.535(a)(8)(ii), 

but also that this provision will be 

applied in situations where the behavior 

was not sporadic in nature. We are 

focused on instances where the provider 

is engaged in an ongoing pattern of 

submitting non-compliant claims. 

Comment: A commenter stated that 

the proposed rule does not explain how 

or why billing is ‘‘abusive’’ merely 

because the claim appears not to meet 

medical necessity criteria. 

Response: There are reasons other 

than a failure to meet medical necessity 

requirements for which a claim can be 

denied (although the continuous 

submission of claims for medically 

unnecessary services can trigger 

§ 424.535(a)(8)(ii)). The term ‘‘abusive,’’ 

as used in the context of 

§ 424.535(a)(8)(ii), is meant to capture a 

variety of situations in which a provider 

or supplier regularly and repeatedly 

submits non-compliant claims over a 

period of time. 

Comment: Several commenters stated 

that whatever criteria CMS plans to use 

in determining whether a revocation 

under § 424.535(a)(8)(ii) is appropriate 

should be included in the final rule’s 

regulatory text or, as one commenter 

suggested, be accompanied by a binding 

administrative document (such as an 

administrator’s ruling) as part of its 

implementation. 

Response: We have included in the 

regulatory text the factors that CMS will 

consider prior to imposing a revocation 

under § 424.535(a)(8)(ii). 

Comment: A commenter 

recommended that before CMS finalizes 

§ 424.535(a)(8)(ii), it should: (1) Instruct 

its contractors not to repeatedly audit 

the same beneficiary’s claims once the 

claims have been upheld on appeal or 

in medical review; (2) instruct its 

contractors not to audit a provider for a 

1-year period if the provider has been 

audited and found to have an acceptable 

error rate; (3) restore contractors’ ability 

to use clinical judgment when 

performing complex medical reviews; 

(4) develop a comprehensive education 

program for practitioners who prescribe 

DMEPOS items; (5) exercise better 

supervision of its contractors; and (6) 

establish clear guidelines for calculating 

provider-specific error rates used to 

place providers on prepayment review. 

The commenter believed these changes 

are necessary to better ensure that 

providers—who are often confused by 

CMS policy changes, which the 

commenter stated are sometimes 

applied retroactively—are able to 

submit correct claims and that CMS’s 

policies are consistent, clear, and 

appropriately announced to providers 

with adequate notice. 

Response: While we appreciate the 

commenter’s suggestions, they are 

outside the scope of this rule. 

Comment: A commenter expressed 

concern that CMS will use audits 

performed by its contractors (for 

example, RACs) as a legitimate, ultimate 

indicator of either fraudulent behavior 

or noncompliance with Medicare 

payment policies. The commenter 

recommended, as did a number of other 

commenters, that CMS eliminate prepayment audits as a basis for 

detrimental action under 

§ 424.535(a)(8)(ii). These commenters 

stated that some providers undergo prepayment review merely as a 

preventative or precautionary measure 

to make sure that the claims submitted 

are appropriate and well-documented or 

because of the amount of the claim. 

They added that certain providers are 

subjected to pre-payment review for 

reasons beyond their control, and that 

losing billing privileges for being placed 

on pre-payment review is a draconian 

and inappropriate penalty. Several other 

commenters stated that there is no 

evidence to suggest that placing certain 

categories of suppliers or product 

categories under pre-payment review is 

resulting in lower error rates. 

Response: While we do not intend to 

use the results of audits performed by 

our contractors as the sole and absolute 

criterion of fraudulent behavior or 

noncompliance with Medicare payment 

policies, such results will be considered 

in our review of all of the factors in 

§ 424.535(a)(8)(ii). 

We will not consider the provider’s 

pre-payment review status in and of 

itself as a factor in § 424.535(a)(8)(ii) 

determinations. Our concern is with 

actual claim denials, rather than the 

means through which such denials were 

issued. 

Comment: Several commenters stated 

that the claim denials of some 

individual practitioners and other 

suppliers sometimes stem from 

deficiencies in the physician’s 

documentation. The commenters 


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believed that CMS’s inclusion of such 

claim denials—that is, claim denials 

based on the insufficient documentation 

of another provider—in its 

§ 424.535(a)(8)(ii) determinations would 

be arbitrary and capricious. 

Response: We disagree. We believe it 

is the responsibility of the provider 

submitting the claim to ensure that all 

requirements—including, as necessary, 

proper and compliant supporting 

documentation—have been met prior to 

the claim’s submission. Repeated 

denials due to improper documentation 

are an indication to a provider or 

supplier that its billing behavior must 

change in order to become compliant 

with Medicare requirements—including 

documentation requirements. 

Comment: A commenter stated that 

proposed § 424.535(a)(8)(ii) should 

contain a knowledge standard that the 

provider knew that the claims did not 

meet Medicare requirements. Several 

other commenters contended that CMS 

should only revoke billing privileges 

under § 424.535(a)(8)(ii) if the supplier 

has specific or actual knowledge of the 

erroneous nature of a particular claim or 

set of claims. This would preclude 

revocations based on honest mistakes; 

one commenter noted the challenges 

associated with EHR systems and the 

possibility that erroneous claims could 

be submitted as a result. One 

commenter stated that the proposed 

provision lacks any standards 

concerning the state of mind of the 

entity. Another commenter stated that 

between the two intent standards that 

are under CMS consideration—‘‘reckless 

disregard’’ and ‘‘knew or should have 

known’’—the former would be more 

appropriate. Another commenter urged 

CMS to apply § 424.535(a)(8)(ii) only 

when there is clear evidence that a 

provider acted knowingly and willfully 

in submitting non-compliant claims. 

This commenter stated that under 

Medicare’s complex billing rules, it 

would be too easy for CMS or a 

contractor to assert that a provider 

‘‘should have known’’ about a billing 

rule; as such, CMS should delete the 

phrase ‘‘should have known’’ in the 

final rule. The commenter believed that 

CMS should focus more on educating 

providers about changes to Medicare 

billing rules than on the punitive 

remedies outlined in § 424.535(a)(8)(ii). 

Response: Although we solicited 

comments on whether a knowledge 

standard should be applied to 

§ 424.535(a)(8)(ii), we have decided not 

to implement such a standard for two 

principal reasons. First, the burden on 

CMS of determining the provider or 

supplier’s intent for each claim it 

submitted (especially when there could 

be hundreds of claims at issue) would 

be excessive. Second, if a provider 

submits a claim with specific or actual 

knowledge that it does not meet 

Medicare requirements or with reckless 

disregard of said compliance, the federal 

government already has various means 

to address these situations, such as the 

False Claims Act. Associating a 

knowledge standard with 

§ 424.535(a)(8)(ii) would simply 

duplicate existing authorities. 

Comment: A commenter stated that 

CMS appears to be attempting to keep 

providers and suppliers from being able 

to effectively provide care for 

beneficiaries and to limit the overall 

number of providers and suppliers. The 

commenter believed that: (1) 

§ 424.535(a)(8)(ii) Is based on a rationale 

that all providers and suppliers are a 

risk to the Medicare Trust Funds; and 

(2) CMS has not fully gauged the 

proposed provision’s impact on many 

honest providers and suppliers that 

furnish services to Medicare 

beneficiaries. 

Response: We are neither attempting 

to impede patient care nor reduce the 

number of providers and suppliers. We 

believe most Medicare suppliers and 

providers are conscientious about 

submitting claims that meet Medicare 

requirements, and this rule will not 

affect that majority. Once again, we are 

merely attempting to address the 

problem of providers and suppliers with 

patterns of non-compliant claim 

submissions. Providers and suppliers 

that are not engaged in a pattern or 

practice of non-compliant billing will 

not be adversely affected by 

§ 424.535(a)(8)(ii). 

Comment: Several commenters stated 

that a mere difference of opinion about 

what is medically necessary—a term 

that is not ‘‘black and white’’—should 

not be the basis for a revocation of 

billing privileges, particularly 

considering that LCDs and views on 

medical necessity will differ among 

MACs. 

Response: We understand the 

commenter’s concern and believe that 

sporadic claim denials based on a lack 

of medical necessity generally should 

not result in revocation under 

§ 424.535(a)(8)(ii). However, we do not 

believe that medical necessity-based 

denials should be excluded from the 

scope of § 424.535(a)(8)(ii). It is of 

concern to us when a provider 

consistently submits claims for services 

that are not medically necessary, for this 

raises quality of care issues as well as 

the possibility that the provider is 

seeking to defraud the Medicare 

program. 

Comment: A commenter noted that 

while CMS states that § 424.535(a)(8)(ii) 

is not designed to revoke enrollment for 

isolated and sporadic claim denials or 

for innocent errors in billing, the 

provision itself (as proposed) does not 

make that intent clear. 

Response: The regulatory text of 

§ 424.535(a)(8)(ii) states that CMS may 

revoke billing privileges if a provider or 

supplier has a pattern or practice of 

submitting claims that fail to meet 

Medicare requirements. It also 

identified five factors that we will use 

to make such a determination, 

including: (1) The percentage of claims 

denied; (2) the reasons for the claim 

denials; (3) a history of final adverse 

actions; (4) the length of time the 

pattern has continued; and (5) the 

length of time the provider or supplier 

has been enrolled in Medicare. 

Comment: Several commenters stated 

that some providers submit many claims 

each year electronically, meaning that a 

single inadvertent error could easily be 

repeated on numerous claims. The 

commenters expressed concern that 

such errors when repeated could 

constitute a pattern or practice of 

submitting erroneous claims under 

§ 424.535(a)(8)(ii). One of these 

commenters added that in light of the 

great complexity of Medicare billing and 

coding requirements, a provider could 

inadvertently submit a claim that failed 

to meet at least one Medicare 

requirement, even though the provider 

in good-faith believed that the claim 

was correct. 

Response: We recognize the 

possibility that a single inadvertent 

error on similar electronic claim 

submissions could result in multiple 

claim denials. As we stated earlier, we 

recognize that Medicare has many rules 

and requirements regarding billing and 

coding, and that claims are sometimes 

submitted in error due to a provider’s 

honest misunderstanding of these 

policies. It is not our intention to revoke 

billing privileges under 

§ 424.535(a)(8)(ii) for such sporadic 

misinterpretations. 

Comment: A commenter suggested 

that the following factors—in order of 

importance—be used in determining 

whether a ‘‘pattern or practice’’ exists 

under § 424.535(a)(8)(ii) and that such 

factors be included in the regulatory 

text: (1) The reason(s) for the claim 

denials; (2) the percentage of submitted 

claims that were denied (for which there 

should be a minimum threshold); (3) 

how long the provider has been enrolled 

in Medicare; (4) whether the provider 

has had any final adverse actions; and 

(5) the length of time of the pattern or 

practice. Another commenter requested 


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that CMS not use the ‘‘total number of 

claims denied’’ as a criterion, for this 

could disproportionately and unfairly 

impact larger providers that submit 

many claims. The commenter also 

requested CMS to clarify whether the 

percentage of submitted claims that 

were denied would be determined using 

individual, subpart, or organizational 

NPIs. 

Response: We have decided not to 

give certain factors greater weight in our 

§ 424.535(a)(8)(ii) determinations than 

other, for the importance of each factor 

may vary based on the particular 

situation. We have also decided not to 

establish a minimum percentage 

threshold for claim denials; as stated 

earlier, we need flexibility to address a 

variety of scenarios. However, we 

included the five factors that the first 

commenter identified—all of which we 

proposed—in the regulatory text as 

criteria that CMS will consider, as 

appropriate or applicable, in its 

§ 424.535(a)(8)(ii) determinations. 

We agree with the second commenter 

that the ‘‘total number of claims denied’’ 

factor could present a distorted view of 

the provider or supplier’s billing 

practices for purposes of 

§ 424.535(a)(8)(ii). Therefore, we will 

not be finalizing this as criterion. 

The ‘‘percentage of claims denied’’ 

criterion will be based on the NPI listed 

on the claim. 

Comment: A commenter suggested 

that: (1) The provider should have an 

opportunity to show that it has 

remedied any error that occurred; and 

(2) proposed § 424.535(a)(8)(ii) should 

be limited to situations that are within 

the provider’s control. With respect to 

this second suggestion, the commenter 

stated that providers sometimes rely 

upon physicians to provide information 

that must be included on the claim; if 

such information is incorrect, CMS 

should not use this as a basis for 

revocation under § 424.535(a)(8)(ii). 

Other commenters shared this view. 

Response: We disagree with both of 

the commenter’s suggestions. We 

believe that the provider already has an 

opportunity to remedy an error once it 

receives a claim denial notice. Repeated 

errors over a period of time indicate that 

the provider is not taking necessary 

corrective steps. Also, while we 

recognize that providers sometimes rely 

on physicians for certain information, 

the provider remains ultimately 

responsible for ensuring that the claim 

and the supporting documentation meet 

Medicare requirements. 

Comment: A commenter stated that 

inconsistent claim determinations, 

policies, and interpretations of policies 

among MACs would lead to inequitable 

results under § 424.535(a)(8)(ii). As 

written, they provide far too much 

latitude for administrative folly, which 

is nearly guaranteed to occur. At a 

minimum, the commenter stated, the 

proposed rule must not be finalized 

without: (1) Substantial clarifying text 

written into the regulation itself; or (2) 

being accompanied by a binding 

administrative document (such as an 

administrator’s ruling) for its 

implementation. 

Response: As stated earlier, CMS, 

rather than its contractors, will make all 

§ 424.535(a)(8)(ii) determinations. 

Comment: Several commenters 

recommended that CMS include in the 

regulatory text of § 424.535(a)(8)(ii) a 

statement that the authority to make 

determinations that a ‘‘pattern or 

practice’’ does not rest with CMS’s 

contractors. The commenters also 

suggested that CMS incorporate into the 

regulatory text the following criteria that 

CMS should use in making 

§ 424.535(a)(8)(ii) determinations: (1) 

Whether the provider has any history of 

‘‘final adverse actions’’ and the nature of 

those actions; (2) the length of time over 

which the pattern or practice has 

continued; (3) how long the provider 

has been enrolled in Medicare; (4) 

whether the pattern or practice occurs 

throughout the provider or supplier’s 

industry; (5) whether the provider had 

a specific intent to submit a false or 

fraudulent claim; (6) whether the 

provider has a corrective action plan in 

place; (7) the number of claims 

overturned on appeal; and (8) the 

reasons for the claim denials. With 

respect to the fourth criterion, the 

commenters stated that consistently 

high industry-wide error rates among 

suppliers are the result of constant 

changes to billing requirements, 

uncertain and inconsistent 

interpretation of requirements by 

regulating and enforcing entities 

(including Medicare contractors), 

inadequately written LCDs, and CMS’s 

expectation that suppliers can enforce 

physician documentation requirements. 

They recommended that CMS consider 

addressing high industry-wide error 

rates through billing requirement reform 

rather than implementing another 

instrument of supplier punishment via 

§ 424.535(a)(8)(ii). 

Response: As we have stated 

elsewhere in this final rule, we will 

make all determinations for revocations 

under § 424.535(a)(8)(ii). We do not 

believe this needs to be restated in the 

regulatory text. 

Insofar as the commenters’ suggested 

factors for consideration, we agree with 

the first, second, third, and eighth 

factors and have included them in the 

regulatory text. We do not agree with 

the fourth suggested factor. Each 

provider or supplier must be reviewed 

individually, rather than as part of a 

larger class of providers and suppliers. 

We do not agree with the fifth suggested 

factor, either; for reasons already stated, 

we will not be applying a knowledge 

standard to § 424.535(a)(8)(ii). We 

disagree with the sixth factor as well. If 

a provider is repeatedly and 

consistently submitting non-compliant 

claims, this indicates that the provider’s 

corrective action plan—assuming it has 

one—is either being partially or wholly 

disregarded or is inadequate. As for the 

seventh factor, and as stated earlier, a 

provider or supplier’s claim denial that 

has been both: (1) Fully (rather than 

partially) overturned on appeal; and (2) 

finally and fully adjudicated will be 

excluded from our § 424.535(a)(8)(ii) 

determinations. 

Finally, we recognize that there may 

be special circumstances surrounding 

the provider or supplier’s noncompliant billing that are beyond the 

scope of the five factors we are 

finalizing. The particular facts of each 

case will vary widely, and the scenarios 

the commenters have presented 

underscore this point. To effectively 

address these situations, we believe that 

a sixth criterion should be established 

that enables CMS to consider any other 

applicable and available information 

regarding the provider or supplier’s 

specific circumstances that CMS deems 

relevant to its determination of a pattern 

or practice of non-compliant billing. 

However, information considered under 

this criterion will not alone be decisive 

in our determinations under 

§ 424.535(a)(8)(ii); the five other factors 

will, of course, be considered as well. 

Regardless, we believe that such 

information, to the extent it exists, 

should be considered in our 

§ 424.535(a)(8)(ii) determinations to 

help ensure that the Medicare Trust 

Funds are protected and, by the same 

token, that providers and suppliers are 

treated fairly. 

Comment: Several commenters 

recommended that CMS give low 

consideration to claim volume and 

percentage of claims denied as factors 

under § 424.535(a)(8)(ii) and that 

thresholds not be established for these 

criteria. The commenters believed that 

these factors may lead CMS to focus on 

the largest suppliers that rely on 

automated claims administration 

systems, while missing smaller 

suppliers that do not attract attention 

because their data does not exceed 

certain thresholds. 

Response: The number of denied 

claims will not be a factor in our 


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§ 424.535(a)(8)(ii) determinations, 

though the ‘‘percentage of denied 

claims’’ will remain as a factor and one 

that is no less important than the others. 

Also, and as explained earlier, we are 

not establishing thresholds for any of 

our criteria. 

Comment: Several commenters 

expressed concern that 

§ 424.535(a)(8)(ii) could be easily 

misapplied or misused because the 

provision is very vague and without 

clear standards. 

Response: As previously explained, 

we are finalizing all but one of the 

factors we proposed and are adopting an 

additional factor in response to the 

comments we received. We believe this 

will furnish sufficient clarity as to the 

scope of § 424.535(a)(8)(ii). 

Comment: Several commenters 

expressed concern about the potential 

application of § 424.535(a)(8)(ii) 

considering that RACs have a financial 

incentive to deny claims. 

Response: RACs review claim 

decisions on a post-payment basis. and 

are only paid for a claim denial if a 

Medicare Administrative Contractor 

(MAC) denial of a claim is upheld on 

appeal; this, we believe, reduces the 

incentive for RACs to make 

inappropriate determinations regarding 

claims. We also reiterate that claim 

denials that are reversed on appeal will 

be excluded from the application of 

§ 424.535(a)(8)(ii) if they meet certain 

criteria. 

Comment: Several commenters urged 

CMS to reconsider revocations based on 

billing patterns because it does not 

appear that there is—nor does CMS cite 

any—statutory authority to support such 

a remedy. 

Response: We cited our statutory 

authority for § 424.535(a)(8)(ii) and all 

of our other provider enrollment 

provisions in both this rule and the 

proposed rule. Specifically, sections 

1102 and 1871 of the Act provide 

general authority for the Secretary to 

prescribe regulations for the efficient 

administration of the Medicare program; 

also, section 1866(j) of the Act (codified 

at 42 U.S.C. 1395cc(j)) provides specific 

authority with regard to the enrollment 

process for providers and suppliers. 

Comment: A commenter stated that: 

(1) There are often good-faith 

differences between providers and 

contractors over appropriate coding; and 

(2) different payers may have different 

rules, which can cause confusion over 

the appropriate way to bill. The 

commenter contended that if there is no 

evidence that the provider intended to 

defraud Medicare, the provider should 

be given a chance to remedy the error. 

Medicare, the commenter added, should 

engage in education, counseling, and 

guidance that leads to correct coding 

before taking draconian measures. 

Response: We believe that frequent 

claim denials should alert the provider 

that there may be an issue with its claim 

submissions and that remedial action 

may be required. We do not believe that 

an interim notification from CMS (for 

example, a ‘‘warning letter’’) should be 

a prerequisite for taking action under 

§ 424.535(a)(8)(ii). Further, if the 

provider has questions regarding CMS’s 

billing and coding requirements, it 

should review CMS’s manuals, 

educational articles, and other 

informational documents at CMS’s Web 

site (www.cms.hhs.gov); the provider 

may also contact its local MAC if it has 

additional questions. 

Comment: A commenter stated that it 

fully supported proposed 

§ 424.535(a)(8)(ii). 

Response: We appreciate the 

commenter’s support. 

Comment: Several commenters stated 

that Medicare providers are already well 

aware of their legal obligation to submit 

correct and accurate claims for services 

that were reasonable and necessary. 

They noted that: (1) The current claim 

submission forms require the physician 

to certify that the services ‘‘were 

medically indicated and necessary for 

the health of the patient’’; and (2) 

enforcement agencies already have 

ample authority under several statutory 

schemes to penalize providers found to 

have inaccurate claims, including the 

False Claims Act. Therefore, the 

commenters questioned the benefit of or 

need for § 424.535(a)(8)(ii), especially in 

light of the danger of CMS overreach in 

its application of this provision. 

Response: We acknowledge these 

authorities as well as the certification 

language on the current claim 

submission forms. However, we 

continue to see instances where, despite 

these obligations, providers and 

suppliers repeatedly submit noncompliant claims. The other federal 

authorities provide remedies different 

from what we have proposed. We thus 

believe that the authority to revoke 

billing privileges under 

§ 424.535(a)(8)(ii) can be part of a 

comprehensive strategy to address these 

situations. 

Comment: A commenter stated that 

there do not appear to be any 

administrative appeal rights if a 

provider is revoked under 

§ 424.535(a)(8)(ii). 

Response: Under § 424.545, a provider 

or supplier may appeal any revocation 

of Medicare billing privileges under 42 

CFR part 498. 

Comment: A commenter stated that 

CMS should exclude physicians from 

the purview of § 424.535(a)(8)(ii) 

because they fall within the ‘‘limited’’ 

screening category under § 424.518(a). 

Response: We do not agree. The issue 

is the correct submission of claims, 

rather than the level of screening to 

which the provider or supplier is 

normally subject under § 424.518(a). 

Comment: A commenter stated that 

revocations under proposed 

§ 424.535(a)(8)(ii) should be limited to 

instances where CMS has data 

indicating that the provider is engaging 

in extreme outlier billing and has an 

established and ongoing pattern of 

abusive practices. 

Response: As stated, we will consider, 

as appropriate or applicable, the six 

factors discussed previously (and 

contained in § 424.535(a)(8)(ii)(A) 

through (F)) in determining whether a 

revocation under § 424.535(a)(8)(ii) is 

warranted. A provider or supplier could 

be an ‘‘outlier biller’’ for any number of 

reasons. Hence, a provider or supplier 

that is an ‘‘outlier biller’’ should not 

automatically be subject to revocation 

based on § 424.535(a)(8)(ii). We have 

noted previously that we will only take 

revocation action under 

§ 424.535(a)(8)(ii) after careful review of 

factors surrounding the provider or 

supplier’s billing behavior. 

Comment: A commenter stated that 

while the proposed rule’s preamble 

indicated that ‘‘claims for services that 

fail to meet Medicare requirements’’ 

meant claims denied for failing to 

satisfy Medicare’s medical necessity 

requirements, the regulatory text did not 

explicitly state as such. The commenter 

recommended that CMS either: (1) 

Delete its proposed § 424.535(a)(8)(ii); or 

(2) revise the provision to clearly limit 

‘‘claims for services that fail to meet 

Medicare requirements’’ to claims that 

do not meet medical necessity 

requirements. The lack of a specific 

reference to ‘‘reasonable and necessary’’ 

requirements, the commenter believed, 

would enable CMS to unreasonably 

apply § 424.535(a)(8)(ii) to a failure to 

meet any Medicare requirement. 

Response: We do not believe that 

revocations under § 424.535(a)(8)(ii) 

should be limited to claim denials based 

on medical necessity. Indeed, proposed 

§ 424.535(a)(8)(ii) was not meant to 

apply only to certain claim denial 

reasons. Repeated claim denials over a 

period of time are of concern to us 

irrespective of the particular reason(s) 

involved. To alleviate any confusion 

about the scope of § 424.535(a)(8)(ii), we 

are deleting the language ‘‘for services’’ 

from this provision. This will clarify 

that § 424.535(a)(8)(ii) applies to claims 


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that are denied for failing to meet 

Medicare requirements and is not 

limited to cases where the claim is 

denied because the services did not 

mean Medicare requirements. 

Comment: A commenter stated that 

CMS should establish a dispute 

resolution process prior to revoking a 

provider’s privileges related to claims 

denials for not meeting Medicare 

requirements. Several other commenters 

stated that CMS should afford appeal 

rights under § 424.535(a)(8)(ii) prior to 

revoking a provider’s billing privileges. 

Response: We disagree with the 

commenters. No other revocation reason 

under § 424.535(a) currently has an 

interim appeals or dispute resolution 

process, and we do not see any basis or 

rationale for permitting such processes 

in the case of § 424.535(a)(8)(ii). As with 

all other revocation reasons, the 

provider or supplier may appeal the 

revocation. 

Comment: A commenter stated that 

revocations under § 424.535(a)(8)(ii) 

should be reserved for only the most 

serious of abuses. 

Response: We agree. As we have 

stated, § 424.535(a)(8)(ii) will only be 

applied when it is clearly appropriate. 

For instance, a § 424.535(a)(8)(ii) 

revocation could be proper, once all of 

the appropriate factors have been 

considered, if— 

• There is a demonstrable pattern or 

practice; 

• The pattern is long-term or has 

otherwise continued over a period of 

time; 

• Education regarding appropriate 

billing is or has been made available to 

the provider in the form of claim denial 

notices, CMS instructional materials 

(such as manuals and articles) on CMS’ 

Web site, etc., yet the provider or 

supplier continues to submit noncompliant claims, and 

• A significant percentage of the 

provider’s or supplier’s claims have 

been denied. 

(We stress that this is merely an 

example and should be not be 

interpreted as the formal establishment 

of minimum criteria.) 

We again state that § 424.535(a)(8)(ii) 

is not targeted toward honest providers 

and suppliers that make occasional 

billing mistakes. Our sole focus is on 

providers and suppliers that engage in 

a systemic, ongoing, and repetitive 

practice of improper billing 

notwithstanding the public availability 

of CMS educational materials or 

guidance and CMS’ issuance of claim 

denial notices to the provider. While we 

hope that this helps to reassure the 

provider and supplier communities of 

CMS’ intentions, we recognize that 

concerns may linger. To that end, we 

plan to issue written guidance to and 

communicate with the public once this 

final rule is implemented, whereby we 

will once again reiterate the objective 

behind § 424.535(a)(8)(ii) and, as 

necessary, discuss certain operational 

aspects of this provision. 

Comment: A commenter stated that 

CMS did not—(1) explain how 

determinations under § 424.535(a)(8)(ii) 

would be made; (2) explain how errors 

in a revocation determination can be 

remedied short of a reapplication after 

the enrollment bar expires; and (3) 

furnish rationale as to the specific 

standards—such as the establishment of 

a percentage threshold for claim 

denials—that CMS will use in its 

determinations. 

Response: We will make all 

§ 424.535(a)(8)(ii) determinations after a 

careful and thorough consideration of 

the factors outlined in 

§ 424.535(a)(8)(ii)(A) through (F). As we 

explained in the proposed rule, any 

revocation under § 424.535(a)(8)(ii) may 

be appealed if the provider or supplier 

chooses to do so. 

We stated earlier that each case will 

be judged on its own specific facts, and 

that establishing specific thresholds 

would, we believe, hinder our ability to 

do so. We believe that the factors 

outlined in § 424.535(a)(8)(ii)(A) 

through (F) sufficiently indicate to 

providers and suppliers the rationale we 

will use in our § 424.535(a)(8)(ii) 

determinations. 

Comment: A commenter questioned 

whether a system would be established 

to ensure that § 424.535(a)(8)(ii) would 

be implemented and enforced uniformly 

across jurisdictions. The commenter 

also requested which entities (for 

example, RACs) would be tasked with 

enforcing these provisions as well as 

any financial incentives for identifying 

wrongdoing. 

Response: Once again, we (not our 

contractors) will make all 

determinations regarding whether a 

§ 424.535(a)(8)(ii) revocation should be 

imposed. We will apply the criteria 

consistently. 

Comment: A commenter suggested 

that in light of the seriousness of a 

revocation under § 424.535(a)(8)(ii), 

CMS should provide direct notice to a 

provider that its billing privileges may 

be revoked if its continues to bill for 

services that do not meet Medicare 

requirements. The commenter believed 

that such a preliminary ‘‘warning’’ 

could encourage the provider to 

improve its claim submission accuracy. 

The commenter also suggested that CMS 

consider a sliding scale that includes a 

lower-level consequence—such as a 

suspension—for less severe occurrences. 

Response: We do not believe that an 

interim alert to the provider is 

necessary. The provider’s receipt of a 

substantial number of claim denials, in 

our view, furnishes adequate notice to 

the provider that corrective action is 

necessary. 

While we appreciate the commenter’s 

suggestion regarding lower-level 

consequences for less severe cases, we 

note again that § 424.535(a)(8)(ii) is only 

intended to address the most severe of 

situations. Still, we will closely monitor 

our application of this provision and the 

scenarios that come before us. Should 

we determine that other sanctions may 

be appropriate, we may, as needed, 

undertake future rulemaking. 

Comment: A commenter stated that 

CMS should not finalize 

§ 424.535(a)(8)(ii) until the public has 

had an opportunity to comment on the 

specific policy CMS will use in defining 

‘‘pattern or practice.’’ 

Response: As stated, we are not 

formally defining ‘‘pattern or practice’’ 

in this rule. We will instead consider a 

number of factors in our determinations 

as to whether a § 424.535(a)(8)(ii) 

revocation is warranted. 

Comment: A commenter stated that 

although CMS sought feedback from the 

provider community regarding 

§ 424.535(a)(8)(ii), it did not believe that 

engaging in this type of review and 

analysis during a 60-day public 

comment period was appropriate. The 

commenter believed that discussions 

and collaboration with the provider 

community via a stakeholder group 

should occur beforehand. 

Response: We disagree with the 

commenter. While we recognize the 

provider community’s concerns 

regarding § 424.535(a)(8)(ii), we do not 

believe that formal discussions with a 

stakeholder group resulting in an 

agreement as to what § 424.535(a)(8)(ii) 

should consist of are necessary prior to 

the provision’s implementation. This is 

especially true considering that we 

received valuable comments from 

providers and suppliers regarding 

§ 424.535(a)(8)(ii) and have incorporated 

them into our final provisions as 

needed. We believe that the notice-andcomment process under the APA is the 

most appropriate means of soliciting 

feedback from the public. 

Comment: A commenter, expressing 

concern about CMS’s potential use of 

statistical analysis in determining 

patterns under § 424.535(a)(8)(ii), cited 

several instances in which a claim is 

denied but cannot automatically or 

necessarily be considered an abusive 

billing situation: (1) A patient dies prior 


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to the interpretation of an applicable 

test; (2) claims for services deemed not 

medically necessary; (3) the beneficiary 

needs a Medicare denial to file 

secondary insurance; and (4) the 

beneficiary has exceeded a benefit 

category unbeknownst to the provider. 

The commenter believed CMS has the 

capability to distinguish between (a) 

abusive billing patterns and (b) claim 

denials that occur in the normal course 

of business and are not based on any 

nefarious intent. The commenter added 

that in providing examples of what may 

constitute a pattern of abusive billing 

behavior, CMS must account for certain 

specialty-specific situations that can 

occur due to the nature of the providerpatient encounter; diagnostic services, 

for example, should not be subject to the 

same standard as other providers due to 

the remote nature of the physicianpatient relationship. 

Response: We agree with the 

commenter’s apparent rationale that 

certain claim denials may be for purely 

innocuous reasons and that CMS has the 

ability to distinguish between these 

situations and extreme instances of noncompliant billing. We note once more 

that the reason(s) for the claim denials 

will be a factor in our § 424.535(a)(8)(ii) 

determinations. 

Comment: A commenter stated that a 

provider often will not be aware of a 

pattern of alleged improper billing 

under § 424.535(a)(8)(ii) until after a 

contractor performs an audit. Under 

such circumstances, the commenter 

believed, the provider should be given 

an opportunity to correct the allegedly 

improper billing via a plan of 

correction. 

Response: As already stated, we 

acknowledge that in sporadic instances 

providers and suppliers may submit 

claims in error due to a 

misunderstanding of Medicare policies. 

It is not our intention to revoke billing 

privileges under § 424.535(a)(8)(ii) for 

such isolated misinterpretations. 

Comment: A commenter stated that in 

situations where coordination of 

benefits is involved, a provider must 

exhaust all efforts to receive payment 

from a primary payer—such as 

Medicare—before billing a secondary 

payer. The commenter urged CMS to 

exclude coordination of benefit 

situations from the category of claim 

denials that can be considered under 

§ 424.535(a)(8)(ii). 

Response: While we do not believe 

that such situations should be 

automatically excluded from the 

purview of § 424.535(a)(8)(ii), we note 

that the reasons for the claim denials 

will be a factor in our § 424.535(a)(8)(ii) 

determinations. Consequently, the 

situation the commenter describes will 

be considered in such determinations. 

Comment: A commenter stated that 

‘‘length of time’’ should only be 

considered as a factor if the provider 

acted in reckless disregard of whether 

its claims did not meet Medicare 

requirements. The commenter added 

that: (1) The reckless disregard standard 

should be used in all cases involving 

§ 424.535(a)(8)(ii); and (2) CMS should 

not use ‘‘the total number of claims 

denied’’ and ‘‘percentage of claims 

denied’’ categories in applying 

§ 424.535(a)(8)(ii) because there are 

many instances in which claims are 

denied—such as in coordination of 

benefit situations—for innocuous 

purposes. 

Response: As stated, we will neither 

be applying a knowledge standard to 

§ 424.535(a)(8)(ii) nor eliminating the 

‘‘percentage of claims denied’’ or 

‘‘length of time’’ criteria from our 

analysis. However, we are removing 

‘‘the total number of claims denied’’ 

criterion. 

Comment: A commenter stated that 

CMS must furnish the provider 

community with guidance regarding 

CMS’s requirements for proper medical 

record documentation, including the 

frequency of documentation to support 

medical necessity for each product 

category. The commenter also 

recommended the inclusion of these 

documents within an electronic health 

record template. 

Response: We believe these comments 

are outside the scope of this rule. 

Comment: A commenter stated that a 

provider’s claims are sometimes denied 

because of insufficient physician 

medical record documentation; such 

instances should not be included within 

the purview of § 424.535(a)(8)(ii) 

because the provider had no control 

over the physician’s documentation. 

Response: We do not believe that 

denials based on insufficient medical 

record documentation should be 

automatically excluded from the scope 

of § 424.535(a)(8)(ii). Again it is 

ultimately the provider’s responsibility 

to ensure that the documentation it 

furnishes in support of a claim meets 

Medicare requirements, though the 

reason(s) for the claim denial will be a 

factor in our § 424.535(a)(8)(ii) 

determinations. 

Comment: A commenter stated that 

claims are occasionally denied because 

information on the certificate of medical 

necessity is inconsistent with CMS’s 

national coverage criteria. The 

commenter suggested that the two 

decisional documents be streamlined to 

coordinate coverage criteria effectively 

and uniformly. 

Response: We believe this comment is 

outside the scope of this rule. 

Comment: A commenter expressed 

concern about what the commenter 

believed was a lack of definition of 

‘‘directing physician’’ as that term is 

used in § 424.535(a)(8)(i). The 

commenter stated that the professional 

component of diagnostic testing services 

is often not performed in the same 

physical location or contractor 

jurisdiction as the technical component, 

and that the date of service may be 

different if the interpretation is not done 

on the same date done as the technical 

component. Such normal, compliant 

practices could be misinterpreted under 

§ 424.535(a)(8)(i). 

Response: As we did not propose any 

changes to the content of existing 

§ 424.535(a)(8), which is merely 

renumbered in this final rule as 

§ 424.535(a)(8)(i), this comment is 

outside the scope of this rule. 

Comment: A commenter contended 

that although § 424.535(a)(8)(i) suggests 

that an abuse of billing privileges 

includes billing for a service when it 

would have been impossible to actually 

provide the service—such as when the 

physician performing the service was 

not available to furnish the service, or 

the patient was not available to receive 

the service because he or she was out of 

the state or country—the regulation does 

not clearly state as such. The 

commenter expressed particular 

concern regarding the situation where a 

laboratory is not in the same state in 

which the physician who ordered the 

service is located, meaning that the 

service could not have been furnished to 

that beneficiary on that date of service. 

The commenter requested that CMS 

clarify that this situation is outside the 

scope of scenarios to which this rule is 

meant to apply. 

Response: As we did not propose any 

changes to the content of existing 

§ 424.535(a)(8), which is merely 

renumbered in this final rule as 

§ 424.535(a)(8)(i), we believe this 

comment is outside the scope of this 

rule. 

Given the comments received and the 

foregoing discussion, we are finalizing 

proposed § 424.535(a)(8)(ii) with a 

modification. We are adding new 

paragraphs (A) through (F) to identify 

the factors for consideration. 

5. Post-Revocation Submission of 

Claims 

Section § 424.535(h) currently states 

that a revoked physician organization, 

physician, non-physician practitioner or 

IDTF must submit all claims for 

furnished items and services within 60 

calendar days of the effective date of the 


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revocation. As we explained in the 

proposed rule, the reason for such a 

relatively short post-revocation claim 

submission period is to limit Medicare’s 

exposure to future vulnerabilities and 

potentially fraudulent claims from such 

revoked individuals and organizations. 

With this in mind, we proposed to 

expand § 424.535(h) to require all 

revoked providers and suppliers to 

submit, within 60 days after the 

effective date of the revocation, all 

claims for items and services furnished 

prior to the date of the revocation letter. 

For HHAs, the date would be 60 days 

after the later of: (1) The effective date 

of the revocation; or (2) the date that the 

HHA’s last payable episode ends. 

A summary of the comments received 

and our responses thereto are as follows: 

Comment: A commenter questioned 

why CMS is proposing to grant 

DMEPOS suppliers an additional 45 

days after revocation to submit claims, 

for § 424.57(d) currently grants 

DMEPOS suppliers only 15 days to 

submit claims after revocation. 

Response: We believe that the 

commenter is misreading § 424.57(d), in 

that § 424.57(d) does not address the 

timeframe in which post-revocation 

claims must be submitted. 

Comment: A commenter expressed 

support for our proposed change, stating 

that all providers and suppliers would 

now be treated equally with respect to 

the post-revocation claim submission 

requirement. 

Response: We appreciate the 

commenter’s support. 

Given the very few comments 

received and the foregoing discussion, 

we are finalizing our proposed changes 

to § 424.535(h). 

6. Effective Date of Billing Privileges 

Under the current version of 

§ 424.520(d), the effective date of billing 

privileges for physicians, non-physician 

practitioners, and physician and nonphysician practitioner organizations is 

the later of: (1) The date of filing of a 

Medicare enrollment application that 

was subsequently approved by a 

Medicare contractor; or (2) the date an 

enrolled physician or non-physician 

practitioner first began furnishing 

services at a new practice location. This 

policy is meant to address our concerns 

about providers and suppliers being 

able to bill for Medicare services 

rendered well before enrollment, for it 

is not always possible to verify whether 

a supplier has met all Medicare 

enrollment requirements prior to the 

date it submits an enrollment 

application. Thus, the Medicare 

program should not be billed for 

services performed before the later of 

the two aforementioned dates. In light of 

this concern, we proposed to expand the 

scope of § 424.520(d) to include 

ambulance suppliers, based in part on 

the elevated risk they pose to the 

Medicare program as stated in 

§ 424.518. Indeed, in a January 2006 

OIG report entitled, ‘‘Medicare 

Payments for Ambulance Transports’’ 

(OEI–05–02–000590), the OIG found 

that 25 percent of ambulance transports 

did not meet Medicare’s program 

requirements; this resulted in an 

estimated $402 million in improper 

payments. 

As explained in the proposed rule, we 

did not include certified providers and 

certified suppliers in our proposed 

revision to § 424.520(d) because of: (1) 

Existing limitations posed by § 489.13 

on their ability to ‘‘backbill’’ for 

services; and (2) the extensive, 

multilayered review process they must 

undergo prior to enrolling in Medicare. 

Yet we did solicit comments on whether 

any other non-certified provider or noncertified supplier types that are not 

currently subject to a backbilling 

restriction similar to the one we 

proposed should be included. 

The following is a summary of the 

comments received regarding this 

proposed change and our responses 

thereto. 

Comment: A commenter stated that 

CMS should treat ambulance services in 

a manner consistent with physicians 

and non-physician practitioners when it 

comes to enrollment and the filing of 

Medicare claims. Retroactive billing for 

ambulance services, the commenter 

continued, should be similar to the 30- 

day retroactive billing authority that 

exists for these individuals; the supplier 

could seek a longer retroactive billing 

period if it can demonstrate that exigent 

circumstances led to a situation that 

forced it to provide transport services 

prior to the normal billing requirements. 

Response: We agree that the 30-day 

and 90-day retroactive billing provisions 

in § 424.521(a), to which the commenter 

is referring, should apply to ambulance 

suppliers to the same extent that they do 

to physicians, physician groups, nonphysician practitioners, and nonphysician practitioner groups. This 

approach would ensure: (1) Consistent 

treatment between ambulance suppliers 

and the other supplier types covered 

under § 424.520(d); and (2) that 

ambulance suppliers can avail 

themselves of a brief retroactive billing 

period if they are able to show that 

urgent circumstances precluded the 

supplier from submitting its enrollment 

application earlier than it did. 

Therefore, we have revised the 

regulatory text in § 424.521(a) to include 

ambulance suppliers. 

Comment: Several commenters stated 

that proposed § 424.520(d) should have 

a mechanism by which ambulance 

suppliers can obtain retroactive billing 

privileges in situations where the failure 

to file the enrollment application prior 

to commencing operations resulted from 

circumstances beyond the supplier’s 

control; one commenter cited the 

example of a county-owned ambulance 

supplier that needs approval from the 

county’s governing board before 

expanding its service area, a process 

that could delay the submission of the 

supplier’s application. The commenters 

had two suggestions in this regard. First, 

the supplier could file a preliminary 

CMS–855 application when it 

anticipates expanding into a new 

service area; the supplier could 

supplement the application with 

additional information at a later date. 

Second, the supplier could appeal for 

retroactive billing privileges. 

Response: As we explained earlier, we 

have incorporated a revised § 424.521(a) 

into this final rule. It will permit limited 

retrospective billing in exceptional 

circumstances. We believe this will 

alleviate some of the commenters’ 

concerns. 

Comment: Several commenters 

requested CMS to clarify that the ‘‘date 

of filing’’ of a CMS–855 application is 

the date on which the contractor 

initially received the application, not 

the date on which the contractor 

deemed the application ‘‘complete.’’ 

Response: The ‘‘date of filing’’ is the 

date on which the provider or supplier 

submitted its CMS–855 application via 

mail or Internet-based PECOS. 

Comment: Several commenters stated 

that a more definitive distinction must 

be made as to what is meant by the date 

of an application that is subsequently 

approved. One commenter stated that it 

is not uncommon for contractors to 

return applications with a request for 

supporting documentation. Another 

commenter requested an explicit 

statement that the date the application 

is entered into PECOS or a paper CMS– 

855B is mailed is the effective date of 

billing privileges, assuming the 

application is eventually accepted; this 

would make it clear that a request for 

additional documentation is part of the 

original process and does not begin an 

entirely new cycle. 

Response: We indicated earlier that 

the effective date of billing privileges 

under § 424.520(d) will be the later of: 

(1) The ‘‘date of filing’’ of an enrollment 

application that is subsequently 

approved; or (2) the date the supplier 

began furnishing services at a practice 


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location. The ‘‘date of filing’’ is 

considered to be the date on which the 

supplier submitted its CMS–855 

application via mail or Internet-based 

PECOS. 

The term ‘‘subsequently approved’’ 

includes application submissions for 

which the contractor requested 

additional information from the 

supplier (or otherwise undertook 

developmental activities with respect to 

the application) and the application was 

ultimately approved. It does not include 

applications that were rejected under 

§ 424.525 or returned pursuant to CMS 

Publication 100–08, chapter 15, and 

were later resubmitted. A contractor’s 

request for additional information does 

not constitute a final disposition 

regarding the application; that is, the 

application is still in process. However, 

a rejection or return indicates that the 

contractor was unable to process the 

application to completion, meaning that 

the application processing cycle has 

ended and the supplier must submit a 

new application. 

Comment: A commenter stated that 

municipalities are sometimes required 

to temporarily curtail their ambulance 

services and must contract with another 

ambulance supplier on an emergency, 

short-term basis; in such emergency 

situations, it may not be possible for the 

municipality to quickly secure all of the 

necessary paperwork to permit 

Medicare billing for transport services. 

The commenter stated that the 

municipality should not be held 

financially responsible for providing 

appropriate transport services for such 

emergency patients. 

Response: In response to the 

comments received, we have revised 

§ 424.521(a) to allow ambulance 

suppliers limited retrospective billing in 

exceptional circumstances. 

Comment: A commenter requested 

that CMS clarify how the 2006 OIG 

report supports CMS’s proposed 

§ 424.520(d). The OIG report, the 

commenter contended, did not indicate 

whether the ambulance transports 

discussed therein occurred prior to the 

date the ambulance supplier submitted 

its enrollment application; citing the 

OIG report is misleading and creates an 

unfair and negative view of all 

ambulance suppliers. 

Response: Our citation of the report 

was not intended to disparage all 

ambulance suppliers but to present 

examples of instances where certain 

ambulance suppliers were not in 

compliance with Medicare 

requirements. Our concern about noncompliance is the precise reason for our 

revision to § 424.520(d). We explained 

earlier that allowing an extensive period 

of backbilling makes it difficult to verify 

whether an ambulance supplier was in 

compliance with Medicare requirements 

well before it submitted an enrollment 

application. 

Comment: A commenter requested 

that CMS: (1) Furnish the information it 

used to single-out ambulance suppliers 

in § 424.520(d); and (2) explain why it 

did not propose a similar backbilling 

limitation for other supplier types such 

as clinical laboratories and mass 

immunization roster billers. 

Response: As we discussed in the 

proposed rule, we elected to include 

ambulance suppliers within 

§ 424.520(d) based on: (1) Their status as 

moderate-risk category suppliers under 

§ 424.514; (2) the OIG report cited in the 

preamble; and (3) other program 

integrity issues we have detected 

regarding ambulance suppliers. Indeed, 

these issues were outlined in a July 31, 

2013 notice (78 FR 46339) in which we 

imposed a temporary moratorium on the 

enrollment of new ground ambulance 

suppliers in several Texas counties; a 

similar moratorium was imposed 

effective January 30, 2014 against 

ambulance suppliers in the 

Philadelphia, Pennsylvania area (79 FR 

6475). 

Comment: A commenter stated that 

the loss of revenue to ambulance 

suppliers resulting from § 424.520(d) 

could preclude them from expanding 

into new areas. 

Response: We understand the 

commenter’s concern. Yet as we have 

stated, it is not always possible for us to 

verify that the supplier met all 

enrollment requirements many months 

prior to the application submission. To 

ensure that Medicare payments are 

made to suppliers that we have 

confirmed met enrollment requirements 

at the time the service was provided, we 

believe it is necessary to restrict the 

period of backbilling. 

Given these comments and in 

accordance with the previous 

discussion, we are finalizing our 

proposed change to § 424.520(d). We 

have also revised the regulatory text of 

§ 424.521(a) to include ambulance 

suppliers. 

7. Effective Date of Re-Enrollment Bar 

Currently under § 424.535(c), a 

revoked provider, supplier, delegated 

official, or authorizing official is barred 

from participating in Medicare from the 

effective date of the revocation until the 

end of the re-enrollment bar. The reenrollment bar is a minimum of 1 year, 

but not greater than 3 years, depending 

on the severity of the basis for 

revocation. In accordance with 

§ 424.535(g), the effective date of a 

revocation is either of the following: 

• Thirty days after CMS or the CMS 

contractor mails notice of its 

determination to the provider or 

supplier. 

• If the revocation is based on a 

federal exclusion or debarment, felony 

conviction, license suspension or 

revocation, or if the practice location is 

determined by CMS or its contractor not 

to be operational, the date of the 

exclusion, debarment, felony 

conviction, license suspension or 

revocation, or the date that CMS or its 

contractor determined that the provider 

or supplier was no longer operational 

constitutes the effective date of the 

revocation and, hence, the date on 

which the re-enrollment bar 

commences. 

We proposed to revise § 424.535(c) to 

specify that all re-enrollment bars begin 

30 days after CMS or the CMS 

contractor mails notice of the revocation 

determination to the provider or 

supplier. The rationale for this change 

was to address situations where the 

revocation is based on a federal 

exclusion or debarment, felony 

conviction, license revocation or 

suspension, or non-operational status. 

Due to potential delays in the updating 

of databases with criminal conviction 

and licensure information, the 

revocation effective dates for these 

actions can be months prior to the date 

the contractor mails the revocation 

letter, and it is from these retroactive 

effective dates that the re-enrollment bar 

runs. By starting the re-enrollment bar 

period after the revocation letter is sent, 

the full period can be imposed. 

A summary of the comments we 

received as well as our responses 

follow: 

Comment: A commenter requested 

that CMS identify the reason for its 

statement in the preamble discussion for 

proposed § 424.535(a)(3) regarding 

months of potential delay in updating 

databases with criminal conviction and 

licensure information. The commenter 

further requested CMS to indicate: (1) 

Whether the requirement under 

§ 424.516 for physicians, non-physician 

practitioners, and owners to report a 

felony conviction within 30 days is 

being waived; and (2) if § 424.516 is 

being waived, whether CMS is also 

waiving the requirement in § 424.565 

that CMS assess an overpayment back to 

the date of the adverse action. 

Response: We indicated in the 

proposed rule that there could be 

instances where a delay exists in 

updating a state Web site with felony or 

licensure data. With respect to the 

commenter’s two requests, this rule 


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does not waive the aforementioned 

requirement to report felony convictions 

or the overpayment assessment mandate 

in § 424.565. 

Comment: A commenter disagreed 

with CMS’s proposed revision to 

§ 424.535(c) because this would 

effectively limit overpayment 

collections from the date of the felony 

conviction or guilty plea, or would 

expose physicians and non-physician 

practitioners to higher Medicare 

overpayment amounts. The commenter 

stated that CMS should retain the 

current policies in these two provisions 

until it explains: (1) Their impact on the 

overpayment provision found in 

§ 424.565; and (2) CMS’s intent to 

impose overpayments based on an OIG 

exclusion or felony conviction from the 

date of the felony conviction or 

exclusion, the date of the revocation 

letter, or the actual revocation date. 

Response: Our revision to § 424.535(c) 

neither addresses nor impacts 

overpayment determinations or 

collections. It simply specifies when the 

enrollment bar begins. For example, if a 

provider is revoked with a retroactive 

effective date, the enrollment bar— 

whatever the length—will commence as 

specified in § 424.535(c). Yet the 

effective date of the revocation (and 

from which date overpayments can be 

collected) will be the same as that 

which currently exists under our 

regulations. 

Comment: A commenter stated that 

our proposal that all re-enrollment bars 

would begin 30 days after CMS mails 

the revocation notice to the provider 

appears prudent, for it would streamline 

and simplify current policy. The 

commenter also expressed support for 

our additional proposals to eliminate 

redundancies and make technical 

corrections to the regulatory text. 

Response: We appreciate the 

commenter’s support. 

Given this, we are finalizing our 

proposal to revise § 424.535(c) to state 

that the re-enrollment bar is effective 30 

days after CMS or its contractor mails 

notice of its revocation determination to 

the provider or supplier. 

8. Corrective Action Plans 

Consistent with § 405.809, a provider 

or supplier whose Medicare billing 

privileges are revoked may currently 

submit a corrective action plan (CAP). 

The CAP must provide evidence that the 

provider or supplier is in compliance 

with Medicare requirements. If CMS or 

the Medicare contractor determines that 

the provider or supplier is, in fact, 

compliant with Medicare requirements, 

the provider or supplier’s billing 

privileges can be reinstated. 

We proposed to revise § 405.809 to 

state in new paragraph (a)(1) that a 

provider or supplier may only submit a 

CAP when the revocation was based on 

§ 424.535(a)(1), which states in part that 

a provider or supplier’s billing 

privileges may be revoked if the 

provider or supplier is determined not 

to be in compliance with our enrollment 

requirements. We stated that providers 

and suppliers generally should not be 

exonerated from failing to fully comply 

with Medicare enrollment requirements 

simply by furnishing a CAP, for it is the 

duty of providers and suppliers to 

always maintain such compliance. The 

proposed exception for § 424.535(a)(1) 

was based on our experiences where a 

provider or supplier revoked under 

§ 424.535(a)(1) had only minimally 

failed to comply with our enrollment 

requirements. To revoke its billing 

privileges when the problem can be 

quickly and easily corrected via a CAP 

could in some instances lead to unfair 

results. In cases where § 424.535(a)(1) is 

one of several reasons for a particular 

revocation, the provider would be able 

to submit a CAP with respect to the 

§ 424.535(a)(1) revocation reason. For 

the other revocation grounds, though, 

the provider would not be able to use 

the CAP process; the provider would 

instead have to use the appeals process 

under Part 498. 

We also proposed in new paragraph 

(a)(2) that providers and suppliers 

would have only one opportunity 

through a particular CAP to correct all 

of the deficiencies that served as the 

basis of the revocation. We expressed 

our view that providers and suppliers 

should not be given multiple 

opportunities to become compliant 

when it is crucial that such compliance 

always be maintained. 

We further proposed to delete the last 

sentence of § 424.535(a)(1), which reads: 

‘‘All providers and suppliers are granted 

an opportunity to correct the deficient 

compliance requirement before a final 

determination to revoke billing 

privileges, except for those imposed 

under paragraphs (a)(2), (a)(3), or (a)(5) 

of this section.’’ This sentence was 

inconsistent with our proposed change 

to § 405.809(a)(1). 

Lastly, we proposed to incorporate the 

existing language of § 405.809 into a 

new paragraph § 405.809(b). 

A summary of the comments we 

received on these proposed changes and 

our responses follow: 

Comment: Several commenters noted 

that under CMS’s proposal to restrict the 

availability of CAPs, a CAP could not be 

used in cases where a revocation 

occurred due to the provider’s failure to 

report a practice location under 

§ 424.535(a)(9). Although these 

commenters generally supported the 

proposed change, they urged CMS to 

clarify the definition of a ‘‘practice 

location’’ for ambulance services 

because Medicare contractors may be 

interpreting this term differently; for 

instance, some may define it as the 

location of the supplier’s management, 

billing, or administrative staff, while 

others consider it to be where the 

supplier garages and/or maintains its 

vehicles. 

Response: We clarified the meaning of 

the term ‘‘practice location’’ as it 

pertains to ambulance suppliers in CMS 

Transmittal 499, dated December 27, 

2013. 

Comment: Several commenters 

opposed our proposed change to 

§ 405.809 and urged CMS to allow CAPs 

to be available for additional scenarios 

beyond those encompassed by 

§ 424.535(a)(1). One commenter stated 

that many enrollment violations can be 

cured. The commenter stated that CAPs 

should be permitted except in cases 

where a CAP clearly jeopardizes 

program integrity or beneficiary health 

and safety. Another commenter 

expressed concern about CMS’s 

statement in the preamble concerning 

the revocation of billing privileges for 

failing to report a practice location 

change; to have the provider in such an 

instance go through the appeals process 

without the availability of a CAP, the 

commenter believed, would be unjust. 

Another commenter stated that CMS 

should never be unwilling to receive 

correct information and that, in the 

commenter’s opinion, Medicare 

contractors furnish misleading and 

inaccurate information to providers and 

suppliers during the enrollment process. 

Response: As we explained in the 

proposed rule, we believe that CAPs are 

inappropriate in a number of revocation 

situations and should accordingly be 

unavailable; to illustrate, revocations 

based on a failure to timely report a 

practice location change should not be 

retroactively corrected via a CAP. 

Indeed, we must be promptly notified of 

all practice location changes so we can 

ensure that services are only performed 

at valid locations and, consequently, 

that payments are made correctly. More 

basically, it is the provider or supplier’s 

responsibility—as indicated on the 

CMS–855 forms that the provider or 

supplier completes and signs as part of 

the enrollment process—to report 

changes to CMS on a timely basis. 

Comment: A commenter 

recommended that CMS eliminate the 

provider enrollment CAP process and 

work with Medicare contractors to 


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eliminate revocations based on a trivial 

matter. 

Response: We believe that CAPs are 

appropriate for revocations based on 

§ 424.535(a)(1), and they will remain 

available. Moreover, we stress that 

revocations are not imposed for trivial 

reasons. Each prospective revocation is 

carefully reviewed to ensure that there 

are legitimate grounds for taking such 

action and that the integrity of the 

Medicare program warrants it. 

Comment: A commenter stated that 

there generally is not enough time for a 

provider to submit both a corrective 

action plan and appeal, for the latter is 

frequently not filed until the results of 

the former are known. The commenter 

thus recommended that CMS either 

discontinue the CAP process or require 

its contractors to decide upon and 

respond to a CAP within 10 days of 

receipt. 

Response: We do not agree that the 

CAP process should be entirely 

discontinued or that a provider must 

wait until the CAP determination has 

been made before filing an appeal. In 

fact, many providers and suppliers file 

a CAP and an appeal as part of the same 

package. Requiring a 10-day period is 

unnecessary and could hinder the 

reviewer’s ability to conduct a thorough, 

careful analysis of the merits of the 

CAP. 

Comment: A commenter urged the 

continued use of CAPs in situations 

where the provider misinterpreted a 

requirement or failed to comply with an 

administrative or record-keeping 

requirement but otherwise acted in 

good-faith. 

Response: CAPs will remain available 

for revocations based on § 424.535(a)(1). 

With respect to other revocation reasons 

that we suspect the commenter may 

classify as ‘‘record-keeping’’ in nature— 

specifically, § 424.535(a)(9) and 

(a)(10)—we do not view these as mere 

administrative requirements. The 

reporting mandates referred to in 

paragraph (a)(9)—and which are 

codified in § 424.516(d)(1)(ii)—help 

ensure that CMS has correct, up-to-date 

information on the provider so CMS can 

determine if a provider or supplier is 

still in compliance with Medicare 

requirements. The maintenance of 

documentation requirements referred to 

in paragraph (a)(10) and codified in 

§ 424.516(f) assist CMS in confirming 

that the physician or other eligible 

professional was qualified to order or 

certify the item or service that the 

provider or supplier furnished. 

Comment: Another commenter stated 

that unless DHHS can provide suppliers 

with accurate and routine visibility to 

statistics (such as the supplier’s error 

rates, enrollment file, and beneficiary 

complaints) that furnish an opportunity 

for suppliers to investigate, respond to, 

and correct potential deficiencies, CMS 

should not finalize its proposed change 

to § 405.809. 

Response: Much of the data the 

commenter refers to is either currently 

available to individual providers and 

suppliers (for example, by reviewing the 

provider or supplier’s PECOS record) or 

can be made available to them upon 

request. However, it is ultimately the 

provider or supplier’s responsibility to 

ensure that it has sufficient internal 

controls to detect deficiencies on its 

own. Providers and suppliers must be 

proactive in their efforts to comply with 

Medicare requirements. Thus, we do not 

believe that the commenter’s contention 

constitutes grounds for withdrawing our 

proposed change to § 405.809. 

Given these comments and the 

aforementioned discussion, we are 

finalizing our proposed CAP provisions 

without modification. 

9. Revisions to §§ 424.530(a)(5) and 

424.535(a)(5) 

We also proposed to revise 

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

stated in the proposed rule that the 

language in these two subsections is 

redundant. To illustrate, the first 

sentence of § 424.530(a)(5) states that a 

provider or supplier’s Medicare 

enrollment may be denied if, upon onsite review or other reliable evidence, 

CMS determines that the provider or 

supplier is not operational or is not 

meeting Medicare enrollment 

requirements. Later, paragraphs 

§ 424.530(a)(5)(i) and (a)(5)(ii) 

essentially repeat this language. The 

same repetition is evident in 

§ 424.535(a)(5), wherein paragraphs 

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

duplicate the language in the first 

sentence of § 424.535(a)(5). 

Accordingly, we proposed to revise 

§ 424.530(a)(5) to state that the provider 

or supplier’s enrollment can be denied 

if (u)pon on-site review or other reliable 

evidence, CMS determines that the 

provider or supplier is either of the 

following: (1) Not operational to furnish 

Medicare-covered items or services; or 

(2) otherwise fails to satisfy any 

Medicare enrollment requirements. 

Likewise, we proposed to revise 

§ 424.535(a)(5) to state that a provider or 

supplier’s Medicare billing privileges 

would be revoked if (u)pon on-site 

review or other reliable evidence, CMS 

determines that the provider or supplier 

is either of the following: (1) No longer 

operational to furnish Medicare-covered 

items or services; or (2) otherwise fails 

to satisfy any Medicare enrollment 

requirements. 

We also proposed to add the phrase 

‘‘or other reliable evidence’’ to 

§ 424.535(a)(5) for two reasons. First, 

§ 424.530(a)(5) currently contains the 

‘‘or other reliable evidence’’ standard, 

and we believe these two paragraphs 

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

should have consistent standards. 

Second, we believe it is important to be 

able to ascertain and take action under 

§ 424.535(a)(5) against a non-operational 

or non-compliant provider or supplier 

through means other than a site review. 

We received one comment regarding 

these proposed changes: 

Comment: A commenter requested 

clarification of the term ‘‘other reliable 

evidence’’ as it is used in § 424.530(a)(5) 

and § 424.535(a)(5). 

Response: The term means any 

credible evidence that demonstrates that 

the provider is not in compliance with 

Medicare requirements. 

Given the foregoing, we are finalizing 

the proposed changes discussed in 

section II.B.9 of this final rule albeit 

with one very minor technical edit. The 

term ‘‘enrollment requirements’’ will be 

changed to ‘‘enrollment requirement’’ to 

clarify our original intention that the 

provider or supplier’s non-compliance 

with any enrollment requirement can 

constitute grounds for revocation. 

10. Technical Changes 

We also proposed certain technical 

changes related to our provider and 

supplier enrollment regulations. 

In § 424.530(a)(1), we proposed to 

change the word ‘‘section’’ to ‘‘subpart 

P’’ in the first sentence so that the 

sentence would read—‘‘[t]he provider or 

supplier is determined not to be in 

compliance with the enrollment 

requirements described in this subpart P 

or in the enrollment application 

applicable for its provider or supplier 

type, and has not submitted a plan of 

corrective action as outlined in part 488 

of this chapter.’’ The purpose of this 

change was to clarify that the provider 

or supplier must comply with all of the 

provider enrollment provisions in 42 

CFR subpart P, not merely those in 

§ 424.530. 

For the same reason, we proposed to 

revise § 424.535(a)(1) to state as follows: 

‘‘The provider or supplier is determined 

not to be in compliance with the 

enrollment requirements described in 

this subpart P or in the enrollment 

application applicable for its provider or 

supplier type, and has not submitted a 

plan of corrective action as outlined in 

part 488 of this chapter.’’ 

Also, in § 424.535(a)(3)(ii) we 

proposed to change the term ‘‘denials’’ 


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to ‘‘revocations,’’ as § 424.535 does not 

address denials. 

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

appeals of denials based on 

§ 424.530(a)(9) related to temporary 

moratoria, the scope of the review is 

limited to whether the temporary 

moratorium applies to the provider or 

supplier. Yet § 424.530(a)(10), rather 

than § 424.530(a)(9), applies to 

temporary moratoria. We proposed to 

correct § 498.5(l)(4) by changing the 

reference to § 424.530(a)(9) therein to 

§ 424.530(a)(10). 

We received no comments on these 

proposed technical changes. Therefore, 

we are finalizing these revisions without 

modification. 

C. General and Other Comments 

We also received a number of general 

comments regarding the proposed rule. 

A summary of these comments and our 

responses are as follows: 

Comment: A commenter indicated 

general support for the changes in this 

rule that expand CMS’s enrollment 

denial authority, for this would improve 

CMS’s ability to detect new fraud 

schemes. However, the commenter 

expressed concern that CMS’s anti-fraud 

efforts could inadvertently harm lawabiding physicians who unintentionally 

make a mistake during the enrollment 

process—a process, the commenter 

believed, that has become increasingly 

complicated. The commenter 

recommended that CMS continually 

evaluate PECOS and remove and 

identify unnecessary and outdated 

requirements. 

Response: Although we are unclear as 

to the specific anti-fraud effort(s) or 

regulatory provision(s) of concern to the 

commenter, we are committed to 

ensuring that the enrollment process 

poses as minimal a burden as possible 

on those providers and suppliers that 

are conscientious about complying with 

Medicare requirements. We have taken 

steps in this direction, including—but 

not limited to—allowing providers and 

suppliers to complete CMS–855 

applications via the Internet as opposed 

to requiring a paper application. We 

also, as the commenter suggested, 

regularly evaluate PECOS, our Program 

Integrity Manual instructions, and our 

regulations to determine whether 

improvements or revisions are 

necessary. We believe it is important 

and indeed necessary to strive to 

achieve an appropriate balance between 

ensuring the integrity of the Medicare 

Trust Funds and easing the burden on 

the provider and supplier communities. 

Comment: A commenter 

recommended that CMS develop the 

systems and resources necessary to 

effectively implement our new provider 

enrollment requirements. 

Response: We will ensure that the 

resources are available and the 

necessary systems changes are made to 

implement the provider enrollment 

requirements outlined in this rule. 

Comment: A commenter suggested 

that CMS consider sharing with other 

payers (both public and private) 

information regarding actions taken 

against providers pursuant to our 

proposed provisions (for example, 

revocations under § 424.535(a)(8)(ii)). 

The commenter stated that such 

dissemination of data is critical to the 

prevention of fraud and abuse in our 

nation’s health care system. 

Response: We agree with the 

commenter that the exchange of 

information between medical payers is 

important to the prevention of health 

care fraud and abuse. CMS, is working 

to expand the exchange of information 

with other payers as evidenced by its 

initiative, the Healthcare Fraud 

Prevention Partnership. 

Comment: A commenter stated that 

any final decision regarding the 

revocation of a provider’s Medicare 

billing privileges should come from 

CMS Central Office rather than from the 

Medicare contractor. 

Response: For reasons mentioned 

earlier, we agree. 

Comment: A commenter expressed 

support for CMS’s clarification that the 

re-enrollment bar does not apply if a 

revocation is based on the provider’s 

failure to respond timely to a 

revalidation request or other request for 

information. 

Response: We appreciate the 

commenter’s support. 

Comment: Several commenters stated 

that physicians need more information 

and education on common billing and 

coding mistakes and better guidance on 

how to avoid audits. The commenters 

recommended that CMS: (1) Publicly 

release information on frequent billing 

and coding errors, including aggregate 

statistics on such errors at a local (MAC 

level) and national level, as well as by 

specialty; (2) educate providers on these 

errors through existing educational 

channels (for instance, Open Door 

Forum calls and MedLearn Matters 

articles); (3) develop a dedicated web 

presence for publishing the 

aforementioned information and an 

associated CMS email list-serve to 

disseminate new data as it becomes 

public; (4) provide technical assistance 

for physician practices—primarily those 

with a high volume of coding and 

billing errors—on how to avoid these 

errors, perhaps through an expanded 

scope of work for Medicare’s quality 

improvement organizations (QIOs); and 

(5) furnish additional guidance on the 

myriad of Medicare rules and 

regulations, which the commenter 

believes are often burdensome and 

confusing. 

Response: We appreciate these 

suggestions and will continue, as 

necessary, to expand our outreach 

efforts to providers and suppliers 

regarding important coding and billing 

issues. 

Comment: With respect to 

§§ 424.530(a)(1) and 424.535(a)(1), a 

commenter stated that CMS should 

make available to providers various 

information (for example, the supplier’s 

error rates, enrollment file, and 

beneficiary complaints) that would 

enable providers to investigate and 

address potential deficiencies. Only 

through this vehicle can a provider 

confirm that it is in compliance with 

enrollment requirements and, if 

necessary, take corrective action. 

Response: As we stated earlier in 

response to a similar comment, much of 

this information is either currently 

available to the provider or can be made 

available upon request. Still, providers 

must be proactive in establishing 

adequate internal controls to ensure 

compliance with Medicare 

requirements; such compliance should 

not be contingent upon the provider 

first receiving substantial quantities of 

information from CMS. 

Comment: A commenter stated that 

program integrity is best ensured when 

providers fully understand how to 

comply with complex Medicare 

requirements. The commenter thus 

urged CMS to issue final rules regarding 

the requirements of mandatory 

compliance programs (as outlined in the 

Affordable Care Act) as soon as possible. 

The commenter added that CMS should 

work with the OIG to update the current 

compliance guidance by working with 

industry stakeholders. 

Response: We appreciate the 

commenter’s concerns. However, the 

compliance plan provisions outlined in 

section 6401 of the Affordable Care Act 

are outside the scope of this rule. 

Comment: A commenter stated that if 

CMS sees any provider or Medicare debt 

as a risk and plans to do everything 

possible to prevent unnecessary threats 

to Medicare beneficiaries and the 

Medicare Trust Funds, this gives CMS 

unrestrained discretion to deny 

enrollment or revoke billing privileges. 

The proposed rule, the commenter 

continued, does not focus on narrowly 

tailoring the approach to target fraud 

and abuse but instead seems geared 

towards reducing the total number of 

providers (including those not engaged 


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in fraudulent or abusive actions) based 

on CMS’s apparent belief that doing so 

will concomitantly reduce fraud and 

abuse. 

Response: We have repeatedly stated 

in numerous forums and throughout 

this rule that the overwhelming majority 

of Medicare providers and suppliers 

submit claims that meet Medicare 

requirements. It is not CMS’s overriding 

objective to reduce the total number of 

Medicare providers and suppliers. 

Nonetheless, a small percentage of 

providers and suppliers are engaging in 

fraudulent, wasteful, inappropriate, or 

abusive activities. Our provider 

enrollment revisions are directed at 

such providers and suppliers, and we 

believe that removing them, as 

necessary, from the Medicare program 

will only serve to benefit Medicare 

beneficiaries, the Trust Funds, the 

taxpayers, and the hundreds of 

thousands of legitimate Medicare 

providers and suppliers that have 

proven to be reliable partners of the 

program. 

Comment: A commenter expressed 

concern that the proposed rule would 

give CMS’s contractors unprecedented 

discretion to revoke Medicare billing 

privileges. The commenter also stated 

that CMS must clearly articulate the 

appeal rights that providers have in 

revocation cases. 

Response: As stated previously, a 

MAC must receive prior CMS approval 

before revoking a provider’s Medicare 

billing privileges. With respect to appeal 

rights in revocation cases, these are 

outlined in 42 CFR part 498 and in CMS 

Publication 100–08, chapter 15. 

Comment: A commenter supported 

the proposed rule’s intent to reduce the 

time necessary to institute a recovery of 

Medicare funds for a provider who has 

submitted bad or faulty billings. 

Response: We appreciate the 

commenter’s support for our anti-fraud 

efforts. 

Comment: A commenter urged CMS 

to amend its opt-out policy to allow 

physicians to opt-out of the Medicare 

program without a requirement to 

reaffirm the opt-out. After the 2-year 

minimum required by law, the 

commenter explained, the opt-out 

period should be effective indefinitely 

unless and until the physician chooses 

to terminate his or her opt-out status 

and private contracts with patients in 

order to rejoin Medicare as a 

participating or non-participating 

physician. 

Response: This comment is outside 

the scope of this rule. 

Comment: A commenter questioned 

why Medicaid was excluded from the 

scope of our proposed rule. 

Response: We have chosen to address 

only Medicare enrollment in this rule, 

though Medicaid enrollment may be 

addressed in the future. 

III. Provisions of the Final Rule 

A. Incentive Reward Program 

In light of the complexity of the 

operational aspects of our proposal, we 

are not finalizing our proposed IRP 

provisions in this rule. We may finalize 

them in future rulemaking. 

B. Enrollment Provisions 

Based on public comments, we are 

finalizing our proposed provider 

enrollment provisions with the 

following revisions: 

• In § 424.502, we are modifying 

paragraph (2) of the definition of 

‘‘Enroll/Enrollment’’ to read as follows: 

Except for those suppliers who 

complete the CMS–855O form, CMSidentified equivalent, successor form or 

process for the sole purpose of obtaining 

eligibility to order or certify Medicarecovered items and services, validating 

the provider or supplier’s eligibility to 

provide items or services to Medicare 

beneficiaries. 

• In § 424.510, we are redesignating 

the first two sentences of existing 

paragraph (a) as new paragraph (a)(1). 

++ Revising the third sentence of 

existing paragraph (a) and redesignating 

as new paragraph (a)(2). The new 

paragraph (a)(2) will state the following: 

To be enrolled to furnish Medicarecovered items and services, a provider 

or supplier must meet the requirements 

specified in paragraphs (d) and (e) of 

this section. 

++ Adding a new paragraph (a)(3) 

that states the following: To be enrolled 

solely to order and certify Medicare 

items or services, a physician or nonphysician practitioner must meet the 

requirements specified in paragraph (d) 

of this section except for paragraphs 

(2)(iii)(B), (2)(iv), (3)(ii), (5), (6), and (9). 

• In § 424.521, we are revising 

paragraph (a) to include ambulance 

suppliers. 

• In § 424.530 we are making the 

following revisions: 

++ Revising § 424.530(a)(3). 

++ In § 424.530(a)(5), we are 

changing ‘‘requirements’’ to 

‘‘requirement.’’ 

—Paragraph (a)(6)(ii)(A) we are 

revising the sentence to state that the 

owner left the provider or supplier with 

the Medicare debt within 1 year before 

or after that provider or supplier’s 

voluntary termination, involuntary 

termination or revocation. 

—In paragraph (a)(6)(ii)(C)— 

—Adding additional language to the 

introductory text, a second sentence that 

reads: In making this determination, we 

consider the following factors. 

—Adding new paragraphs 

(a)(6)(ii)(C)(1) through (5) 

—In § 424.530(a)(6)(iii), we are 

making the following changes: 

—Combining proposed paragraphs (A) 

and (B)(1) 

—Redesignating proposed paragraph 

(a)(6)(iii) as new paragraph (B)(2). 

• In § 424.535 we are making the 

following revisions: 

++ Revising paragraph (a)(3). 

++ In § 424.535(a)(5), we are 

changing ‘‘requirements’’ to 

‘‘requirement.’’ 

++ Adding paragraphs A through F to 

paragraph (a)(8)(ii). 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

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

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. We are soliciting 

public comment on each of these issues 

for the following sections of this 

document that contain information 

collection requirements (ICRs): 

A. ICRs Regarding the Definition of 

Enrollment (§ 424.502, § 424.505, and 

§ 424.510) 

Our revisions to § 424.502, § 424.505, 

and § 424.510 reflect the existing usage 

of the CMS–855O (OMB Approval 

number 0938–0685) and, as such, will 

not impose any additional information 

collection burden. Consistent with 

§ 424.507, an individual who wishes to 

enroll in Medicare for the sole purpose 

of ordering or certifying items or 

services for Medicare beneficiaries can 

become eligible to do so by completing 

the CMS–855O. Use of the CMS–855O 

commenced in July 2011, and OMB at 

that time approved the information 

collection burden associated with its 

use. The CMS–855O is approved under 


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OMB control number 0938–1135 and 

expires August 31, 2015. 

B. ICRs Regarding the Debts to Medicare 

(§ 424.530(a)(6)) 

Our revisions to § 424.530(a)(6) will 

likely result in an increase in 

application denials. While these 

revisions will not directly impose an 

information collection burden, the 

increase in denials could lead to more 

appeals from denied providers and 

suppliers. However, we are unable to 

estimate the number of possible denials 

because we do not have data available 

that can support such an estimate. 

Accordingly, we cannot project the 

potential information collection burden 

that could arise from an increased 

number of: (1) Appeals of denials; or (2) 

resubmitted enrollment applications 

from the denied providers and 

suppliers. 

C. ICRs Regarding the Felony 

Convictions (§§ 424.530(a)(3) and 

424.535(a)(3)) 

Although our revisions to 

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

not directly impose paperwork burdens, 

they will likely result in an increase in 

application denials and revocations, 

respectively. Yet we cannot estimate the 

potential increase in denials and 

revocations based on these changes, for 

we do not have data available that can 

support such an estimate. Therefore, we 

are unable to project the potential 

information collection burden that may 

result from an increased number of 

appeals of denials and revocations. 

D. ICRs Regarding the Abuse of Billing 

Privileges (§ 424.535(a)(8)(ii)) 

Our addition of § 424.535(a)(8)(ii) will 

likely lead to an increase in the 

information collection burden because 

there will be a concomitant increase in 

revocations and associated appeals. 

However, we are unable to estimate the 

number of potential revocations. We do 

not have data available that can help us 

make such an estimate, for each 

situation will have to be reviewed and 

addressed on a case-by-case basis. 

E. ICRs Regarding the Post-Revocation 

Submission of Claims (§ 424.535(h)) 

We do not believe that our revisions 

to § 424.535(h) will result in a change in 

the information collection burden. 

While the claims in question will need 

to be submitted within a shorter 

timeframe (60 days), they will likely be 

submitted regardless of the applicable 

submission period. The shorter 

timeframe will, in general, neither 

increase nor decrease the number of 

claims submitted. 

F. ICRs Regarding the Effective Date of 

Billing Privileges (§ 424.520(d)) 

Our revisions to § 424.520(d) will 

most likely result in a decrease in the 

information collection burden because 

fewer claims will be eligible for 

submission under this change. Yet we 

are unable to project the extent of the 

decrease in the number of claims 

because we do not have data available 

to support such an estimate. Therefore, 

we cannot estimate the decrease in the 

information collection burden. 

G. ICRs Regarding the Effective Date of 

Re-Enrollment Bar (§ 424.535(c)) 

We believe that our revisions to 

§ 424.535(c) will neither increase nor 

decrease the information collection 

burden. With or without this revision, 

the provider will still need to submit the 

applicable CMS–855 application (based 

on the provider or supplier type 

involved) after the expiration of the reenrollment bar in order to enroll again 

in Medicare. 

H. ICRs Regarding the Corrective Action 

Plans (§ 405.809) 

Our revisions to § 405.809 will result 

in a decrease in the information 

collection burden because there will be 

a reduction in the number of CAPs 

submitted. However, we are unable to 

project the extent of the decrease in 

submitted CAPs because we do not have 

sufficient data to support such an 

estimate. 

I. ICRs Regarding the Revisions to 

§ 424.530(a)(5) and § 424.535(a)(5) 

Our revisions to §§ 424.530(a)(5) and 

424.535(a)(5) will not result in a change 

to the information collection burden, for 

we do not believe there will be any 

change in the number of denials or 

revocations, respectively. We note that 

§ 424.530(a)(5) already permits 

revocation based upon a site review ‘‘or 

other reliable evidence.’’ Thus, we do 

not foresee any change in the number of: 

(1) Appeals of denials, or (2) 

resubmitted enrollment applications 

from denied providers and suppliers. As 

for § 424.535(a)(5), the ‘‘or other reliable 

evidence’’ standard is not in the current 

version of that paragraph. But we note 

that § 424.535(a)(1) permits revocation if 

the provider or supplier is determined 

not to be in compliance with the 

enrollment requirements in this section, 

or in the enrollment application that is 

applicable to its provider or supplier 

type. Therefore, the authority to revoke 

based on reliable evidence of noncompliance is largely similar to the 

reasons for revocation stated in 

§ 424.535(a)(1). Hence, we do not 

believe there will be any change in the 

number of: (1) Appeals of revocations; 

or (2) resubmitted enrollment 

applications from revoked providers 

and suppliers. 

The aforementioned burden 

projections for our provider enrollment 

revisions are identical to those we 

proposed and on which we solicited 

comments. We received no comments 

on these estimates. 

V. Regulatory Impact Analysis 

A. Statement of Need 

This final rule is necessary to make 

important revisions to certain Medicare 

provider enrollment requirements in 

order to strengthen our program 

integrity efforts and to help ensure that 

fraudulent parties neither enroll in nor 

maintain their enrollment in the 

Medicare program. 

B. Overview 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(March 22, 1995; Pub. L. 104–4) and 

Executive Order 13132 on Federalism 

(August 4, 1999). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any 1 year). 

As explained in more detail later in 

this section, we encountered several 

uncertainties in estimating the 

economic impact of many of our final 

provisions. We could not estimate the 

number of denials and revocations that 

might stem from the finalized 

enrollment changes. We were also 

unable to estimate the potential 

monetary savings to the federal 

government or the costs to providers 

and suppliers resulting from the 

remaining finalized revisions. However, 

we estimate that our change to 

§ 424.520(d) will result in an annual 

transfer of more than $100 million from 

providers and suppliers to the federal 

government. Therefore, we have 


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prepared an RIA because this is a major 

rule. 

The RFA requires agencies to analyze 

options for regulatory relief for small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organization, and small 

governmental jurisdictions. Most 

entities and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

below Small Business Administration 

thresholds that range from $7 million 

and $35.5 million per year. Individuals 

and states are not included in the 

definition of a small entity. 

As we stated in the proposed rule, 

several provisions will have at least 

some effect on certain small entities. 

These include: (1) The changes at 

§ 424.520(d) to the effective date of 

billing privileges for ambulance 

suppliers; (2) the changes at 

§ 424.530(a)(6) regarding Medicare debt; 

(3) the addition of § 424.535(a)(8)(ii) 

concerning patterns or practices of noncompliant claim submissions; (4) the 

revision of § 424.535(h) regarding the 

submission of claims after revocation; 

and (5) the revision of § 405.809 

concerning the reinstatement of 

provider or supplier billing privileges 

following corrective action. Yet as 

discussed later in this section, we do 

not believe that this final rule will have 

a significant economic impact on a 

substantial number of small entities. 

Section 424.520(d), which changes 

the effective date of billing privileges for 

ambulance suppliers, will only impact 

newly-enrolling ambulance suppliers. 

Each year, new ambulance providers 

constitute only a very small addition to 

the overall universe of the roughly 1.4 

million Medicare-enrolled providers 

and suppliers—an average of 1,127 

ambulance suppliers enrolled in 

Medicare each year between 2006 and 

2011. We further note that this 

provision will not affect their ability to 

bill for services furnished after the later 

of the two events specified in 

§ 424.520(d)(1) and (2). 

Denials and revocations under, 

respectively, § 424.530(a)(6) and 

§ 424.535(a)(8), will not occur until after 

a careful examination by CMS of: (1) 

The level of undue risk that the unpaid 

debt poses; or (2) the criteria for 

determining whether the provider or 

supplier has a pattern or practice of 

submitting non-compliant claims. As 

such, while we anticipate an increase in 

some denials and revocations under 

these two provisions, we do not believe 

they will impact a substantial number of 

small entities. 

Our revisions to § 424.535(h) will not 

have a significant impact on small 

businesses because: (1) Only a small 

number of Medicare providers and 

suppliers have their billing privileges 

revoked; and (2) the revoked provider’s 

claims will likely be submitted 

regardless of the shorter submission 

period. 

Our revisions to § 405.809 will impact 

the ability of some small entities to 

submit CAPs in response to a 

revocation. However, these entities will 

still be able to file a request for 

reconsideration. The overall effect of 

this change will thus not impact a 

substantial number of small entities. 

In short, we believe that the vast 

majority of providers and suppliers— 

both small and large—do not commit 

fraud, have not been convicted of a 

felony, and are otherwise compliant 

with Medicare enrollment requirements. 

Consequently, they will not be affected 

by most of the provisions in this rule. 

Section 1102(b) of the Act requires us 

to prepare a regulatory impact analysis 

if a rule may have a significant impact 

on the operations of a substantial 

number of small rural hospitals. This 

analysis must conform to the provisions 

of section 604 of the RFA. For purposes 

of section 1102(b) of the Act, we define 

a small rural hospital that is located 

outside of a Metropolitan Statistical 

Area for Medicare payment regulations 

and has fewer than 100 beds. We are not 

preparing an analysis for section 1102(b) 

of the Act because we have determined 

and the Secretary certified that this final 

rule will not have a significant impact 

on the operations of a substantial 

number of small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2014, this is 

approximately $141 million. We believe 

that this final rule will have no 

consequential effect on state, local or 

tribal governments or on the private 

sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirements or costs on state and local 

governments, preempts state law, or 

otherwise has federalism implications. 

Since this regulation does not impose 

any costs on state or local governments, 

the requirements of Executive Order 

13132 are not applicable. 

C. Anticipated Effects 

We indicated in section IV. of this 

final rule that there may be an ICR 

burden associated with several of our 

provider enrollment provisions but that 

the burden cannot be estimated. The 

following sections discuss other 

potential costs—as well as savings— 

associated with our enrollment changes. 

1. Definition of Enrollment 

As stated earlier, use of the CMS– 

855O commenced in July 2011. Our 

revisions to §§ 424.502, 424.505, and 

424.510 are intended to clarify that the 

CMS–855O does not convey billing 

privileges. As such, these changes will 

not result in any additional costs or 

savings. 

2. Debts to Medicare 

Our revisions to § 424.530(a)(6) will 

likely result in additional application 

denials. Yet we are unable to estimate 

the number of potential denials because 

we do not have data available to support 

such an estimate. Therefore, we cannot 

project any costs in possible lost billings 

to providers and suppliers or any 

associated potential savings to the 

government. 

While there may be an increase in 

costs to the federal government from 

identifying and making available to 

enrollment contractors information 

about individuals that were associated 

with a revoked entity with an unpaid 

Medicare debt, we are unable to 

estimate the magnitude of any such 

increase. We also anticipate that an 

increase in costs will be offset by 

savings to the government—(1) in 

preventing billing by such providers 

and suppliers, and (2) the repayment of 

debt by these providers and suppliers. 

3. Felony Convictions 

As stated in section IV.B. of this final 

rule, our revisions to § 424.530(a)(3) and 

§ 424.535(a)(3) will likely result in 

additional application denials and 

revocations, respectively. However, we 

are unable to estimate the potential 

increase in denials and revocations and 

associated appeals, for we do not have 

sufficient information to support such a 

projection. Thus, we cannot project the 

potential costs to providers and 

suppliers in lost billings or the potential 

costs or savings to the government 

arising from these revisions. 

4. Abuse of Billing Privileges 

Our addition of § 424.535(a)(8)(ii) will 

likely result in an increase in 

revocations. Yet we are unable to project 

the number of providers and suppliers 

that might be revoked based on this 

change because we do not have data 


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available to help us make such an 

estimate. Thus, we cannot forecast the 

potential costs to providers and 

suppliers in lost billings or the possible 

costs or savings to the government 

arising from this provision. 

5. Post-Revocation Submission of 

Claims 

Our revision to § 424.535(h) is 

unlikely to increase or decrease the 

number of claims submitted. While the 

revoked provider or supplier’s claims 

will need to be submitted within a 

shorter timeframe, we believe that the 

vast majority of claims will still be 

submitted. Therefore, we project only a 

negligible change in costs to providers 

and suppliers in their claim 

submissions. 

6. Effective Date of Billing Privileges 

The revisions to § 424.520(d) will 

likely result in a decrease in claims 

submitted to Medicare. Rather than 

being able to bill for Medicare services 

furnished up to 12 months prior to 

enrollment, newly enrolling ambulance 

suppliers will be unable to bill for 

services furnished prior to the later of: 

(1) The date of filing a Medicare 

enrollment application that was 

subsequently approved; or (2) the date 

the supplier first began furnishing 

services at a new practice location. 

According to our statistics, and as 

stated earlier, an average of 1,127 

ambulance suppliers enrolled in 

Medicare each year between 2006 and 

2011. We will use this figure in our 

calculations. As a result of our 

revisions, these suppliers could lose up 

to 10 months in potential Medicare 

billings for services furnished prior to 

the later of the two events cited in 

§ 424.520(d). 

Based on our data, the average 

ambulance supplier receives 

approximately $581,000 in Medicare 

payments per year, though this of course 

varies by individual supplier. Tentwelfths of this amount (that is, 10 

months divided by 12 months) is 

$484,167. Thus, we estimate that up to 

$545.7 million each year (or $484,167 × 

1,127) in savings to the federal 

government could accrue as a result of 

this change. 

We emphasize that our $545.7 million 

estimate is a high-end estimate. There 

may be new ambulance suppliers that, 

absent our change to § 424.520(d), 

would have met our requirements less 

than 10 months prior to enrollment. For 

instance, if the average newly enrolling 

ambulance supplier would have met our 

requirements 3 months prior to 

enrollment, the potential savings would 

be roughly $163.7 million (or $581,000 

× 3/12 × 1,127). If the average figure is 

6 months, our projection would be 

approximately $327.4 million. We have 

no way of predicting the ratio of 

ambulance suppliers that would have 

met our requirements 10 months, 6 

months or 3 months (or any other point) 

prior to enrollment. Therefore, we will 

use these three timeframes as, 

respectively, high-end, primary, and 

low-end estimates in the accounting 

statement. 

7. Effective Date of Re-Enrollment Bar 

Our revisions to § 424.535(c) will 

result in a longer re-enrollment bar than 

that which currently exists in cases 

where the basis of the revocation occurs 

months before the issuance of the 

revocation letter. The longer period 

during which a provider or supplier is 

unable to re-enroll in Medicare may 

result in lost billings to the provider or 

supplier. This may also lead to savings 

to the government because a provider or 

supplier that may have been billing 

Medicare will not be eligible to do so as 

soon as would otherwise be the case. 

However, we are unable to project the 

possible costs to providers and 

suppliers or the savings to the federal 

government because we do not have 

data available to support such estimates. 

We also cannot estimate: (1) How many 

providers and suppliers will be affected 

by this proposed change; or (2) the 

specific types of providers and suppliers 

that will be affected. 

8. Corrective Action Plans 

Our revisions to § 405.809 will result 

in a reduction in the number of CAPs 

submitted, as noted in the ICR. This 

may result in lost billings to the 

provider or supplier in cases where 

CMS’ acceptance of a CAP has occurred 

more quickly than a reversal of the 

revocation at the appeals level, as the 

CAP review process often takes place 

sooner than the reconsideration process. 

The reduction in the submission of 

CAPs will probably also result in a 

savings to the federal government due to 

a decrease in the resources needed to 

review the CAPs. However, we cannot 

estimate the potential lost billings of 

providers or suppliers resulting from 

this proposed provision, or the savings 

to the federal government. We do not 

have data that can assist us in 

predicting: (1) The number of provider 

and suppliers that our proposed change 

will impact; or (2) the specific types of 

providers and suppliers that will be 

affected. 

9. Revisions to § 424.530(a)(5) and 

§ 424.535(a)(5) 

We stated earlier that we do not 

believe there will be any change in the 

total number of denials or revocations 

based on our revisions to 

§§ 424.530(a)(5) and 424.535(a)(5). 

Therefore, we do not anticipate any 

resultant change in overall costs or 

savings. 

10. Technical Changes 

As these are simply technical 

revisions, there are no costs or savings 

associated with these provisions. 

D. Comments Received and Conclusion 

While we were unable—and remain 

unable—to furnish detailed cost and 

savings estimates for many of our 

enrollment revisions, we solicited 

comments from the public regarding 

their views as to the potential burdens 

and costs of our proposals as well as the 

possible savings. We received several 

comments, which are summarized and 

accompanied by our responses as 

follows: 

Comment: With respect to our savings 

estimates for the proposed change to 

§ 424.520(d), a few commenters believed 

that our projections were inflated and 

that actual data (as opposed to 

estimates) should be used. One of the 

commenters suggested that CMS use 

data regarding Medicare payments made 

for services furnished prior to the 

submission of the CMS–855B. The other 

commenter recommended that CMS 

calculate the actual payments made to 

new ambulance suppliers after January 

1, 2011, for this is the date on which 

CMS began limiting payments to 

suppliers to 12 months from the date of 

service per § 424.520(d). 

Response: We indeed based our 

estimates on actual data—specifically, 

the actual average amount of payments 

a Medicare-enrolled ambulance supplier 

receives per year. As we indicated in the 

proposed rule, we cannot predict the 

number of ambulance suppliers that 

would have met CMS’s requirements at 

various points (for example, 3 months; 

10 months) prior to enrollment. 

Therefore, we can only furnish highend, primary, and low-end estimates. 

Despite the commenters’ request for 

greater monetary specificity, we believe 

that our estimates are reasonable. 

Comment: A commenter expressed 

concern that CMS did not furnish more 

detailed monetary estimates of the rule’s 

potential impact on providers and 

beneficiaries. 

Response: As we explained in both 

sections III. and IV. of the proposed 

rule, we were unable to formulate 


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detailed workload, cost, or savings 

projections for many of our provisions 

because—(1) the necessary background 

data were not available; and (2) future 

behavior often cannot be predicted. 

Thus, we solicited feedback from the 

public that could perhaps assist us in 

developing quantifiable, numerical 

estimates, though we received very few 

comments in response to our request. 

Therefore, we are finalizing our 

proposed projections while reiterating 

our inability to develop estimates with 

respect to other provisions. 

In light of these comments, we are 

finalizing the estimates as previously 

outlined. 

E. Accounting Statement and Table 

As required by OMB Circular A–4 

(available at link http://www.

whitehouse.gov/sites/default/files/omb/

assets/regulatory_matters_pdf/a-4.pdf), 

we have prepared an accounting 

statement. 

The ‘‘transfer’’ category in Table 2 

reflects the application of a 7 percent 

and 3 percent annualized rate to the 

high-end, primary, and low-end 

estimates referred to in section IV.C.2.f. 

of this final rule and involving our 

change to § 424.520(d). 

The 7 and 3 percent figures were 

applied over a 10-year period beginning 

in 2013, with the figures in the 

accounting statement reflecting the 

average annualized costs over this 

period. 

The accounting statement does not 

address the potential financial benefits 

of this proposed rule from the 

standpoint of its effectiveness in 

preventing or deterring certain 

providers and suppliers from enrolling 

in Medicare or maintaining their 

enrollment in Medicare. It is not 

possible for us to quantify these benefits 

in monetary terms. In addition, the 

statement does not include those 

provisions previously discussed that 

may result in a cost or savings that 

nevertheless cannot be estimated. 

TABLE 2—ACCOUNTING STATEMENT AND TABLE

[In millions] 

Category Primary 

estimates 

Low 

estimates 

High 

estimates Year dollars Discount rate 

Period 

covered 

Transfers: 

Resulting from the change in the effective date of 

billing privileges for ambulance suppliers ............. 327.4 

327.4 

163.7 

163.7 

545.7 

545.7 

2013 

2013 

7% 

3% 

2014–2023 

2014–2023 

From Whom to Whom .............................................. Transfers from Ambulance Suppliers to Federal Government. 

* Rounded to the nearest hundred-thousandth. 

F. Alternatives Considered 

As stated, our provider enrollment 

provisions are needed to help ensure 

that fraudulent parties do not enroll in 

or maintain their enrollment in the 

Medicare program. Nonetheless, we did 

consider four alternatives when 

preparing our enrollment provisions. 

First, with respect to § 424.530(a)(6)(i) 

and (ii), we considered and elected to 

propose and finalize an exception to 

these denial reasons for providers, 

suppliers, and owners thereof that have 

agreed to an extended repayment 

schedule. We believe that such an 

agreement indicates a willingness to 

satisfy the debt. 

Second, we considered expanding the 

scope of § 424.520(d) to include all 

certified providers and certified 

suppliers. Yet as we explained 

previously, there already: (1) Is an 

exhaustive and extensive review process 

for certified providers and certified 

suppliers, and (2) are limitations posed 

by § 489.13 on the ability of such 

providers and suppliers to ‘‘backbill’’ 

for services. 

Third, we contemplated eliminating 

CAPs altogether, as the existing appeals 

process affords providers and suppliers 

adequate due process rights. In the 

interests of fairness and efficiency, we 

elected to retain the CAP process for 

revocations based on § 424.535(a)(1). We 

believe this will continue to give certain 

providers and suppliers an additional 

opportunity to remedy inadvertent or 

minor errors without subjecting all 

parties to the lengthier appeals process, 

although we continue to believe that 

eliminating the CAP process for all 

other revocation reasons is warranted. 

G. Impact on Beneficiary Access 

We do not believe that our finalized 

provisions will impact beneficiary 

access. While some providers and 

suppliers may have their Medicare 

enrollment applications denied or their 

Medicare billing privileges revoked as a 

result of these provisions, we believe 

this number will be small. 

In accordance with the provisions of 

Executive Order 12866, this final rule 

was reviewed by the Office of 

Management and Budget. 

List of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Health facilities, Health 

professions. Kidney diseases, Medical 

devices, Medicare, Reporting and 

recordkeeping requirements, Rural 

areas, X-rays. 

42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 498 

Administrative practice and 

procedure, Health facilities, Health 

professions Medicare, Reporting and 

recordkeeping requirements. 

For the reasons stated in the preamble 

of this final rule, the Centers for 

Medicare & Medicaid Services amends 

42 CFR chapter IV as follows: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

■ 1. The authority for part 405 

continues to read as follows: 

Authority: Secs. 205(a), 1102, 1861, 

1862(a), 1869, 1871, 1874, 1881, and 1886(k) 

of the Social Security Act (42 U.S.C. 405(a), 

1302, 1395x, 1395y(a), 1395ff, 1395hh, 

1395kk, 1395rr and 1395ww(k)), and sec. 353 

of the Public Health Service Act (42 U.S.C. 

263a). 

■ 2. Section 405.809 is revised to read 

as follows: 

§ 405.809 Reinstatement of provider or 

supplier billing privileges following 

corrective action. 

(a) General rule. A provider or 

supplier— 

(1) May only submit a corrective 

action plan for a revocation for 


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noncompliance under § 424.535(a)(1) of 

this chapter; and 

(2) Subject to paragraph (a)(1) of this 

section, has only one opportunity to 

correct all deficiencies that served as the 

basis of its revocation through a 

corrective action plan. 

(b) Review of a corrective action plan. 

Subject to paragraph (a)(1) of this 

section, CMS or its contractor reviews a 

submitted corrective action plan and 

does either of the following: 

(1) Reinstates the provider or 

supplier’s billing privileges if the 

provider or supplier provides sufficient 

evidence to CMS or its contractor that 

it has complied fully with the Medicare 

requirements, in which case— 

(i) The effective date of the 

reinstatement is based on the date the 

provider or supplier is in compliance 

with all Medicare requirements; and 

(ii) CMS or its contractor may pay for 

services furnished on or after the 

effective date of the reinstatement. 

(2) Refuses to reinstate a provider or 

supplier’s billing privileges. The refusal 

of CMS or its contractor to reinstate a 

provider or supplier’s billing privileges 

based on a corrective action plan is not 

an initial determination under part 498 

of this chapter. 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

■ 3. The authority for part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

■ 4. In § 424.502, the definition of 

‘‘Enroll/Enrollment’’ is amended by 

revising the introductory text and 

paragraphs (2) and (4) to read as follows: 

§ 424.502 Definitions 

* * * * * 

Enroll/Enrollment means the process 

that Medicare uses to establish 

eligibility to submit claims for 

Medicare-covered items and services, 

and the process that Medicare uses to 

establish eligibility to order or certify 

Medicare-covered items and services. 

The process includes— 

* * * * * 

(2) Except for those suppliers that 

complete the CMS–855O form, CMSidentified equivalent, successor form or 

process for the sole purpose of obtaining 

eligibility to order or certify Medicarecovered items and services, validating 

the provider or supplier’s eligibility to 

provide items or services to Medicare 

beneficiaries; 

* * * * * 

(4) Except for those suppliers that 

complete the CMS–855O form, CMSidentified equivalent, successor form or 

process for the sole purpose of obtaining 

eligibility to order or certify Medicarecovered items and services, granting the 

Medicare provider or supplier Medicare 

billing privileges. 

* * * * * 

§ 424.505 [Amended] 

■ 5. Section 424.505 is amended by 

removing the phrase ‘‘Once enrolled, 

the provider or supplier receives’’ and 

adding in its place the phrase ‘‘Except 

for those suppliers that complete the 

CMS–855O form or CMS-identified 

equivalent, successor form or process 

for the sole purpose of obtaining 

eligibility to order or certify Medicarecovered items and services; once 

enrolled the provider or supplier 

receives’’. 

■ 6. Section 424.510 is amended by 

revising paragraph (a) to read as follows: 

§ 424.510 Requirements for enrolling in 

the Medicare program. 

(a)(1) Providers and suppliers must 

submit enrollment information on the 

applicable enrollment application. Once 

the provider or supplier successfully 

completes the enrollment process, 

including, if applicable, a State survey 

and certification or accreditation 

process, CMS enrolls the provider or 

supplier into the Medicare program. 

(2) To be enrolled to furnish 

Medicare-covered items and services, a 

provider or supplier must meet the 

requirements specified in paragraphs (d) 

and (e) of this section. 

(3) To be enrolled solely to order and 

certify Medicare items or services, a 

physician or non-physician practitioner 

must meet the requirements specified in 

paragraph (d) of this section except for 

paragraphs (d)(2)(iii)(B), (d)(2)(iv), 

(d)(3)(ii), and (d)(5), (6), and (9) of this 

section. 

* * * * * 

■ 7. Section 424.520 is amended by 

revising paragraph (d) to read as 

follows: 

§ 424.520 Effective date of Medicare billing 

privileges. 

* * * * * 

(d) Physicians, non-physician 

practitioners, physician and nonphysician practitioner organizations, 

and ambulance suppliers. The effective 

date for billing privileges for physicians, 

non-physician practitioners, physician 

and non-physician practitioner 

organizations, and ambulance suppliers 

is the later of— 

(1) The date of filing of a Medicare 

enrollment application that was 

subsequently approved by a Medicare 

contractor; or 

(2) The date that the supplier first 

began furnishing services at a new 

practice location. 

■ 8. Section 424.521 is revised to read 

as follows: 

§ 424.521 Request for payment by 

physicians, non-physician practitioners, 

physician and non-physician organizations, 

and ambulance suppliers. 

(a) Physicians, non-physician 

practitioners, physician and nonphysician practitioner organizations, 

and ambulance suppliers may 

retrospectively bill for services when 

the physician, non-physician 

practitioner, physician or non-physician 

organization, and ambulance supplier 

has met all program requirements, 

including State licensure requirements, 

and services were provided at the 

enrolled practice location for up to— 

(1) Thirty days prior to their effective 

date if circumstances precluded 

enrollment in advance of providing 

services to Medicare beneficiaries; or 

(2) Ninety days prior to their effective 

date if a Presidentially-declared disaster 

under the Robert T. Stafford Disaster 

Relief and Emergency Assistance Act, 

42 U.S.C. 5121–5206 (Stafford Act) 

precluded enrollment in advance of 

providing services to Medicare 

beneficiaries. 

(b) [Reserved] 

■ 9. Section 424.530 is amended by 

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

introductory text and (a)(3)(i), and (a)(5) 

and (6) to read as follows: 

§ 424.530 Denial of enrollment in the 

Medicare program 

(a) * * * 

(1) Noncompliance. The provider or 

supplier is determined to not be in 

compliance with the enrollment 

requirements in this subpart P or in the 

enrollment application applicable for its 

provider or supplier type, and has not 

submitted a plan of corrective action as 

outlined in part 488 of this chapter. 

* * * * * 

(3) Felonies. The provider, supplier, 

or any owner or managing employee of 

the provider or supplier was, within the 

preceding 10 years, convicted (as that 

term is defined in 42 CFR 1001.2) of a 

Federal or State felony offense that CMS 

determines is detrimental to the best 

interests of the Medicare program and 

its beneficiaries. 

(i) Offenses include, but are not 

limited in scope or severity to— 

(A) Felony crimes against persons, 

such as murder, rape, assault, and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

(B) Financial crimes, such as 

extortion, embezzlement, income tax 


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evasion, insurance fraud and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

(C) Any felony that placed the 

Medicare program or its beneficiaries at 

immediate risk, such as a malpractice 

suit that results in a conviction of 

criminal neglect or misconduct. 

(D) Any felonies that would result in 

mandatory exclusion under section 

1128(a) of the Act. 

* * * * * 

(5) On-site review. Upon on-site 

review or other reliable evidence, CMS 

determines that the provider or 

supplier: 

(i) Is not operational to furnish 

Medicare-covered items or services; or 

(ii) Otherwise fails to satisfy any 

Medicare enrollment requirement. 

(6) Medicare debt. (i) The enrolling 

provider, supplier, or owner thereof (as 

defined in § 424.502), has an existing 

Medicare debt. 

(ii) The enrolling provider, supplier, 

or owner (as defined in § 424.502) 

thereof was previously the owner (as 

defined in § 424.502) of a provider or 

supplier that had a Medicare debt that 

existed when the latter’s enrollment was 

voluntarily terminated, involuntarily 

terminated, or revoked, and all of the 

following criteria are met: 

(A) The owner left the provider or 

supplier with the Medicare debt within 

1 year before or after that provider or 

supplier’s voluntary termination, 

involuntary termination or revocation. 

(B) The Medicare debt has not been 

fully repaid. 

(C) CMS determines that the 

uncollected debt poses an undue risk of 

fraud, waste, or abuse. In making this 

determination, CMS considers the 

following factors: 

(1) The amount of the Medicare debt. 

(2) The length and timeframe that the 

enrolling provider, supplier, or owner 

thereof was an owner of the prior entity. 

(3) The percentage of the enrolling 

provider, supplier, or owner’s 

ownership of the prior entity. 

(4) Whether the Medicare debt is 

currently being appealed. 

(5) Whether the enrolling provider, 

supplier, or owner thereof was an owner 

of the prior entity at the time the 

Medicare debt was incurred. 

(iii) A denial of Medicare enrollment 

under this paragraph (a)(6) can be 

avoided if the enrolling provider, 

supplier or owner thereof does either of 

the following: 

(A)(1) Satisfies the criteria set forth in 

§ 401.607; and 

(2) Agrees to a CMS-approved 

extended repayment schedule for the 

entire outstanding Medicare debt. 

(B) Repays the debt in full. 

* * * * * 

■ 10. Section 424.535 is amended by 

revising paragraphs (a)(1) introductory 

text, (a)(3), (a)(5), (a)(8), (c), and (h) to 

read as follows: 

§ 424.535 Revocation of enrollment and 

billing privileges in the Medicare program. 

* * * * * 

(a) * * * 

(1) Noncompliance. The provider or 

supplier is determined to not be in 

compliance with the enrollment 

requirements described in this subpart P 

or in the enrollment application 

applicable for its provider or supplier 

type, and has not submitted a plan of 

corrective action as outlined in part 488 

of this chapter. The provider or supplier 

may also be determined not to be in 

compliance if it has failed to pay any 

user fees as assessed under part 488 of 

this chapter. 

* * * * * 

(3) Felonies. (i) The provider, 

supplier, or any owner or managing 

employee of the provider or supplier 

was, within the preceding 10 years, 

convicted (as that term is defined in 42 

CFR 1001.2) of a Federal or State felony 

offense that CMS determines is 

detrimental to the best interests of the 

Medicare program and its beneficiaries. 

(ii) Offenses include, but are not 

limited in scope or severity to— 

(A) Felony crimes against persons, 

such as murder, rape, assault, and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

(B) Financial crimes, such as 

extortion, embezzlement, income tax 

evasion, insurance fraud and other 

similar crimes for which the individual 

was convicted, including guilty pleas 

and adjudicated pretrial diversions. 

(C) Any felony that placed the 

Medicare program or its beneficiaries at 

immediate risk, such as a malpractice 

suit that results in a conviction of 

criminal neglect or misconduct. 

(D) Any felonies that would result in 

mandatory exclusion under section 

1128(a) of the Act. 

(iii) Revocations based on felony 

convictions are for a period to be 

determined by the Secretary, but not 

less than 10 years from the date of 

conviction if the individual has been 

convicted on one previous occasion for 

one or more offenses. 

* * * * * 

(5) On-site review. Upon on-site 

review or other reliable evidence, CMS 

determines that the provider or supplier 

is either of the following: 

(i) No longer operational to furnish 

Medicare-covered items or services. 

(ii) Otherwise fails to satisfy any 

Medicare enrollment requirement. 

* * * * * 

(8) Abuse of billing privileges. Abuse 

of billing privileges includes either of 

the following: 

(i) The provider or supplier submits a 

claim or claims for services that could 

not have been furnished to a specific 

individual on the date of service. These 

instances include but are not limited to 

the following situations: 

(A) Where the beneficiary is deceased. 

(B) The directing physician or 

beneficiary is not in the state or country 

when services were furnished. 

(C) When the equipment necessary for 

testing is not present where the testing 

is said to have occurred. 

(ii) CMS determines that the provider 

or supplier has a pattern or practice of 

submitting claims that fail to meet 

Medicare requirements. In making this 

determination, CMS considers, as 

appropriate or applicable, the following: 

(A) The percentage of submitted 

claims that were denied. 

(B) The reason(s) for the claim 

denials. 

(C) Whether the provider or supplier 

has any history of final adverse actions 

(as that term is defined under § 424.502) 

and the nature of any such actions. 

(D) The length of time over which the 

pattern has continued. 

(E) How long the provider or supplier 

has been enrolled in Medicare. 

(F) Any other information regarding 

the provider or supplier’s specific 

circumstances that CMS deems relevant 

to its determination as to whether the 

provider or supplier has or has not 

engaged in the pattern or practice 

described in this paragraph. 

* * * * * 

(c) Reapplying after revocation. If a 

provider, supplier, owner, or managing 

employee has their billing privileges 

revoked, they are barred from 

participating in the Medicare program 

from the date of the revocation until the 

end of the re-enrollment bar. 

(1) The re-enrollment bar begins 30 

days after CMS or its contractor mails 

notice of the revocation and lasts a 

minimum of 1 year, but not greater than 

3 years, depending on the severity of the 

basis for revocation. 

(2) The re-enrollment bar does not 

apply in the event a revocation of 

Medicare billing privileges is imposed 

under paragraph (a)(1) of this section 

based upon a provider or supplier’s 

failure to respond timely to a 

revalidation request or other request for 

information. 

* * * * * 

(h) Submission of claims for services 

furnished before revocation. (1)(i) 


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 79, No. 234 / Friday, December 5, 2014 / Rules and Regulations 72533 

Except for HHAs as described in 

paragraph (h)(1)(ii) of this section, a 

revoked provider or supplier must, 

within 60 calendar days after the 

effective date of revocation, submit all 

claims for items and services furnished 

before the date of the revocation letter. 

(ii) A revoked HHA must submit all 

claims for items and services within 60 

days after the later of the following: 

(A) The effective date of the 

revocation. 

(B) The date that the HHA’s last 

payable episode ends. 

(2) Nothing in this paragraph (h) 

impacts the requirements of § 424.44 

regarding the timely filing of claims. 

PART 498—APPEALS PROCEDURES 

FOR DETERMINATIONS THAT AFFECT 

PARTICIPATION IN THE MEDICARE 

PROGRAM AND FOR 

DETERMINATIONS THAT AFFECT THE 

PARTICIPATION OF ICFs/MR AND 

CERTAIN NFs IN THE MEDICAID 

PROGRAM 

■ 11. The authority citation for part 498 

continues to read as follows: 

Authority: Secs. 1102, 1128I and 1871 of 

the Social Security Act (42 U.S.C. 1302, 

1320a–7j, and 1395hh). 

§ 498.5 [Amended] 

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

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

the cross-reference ‘‘§ 424.530(a)(10)’’ in 

its place. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: August 8, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: November 20, 2014. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–28505 Filed 12–3–14; 8:45 am] 

BILLING CODE 4120–01–P 


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