(Medicare Claims Processing Manual)

A provider which hereafter enters into or continues such a prohibited payment arrangement may have its participation in the program terminated and its right to receive assigned payment for physician services revoked.   A/B MACs Part B and DME MACs   An A/B MAC Part B and DME MAC may use or adapt the following language for notification:  The Medicare law prohibits us from paying benefits due a physician or other supplier of health care items and services, to another person or organization, under a reassignment or power of attorney or under any other arrangement whereby that other person or  organization receives those payments directly. There are the following exceptions to this rule:   CMS may pay a physicians or suppliers employer under the terms of his/her employment.   CMS may pay a hospital, clinic, or other facility for services furnished by the physician or supplier in the facility, in accordance with the physicians or suppliers agreement with the facility.   CMS may pay a group practice prepayment plan, prepaid health plan, or    HMO for services of physicians and suppliers associated with the plan.    CMS may pay a physician, medical group, or other supplier for the technical component (TC) or professional component (PC) of diagnostic tests (other than clinical diagnostic tests) that are subject to the anti-markup payment limitation.    CMS may pay the patients regular physician or physical therapist for services provided to his/her patients by another physician or physical therapist on an occasional, reciprocal basis     CMS may pay the patients regular physician or physical therapist for services of a substitute physician or physical therapist during the absence of the regular physician or physical therapist where the regular physician or physical therapist pays the substitute on a per diem or similar fee-for-time basis.    CMS may pay a physicians or suppliers benefits in his/her name to a billing or collection agent, e.g., a medical bureau, if:   o The agent receives the payment under an agency agreement with the physician or supplier;  o The agents compensation is not related in any way to the dollar amounts billed or collected;  o The agents compensation is not dependent upon the actual collection of payment; o The agent acts under instructions which the physician or supplier may modify or revoke at any time; and o The agent, in receiving the payment, acts only on the physicians or suppliers behalf.    CMS may pay a physicians or suppliers benefits in accordance with a reassignment established by, or pursuant to the order of, a court of competent jurisdiction.   A physician or supplier should notify us immediately if:   CMS has been mailing his/her benefits to the address of another person or organization;    The physician has given that other person or organization power of attorney or other advance authority to negotiate the physicians benefit checks; and    None of the above exceptions which would permit payment to another person or organization apply in his/her case.  A physician or other eligible recipient of assigned payment who hereafter enters into or continues such a prohibited payment arrangement may have the right to receive assigned payment revoked.   30.2.14.1 - Questionable Payment Arrangements (Rev. 1, 10- 01-03)  A.  Developing Questionable Payment Arrangements   Contractors (both FIs and Carriers) should assume that an arrangement in which Medicare payment is being sent or is to be sent to an address other than the physical location of the provider/supplier is consistent with the requirements of 30.2 in the absence of evidence to the contrary.  However, develop the facts of any case in which:    The contractor becomes aware that it is mailing or asked to mail the provider/suppliers payments to the address of another person or organization; and   It is likely the other person or organization is not qualified to receive payments under one of the exceptions in 30.2.1 or is a financial institution.  (See 30.2.5.)   Contractors must develop the facts of the case, e.g., where it appears that the contractor is mailing or asked to mail the provider provider/suppliers payments to the address of a company known to be engaging in factoring.   B.  How to Develop Questionable Payment Arrangements   Discretion must be used in determining the procedure to follow in developing questionable payment arrangements.  Contractors should ascertain the reason for the special address.  Once it is determined that payments due the provider/supplier are being made to another party (although in the name of the provider), the contractor must ascertain whether any of the exceptions in 30.2.1  apply.  After initial contact with the provider/supplier, the contractor may find the other party to be the best source of information about the arrangement.  The contractor should establish the crucial elements of the arrangement by obtaining a copy of t he formal agreement, if any, between the parties, copies of pertinent correspondence, and/or signed statements of the parties.  The failure of the provider/supplier to cooperate in furnishing the necessary information (or in giving any necessary authorizat ion for others to furnish information) is grounds (see 30.2.15) for terminating the provider/suppliers participation in the program and revoking its right to receive assigned payment.   C.  Change of Address   If the contractor determines that a person or organization is ineligible to receive payments due a provider/supplier, routinely mailing the provider/suppliers payments to that person or organizations address should be discontinued.  However, such a mailing address is acceptable if:    The parties to the arrangement have given written assurances that the person or organization to whose address the check is mailed will not convert the check to its own use and control, or if the organization is a financial institution, that the requirement s of 30.2.5 are met; and    The purpose of the arrangement makes the assurances credible.   An acceptable mailing arrangement could exist, e.g., when the provider/supplier wants its checks mailed for bookkeeping purposes to a business agent who is ineligible to receive the payment, and both the agent and the provider state in writing that the age nt will forward the checks to the providers bank for deposit in a business account from which the provider/supplier is free to withdraw any deposited funds.  D.  Reviewing Endorsements on Checks   In any case where the contractor, after developing the facts, continues to mail the providers payments to an address which may be that of another person, but still doubts that the arrangement is inconsistent with these instructions, review (after a reason able interval) endorsements on the returned checks for indications that the checks are being negotiated under a power of attorney.  When someone negotiates a provider/suppliers checks under a power of attorney, the provider/suppliers name is typically pr inted on the back of the check with the endorsees signature below, followed by p.p. or p.p.a. or p.o.a (for per procuration, per power of attorney, or power of attorney).   30.2.15 - Sanctions for Prohibited Payment Arrangement  (Rev. 1, 10- 01-03) A3-3488.4, B3- 3060.13, B3- 3060.14  A.  Advice to Provider   If the contractor finds that a provider (for Part B, physician or other supplier, or party eligible to receive the payment under 30.2 as an employer, facility or organization) has entered into, or is considering entering into, a payment arrangement prohibited by 30.2, the contractor must advise that provider in writing that the arrangement violates Medicare law and regulations and subj ects the provider to the penalties described in subsections B and C.  When the improper payment arrangement is in effect, the contractor must require a change in the address to which the providers checks are sent.  For an exception, see 30.2.14.1C .  B.  Bases for Termination of a Providers Medicare Participation Agreement   The CMS may terminate a providers Medicare participation agreement if the provider/physician:    Executes or continues an assignment or a power of attorney, or enters into or continues any other arrangement, that authorizes or permits Medicare cost -basis payments to be made contrary to 30.2, 42 CFR 405.1668, and 1815(c)  of the Act after having been advised under subsection A above; or    Fails to furnish upon request by CMS or the contractor such information as CMS or the contractor finds necessary to establish compliance with the requirements of this section.   The provider has the usual appeal rights applicable to agreement termination determina -tions.   C.  Bases for Revocation of Assignment Privilege   The CMS may revoke the right of a provider to receive assigned payment for physician services if the provider:    Executes or continues a reassignment or power of attorney, or enters into or continues any other arrangement, that authorizes or permits Medicare charge basis payments to be made contrary to 30.2, 42 CFR  405.1680, and 1842(b)(6)  of the Act, after CMS or the carrier gives the provider advice about such violation;    Fails to furnish upon request by CMS or the carrier evidence needed to establish compliance with the requirements of 30.2, 42 CFR  405.1680, and 1842(b)(6) of the Act;    Violates the terms of assigned payment; e.g., by collecting or attempting to collect more than the allowable amount, after CMS or the carrier gives the provider advice about such violations; or    Fails to desist from collection efforts already begun, or to refund monies incorrectly collected, in violation of the terms of assigned payment, after CMS or the carrier gives the provider instructions to cease to take such action.   A special appeals procedure is provided within CMS when action is taken to revoke a providers right to accept assignment.  The fact that a providers right to accept assignment is revoked does not preclude it from billing the beneficiary for the services or changing its arrangement with the physician to permit billing for rendered services, either on an assigned or unassigned basis.  On the other hand, a provider is not ordinarily precluded from accepting assignment from a beneficiary for the services of a physician whose assignment privilege has been revoked if the beneficiary has an agreement with the provider giving it the r ight to bill for services rendered.  There is an exception.  The revocation of a physicians assignment privilege automatically revokes the assignment privilege of any corporation, partnership, or other entity in which the provider/supplier directly or indirectly has or obtains all or all but a nominal part of the financial interest.  Such entity may not accept assignment for the services of the physician or anyone else.  What is a nominal interest depends upon the circumstances.  The contractor may assume that an interest by other persons totaling at least five percent of the financial interest of the entity is more than nominal.  The term indirect interest refers to the situation where the entity billing for the physicians services is owned by another entity in which the physician has most of the financial interest.   D.  Action When Violations Are Found   When the contractor finds that the provider/supplier has, after warning to the contrary, entered into, or continued, a prohibited payment arrangement, failed to cooperate in furnishing the information necessary to resolve the issue, violated its assignment  agreement or failed to correct a violation of its assignment agreement, the contractor forwards a copy of the file to the program integrity staff in the RO.  The RO considers whether further development of the facts or admonition of the provider will be useful before taking steps to terminate its participation agreement and/or to revoke its right to accept assignment.   In imposing the administrative sanction of revocation of the assignment privilege, the RO notifies the provider/supplier of the proposed revocation of its right to receive assigned benefits and gives it 15 days in which to submit a statement, including any pertinent evidence, explaining why its right to payment should not be revoked.  After the statement has been submitted, or the 15- day period has expired without the filing of the statement, the RO determines whether to revoke the provider/suppliers right  to receive assigned payment.  If its determination is to revoke, the RO notifies the contractor to suspend payment on all assigned claims submitted by the provider/supplier and received after the effective date of the revocation. It notifies the provider/ supplier of the revocation and of its right to request a hearing on the revocation within 60 days.  (The RO may extend the period for requesting a hearing.)   If the provider/supplier requests a formal hearing (to be conducted by a member of the hearings staff of CMS) and the hearing officer reverses the revocation determination, the RO instructs the carrier and FI to pay the provider/supplier s assigned claims  (the physician component).  If the hearing officer upholds the revocation determination or if no request for a hearing is filed during the period allowed for this, the RO instructs the carrier and FI to make any assigned payments otherwise due the provide r to the beneficiary who received the services, or another person or agency authorized under the law and regulations to receive the payments (e.g., the beneficiarys legal guardian or representative payee or, if the beneficiary is deceased, the person who paid the bill).  The revocation remains in effect until the RO finds that the reason for the revocation has been removed and that there is reasonable assurance that it will not recur.  The RO decision to continue the revocation in effect may not be appeale d.