New Provider and Supplier Enrollment Requirements To Take Effect June 20, 2006

On April 21, 2006 the Centers for Medicare and Medicaid Services (“CMS”) published a Final Rule setting out CMS’ requirements for providers and suppliers to establish and maintain Medicare enrollment and billing privileges. The new regulations will be codified at 42 C.F.R. 424 Subpart P and will go into effect on June 20, 2006.

In issuing the final rule, CMS addressed its ongoing concerns about the integrity of the Medicare program and the “easy entry into the Medicare program by unqualified or even fraudulent providers and suppliers.” These new regulations are CMS’ latest attempt to “step up” its oversight of participating entities and to “establish more stringent controls on provider and supplier entry into the Medicare program.” Providers and suppliers should carefully review the regulations and anticipate complying with them by the June, 2006 effective date.

Under the new rules, all providers and suppliers, including those currently billing Medicare, are required to submit a complete CMS Form 855 enrollment application and participate in enrollment and revalidation procedures. Providers and suppliers who are currently enrolled in the Medicare program, and who have not had any changes to the information previously submitted, are not required to submit any additional information until CMS begins the revalidation process.

As has always been the case, providers and suppliers must submit all documentation required by the application, and the application must be signed by the provider or supplier to certify compliance with all applicable federal and state laws. As part of the enrollment process, CMS has reserved the right to itself conduct site visits of any applicant in order to confirm that providers actually exist and that services are actually being provided. Once the enrollment process has been completed, Medicare billing privileges will be granted and a billing number will be issued. The effective date of reimbursement will continue to be based on current Medicare regulations, based on the type of provider or supplier submitting claims.

The final rule also contains procedures to require providers and suppliers to update enrollment information when there are changes, including changes of ownership and control, and to periodically revalidate the information submitted by providers and suppliers. Revalidation will be conducted on regular five-year cycles, and will also include site visits. CMS also reserves the right to conduct “off-cycle” revalidation of providers and suppliers where CMS has reason to believe that further review of the provider or supplier is warranted.

Under the final rule, CMS may deny an enrollment application or revoke existing billing privileges on several grounds including: failure to comply with enrollment requirements; exclusion, debarment, or suspension of the provider or supplier; conviction of any provider, supplier, or owner of the provider or supplier of a Federal or State felony offense - whether or not the offense is health-care related - within 10 years preceding enrollment or revalidation of enrollment; and for the knowing misuse of a billing number, including selling the billing number or allowing another individual or entity to use the billing number. Whenever a provider or supplier is denied enrollment, CMS will automatically review the Medicare enrollment files of any related entities, to determine whether a denial (or revocation) of the related provider or supplier’s billing privileges is warranted.

Providers or suppliers who seek reenrollment after their billing privileges are revoked must reenroll as new providers or suppliers in the Medicare program through the completion and submission of a new enrollment application. Because revocation of billing privileges is grounds for termination by CMS under §489.53, providers must be resurveyed and recertified by applicable state agencies as new providers and must establish new provider agreements with CMS.

The final rule also provides for deactivation of a provider or supplier’s billing privileges for failure of the provider or supplier to submit any Medicare claims for twelve consecutive calendar months. CMS promulgated the deactivation rules to protect the Medicare program against fraud and abuse, and to protect the provider or supplier from misuse of its billing number. CMS also wants to prevent providers from obtaining multiple billing numbers in order to keep one “in reserve” in the event the provider or supplier is subject to suspension of payments. Deactivation does not have any effect on a provider or supplier’s participation agreement or conditions of participation, and reactivation does not require recertification by State survey agencies.

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This material was prepared by Crowell & Moring LLP attorneys. It is made available on the Crowell & Moring website for information purposes only, and should not be relied upon to resolve specific legal questions.