November 11, 2010 | Comments Off on PPACA Expands Medicare/Medicaid Suspension Authority
Posted by Beth Christian
One of the most draconian weapons that can be utilized by the Medicare and Medicaid programs is the suspension of payment remedy. Typically, most Medicare and Medicaid claims are submitted for payment by a provider or supplier and are paid, subject to later post-payment review. Existing regulatory authority allows the Secretary of Health and Human Services (“HHS”) to place a provider on prepayment claims review, or to impose a suspension of payment in certain circumstances. Section 6402(a) of the Patient Protection and Affordable Care Act (“PPACA”) has expanded the Secretary’s authority with regard to the circumstances under which suspension of payment may be initiated. Proposed rules implementing these provisions were published in the Federal Register on September 23, 2010.
Pursuant to 42 C.F.R. §405.370, a “suspension of payment” is defined as the withholding of payment by a Medicare contractor from a provider or supplier of an approved Medicare payment amount before a determination of the amount of the overpayment that exists, or until the resolution of an investigation or a credible allegation of fraud. Historically, both the Medicare and Medicaid regulations have authorized the Secretary of HHS or the state Medicaid agency to suspend payments to providers in cases where a provider has incurred an overpayment or in cases of suspected fraud.
The proposed regulations (set forth at 42 C.F.R. §405.370, et seq. and 42 C.F.R. §455.2, et seq. incorporate a new definition which allows the Secretary or the state Medicaid agency to suspend payments in cases where there is a credible allegation of fraud against a provider. The proposed regulations define the term “credible allegation of fraud” as an allegation from any source, including, but not limited to the following: (1) a fraud hotline complaint; (2) claims data mining; or (3) patterns identified through provider audits, civil false claims cases and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability. Significantly, the proposed regulations do not contain a definition of the term “indicia of reliability”. The proposed regulations provide that an investigation of credible allegations of fraud will be considered resolved when legal action is terminated by settlement, judgment or dismissal, or when the case is closed or dropped because of insufficient evidence to support the allegations of fraud.
In certain circumstances, the Secretary or the state Medicaid agency may elect not to suspend payments if good cause exists. Good cause is defined as: (1) a situation where the Office of Inspector General (“OIG”) or other law enforcement agency has specifically requested that a payment suspension not be imposed because such a payment suspension may compromise or jeopardize an investigation; (2) it is determined that beneficiary access to items or services would be jeopardized by a payment suspension in whole or in part so as to cause a danger to life or health; (3) it is determined that other available remedies implemented by CMS or a Medicare contractor will more effectively or quickly protect Medicare funds without implementing a payment suspension; or (4) CMS determines that a payment suspension or a continuance of a payment suspension is not in the best interests of the Medicare program.
The “good cause” exceptions for Medicaid are slightly different. In addition to the “law enforcement,” “other available remedies,” and “best interests” exceptions referenced above, good cause for not implementing a Medicaid suspension of payment can also exist if (1) an individual or entity is the sole community physician or the sole source of essential specialized services in a community; or (2) the individual or entity serves a large number of recipients within a Health Resources and Services Administration designated medically underserved area. In addition, a Medicaid suspension will not be imposed if law enforcement declines to certify that a matter continues to be under investigation.
For Medicaid only, suspension of payment may be imposed only in part if: (1) a full suspension would jeopardize recipient access to items or services under the circumstances referenced above; (2) the state determines that payment suspension only in part is in the best interests of the Medicaid program; (3) the credible allegation focuses solely and definitively on only a specific type of claim that arises from only a specific business unit of a provider; or (4) the state determines and documents in writing that a payment suspension in part would effectively ensure that potentially fraudulent claims were not continuing to be paid.
A decision to suspend Medicare payments will be reviewed by CMS every 180 days. The regulations provide that CMS will request that the OIG or other law enforcement agency provide a certification regarding whether or not they are continuing to investigate the matter. While CMS indicated that it will actively evaluate the process of any investigation to determine whether or not the suspension should continue, CMS did not include a limitation on the number of months that a suspension may be in effect. However, the proposed regulations do specify that all suspensions of payment will be temporary and will not continue after the resolution of an investigation unless a suspension is warranted because of reliable evidence of an overpayment or that payments to be made may not be correct.
With regard to Medicaid, the proposed regulations state that all suspension of payment actions will be temporary and will not continue after either of the following: (1) the state agency or the prosecuting authorities determine that there is insufficient evidence of fraud by the provider; or (2) legal proceedings related to the provider’s alleged fraud are complete.
Of course, the notion that any Medicare or Medicaid suspension actions will be “temporary” will provide scant comfort to providers or suppliers who are the subject of a suspension action. Our experience in working with providers who become the subject of suspension of payment actions have shown that more often than not, a suspension of payment will operate as a death knell for the provider or supplier’s continuation of their business, since such a suspension will have an immediate and often drastic impact on a provider’s cash flow. In addition, it has been our experience that healthcare fraud investigations often take a protracted period of time, making the “temporary” nature of the suspension even more illusory.