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CMS Revises Views on Denying Medicare Enrollment Based on Outstanding Overpayments

on Friday, 6 December 2013 in Health Law Alert: Erin E. Busch, Editor

After rescinding proposed instructions on Medicare provider enrollment denials for applicants with outstanding overpayment liability earlier this year, the Centers for Medicare & Medicaid Services (CMS) has clarified its guidance.

CMS’s revisions to chapter 15 of the Medicare Program Integrity Manual outline the process by which a provider enrollment application may be denied under 42 C.F.R. § 424.530(a)(6) if the current owner of the enrolling provider or supplier, or the enrolling physician or non-physician practitioner has an existing or delinquent overpayment of at least $1,500 that has not been repaid in full at the time the application is filed. This authority exists for all Form CMS-855 enrollment and change of ownership (CHOW) applications, except where the applicant is on a CMS-approved repayment plan or if the applicant’s overpayment is currently being offset or is under appeal.

The guidelines instruct Medicare Administrative Contractors (MACs) to first determine, using a daily, system-generated listing, whether an owner or the enrolling practitioner listed on a Form CMS-855A, -855B, 855S, or 855I has an existing or delinquent Medicare overpayment. If so, the MAC must obtain approval from the Provider Enrollment Operations Group (PEOG) to deny the application, and thereafter is required to issue a denial to the applying provider, supplier or practitioner.

It is important to note that § 424.530(a)(6) applies only to physicians, practitioners and owners. Thus, if a hospital with outstanding overpayment liability terminates its Medicare provider agreement and subsequently opens as a new hospital and submits a Form CMS-855A as a new provider, the MAC cannot deny the application on this basis. Further, a legal entity’s overpayment does not impute to the entity’s owners, and because CMS interprets the rule to apply to an entity’s owner’s collectively, one owner’s overpayment liability will not be attributed to the other owners of an entity submitting an initial enrollment or CHOW application.

The complete Transmittal 479 release, which includes additional examples, is available at


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