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Revocation of Medicare Participation as a Result of Failure to Report Enrollment Changes to CMS

By: Miranda A. Preston and Desalina Williams, Milligan Lawless

The Centers for Medicare & Medicaid Services (CMS) has broad authority to revoke a health care provider’s and supplier’s Medicare enrollment, and in recent years, CMS’s revocation authority has increased.[1]  Currently, CMS has the discretion to revoke the Medicare enrollment of any health care provider or supplier who fails to report various events to CMS, whether in the initial enrollment application, or after enrollment, following the occurrence of certain events.[2]  

Physicians, non-physician practitioners, and their respective organizations (collectively, the “Physicians” in this article[3]), who are enrolling in Medicare, or who are currently enrolled are required[4] to report all of the following to their designated Medicare contractor within the following time periods:

     (1) Within 30 days – 

            (i) A change of ownership[[5]]; 

           (ii) Any adverse legal action; or 

           (iii) A change in practice location. 

     (2) All other changes in enrollment must be reported within 90 days.

The Medicare regulations do not define what constitutes an “adverse legal action.”  The Medicare regulations do however define a “final adverse action,” to include one or more of the following: 

     (1) a Medicare-imposed revocation of any Medicare billing privileges; (2) suspension or revocation of a license to provide health care by any State licensing authority [e.g., Arizona’s allopathic or osteopathic Medical Boards]; (3) revocation or suspension by an accreditation organization; (4) a conviction of a Federal or State felony offense (as defined in § 424.535(a)(3)(i))[[6]] within the last 10 years preceding enrollment, revalidation, or re-enrollment; or (5) an exclusion or debarment from participation in a Federal or State health care program.[[7]]

From the definition of a “final adverse action,” one can reasonably conclude (and CMS appears to have taken the position) that “any adverse legal action” includes all of the above circumstances, and any other event which could possibly be construed as an adverse legal action, even if it has no bearing on a Physician’s practice of medicine.  Accordingly, Physicians should consult with legal counsel to ensure timely and complete disclosures to their Medicare contractor of events that could possibly constitute adverse legal actions.

If a Physician fails to report any of the above within the required time frames, CMS may revoke the Physician’s participation in the Medicare program, effectively terminating the Physician’s Medicare participation agreement.[8] Medicare revocations for failure to report in compliance with the above requirements are often coupled with other bases for revocation, such as when a Physician fails to report a felony conviction.[9]  

When a Physician’s Medicare participation is revoked (in addition to the host of other potentially devastating consequences listed below), CMS bars the Physician from participating in the Medicare program from the date of the revocation until the end of the re-enrollment bar imposed by CMS, which can range from 1-10 years.[10]  Medicare revocation can have other far reaching negative consequences for Physicians, including but not limited to: (i) placement on the CMS Preclusion List, rendering the Physician unable to contract with Medicare Advantage plans, or prescribe Part D prescription drugs; (ii) termination of commercial payor agreements; (iii) loss of medical staff privileges; (iv) termination of employment; (v) and general reputational damage. 

To avoid revocation of Medicare enrollment as a result of a Physician’s failure to report, Physicians enrolled in Medicare must carefully monitor operational changes that are a part of the Medicare enrollment file and timely report such changes. 

For more information, or if you have questions about Medicare reporting requirements, please contact Miranda Preston, Desalina Williams, or another health care attorney at Milligan Lawless.

[1]  See Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process, 84 Fed. Reg. 47794 (Sept. 10, 2019); CMS Announces New Enforcement Authorities to Reduce Criminal Behavior in Medicare, Medicaid, and CHIP, CMS.gov Newsroom (Sept. 5, 2019), https://www.cms.gov/newsroom/press-releases/cms-announces-new-enforcement-authorities-reduce-criminal-behavior-medicare-medicaid-and-chip. 

[2]  See 42 C.F.R. § 424.535(a)(9).

[3]  The more commonly used term, health care “Provider” is a specifically defined term in the Medicare regulations.  Accordingly, this article uses the term “Physicians” throughout, even though non-physician providers are included in this definition.  Under Medicare regulations, a “supplier” furnishes services under Medicare and includes physicians or other practitioners and facilities that are not included within the definition of the phrase “provider of services.”  42 U.S.C. § 1395x(d).  A “provider of services,” commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled nursing facilities, comprehensive outpatient rehabilitation facilities, home health agencies, hospice programs, and a fund as described in sections 1395f(g) and 1395n(e).  42 U.S.C. § 1395x(u).  The distinction between providers and suppliers is important because they are treated differently under Medicare regulations for some purposes. 

[4]  42 C.F.R. § 424.516(d).

[5] For most Physicians (excluding Medicare suppliers that require approval through certification survey by the state surveying agency or through accreditation (e.g., portable X-ray suppliers, ambulatory surgery centers, and hospitals with departments that bill for Medicare Part B services)), any change in the ownership or control of the Physician must be reported on the Physician’s Medicare enrollment application within 30 days of the change.  Generally, a change of ownership that also changes the Physician’s tax identification number requires the completion and submission of a new enrollment application from the new owner. See 42 C.F.R. § 424.550(c). A “change of ownership,” the CMS term of art often abbreviated as a CHOW, is a distinct process. The regulations for CHOWs are codified at 42 C.F.R. § 489.18.

[6]  Section 424.535(a)(3)(i) defines “Felonies” as:

  • 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 – 

(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.

  • 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.

[7]  42 C.F.R. § 424.502. 

[8]  42 C.F.R. § 424.535(a)(9). 

[9]  Physicians who have been convicted of a felony offense within the preceding 10 years, which felony CMS determines is “detrimental to the best interests of the Medicare program,” can be revoked from Medicare participation under a separate regulatory basis.  See 42 C.F.R. § 424.535(a)(3).  CMS has virtually unbridled discretion to determine that felony offenses are detrimental to the best interests of the Medicare program, even if the conviction has no apparent connection to the Physician’s treatment of Medicare beneficiaries (e.g., felony convictions for driving under the influence). 

[10]  42 C.F.R. § 424.535(c).