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Expanded Medicare Disqualification Standards Effective Feb. 3, 2015

January 7, 2015

Overview

Effective February 3, 2015, the Centers for Medicare and Medicaid Services ("CMS") may deny or revoke provider enrollment in federal health care programs if the provider contracted with persons who, in the past, affiliated with excluded contractors, those owing money to Medicare, or management personnel with felony convictions that CMS deems relevant.

For some time, Medicare providers have been prohibited from contracting with persons or organizations excluded from federal health programs. In a final rule published December 5, 2014, CMS substantially expands the class of persons with whom Medicare providers may not contract:

  1. those affiliated with excluded organizations within a year of the organization's termination or revocation by Medicare;
  2. those with unpaid Medicare debts or formerly affiliated with such debtors (although individual determinations of the risk of fraud and abuse will be made); and
  3. those with a felony conviction within the past ten years that is considered detrimental to Medicare or its beneficiaries, e.g., crimes against a person (murder, rape, assault), financial crimes (embezzlement, tax evasion), malpractice felonies, or felonies involving drug abuse or trafficking.

A Medicare provider may not contract with a person affiliated with such an organization or individual within twelve months of that organization or individual's exclusion from Medicare.

The new rule creates issues that will need to be accounted for in existing and new contracts with vendors, contactors, or employees. Most obviously, new representations and warranties will be needed about past affiliations, debts to CMS, and criminal history. An additional provision will need to account for changes in status during the first year of a contract relationship.

For further information or questions regarding this alert, please contact Kelly Hagan at 503-796-2423 or khagan@schwabe.com.

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