Health care providers: Take note of new Medicare rules that go into effect today (Guest column)

Feb 3, 2015, 10:21am PST

Attorney Kelly Hagan of Schwabe, Williamson & Wyatt says health care providers should take note of new Medicare rules around “excluded providers.”

Kelly Hagan, Guest columnist

Healthcare providers, suppliers, and others receiving reimbursement under the Medicare program should take note of expanded program rules aimed at combating fraud.

Starting today, the pool of “excluded providers” will be broadened, meaning that more individuals and entities will be disqualified from contracting with providers and suppliers receiving reimbursement from the Centers for Medicare and Medicaid Services.

What prompted this change?

Unfortunately, it is currently not uncommon for Medicare providers or suppliers from incurring substantial Medicare debt and then re-enrolling as a new entity.

Concerned that those committing this type of fraud have been able to jump from one enterprise to another while bilking the federal government, CMS will now prohibit contracting with people affiliated in the past twelve months with excluded providers or people owing money to Medicare. The updated contracting prohibition also includes ‎management personnel with pertinent felony convictions in the past ten years.

For years, contracting rules have served to keep individuals or entities that have defrauded the government from continuing to provide services to Medicare or other federal healthcare programs. Contracting with so-called “excluded providers” can lead to fines and even expulsion from the Medicare program.

Detecting bad actors is not going to be easy: the purpose of the rule is to identify people who have already proved themselves capable of fraud. The Office of Inspector General at CMS will be looking for commercially reasonable efforts to implement the new prohibitions.

Checking the excluded provider list online at CMS has long been a routine step for providers when conducting due diligence and credentialing potential contract partners.

The new rule demands even greater scrutiny by requiring Medicare providers to inquire about the past affiliations or convictions of new contractors. So it would seem advisable to ask new contractors for a list of those entities or individuals for whom they have worked in the past year. Those names could then be run through the excluded provider list.

‎Another legal strategy would be to obtain contract representations and warranties from new contractors, which would effectively serve as assurances that they do not fall into one of the prohibited categories.

While not foolproof, at least a business would then have a basis upon which to claim good faith in case they are hoodwinked by a Medicare cheat. While such “reps and warranties” may not provide, as a practical matter, enforceable remedies against those willing to lie about their past, they do demonstrate attention to the issue.

The new rule also will need to be accounted for in existing contracts with ‎suppliers, service providers, medical staff members, and employees that are of less than one-year’s duration.

New representations and warranties about past affiliations, debts to CMS, and criminal history ‎need to be included in these contracts and policies. And new provisions requiring notice of changes in status during the first year of a contract relationship or staff membership also will be necessary in agreements that are less than a year-old.

There are additional details within the new rule that further specify why certain healthcare entities may be refused reimbursement starting today. I would encourage companies or individuals that may be affected to become more familiar with the rule.

In general, however, the new rule reinforces rules of thumb that have always applied in the healthcare, or in any other industry for that matter: know who you are dealing with, and always maintain an up-to-date awareness on the rules and regulations that impact your business.

Hagan is a health care and employment attorney at Northwest law firm Schwabe, Williamson & Wyatt.

As published Portland Business Journal, February 3, 2014

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