CMS Expands Power to Ban Providers with ‘Problematic’ Affiliations from Medicare, Medicaid

The federal government on Thursday finalized a rule that will expand its power to remove potentially unscrupulous health care providers from Medicare and Medicaid eligibility.

Under the new final rule, the Centers for Medicare & Medicaid Services (CMS) can kick providers out of the programs if they have a previous affiliation with a banned organization, even if the provider itself has not been directly hit with a federal investigation.

“For example, a currently enrolled or newly enrolling organization that has an owner/managing employee who is ‘affiliated’ with another previously revoked organization can be denied enrollment in Medicare, Medicaid, and CHIP or, if already enrolled, can have its enrollment revoked because of the problematic affiliation,” the organization noted in a statement on its new authority.


The regulation, officially known as the Program Integrity Enhancements to the Provider Enrollment Process, takes effect on November 4.

The “problematic affiliation” restriction was just one of many new levers that CMS approved for its anti-fraud efforts. The agency can now boot operators from the three federal programs if they bill for services or supplies from “non-compliant locations”; if they show a pattern of improper ordering of services, supplies, or drugs under Medicare Parts A or B; or if they have an outstanding debt related to Medicare or Medicaid overpayments.

In addition, previously banned individuals can be kicked back out for attempting to come back in under a different name — a process that CMS described as a provider trying to “reinvent itself.”


The agency framed the rule as shift away from a “pay-and-chase” method of enforcement to a strategy that seeks to prevent fraud before it starts.

“For too many years, we have played an expensive and inefficient game of ‘whack-a-mole’ with criminals — going after them one at a time — as they steal from our programs,” CMS administrator Seema Verma said in a statement. “These fraudsters temporarily disappear into complex, hard-to-track webs of criminal entities, and then re-emerge under different corporate names.”

The new rule also extends CMS’s ability to bar “fraudulent or otherwise problematic” providers from the Medicare program for a full decade — up from three years — and hand out three-year bans to providers and suppliers that lie on their initial applications to participate in Medicare.

Should a provider make it back into the program after serving its time for a revocable offense and then commit another one, CMS can ban that operator for 20 years.

“This is CMS hardening the target for criminals and locking the door to the vault,” Verma said. “If you’re a bad actor, you can never get into the program, and you can’t steal from it.”

Speaking with SNN last month, CMS chief medical officer Kate Goodrich pointed to then-proposed rule in response to a question about how the federal government can prevent the spread of nursing home owners with checkered pasts into new markets.

“We proposed new regulations that implement additional provider enrollment provisions that are related to requirements under the Affordable Care Act — that help to make certain that entities and individuals who pose risks to the Medicare program and our beneficiaries are kept out of — or are removed, in fact — from the Medicare program,” Goodrich said.

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