During November 2023, the Department of Health and Human Service, Centers for Medicare and Medicaid Services (CMS) finalized its Calendar Year 2024 Medicare Physician Fee Schedule Rule (MPFSR). Issued annually, the MPFSR adjusts the rates at which health care providers are reimbursed for services provided to Medicare beneficiaries. But it does significantly more. Within its 1,230 pages, the 2024 MPFSR addresses a wide variety of issues affecting the Medicare program. The MPFSR makes regulatory changes affecting the requirements for securing and maintaining enrollment as a Medicare provider and—as the other side of the coin—the conditions under which CMS can revoke a provider’s billing privileges. To safeguard the Medicare trust fund and the integrity of the system, CMS closely regulates who may or may not bill Medicare as a provider or supplier. Falling out of compliance with those regulations can result in the loss of billing privileges, often for years. And billing privileges are often revoked retroactively, resulting in Medicare recouping funds already paid. The loss of billing privileges as well as demands for repayment of funds already paid can be crippling for providers or suppliers who serve Medicare patients. It is therefore critical that providers and suppliers are aware of any changes in the regulatory scheme governing continued enrollment and enforcement actions.

This article briefly addresses some of the changes to the Medicare enrollment requirements and enforcement authority adopted in the 2024 MPFSR, which became effective Jan. 1, 2024.

Stays of Enrollment

First, some good news for providers and suppliers:

CMS previously had two primary options when it determined a provider or supplier was out of compliance with enrollment requirements. It could either (1) revoke or (2) deactivate the provider’s enrollment. First, “revocation” comes with a mandatory prohibition on re-enrollment lasting at least one year and up to 10 years (or up to 20 years where the provider’s enrollment has been revoked previously). In a “deactivation,” the provider’s or supplier’s billing privileges are temporarily stopped but can be resumed when the provider or supplier later reapplies and certifies compliance. Though deactivations do not involve a re-enrollment bar, services billed during the period of deactivation are not retroactively compensable when billing privileges are reactivated.

In the 2024 MPFSR, CMS formalized a third option, now codified at 42 C.F.R. § 424.541. Less impactful than either revocation or deactivation, CMS may now impose a “stay of enrollment” in circumstances where a provider or supplier is non-compliant with requirements, but CMS determines such non-compliance can be easily cured if the provider or supplier provides additional information. For example, where a provider has not promptly notified CMS of a change of address or ownership as required by enrollment requirements, that failure can be easily remedied by submitting a form with the relevant information. Such a stay operates as a mere “pause” on billing privileges for, at most, 60 days, during which period the provider or supplier remains enrolled in Medicare and can remedy the non-compliance by providing the requested information. According to CMS, a stay of enrollment is “neither formally nor informally” a “sanction or adverse action for purposes of Medicare enrollment,” but instead, is a mechanism for the correction of minor instances of non-compliance associated with the failure to update information. Importantly, and unlike services provided during a period of deactivation, bills for services provided during a period of a stay of enrollment can be submitted after the stay has been lifted and will be paid.

CMS has discretion whether it issues a revocation, a deactivation or a stay. Nevertheless, the additional option is helpful to providers who inadvertently lapse from compliance with Medicare enrollment requirements through failure to promptly update CMS regarding changed information. Likewise, it is helpful to providers that CMS acknowledged that both revocation and deactivation are likely too severe a sanction in such circumstances.

Denial or Revocation for Judgments Under the False Claims Act

CMS also added additional and expanded bases for revocation.

The False Claims Act provides a cause of action against those who knowingly defraud the federal government. Under a new rule, now codified at 42 C.F.R. § 424.535(15), CMS may revoke a provider or supplier’s enrollment where the provider or supplier, any owner, managing employee or organization, officer or director, has been subject to a civil judgment under the False Claims Act within the prior 10 years. A settlement of an action brought under the False Claims Act does not constitute a “judgment” for purposes of the rule.  

Revocation is not automatic in such circumstances. To determine whether revocation is appropriate, CMS will look to: (1) the number of distinct false claims at issue in the judgment; (2) the nature of the false claim or claims at issue; (3) the monetary amount of the judgment; (4) the date of the judgment; (5) any history of other adverse actions; and (6) in a catch-all provision, any other information deemed relevant.

“Existing Debt” vs. “Failure to Repay Debt”

Prior to the 2024 MPFSR, a provider’s or supplier’s enrollment could be revoked when there was an “existing debt” that was referred by CMS to the U.S. Treasury Department for recovery. For example, if CMS determined that the provider or supplier received a Medicare overpayment and subsequently referred that debt for collection to the Treasury Department, then the “existing debt”—unsatisfied—would be potential grounds for revocation. In the lead-up to the 2024 MPFSR, CMS recognized that the “existing debt” language implied that that if the Treasury Department ceased any collection efforts, and so arguably there was no “existing debt,” there would arguably be no basis for revocation. As a result, CMS has modified the “existing debt” language to instead provide for potential revocation where the provider or supplier “failed to repay a debt that CMS appropriately referred” to the Treasury Department. There is a basis for revocation as long as a debt was referred to the Treasury Department and has not been paid, whether or not the Treasury Department continues to make efforts to collect the debt.  

Reporting Changes to Practice Locations

All Medicare providers and suppliers must report changes in their practice location. Previously, there was some variation in the time length of time within which they were required to report. For some provider and supplier types, such changes had to be reported within 30 days, while others had 90 days. CMS has eliminated that variation. For all provider and supplier types, a change in practice location must now be reported within 30 days. CMS has also clarified—what it took to already be law—that both adding a new location and eliminating an existing location constitute changes of practice location that must be reported within thirty days.

Additional Retroactive Revocation Dates

CMS has long exercised the power to revoke billing privileges retroactively under certain circumstances, which then requires the provider or supplier to repay funds that were disbursed after the retroactive revocation date. For example, CMS exercises that power where the revocation of billing privileges is based on a felony conviction with the retroactive revocation date the date of the felony conviction. It has now claimed the same authority in additional circumstances. The revocation date is retroactive where revocation is based on (1) surrendering a State license in lieu of disciplinary action (with the revocation date the date the license is surrendered); (2) termination from another Federal health care program, for example, Medicaid, (with the revocation date the date of the termination); (3) termination of a provider agreement under 42 C.F.R. part 489 (with the revocation date the date of the termination); or (4) violation of provider and supplier standards applicable to certain “specialty” providers or suppliers, including Independent Diagnostic Testing Facilities; suppliers of Durable Medical Equipment, Orthotics, Prosthetics, and Supplies; Opioid Treatment Programs; Home Infusion Therapy suppliers; or Medicare Diabetes Prevention Programs (with the revocation date varying depending on the provider or supplier standard at issue).

Shortened Time to Terminate Relationships With Sanctioned Business Partners

One basis for revocation is a close business relationship with a person or entity—an owner, managing employee, managing organization, officer, director, authorized or delegated official or supervising physician, for example—that was subject to an adverse action, such as a felony conviction, a judgment under the False Claims Act or exclusion from Medicaid. In such cases, CMS has provided a 30-day period in which the provider or supplier can reverse the revocation by terminating the relationship with that person or entity and providing proof of such termination. In the 2024 MPFSR, CMS has shortened that period to 15 days.

The regulations adopted by CMS in the 2024 MPFSR reflect its repeatedly expressed concerns with safeguarding the Medicare trust fund. To further that end, it has continued a trend of tightening enrollment requirements and providing itself with greater authority and discretion with respect to enforcement. While new enforcement options like the Stay of Enrollment are potentially beneficial to providers and suppliers who find themselves inadvertently non-compliant, it is CMS that will decide whether to initiate a stay, deactivate or revoke billing privileges. Given the severe impact deactivation or revocation can have on a practice, particularly where there is a retroactive revocation date, providers and suppliers must endeavor to stay abreast of, and compliant with, the enrollment requirements.

Andrew V. Wake is a litigation associate whose work focuses primarily on healthcare law. He vigorously defends healthcare providers in civil suits, against licensure complaints and in regulatory enforcement proceedings and assists providers in complying with their regulatory obligations. To contact Andrew, call 208.526.4900 or send an email to awake@parsonsbehle.com.