Enrollment Denials When Overpayment Exists

The following article is from Palmetto GBA and lists changes that may affect home health agencies regarding enrollment denials when an overpayment has not been repaid in full:

 

Related Change Request (CR) #: CR 8039 
Related CR Release Date: August 1, 2013 
Effective Date: October 1, 2013 
Related CR Transmittal #: R479PI 
Implementation Date: October 7, 2013 

Note: This article was revised on October 17, 2013, to reflect the revised CR8039 issued on August 1. Several examples and clarifying statements have been added. In addition, the transmittal number and the Web address for accessing CR8039 were revised. 

Provider Types Affected 
This MLN Matters® Article is intended for physicians, providers, and suppliers, including current owners of an enrolling provider or supplier or the enrolling physician or non-physician practitioner, submitting enrollment applications to Medicare contractors (Fiscal Intermediaries (FIs), Regional Home Health Intermediaries (RHHIs), Carriers, Durable Medical Equipment (DME) Medicare Administrative Contractors (MACs), and A/B MACs). 

What You Need to Know 
This article, based on Change Request (CR) 8039, informs you that Medicare contractors may deny a Form CMS-855 enrollment application if the current owner of the enrolling provider or supplier or the enrolling physician or non-physician practitioner has an existing or delinquent overpayment that has not been repaid in full at the time an application for new enrollment or Change of Ownership (CHOW) is filed. 

Background 
Under 42 Code of Federal Regulations (CFR) Section 424.530(a)(6), an enrollment application may be denied if the current owner (as that term is defined in 42 CFR Section 424.502) of the applying provider or supplier, or the applying physician or non-physician practitioner has an existing or delinquent overpayment that has not been repaid in full at the time the application was filed. 

(Under 42 CFR 424.502, the term “Owner” means any individual or entity that has any partnership interest in, or that has 5 percent or more direct or indirect ownership of the provider or supplier as defined in Sections 1124 and 1124A(A) of the Social Security Act) of the applying provider or supplier) 

Overpayments are Medicare payments that a provider or beneficiary has received in excess of amounts due and payable under the statute and regulations. Once a determination of an overpayment has been made, the amount is a debt owed by the debtor to the United States Government. 

Upon receipt of a CMS-855A, CMS-855B, or CMS-855S application, the Medicare contractor will determine –whether any of the owners listed in Section 5 or 6 of the application has an existing or delinquent Medicare overpayment. 

Upon receipt of a CMS-855I application, the Medicare contractor will determine whether the physician or non-physician practitioner has an existing or delinquent Medicare overpayment. (For purposes of this requirement, the term “non-physician practitioner” includes physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, certified nurse-midwives, clinical social workers, clinical psychologists, and registered dietitians or nutrition professionals.) 

If an owner, physician, or non-physician practitioner has such an overpayment, the contractor shall deny the application, using 42 CFR 424.530(a)(6) as the basis. 

Consider the following examples: 

Example #1: Hospital X has a $200,000 overpayment. It terminates its Medicare enrollment. Three months later, it reopens as Hospital Y and submits a new CMS-855A application for enrollment as such. A denial is not warranted because §424.530 (a)(6) only applies to physicians, practitioners, and owners. 

Example #2: Dr. John Smith’s practice (“Smith Medicine”) is set up as a sole proprietorship. He incurs a $50,000 overpayment. He terminates his Medicare enrollment. Six months later, he tries to enroll as a sole proprietorship; his practice is named “JS Medicine.” A denial is warranted because §424.530 (a)(6) applies to physicians and the $50,000 overpayment was attached to him as the sole proprietor. 

Example #3: Dr. John Smith’s practice (“Smith Medicine”) is set up as a sole proprietorship. He incurs a $50,000 overpayment. He terminates his Medicare enrollment. Six months later, he tries to enroll as an LLC of which he is only a 30 percent owner; the practice is named “JS Medicine, LLC.” A denial is not warranted because the provision applies to “all” owners collectively and, again, the $50,000 overpayment was attached to him. 

Example #4 – Jane Smith is a nurse practitioner in a solo practice. Her practice (“Smith Medicine”) is set up as a closely-held corporation, of which she is the 100 percent owner. Smith Medicine is assessed a $20,000 overpayment. She terminates her Medicare enrollment. Nine months later, she submits a CMS-855I application to enroll Smith Medicine as a new supplier. The business will be established as a sole proprietorship. A denial is not warranted because the $20,000 overpayment was attached to Smith Medicine, not to Jane Smith. 

Excluded from denial under §424.535(a)(6) are individuals or entities (1) on a Medicare-approved plan of repayment or (2) whose overpayments are currently being offset or being appealed. 

Note that CR8039 applies only to initial enrollments and new owners in a CHOW. Note also that if the Medicare contractor determines that the overpayment existed at the time the application was filed, but the debt was paid in full by the time the contractor performed its review, the contractor will not deny the application because of that overpayment. 

Additional Information 
The official instruction, CR8039, issued to your Medicare contractor regarding this change, may be viewed athttp://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R479PI.pdf on the CMS website. 

Disclaimer 
This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents. CPT only copyright 2012 American Medical Association.

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