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Beware of government’s authority to suspend Medicare payments

From international law firm Arnold & Porter LLP comes timely views on current regulatory and legislative topics that weigh on the minds of today’s physicians and health care executives.

Early in 2011 CMS published regulations that went virtually unnoticed by the provider community, but could have a profound impact on any provider affected by them.

Under the provisions of Title 42, Code of Federal Regulations, section 405.371, either CMS or a Medicare contractor may suspend all Medicare payments to a provider if CMS or the contractor has “reliable information” that an overpayment exists, or that there is suspected fraud based on a “credible allegation of fraud.”

 

Alan E. Reider

It is important to understand that under the standards articulated above, Medicare may stop making payments to a provider before an overpayment determination has been made, or before any fraudulent conduct has been confirmed.

One would think that a provider would have some remedy for such extraordinary and draconian action. One would be wrong.

While the regulations provide that a provider has the opportunity to submit a rebuttal statement once it receives notice of suspension, if CMS or the contractor rejects the arguments submitted by the provider, the suspension goes into effect. And, remarkably, according to the regulations, there is no basis to appeal a suspension of payments. Instead, the provider is forced to wait until the Medicare program has completed its determination as to whether an overpayment has been made or there has been a determination if fraud exists.

 

And the wait can be a long one. In an apparent attempt to be sensitive to the provider community, the regulations “limit” a suspension of payment to 180 days. The regulations also provide, however, that an additional 180 days may be requested if the contractor or CMS is unable to complete its examination of the information used initially to trigger the suspension.

One doubts whether a request of this sort would ever be denied. Therefore, a suspension of payments may be in effect for an entire year. How long can most providers operate with their Medicare payments suspended for 1 year? And how fair is it for payments to be suspended before an overpayment determination has been made or a finding of fraud has been confirmed?

The suspension of payment regulations raises serious legal concerns about the Medicare program imposing an extraordinary sanction against a provider before any finding of misconduct has been made. And while the regulations may be subject to challenge, there are few providers who could mount such a challenge in the face of having all of their Medicare payments suspended.

Alan E. Reider, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-6496; email: Alan.Reider@aporter.com