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Blog Series Part 3: CMS Proposed Rule on Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Medicaid Fee-For-Service, Medicaid Managed Care Programs for Years 2020-21: Medicare Advantage and Part D Preclusion List

Read Part 1 and Part 2.

Medicare Advantage and Part D Preclusion List

The proposed rule issued November 1, 2018 (the “Proposed Rule”) by the Centers for Medicare and Medicaid Services (“CMS”) includes a number of regulatory changes to the manner in which providers are to be included on CMS’ Medicare Advantage and Part D “Preclusion List”, providers’ appeal rights prior to such inclusion, the timeframes that providers must remain on the list, and the financial impact to beneficiaries and claimants who receive and provide items and services furnished or prescribed by a precluded provider.

Background; The April 2018 Final Rule

Prior to 2018, many Part D prescribers, Medicare Advantage (“MA”) providers, MA Organizations (“MAOs”) and Part D Plans (“PDPs”) had complained about the enrollment burden imposed by CMS’ preexisting rules, which required that (i) for a prescription to be eligible for coverage under Part D, the prescriber must be enrolled in the Medicare fee-for-service program; and (ii) providers who furnish items and services to a beneficiary who receives his or her Medicare benefit through an MAO must be in enrolled in the Medicare fee-for-service program. MAOs and PDPs had also complained about the rules’ impact on their ability to maintain adequate provider networks. Nearly 500,000 Part D prescribers and 120,000 MA providers remain unenrolled in the Medicare fee-for-service program.

Accordingly, in its April 16, 2018 Final Rule (the “Final Rule”), CMS removed those regulatory requirements, opting to protect MA and Part D program integrity not via the enrollment processes, but rather by promulgating rules that would (1) have CMS publish a “preclusion list” that will identify “demonstrably problematic” providers and prescribers, and (2) require MAOs and PDPs to reject or deny payments for MA services and items and Part D drugs furnished or prescribed by precluded providers and prescribers, respectively.

The Proposed Rule

Appeal Processes for Individuals and Entities Notified of Inclusion on the Preclusion List

Although the Final Rule established an appeals process for providers notified of CMS’ decision to place them on the preclusion list, the Proposed Rule seeks to abbreviate the timeframe for that process with respect to providers to be placed on the preclusion list due to the revocation of their Medicare enrollment. Under the current process, a precluded provider may commence the appeal of notice of being added to the preclusion list after the resolution of an appeal of his or her Medicare revocation – a staggered process that requires the MAO or PDP to pay for items and services ordered or prescribed by a precluded provider for up to nine (9) months after the provider’s entry on the preclusion list. To shorten this timeframe, the Proposed Rule would consolidate these appeals processes, such that they run concurrently and not consecutively, and would also allow a provider to request a joint reconsideration of notice of both enrollment revocation and inclusion on the preclusion list.

Effective Dates

The proposed changes related to the abbreviation and consolidation of the appeals process, as described above, would take effect 60 days after publication of a final rule. The remaining proposed rules, as described below, would take effect on January 1, 2020.

Timing of Addition to Preclusion List

Once a provider is notified that CMS intends to include the provider on the preclusion list, the provider has 60 days to file a reconsideration request. Under the Proposed Rule, a provider would be placed on the preclusion list either (i) upon the expiration of that 60-day period, if the provider does not file a reconsideration request, or (ii) upon the date on which CMS denies the provider’s reconsideration, if requested and denied.

However, with respect to providers and prescribers who are excluded from Federal health care program participation by the Department of Health and Human Services Office of the Inspector General (:OIG”), CMS proposes to include such providers and prescribers on the preclusion list, effective as of the dates of their exclusion, even if they request that CMS reconsider their inclusion on the preclusion list.

Claims Denials and Beneficiary Notification

In the Final Rule, CMS imposed a 90-day wait period between (i) CMS’ publication of its first preclusion list, and (ii) the first date on which an MAO or PDP could deny claims for services or items ordered or prescribed by a precluded provider. CMS designed the 90-day period to allow MAOs and PDPs to intake the preclusion list, to notify beneficiaries of provider and prescriber preclusions, and to work with affected beneficiaries to transition them to new providers and prescribers. However, under the Final Rule, no such time period applied to subsequent additions to the preclusion list, i.e., an MAO or PDP could deny claims submitted for services and items ordered and prescribed by a provider or prescriber added to the initial preclusion list, effective the first day of that provider’s inclusion on the list. In preamble commentary to the Proposed Rule, CMS stated that it is concerned with this rule’s impact on beneficiary access to care. Accordingly, the Proposed Rule would apply the 90-day wait period with respect to claims submitted for services and items ordered and prescribed by a provider added as part of an update to the preclusion list. Although this proposal would be effective January 1, 2020, CMS recommended that MAOs and PDPs adopt this policy on January 1, 2019 (i.e., the effective date of the Final Rule).

Beneficiary Appeals

The Proposed Rule would add a regulatory provision specifically stating that a beneficiary could not appeal a payment denial based upon a provider’s or prescriber’s inclusion on the preclusion list.

Time on the List: Felony Convictions and OIG Exclusions

Under the Final Rule, unenrolled prescribers and providers who are on the preclusion list stay on the preclusion list for the same length of time as the reenrollment bar that CMS could have imposed, had they been enrolled and then revoked. However, CMS believes that providers and prescribers convicted of a felony should remain on the preclusion list for longer periods of time, if appropriate. Therefore, the Proposed Rule would require providers and prescribers included on the preclusion list because of a felony conviction to stay on the list for a 10-year period running from the date of conviction, unless CMS determines a shorter length of time is warranted. This is a significant consideration for providers faced with criminal proceedings and the choice to plea to a lesser (but felony) offense. Similarly, to the extent that the OIG excludes a provider or prescriber from Federal health care program participation for a period of time longer than the reenrollment bar, CMS proposes to keep such a provider or prescriber on the preclusion list until the OIG reinstates the provider.

Beneficiary Liability

The Proposed Rule would add a regulatory provision requiring an MAO’s contract with CMS to specifically state that an MA enrollee must not have any financial liability for services or items furnished to the enrollee by an MA-contracted individual or entity on the preclusion list. CMS acknowledges that this proposal would only extend to MA-contracted providers (and would not extend to out-of-network providers).

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume VIII, Number 305
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About this Author

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Mr. Paddock's practice primarily involves healthcare fraud and abuse matters, particularly those relating to civil False Claims Act, physician self-referral (Stark Law), and anti-kickback issues. He often advises clients on compliance and transactional matters, the conduct of internal investigations related to potential fraud and abuse issues, and responding to and defending against government anti-fraud and abuse enforcement efforts and regulatory inquiries, including qui tam and government allegations of False Claims Act violations. He is an active member of...

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