Medicare, Medicaid and CHIP Enrollment: Prepare for Affiliation Disclosure Obligations

Last September, the Centers for Medicare & Medicaid Services (CMS) issued a final rule[1] that will require providers and suppliers undergoing Medicare enrollment or revalidation (referred to in this blog as “enrolling providers”) to disclose affiliations they or a wide range of their owners, leaders or professionals, have had within the last five years with any provider or supplier involved in a “disclosable event.”

When implemented, these regulations will require an enrolling provider to establish a process to make the following determinations:

1.Identify its, his or her relationships within the last five years that fit within the regulation’s definition of “affiliation,” which includes any of the following relationships with a current or former Medicare, Medicaid or Children's Health Insurance Program (CHIP) enrollee:

• 5% or greater direct or indirect ownership interest or security interest.
• A general or limited partnership interest.
• A position or interest providing operational or managerial control over day-to-day operations, whether as an employee or in another role.
• Officer or director position with a corporation.
• Any Medicare Part B reassignment relationship (or, with respect to a Medicaid or CHIP enrolling provider, a similar Medicaid assignment).

2.Determine whether any of those affiliated individuals or organizations has any “disclosable event,” which is defined as any of the following:

• Currently has any uncollected debt to Medicare, Medicaid or CHIP.
• Any history of payment suspension under any federal health care program.
• Has been or is excluded from participation in Medicare, Medicaid or CHIP.
• Has had its Medicare, Medicaid or CHIP enrollment denied, revoked or terminated.

3.Identify all of the enrolling provider’s “owning or managing employees or organizations,” defined broadly to include: 

• Any individual or entity with either a partnership interest (of any size) in the enrolling provider, or a 5% or more direct or indirect ownership interest in the enrolling provider.
• Any general manager, business manager, administrator, director or other individual that exercises operational or managerial control over, or directly or indirectly conducts, the day-to-day operation of the provider or supplier, whether or not an employee.  

4.Identify all relevant affiliations of the enrolling provider’s owning or managing employees with any current or former Medicare, Medicaid or CHIP enrollee that had any disclosable events within the past five years.

This affiliation disclosure obligation will cast a potentially broad net requiring many organizations to obtain accurate and timely information from a wide range of investors as well as individuals and organizations involved in its management. Potential consequences of failure to disclose affiliations that an enrolling provider “knew or should have known” include denial or revocation of enrollment as well as increased maximum reenrollment bar timeframes. CMS plans to issue guidance to clarify its expectations regarding the level of effort enrolling provides will be required to expend in researching affiliations. A possible collateral effect is that providers may become more selective about their affiliations in order to avoid disclosure requirements and potentially the loss of Medicare billing privileges.

CMS recognized that this standard will be difficult to implement, and so announced it will be phasing in this rule, which became effective November 4, 2019.  As the initial step in this phased-in approach, CMS will request the affiliation disclosures when it determines that an enrolling provider may have at least one disclosable affiliation. Upon receipt of the CMS request, the enrolling provider will then be required to report all reportable affiliations as set out in the final rule. CMS stated in its commentary that it will begin imposing this disclosure requirement after Form 855 applications are updated to include an affiliation disclosure section, and it expects that it will be several years before the “overwhelming majority” of enrolling providers will be required to report disclosable affiliations.

This rule also revised Medicaid enrollment regulations to require states to impose similar disclosure requirements for Medicaid and CHIP enrolling providers that are not enrolled in Medicare. Each state must select one of two options for disclosure requirements. In a state that selects the “First Option,” the disclosure obligation will be imposed on any enrolling provider with respect to all affiliations that it or any of its owning or managing employees or organizations have had within the last five years with any currently or formerly enrolled Medicare, Medicaid or CHIP provider or supplier that has a disclosable event. In a state that elects the “Second Option” the disclosure obligation will (similar to the Medicare rule) apply upon request by the state.

Complying with the new final rule could prove costly and logistically difficult for many providers due to the need to gather the historical data and implement a method for collection and maintenance of that data.  Accordingly, enrolling providers may wish to begin preparing now for compliance with the final rule by implementing an action plan including steps such as the following:

• Create a system for collection and maintenance of the required information from each of its affiliates.
• Determine its direct affiliations and disclosure events.
• Require its investors, leaders and physicians to disclose all of their affiliations.
• Require all other affiliates to disclose all disclosure events within a reasonable time frame of occurrence.
• Identify its direct and indirect affiliations that may require disclosure, so that the enrolling provider will be in a position to provide a timely response if required to disclose.
• Include provisions in its operating, shareholder or partnership agreements allowing for expulsion of an investor who fails to provide requested disclosures, or whose ownership endangers the enrolling provider’s ability to continue its Medicare enrollment.  

For more information, please contact one of the attorneys listed below.