Medicare’s New Tactic—No Admission  In one of the most unique approaches to addressing Medicare payment issues, CMS issued a notice on July 26, 2013 that, in certain American counties, it was unilaterally suspending, effective July 30, 2013,  the creation of new Medicare providers in ambulance services and home health agencies.  The suspension is for a six (6) month period and may be unilaterally extended by CMS in six (6) month increments.  To date, these moratoria are limited principally to Cook and Miami-Dade counties following decades of focus on the States of Illinois, New York, Florida, Texas and California as sites of Medicare and Medicaid fraud.

Citing, among other provisions of the Affordable Care Act, Section 1866(j)(7) of the Act, CMS believes that it has the authority to make unilateral determinations of whether providers will be approved regardless of quality or financial strength.  In pertinent part, CMS quotes from the Act that language that empowers the Secretary of HHS to impose the moratorium “if the Secretary determines such moratorium is necessary to prevent or combat fraud, waste, or abuse under either such program.”  Exacerbating this announcement is the claim by CMS that rights of appeal will be extraordinarily limited.

In my 32 years of practice, I have never seen this tactic used before.  Part of the rationale must be the limitations on the federal government’s historic “pay and chase” methods of collection where enforcement activities are sometimes years in arrears of fraudulent activity and, therefore, ineffective because the offending party has long since taken the money, closed shop and left the country or moved.  The reimbursement system is too large and the money trails too numerous to effectively monitor more closely.  And, while in many respects this sort of program is repugnant to me as a citizen, this announcement is, to a large degree, an improvement on historic unstated and “unofficial” enforcement activities like placing all providers of a suspect class under audit, thereby eliminating that class of providers because of a financial inability to survive without reimbursement.  A classic example of this “unofficial” enforcement activity was the cost-reimbursed CORF’s that were essentially starved out of existence.  Do note, however, that audit activities generally have increased and a number of providers are reporting delays in payments associated with audits when no billing or service errors are ultimately found.  The applicable Medicare reimbursements have, however, remained in the Federal coffers longer without payment to providers who have rendered services and are awaiting reimbursement.


The utility of this new program must be scrutinized.  For any number of reasons, it is suspect.  Existing providers of ambulance and home health services will see the value of their respective companies increase as they will have less and less competition.  The federal government has effectively
created a bar to the development of new business in the targeted areas and established mini-monopolies at a time when the FTC is worried about enforcement actions against the same threat.  Second, this federal enforcement may also run afoul of state Certificate of Need (“CON”) laws, pursuant to which individual states determine whether there is a need for a particular service line in a particular geographic area and, based on authority from individual state legislatures, grant or withhold the issuance of a CON.  Although the CON laws themselves have been waning since initially developed by grants from (and I cannot make this stuff up) the federal government in the early 1970’s, CON laws still remain an important component of state health regulatory authority in approximately 20 states.  Does another state/federal issue arise if a state grants a CON for a particular provider based on the state’s determination of a need for a service line in a particular geographic area and the federal government unilaterally refuses to reimburse or other recognize a provider who has been so granted authority to act?  The July 26, 2013 notice importantly did not mention communications between the federal government and those state agencies responsible for CON determinations.  Do I hear the pitter-pat of appellate attorneys making their way, yet again, to federal courts in Florida and Illinois to raise improper federal preemption questions?  I have to believe that the determination on the state need for a particular health service in a particular geographic area effected following the cultivation of demographic data and input from health care providers and the citizenry must override federal determinations that the provider will not be recognized for reimbursement because the federal government’s prior law enforcement activities were to ineffective.  And, for the record, we have had almost five (5) decades of CON laws nationally that were heralded as governors on health care expenditures and almost five (5) decades of proof that restrictions on the number of providers do not result in reduced costs.

CMS may not be able to police its providers quickly enough for their own satisfaction.  That failure should not be justification for federal determinations of whether a state has enough providers of a particular type.  I would encourage the federal government to get better at their job of enforcement and leave the decisions on health care providers to the marketplace and individual communities.