[Federal Register: April 25, 2003 (Volume 68, Number 80)]
[Proposed Rules]               
[Page 22063-22112]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25ap03-14]                         
 
[[Page 22063]]

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Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 420, et al



Medicare Program; Requirements for Establishing and Maintaining Medicare
Billing Privileges; Proposed Rule


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 420, 424, 489, and 498

[CMS-6002-P]
RIN 0938-AH73

 
Medicare Program; Requirements for Establishing and Maintaining 
Medicare Billing Privileges

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would require that all providers and 
suppliers (other than physicians who have elected to ``opt-out'' of the 
Medicare program) complete an enrollment form and submit specified 
information to us, and periodically update and certify to the accuracy 
of the enrollment information, to receive and maintain billing 
privileges in the Medicare program. The information must clearly 
identify the provider or supplier and its place of business, provide 
documentation that it is qualified to perform the services for which it 
is billing, ensure that it is not currently excluded from the Medicare 
program, and meets any other applicable Medicare requirements. If we 
determine the information submitted is incomplete, invalid, or 
insufficient to meet Medicare requirements, we would have the 
discretion to reject, deny, deactivate, or revoke billing privileges.
    This proposed rule would implement provisions in the Medicare 
statute that require the Secretary to ensure that all Medicare 
providers and suppliers are qualified to provide the appropriate health 
care services. These statutory provisions include requirements meant to 
protect beneficiaries and the Medicare trust fund by preventing 
unqualified, fraudulent, or excluded providers and suppliers from 
providing services to Medicare beneficiaries or billing the Medicare 
program or its beneficiaries.

DATES: We will consider comments if we receive them at the appropriate 
address, as provided below, no later than 5 p.m. on June 24, 2003.

ADDRESSES: In commenting, please refer to file code CMS-6002-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission. Mail written comments (one original and 
two copies) to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-6002-P, P.O. Box 8013, Baltimore, MD 
21244-8013.

    Please allow sufficient time for us to receive mailed comments on 
time in the event of delivery delays.
    If you prefer, you may deliver (by hand or courier) your written 
comments (one original and two copies) to one of the following 
addresses:

Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201, or Room C5-14-03, 7500 Security Boulevard, 
Baltimore, MD 21244-8013.

    (Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available if you wish to retain proof of filing by stamping in and 
retaining an extra copy of the comments being filed).
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and could be considered late.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Michael C. Collett, (410) 786-6121.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: Comments received timely will be 
available for public inspection as they are received, generally 
beginning approximately 3 weeks after publication of a document, at the 
headquarters of the Centers for Medicare & Medicaid Services, 7500 
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of 
each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view 
public comments, phone (410) 786-7197.
    Copies: To order copies of the Federal Register containing this 
document, send your request to: New Orders, Superintendent of 
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date 
of the issue requested and enclose a check or money order payable to 
the Superintendent of Documents, or enclose your Visa or Master Card 
number and expiration date. Credit card orders can also be placed by 
calling the order desk at (202) 512-1800 (or toll-free at 1-888-293-
6498) or by faxing to (202) 512-2250. The cost for each copy is $10. As 
an alternative, you can view and photocopy the Federal Register 
document at most libraries designated as Federal Depository Libraries 
and at many other public and academic libraries throughout the country 
that receive the Federal Register.
    This Federal Register document is also available from the Federal 
Register online database through GPO Access, a service of the U.S. 
Government Printing Office. The Web site address is: http://www.access.gpo.gov/nara/index.html
.

I. Background

A. General

    The Medicare program, Title XVIII of the Social Security Act (the 
Act), is currently the principal payer for health care for 39.2 million 
enrolled beneficiaries. Under section 1802 of the Act, a beneficiary 
may obtain health services from any institution, agency, or person 
qualified to participate in the Medicare program. Qualifications to 
participate are specified in statute and in regulations. See, for 
example, sections 1814, 1815, 1819, 1833, 1834, 1842, 1861, 1866, and 
1891 of the Act; and 42 CFR Chapter IV, Subchapter E, which concerns 
standards and certification requirements.
    Providers and suppliers furnishing services must comply with the 
Medicare requirements stipulated in the Act and in our regulations. 
These requirements are meant to ensure compliance with applicable 
statutes, as well as to promote the furnishing of high quality care. We 
and/or State Survey and Certification Agencies inspect facilities when 
required, for compliance with regulatory and operational requirements 
before we allow them to participate in the Medicare program. 
Thereafter, either

[[Page 22065]]

as part of a scheduled re-certification survey, or as a result of a 
complaint or other information received that would directly affect the 
provider's or supplier's business relationship with the Medicare 
program or indicate non-compliance of this regulation, we will review 
and re-verify the continued adherence to our requirements. The initial 
certification and subsequent re-certification ensure that Medicare 
requirements are met and continue to be met, and promote the 
appropriate spending of the Medicare trust fund by helping to ensure 
that unqualified providers and suppliers are not granted billing 
privileges with the Medicare program.
    Historically, a provider or supplier wishing to receive payment 
from Medicare or its beneficiaries would contact a fiscal intermediary 
(FI), State Survey Agency, or carrier. In compliance with sections 1816 
or 1842 of the Act, as stipulated in 42 CFR Part 421, we contract with 
FIs and carriers to administer payment for services and to carry out 
other administrative responsibilities that the law imposes. Our 
Regional Offices, State Survey Agencies, carriers and FIs use statutes, 
regulations, and operating instructions as guidance when assigning 
appropriate identification numbers and determining whether to grant 
billing privileges in the Medicare program to providers and suppliers.
    As Medicare program expenditures have grown, increasing attention 
has been focused on strategies to curb improper Medicare payments by 
implementing business processes and standards that safeguard the 
Medicare program and its beneficiaries, while ensuring that well 
qualified individuals and health care organization serve beneficiaries 
as promptly as possible.

B. Specific Authority to Collect Enrollment Information

    1. Various sections of the Act and the Code of Federal Regulations 
require providers and suppliers to furnish information concerning the 
amounts due and the identification of individuals or entities who 
furnish medical services to beneficiaries before payment can be made.
    Sections 1102 and 1871 of the Act allow general authority for the 
Secretary to prescribe regulations for the efficient administration of 
the Medicare program. Under the above authority, this proposed 
regulation will require the collection of information from providers 
and suppliers for the purpose of enrolling in the Medicare program and 
granting privileges to bill the program for health care services 
rendered to Medicare beneficiaries.
    Sections 1814(a), 1815(a), and 1833(e) of the Act require the 
submission of information necessary to determine the amounts due to a 
provider or other person.
    Section 1842(r) of the Act requires us to establish a system for 
furnishing a unique identifier for each physician who furnishes 
services for which payment may be made. To do so, we need to collect 
information unique to that physician.
    Section 1862(e)(1) of the Act states that no payment may be made 
when an item or service was at the medical direction of an individual 
or entity that has been excluded in accordance with sections 1128, 
1128A, 1156, or 1842(j)(2) of the Act.
    Section 1834(j) of the Act states that no payment may be made for 
items furnished by a supplier of durable medical equipment, 
prosthetics, orthotics, and supplies (DMEPOS) unless that supplier 
obtains, and renews at such intervals as we may require, a billing 
number.
    The Balanced Budget Act of 1997 (BBA) (Public Law 105-33), section 
4313, amended sections 1124(a)(1) and 1124A of the Act to require 
disclosure of both the Employer Identification Number (EIN) and Social 
Security Number (SSN) of each provider or supplier, each person with 
ownership or control interest in the provider or supplier, any 
subcontractor in which the provider or supplier directly or indirectly 
has a five percent or more ownership interest, and any managing 
employees. The Secretary of Health and Human Services (the Secretary) 
signed and sent to the Congress a ``Report to Congress on Steps Taken 
to Assure Confidentiality of Social Security Account Numbers as 
Required by the Balanced Budget Act'' on January 26, 1999, with 
mandatory collection of SSNs and EINs effective on or about April 26, 
1999.
    2. Section 31001(i)(1) of the Debt Collection Improvement Act of 
1996 (DCIA) (Public Law 104-134) amended 31 U.S.C. section 7701 by 
adding paragraph (c) to require that any person or entity doing 
business with the Federal Government must provide their Tax 
Identification Number (TIN).
    3. We are authorized to collect information on the Form CMS 855 
(Office of Management and Budget (OMB) approval number 0938-0685) to 
ensure that correct payments are made to providers and suppliers under 
the Medicare program as established by Title XVIII of the Act.

II. Current Enrollment Initiatives

    For a number of years, concern about easy entry into the Medicare 
program by unqualified or even fraudulent providers or suppliers has 
led us to step up our efforts on a number of fronts to establish more 
stringent controls on provider and supplier entry into the Medicare 
system. For example, in 1993 we established the National Supplier 
Clearinghouse (NSC), our contractor for enrolling suppliers of DMEPOS 
in Medicare. We instituted new procedures to use validation software to 
certify the existence of the listed business address for suppliers of 
DMEPOS. The NSC also checked the DMEPOS supplier telephone numbers 
against a national directory. This initial effort resulted in the 
revocation of about 1,500 supplier billing numbers and an estimated 
savings of $7 million per month to the Medicare trust fund.
    In fiscal year 1998, we required site visits for all new DMEPOS 
suppliers. The DMEPOS visits resulted in:
    [sbull] 156 denials of new applicants, out of 159 visits; and
    [sbull] 656 revocations of existing suppliers, out of 2,091 visits.
    In fiscal years 1998 and 1999, our carriers and FIs submitted 
proposals to conduct site visits for those provider or supplier types 
that they believed would yield the greatest benefit in their regions. 
After reviewing the submitted proposals, we funded 320 site visits to 
various enrolling and currently enrolled Independent Diagnostic Testing 
Facilities (IDTFs), skilled nursing facilities (SNFs), home health 
agencies (HHAs), rural health clinics, comprehensive outpatient 
rehabilitation facilities, physician groups, clinical psychologists, 
and ambulance companies. The project provided useful information for 
making appropriate determinations for the eligibility to bill Medicare. 
In the course of these reviews--
    [sbull] 219 provider numbers were authorized or maintained;
    [sbull] 30 provider numbers were deactivated;
    [sbull] 37 provider applications were denied; and
    [sbull] 34 providers were referred to contractor fraud units.
    These site visits proved valuable to some providers by helping them 
to enroll in the Medicare program properly. The site visits were also 
helpful to us in ensuring that we only conduct business with legitimate 
providers. We believe that site visits are an important component of 
successful provider enrollment. As past experience has demonstrated, in 
many cases site

[[Page 22066]]

visits are the only method we have to ensure that providers and 
suppliers actually exist and meet the requirements to participate in 
the Medicare program, particularly in the absence of State licensure or 
regulation. Left unchecked, Medicare program resources and the health 
of Medicare beneficiaries may be vulnerable.

III. Provisions of the Proposed Rule

    This proposed rule would build on our collective experience and set 
forth our standard enrollment requirements in new subpart P in Part 424 
of this chapter. We are proposing that all providers and suppliers, 
other than the ``opt-out'' physicians and ``opt-out'' practitioners 
described below, must submit an enrollment application with specific 
information to enroll in the Medicare program, obtain a Medicare 
billing number, and receive Medicare billing privileges. The provisions 
of this proposed rule would supplement, but not replace or nullify, 
existing regulations concerning the establishment of provider or 
supplier agreements, the issuance of provider or supplier billing 
numbers, and payment for Medicare covered services or supplies to 
eligible providers or suppliers.
    Specifically, we are proposing to require that providers and 
suppliers prove their qualifications and identity and submit specified 
information to us before they are granted billing privileges in the 
Medicare program. If the provider or supplier fails to meet the 
requirements or submit the required information, we would not enroll it 
in the Medicare program or, if it is currently in the program, we would 
revoke its billing privileges. We believe the documentation and 
associated verification methods we use to determine whether to grant a 
provider or supplier billing privileges are necessary to ensure 
compliance with Medicare requirements and to prevent abuse of the 
Medicare program and the inappropriate use of Medicare funds. We also 
believe that such requirements will not hinder qualified individuals 
and organizations from enrolling or maintaining enrollment in the 
Medicare program.

A. Scope and Definitions

    We are proposing to establish our standard enrollment requirements 
in Part 424, new subpart P. In proposed Sec.  424.500 (Scope) we are 
stating that these requirements apply to all providers and suppliers 
except those physicians and other eligible practitioners who have 
elected to ``opt-out'' of Medicare as described in Part 405, subpart D 
of our regulations.
    In proposed Sec.  400.502 (Definitions) we are establishing the 
definitions for several key terms used throughout subpart P. The terms 
``provider'' and ``supplier'' are not defined in this subpart because 
their definitions have already been established throughout 42 CFR. The 
term ``provider'' is defined in both Sec.  488.1 and Sec.  400.202. 
Together these sections define a provider as including a hospital, a 
critical access hospital, a skilled nursing facility, a nursing 
facility, a comprehensive outpatient rehabilitation facility, a home 
health agency, or a hospice, that has in effect an agreement to 
participate in Medicare; or a provider of outpatient physical therapy 
or speech pathology services; or a community mental health center. The 
term ``supplier,'' as defined in Sec.  400.202, is a physician or other 
practitioner, or an entity other than a provider (as defined in 
Sec. Sec.  400.202 and 488.1) that furnishes health care services under 
Medicare. Section 488.1 also defines ``supplier'' to mean independent 
laboratory; portable X-ray services; physical therapist in independent 
practice; ESRD facility; rural health clinic; Federally qualified 
health center; or chiropractor. The term ``supplier'' also includes 
``indirect suppliers,'' as indicated in 45 CFR 61.3.
    We define ``managing employee'' to be ``a general manager, business 
manager, administrator, director, or other individual that exercises 
operational or managerial control over, or who directly or indirectly 
conducts the day-to-day operations of, the institution, organization, 
or agency, either under contract or through some other arrangement, 
regardless of whether the individual is a W-2 employee.''
    Section 1124A of the Act and 42 CFR 420.204 authorize the Secretary 
to collect information about ``managing employees.'' Section 1124A 
incorporates by reference the following definition of ``managing 
employee,'' contained in 1126(b) of the Act: ``An individual, including 
a general manager, business manager, administrator, and director, who 
exercises operational or managerial control over the entity, or who 
directly or indirectly conducts the day-to-day operations of the 
entity.'' We have found that a number of providers and suppliers are 
managed by individuals that have control over the day-to-day operations 
of the entity and are not ``employees.'' Some of these individuals have 
been known to bill Medicare fraudulently, and are on the Office of 
Inspector General (OIG) ``List of Excluded Individuals and Entities 
and/or the General Services Administration'' (GSA) ``List of Parties 
Excluded from Federal Procurement and Nonprocurement Programs''. These 
lists are commonly referred to as the ``OIG Sanction List'' for those 
parties excluded by the QIG from participation in any Federal health 
care programs (as defined in section 1128B(f) of the Act), and the 
``GSA Debarment List'' for those parties debarred, suspended or 
otherwise excluded by other Federal agencies from participation in 
Federal procurement and non-procurement programs and activities, in 
accordance with the Federal Acquisition and Streamlining Act of 1994, 
and with the HHS Common Rule at 455 CFR Part 76.
    Extending the term ``managing employee'' to include individuals 
performing managerial duties who are not technically employees would be 
consistent with the legislative intent to require information on those 
individuals that have effective control over a provider's or supplier's 
day-to-day operations.

B. Basic Enrollment Requirement

    Proposed Sec.  424.505 requires a provider or supplier to have a 
valid Medicare billing number for the date a service was rendered in 
order to receive payment for covered Medicare services from either 
Medicare (in the case of assigned claims) or the Medicare beneficiary 
(in the case of unassigned claims).
    Under longstanding policy and operating procedures, any claim 
submitted without an active billing number is incomplete and cannot be 
processed for payment. Providers and suppliers who are not enrolled in 
the Medicare program must adhere to the mandatory claims submission 
rules found at Sec.  424.32(a)(1) (Basic requirements for all claims) 
and section 1848(g)(1)(B) of the Act. In addition, a claim submitted 
without a valid Medicare billing number would not be considered a valid 
claim and would be rejected. If the mandatory claims submission 
requirements are not met the provider or supplier could have sanctions 
imposed as outlined in section 1848(g)(4) of the Act for failure to 
file a claim as required.

C. Requirements for Obtaining a Billing Number and Medicare Billing 
Privileges

    To obtain a Medicare billing number and be eligible to receive 
payment for Medicare covered services, providers and suppliers must 
enroll in the Medicare program and meet other applicable Federal 
requirements. The Medicare program, through its contractors, requires 
specific identifying

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information from a provider or supplier before payment is authorized. 
Our issuance of an identification number to a provider or supplier does 
not automatically convey the privilege to bill Medicare. There must be 
a corresponding approval of the provider or supplier as meeting all 
Federal requirements to bill Medicare for the number to be an approved 
and active Medicare billing number.
    In new Sec.  424.510 (Form CMS 855), we propose that a provider or 
supplier must submit to us the appropriate completed form CMS 855--
Provider/Supplier Enrollment Application based on the type of provider 
or supplier enrolling. As part of our continuing efforts to improve the 
enrollment process, the series of CMS 855 enrollment forms with 
proposed revisions are being submitted with this proposed rule, to be 
published in the Federal Register concurrently for review and public 
comment. Some of the proposed revisions are the removal of certain data 
collections from all forms in the series such as information on 
clearinghouses used in claims submission, practice locations from the 
CMS 855R, and a shortened attachment for ambulance companies in the CMS 
855B. We have also simplified the sections for reporting owners and 
managers and added instructional clarifications. The forms are 
identified as follows:
    [sbull] Form CMS 855A--For providers billing fiscal intermediaries.
    [sbull] Form CMS 855B--For supplier organizations billing carriers.
    [sbull] Form CMS 855I--For individual health care practitioners 
billing carriers.
    [sbull] Form CMS 855R--For individual health care practitioners to 
reassign benefits to an organization.
    [sbull] Form CMS 855S--For DMEPOS Suppliers billing the NSC.
    The CMS 855 applications will be used to gather information on 
providers and suppliers for the purpose of authorizing billing numbers 
and establishing eligibility to furnish services to Medicare 
beneficiaries. The information submitted will also uniquely identify 
the providers and suppliers for the purpose of enumeration and payment. 
OMB has approved the CMS 855 for these purposes (OMB approval number 
0938-0685).
    At proposed Sec.  424.510(a)(1) we are requiring that a provider or 
supplier submit the following on its CMS 855: Complete and accurate 
responses to all information requested within each section as 
applicable to the provider or supplier type.
    [sbull] Any documentation currently required by CMS under this or 
other statutory or regulatory authority to uniquely identify the 
provider or supplier (for example, a social security number (SSN) or a 
tax identification number (TIN)).
    [sbull] Any documentation currently required by CMS under this or 
other statutory or regulatory authority to establish the provider or 
supplier's eligibility to furnish services to beneficiaries in the 
Medicare program (for example, a medical license or business license).
    Under the authorities mentioned earlier in this preamble all 
providers, suppliers, and other health care related individuals and 
entities who will receive Medicare reimbursements, either directly or 
indirectly as a result of enrolling in the Medicare program, must 
furnish their SSN and/or TIN as a condition of maintaining an active 
enrollment status and billing privileges. We also maintain the right to 
require persons with ownership or control interests (as that term is 
defined in section 1124(a)(3) of the Act) in such providers and 
suppliers, and of all managing employees (as that term is defined in 
section 1126(b) of the Act and at 42 CFR 420.201) of such providers and 
suppliers to also furnish their SSN and/or TIN as a condition of 
enrollment.
    We are proposing that providers and suppliers must certify that all 
the information furnished on the CMS 855 is accurate, complete, 
truthful, and verifiable. Any concealment or misrepresentation of 
material information in these applications constitutes a violation of 
this regulation and may result in the rejection, denial, or revocation 
of the provider or supplier's enrollment and billing privileges. In 
addition, such concealment or misrepresentation will be referred to the 
Office of Inspector General for investigation and appropriate criminal, 
civil or administrative action.
    In Sec.  424.510(a)(2), we propose that the CMS 855 must be signed 
by an individual who has the authority to bind the provider or supplier 
both legally and financially to the requirements set forth in subpart 
P. This person must be the individual practitioner or have an ownership 
or control interest in the provider or supplier, as that term is 
defined in section 1124(a)(3) of the Act, such as, be the provider's or 
supplier's general partner, chairman of the board, chief financial 
officer, chief executive officer, president, or hold a position of 
similar status and authority within the provider or supplier 
organization. The signature would attest that the information submitted 
is accurate, complete, and truthful, and the provider or supplier is 
aware of, and will abide by, Medicare rules and regulations.
    To ensure that the individual signing the form can bind the 
enrollee from a financial and legal standpoint, we would require the 
following persons to sign the enrollment form:
    [sbull] In the case of an individual practitioner, the applying 
practitioner.
    [sbull] In the case of a sole proprietorship, the applying sole 
proprietor.
    [sbull] In the case of a corporation, partnership, group, limited 
liability company (LLC), or other organization, an authorized official, 
as defined in Sec.  424.502. When an authorized official signs the 
application, the signed application is considered binding upon the 
corporation partnership, organization, group, or LLC (hereafter 
referred to in this section as an organization), as applicable. This 
requirement establishes accountability for the accuracy of the 
information on the CMS 855 and ensures that the provider or supplier is 
committed to taking the necessary steps to comply with these 
requirements. In addition to the signature requirements, we are 
establishing a delegation of authority. As required above, the original 
and all subsequent revalidation CMS 855s submitted by an organization 
to enroll or maintain enrollment in the Medicare program must have 
certification statements signed by the current authorized official on 
file with Medicare. Any subsequent updates or changes made outside the 
enrollment or revalidation process may be signed by a delegated 
official of the enrolled organization.
    The delegated official must be a W-2 managing employee of the 
provider or supplier who is enrolling in, or currently enrolled in, the 
Medicare program, or be an individual with ownership or control 
interest in the provider or supplier.
    The delegation of signature authority will not apply for individual 
practitioners and sole proprietors. All CMS 855s submitted by 
individual practitioners or sole proprietors must be signed by the 
enrolling/enrolled individual.
    As proposed in Sec.  424.510(a)(2)(ii), the delegation of authority 
must be assigned by the authorized official currently on file with us 
or the authorized official who has signed the CMS 855 currently being 
submitted to us. All delegations of authority must be submitted via the 
CMS 855 and must include the title of each person delegated authority 
to update or change the organization's enrollment information. The 
assignment

[[Page 22068]]

must be signed by both the authorized official currently on file with 
Medicare and the person(s) being delegated as an official of the 
organization. The signature of the delegated official will bind the 
organization both legally and financially, as if the signature was that 
of the authorized official. Once the delegation of authority is 
established, the signatures of the authorized official or the assigned 
delegated official(s) will be the only acceptable signature(s) on 
correspondence to report updates or changes to the enrollment 
information.
    As proposed in Sec.  424.510(b), we would verify initial compliance 
with Medicare statutes and regulations before providers and suppliers 
are granted billing privileges, as well as on a continuing basis. The 
verifications would be based on information submitted by providers and 
suppliers on the CMS 855.
    We are proposing in Sec.  424.510(c) that providers and suppliers, 
including those that are deemed to meet Medicare health and safety 
requirements by virtue of their accreditation by a national accrediting 
body, must attest via signature on the CMS 855 that they have met all 
the requirements set forth in this regulation before they are granted 
billing privileges. Those providers for which certification is required 
must meet the provisions of 42 CFR Part 488 concerning mandatory State 
survey and certification requirements. Providers also must have 
completed a provider agreement in accordance with 42 CFR Part 489, 
which specifies the requirements for provider agreements. In addition, 
in paragraphs (d) and (e) in proposed Sec.  424.510, we are requiring 
that providers and suppliers must be operational as defined in Sec.  
424.502 and must meet additional requirements that apply to both 
enrolling and currently enrolled providers and suppliers before 
receiving a Medicare billing number and becoming eligible for Medicare 
payments.
    In recognition of the effectiveness of site visits, we are 
proposing, at Sec.  424.510(f), a plan for integrating site visits as 
part of our enrollment validation process and general program oversight 
activities. We are reserving the right to perform on-site inspections 
of the provider or supplier when we deem necessary to ensure compliance 
with Medicare enrollment requirements. For certain providers and 
suppliers this practice has always been the case (for example, 
Hospitals, Skilled Nursing Facilities (SNFs), and Home Health Agencies 
(HHAs)), but we are extending this to all providers and suppliers when 
deemed necessary based on questionable enrollment information. Site 
visits for enrollment purposes will not affect those site visits 
performed for establishing conditions of participation. Our proposed 
site visits and on-site inspections to ensure compliance with Medicare 
enrollment requirements are unrelated to the compliance-related site 
visits already being conducted by the OIG. After a provider or supplier 
enters into a corporate integrity agreement with the OIG, usually as 
the result of a Federal False Claims Act settlement, the OIG may 
conduct a site visit as part of its work in monitoring the provider or 
supplier's compliance with the terms of the corporate integrity 
agreement. Upon the provider or supplier's successful completion of the 
enrollment process, including State survey and certification, 
accreditation, and approval of the CMS 855, we will grant Medicare 
billing privileges and issue a billing number if one has not already 
been issued. The effective date for reimbursement of Medicare covered 
services will continue to be determined based on current Medicare 
regulations and policy based on the type of provider or supplier 
submitting claims. Currently, the effective dates for reimbursement can 
be found at Sec.  489.13 for providers and suppliers requiring State 
survey or certification or accreditation, Sec. Sec.  424.5 and 424.44 
for non-surveyed or certified/accredited suppliers, and Sec.  424.57 
and section 1834(j)(1)(A) of the Act for DMEPOS suppliers. For those 
providers and suppliers seeking accreditation from a CMS approved 
accreditation organization, the effective date for reimbursement will 
be the later of the date accreditation was received or the final 
approval of the CMS 855. Based on the regulations cited above, CMS will 
not issue Medicare billing numbers or grant Medicare billing privileges 
retroactive to the date that the provider or supplier received final 
approval of their enrollment application (CMS 855). We are proposing to 
use this process because we believe there is a relationship between 
fulfilling the requirements stipulated in the Medicare program statutes 
and related laws, the integrity of the provider and supplier, the 
quality of care furnished to Medicare beneficiaries, and the confidence 
of the public in the Medicare program.
    In the future there will be universal provider and supplier 
numbers, as required by the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA), for uniquely identifying a provider 
or supplier and for purposes of billing all health plans, including 
Medicare and Medicaid. When this universal number is in place, it will 
still be necessary for providers and suppliers to apply for enrollment 
as a Medicare provider or supplier and be granted Medicare billing 
privileges.
    D. Requirements for Reporting Changes and Updates To, and the 
Periodic Revalidation of, Medicare Enrollment Information
    We propose that, under new Sec.  424.515, a provider or supplier 
must update its enrollment information, and re-certify as to its 
accuracy when any changes are made. We will also periodically require 
revalidation of the enrollment information by all providers and 
suppliers when enrollment information has aged over three years. The 
revalidation process will ensure that we have complete and current 
information on all Medicare providers and suppliers and ensure 
continued compliance with Medicare requirements. In addition, this 
process further ensures that Medicare beneficiaries are receiving 
services furnished only by legitimate providers and suppliers, and 
strengthens our ability to protect the Medicare trust fund.
    The accuracy of the data describing the individuals or 
organizations with whom we do business is essential to efficient and 
effective operation of the Medicare program. For this reason, we are 
proposing at Sec.  424.520(b), that individuals and organizations are 
responsible for updating their CMS 855 information to reflect any 
changes in a timely manner. We define timely as meaning within 90 days, 
with the exception of a change in ownership or control of the provider 
or supplier which must be reported within 30 days. Failure to do so may 
result in deactivation or even revocation of their billing privileges.
    We will determine, upon receipt of any changes, if continued 
enrollment in the Medicare program is proper. We expect that in the 
vast majority of cases, updates or changes will not affect the status 
of the provider or supplier. Where it does, we will follow the 
revocation procedures outlined later in this rule.
    When no such changes or updates have been reported or submitted for 
a period of time, we believe that it is prudent to take steps to 
confirm the continued validity of the information that was previously 
submitted. We believe that this revalidation of enrollment information 
should be accomplished in a way that minimizes the reporting burden to 
the provider or supplier, but also mitigates the risk to the program of 
maintaining incomplete or inaccurate information that materially 
affects the relationship of the program to the provider or supplier. 
For

[[Page 22069]]

this reason, we are proposing that we would initiate a revalidation 
process for any individual or organization that has not submitted a 
change or update within the last three years. Routine revalidation may 
or may not be accompanied by site visits.
    We reserve the right to perform non-routine revalidation and 
request the provider or supplier to re-certify as to the accuracy of 
the enrollment information when warranted to assess and confirm the 
validity of the enrollment information. Non-routine revalidation may be 
triggered as a result of information indicating local problems, 
national initiatives, fraud investigations, complaints from 
beneficiaries, or other reasons that cause us to question the integrity 
of the provider or supplier in its relationship with the Medicare 
program. Like routine revalidation, non-routine revalidation may or may 
not be accompanied by site visits.
    We are proposing that the revalidation of enrollment information 
occur no more than once every 3 years. We reserve the right to adjust 
this schedule if we determine that revalidation should occur on a more 
frequent basis due to complaints or evidence we receive indicating non-
compliance with the Medicare statute or regulations by specific 
provider or supplier types. The schedule may also be on a less frequent 
basis if we determine that the integrity of and compliance with the 
Medicare statute and regulations by specific provider or supplier types 
indicates that less frequent validation is justified. If such a change 
were to occur, we will notify all affected providers and suppliers in 
writing at least 90-days in advance of implementing the change. We will 
continue to revalidate enrollment information for Ambulance Service 
Suppliers in accordance with regulations set forth at Sec.  
410.41(c)(2) (Requirements for ambulance suppliers), and DME suppliers 
will continue to renew enrollment in accordance with regulations set 
forth at Sec.  424.57(e) (Special payment rules for items furnished by 
DMEPOS suppliers and issuance of DMEPOS supplier billing numbers). We 
specifically invite further comments on the initially proposed 
revalidation time frame.
    We propose at new Sec.  424.515(a) that during the revalidation or 
update process all providers and suppliers must attest by way of a 
signed certification statement that the requirements set forth in this 
regulation continue to be met. This requirement will not only ensure 
continued accuracy of the CMS 855 information, but will also ensure 
that the provider or supplier is committed to taking the necessary 
steps to maintain compliance with these requirements. However, it 
should be noted that periodic validation of a provider or supplier's 
Medicare enrollment information is separate from the survey 
requirements for the provider or supplier as contained in 42 CFR 
chapter IV, subchapter E (standards and certification).
    We would require the information submitted for revalidation or 
update to include any new or changed documentation as required by CMS 
under this or other statutory or regulatory authority that identifies 
the provider or supplier, and any documentation as required by CMS 
under this or other statutory or regulatory authority required to 
verify the provider or supplier's continued eligibility to furnish 
services to beneficiaries in the Medicare program. We would also 
require a signature on the completed CMS 855 that meets the 
requirements proposed in Sec.  424.510(a)(3).
    We are also requiring at proposed Sec.  424.515(b) that a provider 
or supplier must submit a CMS 855 with complete information for 
revalidation within 60 calendar days of our revalidation notification. 
For those providers and suppliers who initially enrolled in the 
Medicare program via the CMS 855, we would furnish a copy of the 
information currently on file for their review, request that they make 
any changes, and certify via their signature that the information is 
accurate, complete, and truthful. We estimate that completion of the 
form will require on average 8 hours. Therefore, we believe 60 days is 
a reasonable time frame for providers and suppliers to comply.
    As part of the revalidation process, we would verify the accuracy 
of the reported information on the applicable CMS 855. Because survey 
and certification are independent program requirements distinct from 
the revalidation of enrollment information requirements set forth in 
this subpart, we are stating in proposed Sec.  424.515(c) that new 
surveys or certifications are not required for the revalidation 
process. However, providers must continue to meet the provisions of 42 
CFR Part 488 concerning mandatory State survey and certification 
requirements. When applicable, providers must also have completed a 
provider agreement in accordance with 42 CFR Part 489, which specifies 
the requirements for provider agreements. We would also reserve the 
right, at proposed Sec.  424.575(d), to perform on-site inspections, to 
further ensure compliance with Medicare requirements.
    We understand that the resubmission and update of enrollment 
information will place an obligation on providers and suppliers. We are 
considering a variety of ways to minimize the burden of this important 
information collection and verification provision (including the use of 
Internet technology).
    To reduce the burden when reporting updates or changes in the 
future, we will require that all providers and suppliers currently in 
the Medicare program complete, in its entirety, the CMS 855 at least 
once if they have not done so in the past. This will ensure that we 
have the most current and accurate information, and will allow us to 
make full use of electronic data submissions via the Internet. By 
having a complete enrollment record, we will be able to produce and 
transmit or mail the CMS 855, pre-complete with previously reported 
information, to the provider or supplier for their review and signature 
certification as to the continued accuracy of the information and 
require them to update any information that is no longer current.

E. Additional Provider and Supplier Requirements for Enrolling and 
Maintaining Active Enrollment Status in the Medicare Program

    In new Sec.  424.520, we are specifying the additional requirements 
that providers and suppliers must meet to enroll or maintain enrollment 
in the Medicare program. The provider or supplier must certify that it 
meets, and continues to meet, the following requirements:
    [sbull] Compliance with Title XVIII of the Act (Medicare Statutory 
Provisions) and applicable regulations.
    [sbull] Compliance with all applicable Federal and State licensure 
and regulatory requirements that apply to the specific provider or 
supplier type that relate to providing health care services.
    [sbull] Not employing or contracting with individuals or entities 
excluded from participation in Federal Health care programs for the 
provision of items and services reimbursable under these programs in 
violation of section 1128A(a)(6) of the Act.
    The OIG program exclusion regulations were amended effective August 
25, 1995, in accordance with the Federal Acquisition Streamlining Act 
of 1994 (FASA), and with the HHS Common Rule at 45 CFR part 76, to 
explain the scope and effect of an OIG exclusion. In accordance with 
the FASA, government-wide reciprocal effect will be given by all 
Federal

[[Page 22070]]

agencies to an administrative sanction imposed by any Federal agency. 
Specifically, the law provides that: ``No agency shall allow a party to 
participate in any procurement and non-procurement activity if any 
[other] agency has debarred, suspended, or otherwise excluded, that 
party from participation in a procurement or non-procurement 
activity.'' (FASA, section 2455). Therefore, consistent with FASA, its 
implementing regulation, and OIG regulations (42 CFR 1001.1901(b)), we 
would deny or revoke enrollment (revocation effective on the date of 
the exclusion) if the provider or supplier is subject to an OIG 
exclusion, or is debarred, suspended or otherwise excluded by any other 
Federal health care program or agency.

F. Rejection of a Provider or Supplier's CMS 855 for Medicare 
Enrollment

    In new Sec.  424.525, we propose that if a provider or supplier 
enrolling in the Medicare program for the first time fails to furnish 
complete information on the CMS 855, or fails to furnish missing 
information or any necessary supporting documentation as required by 
CMS under this or other statutory or regulatory authority within 60 
calendar days of our request to furnish the information, we would 
reject the provider or supplier's CMS 855 application. Rejection will 
not occur if the provider or supplier is actively communicating with 
CMS to resolve any issues regardless of any timeframes.
    Upon notification of a rejected CMS 855, the provider or supplier 
must again begin the enrollment process by completing and submitting a 
new CMS 855 and all applicable documentation. We are specifying in 
Sec.  424.525(b) that the new form must also update any information 
that is different from that originally submitted. This will ensure that 
we have the most recent information about the provider or supplier. The 
enrollment process would culminate in the granting of billing 
privileges, or denial or rejection of the application.

G. Denial of Enrollment

    We would deny enrollment in the Medicare program to providers or 
suppliers whom we determine to be ineligible. Providers and suppliers 
who are denied enrollment would not receive Medicare billing 
privileges. In Sec.  424.530(a) we are proposing that a provider or 
supplier applying for enrollment in the Medicare program may be denied 
enrollment for the following reasons:
    [sbull] Under Sec.  424.530 (a)(1), enrollment may be denied if the 
provider or supplier were found not to be in compliance (for example, 
failure to furnish required documentation, lack of qualified practice 
location) with the Medicare enrollment requirements applicable to the 
type of provider or supplier enrolling, unless the reason for non-
compliance were corrected or the provider or supplier has submitted a 
plan of corrective action as outlined in Part 488 and under section 
1812(h)(2)(c) of the Act.
    [sbull] In Sec.  424.530(a)(2) we propose that enrollment may also 
be denied if: (A) the provider or supplier, or any owner, managing 
employee, authorized or delegated official; or (B) any supervising 
physician, medical director, or other health care personnel furnishing 
Medicare reimbursable services who is required to be reported on the 
providers' or suppliers' CMS 855--(for example, an ambulance crew 
member.)
    [sbull] Is excluded from the Medicare, Medicaid and any other 
Federal health care programs, as defined in Sec.  1001.2, in accordance 
with Sec.  1001.1901(a);
    [sbull] Is debarred, suspended, or otherwise excluded from 
participating in any other Federal procurement or non-procurement 
activity in accordance with FASA section 2455; (See HHS Common Rule 
provisions that discuss the effect of a program exclusion under Title 
XI of the Act, as well as other Federal agency debarments, suspensions, 
and exclusions found at 45 CFR 76.100(c) and (d)).
    We are required to ensure that no payments are made to any 
providers or suppliers who are excluded from participation in the 
Medicare program under authorities found in sections 1128, 1156, 1862, 
1867, and 1892 of the Act, or who are debarred, suspended or otherwise 
excluded as authorized by FASA. This includes any individual, entity, 
or any provider or supplier that arranges or contracts with (by 
employment or otherwise) an individual or entity that the provider or 
supplier knows or should know is excluded from participation in a 
Federal health care program for the provision of items or services for 
which payment may be made under such a program (section 1128A(a)(6) of 
the Act), and any provider or supplier that has been debarred, 
suspended, or otherwise excluded from participation in any other 
Executive Branch procurement or non-procurement programs or activity 
(FASA, section 2455).
    Therefore, when an individual or entity is excluded by the OIG 
under section 1128 of the Act, the exclusion is applicable to 
participation in all Federal health care programs (including Medicare 
and Medicaid as defined in section 1128B(f) of the Act). In addition, 
section 1862(e) of the Act prohibits the Secretary from paying for 
items and services furnished by excluded individuals. We believe that 
our general authorities, in combination with the prohibition against 
paying for items or services furnished by excluded individuals, 
provides authority for us to deny enrollment unless a provider or 
supplier terminates its relationship with the relevant individual. The 
denial would remain effective until that provider, supplier, managing 
employee, or an authorized or delegated official; or a medical 
director, supervising physician, or other health care personnel 
furnishing Medicare reimbursable services, is no longer excluded or 
sanctioned. Section 424.530(b)(3) also provides that the denial may be 
within 30 days of the denial notification.
    We also propose, in Sec.  424.530(a)(3), that we may deny 
enrollment in the Medicare program if the provider or supplier, or any 
owner of the provider or supplier, has been convicted of a Federal or 
State felony offense that we determine to be detrimental to the best 
interests of the Medicare program or its beneficiaries. This authority 
is afforded to us in many of the HIPAA fraud and abuse provisions and 
section 4302 of the BBA. In making assessments, we are proposing to 
include any felony convictions from the last 10 years or more. In 
addition, we will consider the severity of the underlying offense.
    Felonies that we determine to be detrimental to the best interests 
of the Medicare program or its beneficiaries include:
    [sbull] Within the last 10 years or more preceding enrollment or 
revalidation of enrollment, crimes against persons, such as rape, 
murder, kidnapping, assault and battery, robbery, and other similar 
crimes for which the individual was convicted, including guilty pleas 
and adjudicated pre-trial diversions. We believe it is reasonable for 
the Medicare program to question the ability of the individual or 
entity with such a history to respect the life and property of program 
beneficiaries.
    [sbull] Within the last 10 years or more preceding enrollment or 
revalidation of enrollment, financial crimes, such as extortion, 
embezzlement, income tax evasion, making false statements, insurance 
fraud and other similar crimes for which the individual was convicted, 
including guilty pleas and adjudicated pre-trial diversions. We believe 
it is reasonable for the Medicare program to question the honesty and 
integrity of the individual or entity with such a history in providing 
services and

[[Page 22071]]

claiming payment under the Medicare program.
    [sbull] Within the last 10 years or more preceding enrollment or 
revalidation of enrollment, any felony that placed the Medicare program 
or its beneficiaries at immediate risk, such as a malpractice suit that 
results in a conviction of criminal neglect or misconduct.
    [sbull] Any felonies referred to in section 1128 of the Act.
    Under section 1128(a) of the Act, the Secretary must exclude 
individuals or entities convicted of certain crimes, such as program-
related crimes, crimes related to patient abuse or neglect, and 
conviction of a felony related to health care fraud or controlled 
substances. In addition, the Secretary has authority to exclude 
individuals and entities for other adverse actions including when an 
individual or entity is owned or controlled by a sanctioned or 
convicted individual, in accordance with section 1128(b)(8) of the Act.
    In cases where the provider or supplier is not a convicted 
individual but, rather, has an ownership or management relationship 
with a convicted or excluded individual, that provider or supplier may 
also be subject to civil monetary penalties (section 1128A(a)(6) of the 
Act). In addition, we may deny or revoke billing privileges if such a 
relationship exists. However, the denial may be reversed if, within 30 
days of the denial notification, the provider or supplier terminates 
its ownership or management relationship with the convicted or excluded 
individual or organization. We specifically invite further comments on 
our approach to treating convicted felons, and any impact that may have 
on access to care for Medicare beneficiaries.
    We propose in Sec.  424.530(a)(4) that we may deny enrollment if 
the provider or supplier has deliberately submitted false or misleading 
information on their CMS 855 to gain enrollment in the Medicare 
program. Offenders may be subject to fines or imprisonment, or both, in 
accordance with current law and regulation.
    In Sec.  424.530(a)(5) we propose possible denial of enrollment 
where there are repeated instances in which, upon onsite review or 
other reliable evidence, we do not find present those licensed medical 
professionals required under the Medicare statute or regulations to 
supervise treatment or provide Medicare covered services for Medicare 
patients; or we determine that the provider or supplier is not 
operational to furnish Medicare covered services or supplies.
    As outlined in proposed Sec.  424.530(b), if the denied provider or 
supplier appeals the decision, and the denial is upheld, that provider 
or supplier may submit a new CMS 855 after we notify it that the 
original determination has been upheld. If the provider or supplier did 
not appeal the determination, it may submit a new CMS 855 when the time 
frame for appeal rights has lapsed. We are proposing this latter 
requirement to prevent administrative difficulties that might result in 
processing two enrollment forms if a new one is submitted during the 
time period when the provider or supplier may appeal an initial denial.
    Medicare enrollment denials will impact the provider or supplier on 
a national scale. In proposed Sec.  424.530(c), we state that when a 
provider or supplier is denied enrollment in Medicare, we will review 
all other related Medicare enrollment files that the denied provider or 
supplier has an association with (for example, as an owner or managing 
employee) to determine if the denial warrants an adverse action of the 
associated Medicare provider or supplier.

H. Revocation of Enrollment and Billing Privileges from the Medicare 
Program

    Revocation occurs when an enrolled provider or supplier's billing 
privileges are terminated. In proposed Sec.  424.535, we outline the 
causes for revocation and what a provider or supplier would need to do 
to re-enroll in the Medicare program after revocation. In considering 
whether to revoke enrollment and billing privileges in the Medicare 
program, we would consider the severity of the offenses, mitigating 
circumstances, program and beneficiary risk if enrollment continued, 
possibility of corrective action plans, beneficiary access to care, and 
any other pertinent factors.
    In general, we propose revocation criteria that are similar to our 
reasons for denial of initial Medicare program enrollment. In Sec.  
424.535(a)(1) we propose that a provider or supplier's enrollment and 
billing privileges may be revoked if, at any time, it is determined to 
be out of compliance with the Medicare enrollment requirements outlined 
in subpart P including failure to report changes to enrollment 
information timely or failure to adhere to corrective action plans, and 
has not corrected the problem within 30 days of notice of non-
compliance or submitted a plan of corrective action as cited earlier. 
We are providing that we may request additional documentation from the 
provider or supplier to determine compliance if adverse information is 
received or otherwise found concerning the provider or supplier. If 
requested documentation as required by CMS under this or other 
statutory or regulatory authority is not submitted within 30 calendar 
days of our request, we would immediately begin revocation proceedings. 
If the documentation is received timely, we would review and verify the 
information to determine if we should proceed with the revocation. 
Providers requiring State survey and certification would continue to 
receive payment during the data verification review under current 
regulations found at Part 488 and under section 1819(h)(2)(c) of the 
Act. Providers and suppliers not subject to State survey and 
certification may have its payments suspended during the data review.
    We are also proposing that we may revoke a provider or supplier's 
billing privileges if the provider or supplier establishes:
    [sbull] Repeated instances in which, upon onsite review or other 
reliable evidence, we do not find present those licensed medical 
professionals required under the Medicare statute or regulation to 
supervise treatment of, or to provide Medicare covered service for, 
Medicare patients. Additional proposed reasons that may result in the 
revocation of billing privileges in Sec.  424.535(a) include the 
following:
    [sbull] In accordance with section 1862(e)(1) and (2) of the Act, 
the provider or supplier, any owner, managing employee, authorized or 
delegated official, supervising physician or other health care 
personnel who must be reported on the CMS 855 (for example, ambulance 
crew member), of the provider or supplier, becomes excluded from the 
Medicare, Medicaid or any other Federal health care programs, as 
defined in Sec.  1001.2, in accordance with section 1128 or 1156 of the 
Act, or is debarred, suspended or otherwise by any Federal health care 
program or agency.
    [sbull] The provider or supplier, or any owner of the provider or 
supplier, is convicted of a Federal or State felony offense that we 
determine to be detrimental to the best interests of the program as 
outlined in ``Denial of Enrollment'' above.
    [sbull] The provider or supplier certified as ``true'' deliberately 
submitted false or misleading information on the CMS 855 in order to 
enroll or maintain enrollment in the Medicare program. (Offenders may 
be subject to criminal or civil prosecution, in accordance with current 
laws and regulations).
    [sbull] Upon onsite review, we determine that the provider or 
supplier is no longer operational to furnish Medicare covered services 
or supplies.

[[Page 22072]]

    [sbull] The provider or supplier fails to furnish complete and 
accurate information on the CMS 855 and any applicable documentation 
within 60 calendar days of our notice to re-certify its enrollment 
information.
    [sbull] The provider or supplier knowingly sells to or allows 
another individual or entity to use its billing number.
    In addition to the revocation of the provider's or supplier's 
billing privileges, we propose at Sec.  424.535(b) that any provider 
agreement in effect at the time of revocation will also be terminated 
effective with the date of revocation. We do not feel it would be 
prudent for CMS to maintain an active provider agreement for a provider 
or supplier whose business relationship with Medicare was adverse 
enough as to cause the revocation of their billing privileges. Section 
1866(b)(2)(A) of the Act states that the Secretary may terminate a 
provider agreement after the Secretary ``has determined that the 
provider fails to comply substantially with the provisions of Title 
XVIII.'' We will amend Sec. Sec.  489.53 and 498.3 to reflect this 
proposal.
    In new Sec.  424.535(c) we propose that upon notification of the 
revocation of its billing number, if the provider or supplier seeks to 
re-establish enrollment and billing privileges in the Medicare program 
(either after the appeals process is exhausted or in place of the 
appeals process), then the provider or supplier must complete and 
submit a new CMS 855 as a new provider or supplier and applicable 
documentation. Providers must be re-surveyed or re-certified by the 
State survey agency as a new provider and must establish a new provider 
agreement with our Regional Office.
    If the billing privileges are revoked due to the adverse activity 
of an individual or organization other than the provider or supplier, 
the revocation may be reversed if the provider or supplier terminates 
their business relationship with the individual or organization that 
was responsible for the revocation within 30 days.
    As with a denial of Medicare enrollment, revocations would impact 
the provider or supplier on a national scale. As proposed in Sec.  
424.535(d), if a provider or supplier's billing privileges are revoked, 
we would review all other related Medicare enrollment files that the 
revoked provider or supplier has an association with (for example, as 
an owner or managing employee) to determine if the revocation warrants 
an adverse action of the associated Medicare provider or supplier.

I. Deactivation of Medicare Billing Privileges

    When a provider or supplier's billing number is deactivated, 
billing privileges have been temporarily suspended, but can be restored 
upon the submission of updated or re-certified information. In new 
Sec.  424.540, we propose to deactivate a provider or supplier's 
Medicare billing number if no Medicare claims are submitted for 2 
consecutive calendar quarters (6 months) unless current policy or 
regulations specify otherwise for specific provider or supplier types. 
Our current policy requires deactivation of billing numbers after 4 
consecutive calendar quarters (12 months) of no claim submissions. We 
are including this reduction to the current requirement because we are 
aware of a number of program integrity issues related to inactive 
Medicare billing numbers. We wish to prevent, for example, questionable 
businesses from deliberately obtaining multiple numbers so that they 
could keep one ``in reserve'' in the event their practices result in 
suspension of claims payment under their active number. We also wish to 
prevent fraudulent entities from obtaining information about 
discontinued providers or suppliers, for example, using the Medicare 
billing number of a deceased physician. While we are proposing to use 6 
months of no billing as a criteria for deactivation, we are seeking 
comments on the feasibility and reasonableness of this time frame. We 
are interested in receiving comments on whether this time frame should 
apply to all categories of providers and suppliers, or whether there 
should be a special process for categories of providers and suppliers 
that would have reason to bill Medicare infrequently.
    We are also proposing to deactivate a billing number if we discover 
changes to the information provided on the provider or supplier's CMS 
855 that were not reported within 90 days of the change. This includes, 
but is not limited to, changes to billing services, a change in the 
practice location, or a change of any managing employee. A change in 
ownership or control must be reported within 30 calendar days.
    Deactivation of Medicare billing privileges is considered a 
temporary action to protect the provider or supplier from misuse of 
their billing number and to also protect the Medicare trust fund from 
unnecessary overpayments. The temporary deactivation of a billing 
number will not have any effect on a provider or supplier's 
participation agreement or conditions of participation.
    In proposed Sec.  424.540(b), we state that a provider or supplier 
whose billing number has been deactivated for any reason other than 
non-submission of a claim for 6 months and who wants to reactivate its 
Medicare billing number must complete and submit a new CMS 855. Those 
providers and suppliers whose billing number has been deactivated after 
non-submission of a claim must re-certify that the enrollment 
information current on file with Medicare is correct before the claim 
will be paid. In addition, the provider or supplier must meet all 
current Medicare requirements in place at the time of the re-
activation. The provider or supplier must also be prepared to submit a 
valid claim or risk subsequent deactivate of their billing number. Once 
notified, we will give all reactivations of Medicare billing numbers 
priority handling to ensure expedient payment of claims. Reactivation 
of a Medicare billing number would not require re-survey or 
certification by State agency, or the establishment of a new provider 
agreement.

J. Provider and Supplier Appeal

    In new Sec.  424.545, we propose that a provider or supplier that 
has been denied enrollment in the Medicare program, or whose enrollment 
has been revoked, may appeal our decision in accordance with our 
regulations at Part 405, Subpart H, for suppliers or Part 498, Subpart 
A, for providers. CMS is currently drafting a single regulatory appeals 
process for all providers and suppliers denied or revoked from 
participation in the Medicare program. In keeping with current policy, 
we also propose that no payments will be made during the appeals 
process. If the provider or supplier is successful in overturning a 
denial or revocation, unpaid claims for services furnished during the 
overturned period may be resubmitted.
    In addition, we propose in new Sec.  424.545(b) that a provider or 
supplier whose billing privilege has been deactivated may file a 
rebuttal using procedures found at Sec.  405.74.

K. Prohibitions on the Sale or Transfer of Billing Privileges

    We propose in new Sec.  424.550 that a provider or supplier would 
be prohibited from selling its Medicare billing number to any 
individual or entity, or allowing another individual or entity to use 
its Medicare billing number. Similarly, we would prohibit a provider or 
supplier from transferring its Medicare billing privileges to any 
individual or entity, except during a change in ownership, as stated 
below. A

[[Page 22073]]

provider or supplier does not have independent authority to sell or 
transfer any billing number issued or the billing privileges granted 
with the billing number assigned.
    We propose this policy because only we and our agents have the 
authority to issue Medicare billing numbers and grant Medicare billing 
privileges. These numbers are issued only after the information about 
the provider or supplier collected on the CMS 855 is verified. Because 
it is used to uniquely identify a provider or supplier, the Medicare 
billing number we issue is solely for use by the specific provider or 
supplier to whom it was issued.
    In the case of a provider or supplier undergoing a change of 
ownership as described in part 489 subpart A, we would require at Sec.  
424.550(b) that a CMS 855 be completed and submitted by both the 
current owner and the new owner before the completion of the ownership 
change. Failure of the current owner to submit the CMS 855 prior to the 
change of ownership may result in sanctions and/or penalties, after the 
date of ownership change, in accordance with Sec. Sec.  424.520, 
424.540, and 489.53. Failure of the new owner to submit the CMS 855 
prior to the change of ownership may result in the deactivation of the 
Medicare billing number until the CMS 855 has been submitted.
    We may deactivate a Medicare billing number at any time before 
final transference of the provider agreement to the new owner. This may 
occur as a result of the submission of a CMS 855 with material 
omissions, or preliminary information received or determined by us that 
makes us question whether the new owner will ultimately be granted a 
final transference of the provider agreement. This allows us the right 
to ensure that billing privileges are given only to a new owner for 
which we have adequate information to, at a minimum, determine that the 
new owner should have billing privileges prior to the complete 
validation of their CMS 855 and the transfer of the provider agreement.
    We understand that not all enrollment information is available 
before the change of ownership. We will work with the new owner(s) to 
ensure a seamless transition, but it is the provider's or supplier's 
responsibility to report this and any other changes to us to prevent us 
from imposing any adverse action against it.
    For those providers and supplier not covered by Part 489, any 
change in the ownership or control of the provider or supplier must be 
reported on the CMS 855 within 90 days of the change as noted in Sec.  
424.540(a)(2). Generally, a change of ownership that also changes the 
tax identification number will require a new CMS 855 from the new 
owner.

L. Payment Liability

    In new Sec.  424.555, we propose that any expenses for services 
furnished to a Medicare beneficiary by those categories of suppliers 
covered by section 1834 of the Act (that is, suppliers of DMEPOS) are 
the responsibility of that supplier if the supplier has been denied 
Medicare billing privileges. We further propose that no payment may be 
made for covered services furnished to a Medicare beneficiary by a 
provider or supplier whose billing privileges have been deactivated or 
revoked. The Medicare beneficiary will have no financial responsibility 
for this type of expense, and the provider or supplier must refund on a 
timely basis any amounts collected from the beneficiary for those 
covered services.
    We are proposing these provisions because a provider or supplier 
who fails to provide valid enrollment information, or who is not a 
valid provider or supplier type under the Medicare program, cannot be 
verified as a legitimate provider or supplier for purposes of this 
rule. Claims or bills submitted for covered Medicare services must have 
an active Medicare billing number. Claims or bills submitted by a 
provider or supplier who is not properly enrolled, and does not have an 
active Medicare billing number, would be considered incomplete and 
would be returned. The provider or supplier would then be in violation 
of the mandatory claims submission requirements and could be fined for 
each occurrence. An incomplete claim returned for this reason would not 
be afforded appeal rights for the provider or supplier. However, as 
described earlier, a provider or supplier may appeal a denial or 
revocation of enrollment in accordance with regulations elsewhere in 
this subpart.
    Sections 1802(b), 1834(j), 1866, and 1870 of the Act, provide 
Medicare beneficiaries with certain protections against liabilities 
imposed by providers and suppliers. In section 1834(j)(4), for example, 
the statute protects the beneficiary against demands for payment for 
covered Medicare services by certain categories of suppliers that have 
not been granted Medicare billing privileges. Section 1866 of the Act 
prohibits providers that have entered into agreements described in that 
section from charging the beneficiary for covered items or services 
that are not paid by Medicare because the provider has failed to comply 
with certain requirements. Furthermore, section 1802(b) of the Act, 
which sets forth a variety of criteria under which physicians and 
practitioners may enter into private contracts with Medicare 
beneficiaries, provides for additional beneficiary protection. Section 
1870 provides that, except under certain circumstances, any payment to 
a provider of services with respect to items or services furnished 
shall be considered a payment to the individual, but that the 
individual will not be liable for overpayment to the provider where the 
individual is without fault.
    In addition, section 1128A(a)(6) of the Act provides for criminal 
penalties for providers and suppliers having knowledge of events 
affecting the right to benefit or payment, and concealing or failing to 
disclose such an event with an intent to fraudulently secure benefit or 
payment when it is not authorized.

IV. Data Requested on the CMS 855 and Its Iterations

    Because we are intending to use the CMS 855 series of forms as the 
principal information collection instrument, we are providing the 
following information about the data requested on the CMS 855 forms. In 
addition to the legal authority already cited in this preamble, the 
following additional provisions of the statute grant us the authority 
to collect the information required to complete the CMS 855:
    [sbull] Section 1814(a) of the Act states that payment for services 
furnished to an individual may only be made to providers eligible under 
section 1866 and only if a written request is filed in such a form and 
manner as the Secretary may prescribe.
    [sbull] Sections 1815(a) and 1833(e) of the Act authorize the 
Secretary to withhold Medicare payments until the provider or supplier 
furnishes such information as may be necessary to determine amounts 
due.
    [sbull] Section 1866(a)(1) of the Act establishes provider 
agreement requirements; including a requirement not to charge the 
beneficiary (except as provided in section 1866(a)(2)) for items or 
services for which the beneficiary would have been entitled to have 
payment had the provider complied with procedural requirements.

A. Information Collection on the CMS 855

    Since its inception in April 1996, the CMS 855 has been revised 
three times, in May 1997, January 1998, and in November 2001. A new 
proposed revision of the CMS 855 series is being submitted with this 
proposed rule for

[[Page 22074]]

additional public comment. Each revision has been based on comments 
received from our contractors, the health care industry, and new 
requirements imposed through legislation. All revisions are submitted 
to OMB and published in the Federal Register for public comment before 
approval and implementation.
    The primary function of the CMS 855 is to gather information from a 
provider or supplier that tells us who it is, whether it meets certain 
qualifications to be a health care provider or supplier, where it 
practices or renders its services, the identity of the owners of the 
enrolling entity, and information necessary to establish the correct 
claims payment. The goal of evaluating and revising the CMS 855 is to 
simplify and clarify the information collection without jeopardizing 
our need to collect specific information. Listed below are the various 
sections of the CMS 855 and the information that each section collects. 
Not all sections apply to all provider and supplier types. For specific 
information collection requirements by provider or supplier type, 
review the applicable CMS 855 as mentioned earlier in this preamble.
1. Provider or Supplier Application
    To ensure efficient processing of the CMS 855, this section 
requires the provider or supplier to give the reason for submission of 
the CMS 855 and to state whether it is currently known (enrolled) in 
Medicare and for any current Medicare identifiers (billing numbers or 
Medicare contractor name(s)).
2. General Identification Information
    This section collects personal and business information to uniquely 
identify the provider or supplier with such information as type or 
specialty, name, business name, address, date of birth, SSN, EIN, 
correspondence address, and other similar information. This information 
is needed to uniquely identify the provider or supplier. Moreover, as 
detailed above, section 1124(a)(1) of the Act requires disclosure of 
both EINs and SSNs. See also section 31001(I) of the DCIA.
3. Adverse Legal Action(s) and Overpayment(s)
    The information obtained in this section enables us to determine if 
an individual or entity should have its Medicare billing number denied 
or revoked. Table A in this section cites specific adverse legal 
actions which have a direct bearing on the individual's or entity's 
professional competence, professional performance, or financial 
integrity that the provider or supplier must report to Medicare. These 
actions may serve as a basis for the Secretary, as set forth in section 
1128 of the Act, to exclude an individual or entity from participation 
in Medicare and all other Federal health care programs.
4. Current Practice Location(s)
    This section collects information to verify that the practice 
location where services are proposed to be or are being furnished by 
the enrolling provider or supplier meets Medicare requirements.
5. Ownership Interest and/or Managing Control Information 
(Organizations)
6. Ownership Interest and/or Managing Control Information (Individuals)
7. Chain Home Office Information
    The information collected in the above three sections (5 through 7) 
is needed to ensure that all individuals and entities deriving 
financial benefit from the Medicare program are identified as required 
in sections 1124 and 1124A(a) of the Act, and in Sec.  420.204. Those 
sections state that as a condition for approval or renewal of a 
contract or agreement, and for an entity to receive payment under Title 
XVIII, complete information as to the identity of each person and/or 
organization with an ownership or controlling interest of 5 percent or 
more and each managing employee as defined in section 1126(b) of the 
Act and Sec.  420.201, must be disclosed.
8. Billing Agency
    This section is needed to capture identifying information, such as 
legal business name and address, and to obtain information about the 
contract between the provider or supplier and the billing agency that 
submits bills or claims for Medicare payments on behalf of a Medicare 
provider or supplier. In addition, we need this information to verify 
that the biller has been authorized by the provider or supplier to 
submit bills or claims on the provider or supplier's behalf. We need to 
be able to monitor agreements made between billing and collection 
agents and providers and suppliers to ensure compliance with Medicare 
requirements found at 1842(b)(6) of the Act and Sec. Sec.  424.73 and 
424.80.
9. For Future Use
10. Staffing Company
    This section is needed to capture identifying information, such as 
legal business name and address, and to obtain information about the 
contract between the provider or supplier and the staffing company that 
submits bills or claims for Medicare payments on behalf of a Medicare 
provider or supplier. In addition, we need this information to verify 
that the biller has been authorized by the provider or supplier to 
submit bills or claims on the provider or supplier's behalf. We need to 
be able to monitor agreements made between staffing companies and 
providers and suppliers to ensure compliance with Medicare requirements 
found at section 1842(b)(6) of the Act and Sec. Sec.  424.73 and 
424.80.
11. Surety Bond Information
    This section will be used on an ``as needed'' basis and would 
furnish us with information regarding certain providers and suppliers 
that are required to obtain a surety bond under section 4312 of the BBA 
(codified at sections 1834(a)(16), 1861(o)(7), 1861(p)(4)(A)(v) and 
1861(cc)(2)(I)) of the Act. The BBA further grants the Secretary the 
authority, at his or her discretion, to impose the requirements on 
other Medicare providers or suppliers (other than physicians or other 
practitioners as defined in section 1842(b)(18)(C) of the Act). See 
also section 1834(a)(16) of the Act.
12. Capitalization Requirements for Home Health Agencies (HHAs)
    This section collects information required by Sec.  489.28, which 
requires all HHAs enrolling in Medicare for the first time to submit 
proof of sufficient operating funds.
13. Contact Person(s)
    This information will allow a Medicare contractor to establish a 
direct point of contact to resolve issues pertaining to the completion 
and validation of the information furnished in the CMS 855.
14. Penalties for Falsifying Information on this Enrollment Application
    This section is informational only. It cites various statutory 
references in the United States Code and the Social Security Act 
concerning actual knowledge, deliberate ignorance or reckless disregard 
of the truth or falsity of the information contained therein on an 
application to receive payment.
15. Certification Statement
    The certification statement is being revised. Statement 3 on the 
CMS 855A, CMS 855B, and CMS 855S forms and statement 4 on the CMS 855I 
form have been changed to provide a better understanding of Medicare 
policy. An additional statement is also being added to the CMS 855A and 
CMS 855B forms for providers and suppliers that receive

[[Page 22075]]

accreditation from an outside organization authorizing the release of 
the survey to us or our agents. By adding this language to the 
certification statement, the current CMS 1514 form will be eliminated 
for Medicare purposes.
16. Delegated Official (Optional)
    The signature(s) obtained in sections 15 and 16 would attest that 
the provider or supplier has submitted accurate, complete, and truthful 
information as required by sections 1814(a) and 1833(e) of the Act, and 
that the person the provider or supplier has authorized to sign for the 
provider or supplier attests on behalf of the provider or supplier to 
having read and understood the information furnished and collected in 
the CMS 855, and that the information is accurate, complete, and 
truthful. By signing the certification statement, the provider or 
supplier, or the authorized or delegated official signing on behalf of 
the provider or supplier, is attesting, among other things, that the 
provider or supplier is aware of and will abide by all applicable 
Medicare laws and regulations.
17. Attachments
    This section is a checklist of possible documents that should be 
submitted with the enrollment application. These documents are used as 
evidence or proof of the validity of the information furnished through 
the CMS 855.

B. Information Pertaining to Specific Provider and Supplier Types

1. Attachment 1 to Form CMS 855B--Ambulance Service Suppliers
    We must collect specific information on ambulance service suppliers 
to verify their eligibility to receive payment for Medicare covered 
services. Section 410.41 (Requirements for ambulance suppliers) sets 
forth the requirements for ambulance service suppliers. An ambulance 
must be specially designed to respond to medical emergencies or provide 
acute medical care to transport the sick and injured and comply with 
all State and local laws governing an emergency transportation vehicle. 
We require that, at a minimum, an ambulance contain a stretcher, 
linens, emergency medical supplies, oxygen equipment, and other 
lifesaving emergency medical equipment as required by State or local 
laws, and be equipped with emergency warning lights, sirens, and two-
way telecommunications.


    Note: This attachment replaced the HCFA R-88 (OMB Approval 
Number 0938-0460).

2. Attachment 2 to Form CMS 855B--Independent Diagnostic Testing 
Facilities (IDTFs)
    IDTFs must submit specific information to us to justify their 
eligibility to receive payment for Medicare covered services. The 
information collected in this attachment allows us to assess compliance 
with 42 CFR Sec.  410.33 (Independent diagnostic testing facility). In 
addition, 42 CFR Sec.  440.30 (Other laboratory and x-ray services) 
defines laboratory and X-ray services. These services may be provided 
in an office or similar facility other than a hospital outpatient 
facility or clinic, and must be furnished by a laboratory that meets 
the requirements of Part 493 of chapter IV, 42 CFR.

C. Supplemental Applications

1. Supplemental Application CMS 855S (DMEPOS Supplier Application)
    The information collected in this iteration of the CMS 855 allows 
us to assess compliance with Sec.  424.57 (Special payment rules for 
items furnished by DMEPOS suppliers and issuance of DMEPOS supplier 
billing numbers), which outlines specific standards that must be met 
for the enrollment and renewal of enrollment for DMEPOS suppliers. This 
collection was previously approved by OMB via the HCFA 192 (OMB 
Approval Number 0938-0594). The CMS 855S has replaced the HCFA 192.


    Note: A DMEPOS supplier is not required to submit a CMS 855B 
form in addition to a CMS 855S.

2. Supplemental Application CMS 855R (Individual Reassignment of 
Benefits Application)
    The CMS 855R will be used to link individual Medicare suppliers 
with Medicare entities to whom the individual reassigns his or her 
benefits and is used in conjunction with the CMS 855I or the CMS 855B 
during initial enrollment into the Medicare program, or whenever an 
individual supplier wishes to, or is required to, reassign its 
benefits. The CMS 855R contains only the information needed to identify 
and link individual suppliers reassigning their benefits to the 
individuals and entities to whom their benefits are being reassigned.

V. Sanctions and Penalties

    The CMS 855 states that the following penalties may be imposed:
    [sbull] 18 U.S.C. 1001 authorizes criminal penalties against an 
individual who in any matter within the jurisdiction of any department 
or agency of the United States knowingly and willfully falsifies, 
conceals or covers up by any trick, scheme or device a material fact, 
or makes or uses any false, fictitious, or fraudulent statements or 
representations, or makes any false writing or document knowing the 
same to contain any false, fictitious or fraudulent statement or entry. 
Individual offenders are subject to fines of up to $250,000 and 
imprisonment for up to 5 years. Offenders that are organizations are 
subject to fines of up to $500,000. 18 U.S.C. 3571(d) also authorizes 
fines of up to twice the gross gain derived by the offender.
    [sbull] Section 1128B(a)(1) of the Act authorizes criminal 
penalties against an individual who ``knowingly and willfully makes or 
causes to be made any false statement or representation of a material 
fact in any application for any benefit or payment under a Federal 
health care program.'' The offender is subject to fines of up to 
$25,000 or imprisonment for up to 5 years, or both.
    [sbull] The Civil False Claims Act, 31 U.S.C. 3729, imposes a civil 
penalty of $5,000 to $10,000 per violation, plus three times the amount 
of damages sustained by the Government and imposes civil liability, in 
part, on any person who--
    [sbull] Knowingly presents, or causes to be presented, to an 
officer or an employee of the United States Government a false or 
fraudulent claim for payment or approval;
    [sbull] Knowingly makes, uses, or causes to be made or used, a 
false record or statement to get a false or fraudulent claim paid or 
approved by the Government; or
    [sbull] Conspires to defraud the Government by getting a false or 
fraudulent claim allowed or paid.
    [sbull] Section 1128A(a)(1) of the Act imposes administrative 
sanctions on a person for the submission to a Federal health care 
program of false or otherwise improper claims.
    These administrative sanctions include a civil monetary penalty of 
up to $10,000 for each item or service falsely or fraudulently claimed 
an assessment of up to triple the amount claimed, and exclusion from 
participation in all Federal health care programs.
    The government may assert common law claims such as ``common law 
fraud,'' ``money paid by mistake,'' and ``unjust enrichment.'' Remedies 
include compensatory and punitive damages, restitution, and recovery of 
the amount of the unjust profit.
    In addition, the following two sanctions will be added to the CMS 
855 form:

[[Page 22076]]

    [sbull] 18 U.S.C. 1035 authorizes criminal penalties against 
individuals in any matter involving a health care benefit program who 
knowingly and willfully falsifies, conceals, or covers up by any trick, 
scheme, or device a material fact; or makes any materially false, 
fictitious, or fraudulent statements or representations, or makes or 
uses any materially false fictitious, or fraudulent statement or entry, 
in connection with the delivery of or payment for health care benefits, 
items, or services. The individual shall be fined or imprisoned up to 5 
years or both.
    [sbull] 18 U.S.C. 1347 authorizes criminal penalties against 
individuals who knowing and willfully execute, or attempt, to execute a 
scheme or artifice to defraud any health care benefit program, or to 
obtain, by means of false or fraudulent pretenses, representations, or 
promises, any of the money or property owned by or under the control 
of, any health care benefit program in connection with the delivery of 
or payment for health care benefits, items, or services. Individuals 
shall be fined or imprisoned up to 10 years or both. If the violation 
results in serious bodily injury, an individual shall be fined or 
imprisoned up to 20 years, or both. If the violation results in death, 
the individual shall be fined or imprisoned for any term of years or 
for life, or both.

VI. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), agencies are 
required to provide a 60-day notice in the Federal Register and solicit 
public comment before a collection of information requirement is 
submitted to OMB for review and approval. To evaluate fairly whether an 
information collection should be approved by OMB, section 3506(c)(2)(A) 
of the PRA requires that we solicit comments on the following issues:
    [sbull] Whether the information collection is necessary and useful 
to carry out the proper functions of the agency;
    [sbull] The accuracy of the agency's estimate of the information 
collection burden;
    [sbull] The quality, utility, and clarity of the information to be 
collected; and
    [sbull] Recommendations to minimize the information collection 
burden.
    Therefore, we are soliciting public comment on each of these issues 
for the information collection requirement discussed below.
    The following sections of this document contain information 
collection requirements:

Section 424.510 Requirements for Obtaining a Billing Number and 
Medicare Billing Privileges

    To enroll in the Medicare program and obtain and activate a 
Medicare provider or supplier billing number, Sec.  424.510(a) requires 
a provider or supplier to complete and submit a CMS 855 to us, 
demonstrating that the provider or supplier meets all of the 
requirements set forth in this section. The burden associated with 
these requirements are currently captured in the CMS 855 (OMB Approval 
Number 0938-0685) and shown below in Table 1.

            Table 1.--Current Estimated Hours for Completion of CMS 855 Forms for Initial Enrollment
----------------------------------------------------------------------------------------------------------------
                                           Estimated       Estimated time for      Total number    Total cost in
            CMS form number                number of         completion per        of hours for       dollars
                                          respondents          respondent           completion       (million)
----------------------------------------------------------------------------------------------------------------
855A..................................           5,000  8 Hours.................          40,000              $3
855B..................................          10,000  8 Hours.................          80,000              $6
855I..................................          50,000  5 Hours.................         250,000              $3
855R..................................         100,000  15 Minutes..............          25,000             $.3
855S..................................           9,000  8 Hours.................          72,000            $5.4
                                                                                 -------------------------------
    Total Estimated Hourly and          ..............  ........................         467,000           $17.7
     Financial Burden.
----------------------------------------------------------------------------------------------------------------

    The estimated number of respondents is based on current Medicare 
contractor workload reports. The cost in dollars is based on hourly 
salaries for applicable staff to complete the applications.
    Section 424.510(f) states that we reserve the right to perform on-
site inspections of a provider or supplier to verify and ensure 
validity of the information submitted to us or our agents and to 
determine compliance with Medicare requirements. We intend to conduct 
on-site visits of all new suppliers of DMEPOS before they can enroll in 
the Medicare program. The burden associated with these requirements are 
currently captured and approved in form HCFA-R-263 (OMB Approval Number 
0938-0749).
    We also intend to conduct approximately 490 on-site visits to 
Community Mental Health Centers. The burden associated with these 
requirements are currently captured and approved in form HCFA-R-273 OMB 
Approval Number 0938-0770). We also intend to conduct approximately 
2800 visits to IDTFs on an annual basis. We will seek OMB approval for 
these visits. The burden associated with this requirement is the time 
and effort necessary for a facility to provide documentation to verify 
information provided on their CMS 855 and to demonstrate that they meet 
other necessary Medicare requirements and regulations.

                                   Table 2.--Estimated Annual Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                                  Average burden
          CFR sections             Annual number     Frequency     per response    Annual burden    Annual cost
                                   of responses                       (hours)         (hours)
----------------------------------------------------------------------------------------------------------------
424.510(f)......................            2800               1               4          11,200              $0
----------------------------------------------------------------------------------------------------------------

    Since these site visits are unannounced and performed to ensure 
proper physical location, equipment, and personnel to meet Medicare 
requirements, we do not expect the

[[Page 22077]]

provider or supplier to incur any financial burden.
    We may also conduct on-site visits of providers or suppliers based 
on any information that leads us or our agents to believe that an 
administrative action, investigation or audit is warranted. Information 
collected under these situations is exempt from the PRA, as stipulated 
under 5 CFR 1320.4.

Section 424.515 Requirements for Reporting Changes and Updates to, and 
the Periodic Revalidation of, Medicare Enrollment Information

    A provider or supplier must re-certify for revalidation its 
enrollment information no more than once every 3 years. Section 
424.515(b) states that within 60 calendar days of our notice to re-
certify their enrollment information for revalidation, a provider or 
supplier must submit any new or revised CMS 855 information and 
documentation necessary to demonstrate that they meet the requirements 
set forth in this section.

                                   Table 3.--Estimated Annual Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                                      Average
                                   Annual number                    burden per     Annual burden    Annual cost
          CFR sections             of responses      Frequency       response         (hours)        (million)
                                                                     (minutes)
----------------------------------------------------------------------------------------------------------------
424.515(b)......................         387,000            (**)              95         612,750            $15
----------------------------------------------------------------------------------------------------------------
** Frequency is no more than once every 3 years. (1.16 million providers and suppliers/3 years x 95 minutes/60
  minutes.)

    The burden hours shown above are for the most restrictive 
reporting. As indicated elsewhere in this preamble, we are exploring 
various options and are soliciting comments on ways of minimizing the 
burden on providers and suppliers during the process of revalidating 
their enrollment information.
    The estimated cost is based on $40 per application per provider to 
review and return.

Section 424.520 Additional Provider and Supplier Requirements for 
Enrolling and Maintaining Active Enrollment Status in the Medicare 
Program

    Following enrollment and periodic recertification of enrollment 
information, a provider or supplier must report to us any changes to 
the information furnished on the CMS 855 or supporting documentation 
within 90 calendar days of the change.

                                   Table 4.--Estimated Annual Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                                  Average burden
           CFR section             Annual number     Frequency     per response    Annual burden    Annual cost
                                   of responses                       (hours)         (hours)       (millions)
----------------------------------------------------------------------------------------------------------------
424.20..........................          40,000               1               1          40,000            $1.6
----------------------------------------------------------------------------------------------------------------

Section 424.525 Rejection of a Provider or Supplier's CMS 855 for 
Medicare Enrollment

    We will reject a provider or supplier's CMS 855 if the provider or 
supplier does not furnish missing or necessary information and 
documentation to us within 60 calendar days of a request. We believe 
that the burden associated with this requirement is captured in Sec.  
424.515, as we will merely be seeking the information initially 
requested in the CMS 855.
    Section 424.525(b) states that upon notification of a rejected CMS 
855, the provider or supplier must once again begin the enrollment 
process by completing and submitting a new CMS 855 and all applicable 
documentation if it wishes to obtain a Medicare billing number.

                                   Table 5.--Estimated Annual Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                                  Average burden
          CFR sections             Annual number     Frequency     per response    Annual burden    Annual cost
                                   of responses                      (minutes)        (hours)
----------------------------------------------------------------------------------------------------------------
424.525(b)......................          11,250               1              95          17,812        $563,000
----------------------------------------------------------------------------------------------------------------

    The annual dollar cost is based on $50 per respondent to update and 
resubmit a previously submitted enrollment application.

Section 424.535 Revocation of Enrollment and Billing Privileges From 
the Medicare Program

    Section 424.535(b) states that upon notification of the revocation 
of its billing number and billing privileges, if the provider or 
supplier seeks to re-establish enrollment in the Medicare program it 
must re-enroll in the Medicare program through the completion and 
submission of a new CMS 855 and applicable documentation.

[[Page 22078]]



                                   Table 6.--Estimated Annual Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                                  Average burden
          CFR sections             Annual number     Frequency     per response    Annual burden    Annual cost
                                   of responses                       (hours)         (hours)       (millions)
----------------------------------------------------------------------------------------------------------------
424.535(b)......................            2000               1               8          16,000            $1.2
----------------------------------------------------------------------------------------------------------------

    The annual dollar cost is based on $600 per respondent to re-enroll 
in the Medicare program.
    Providers must also be re-surveyed or re-certified by the State 
Survey Agency and must establish a new provider agreement with our 
Regional Office. The burden associated with the survey and 
certification requirement is exempt from the PRA, as provided in 
section 4204(c) of Pub. L. 100-203 COBRA 87, as amended by Pub. L. 100-
360 (Medicare Catastrophic Coverage Act of 1988). The burden associated 
with the requirement to establish a new provider agreement (Form HCFA-
460) is currently approved under OMB Approval Number 0938-0373.

Section 424.540 Deactivation of Medicare Billing Privileges

    Section 424.540(a)(1) states that if no Medicare claims are 
submitted for two consecutive calendar quarters (6 months) we would 
deactivate a provider or supplier's Medicare billing number. The 
provider or supplier must complete and submit a CMS 855 for validation 
to reactivate its Medicare billing number and billing privileges.

                                   Table 7.--Estimated Annual Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                                  Average burden
          CFR sections             Annual No. of     Frequency     per response    Annual burden    Annual cost
                                     responses                       (minutes)         hours
----------------------------------------------------------------------------------------------------------------
424.540 (a)(1)..................            1200               1              95           1,900         $48,000
----------------------------------------------------------------------------------------------------------------

    The annual cost is based on $40 per respondent to review and re-
certify via signature their previously submitted enrollment 
application/information.
    Table 8 below shows the total estimated hourly and financial burden 
for all requirements outlined and proposed in this rule.

                      Table 8.--Estimated Hourly and Financial Burden for All Requirements
----------------------------------------------------------------------------------------------------------------
                                                                   Annual No. of   Annual burden    Annual cost
                           CFR section                               responses         hours         (million)
----------------------------------------------------------------------------------------------------------------
424.500.........................................................         618,250     1.2 million           $36.6
----------------------------------------------------------------------------------------------------------------

    We have submitted a copy of this proposed rule to OMB for its 
review of the information collection requirements in Sec. Sec.  
424.510, 424.515, 424.520, 424.525, 424.535, and 424.540 and related 
forms in the addendum. These requirements are not effective until they 
have been approved by OMB.
    If you have any comments on any of these information collection and 
record keeping requirements, please mail the original and 3 copies 
directly to the following:

Centers for Medicare and Medicaid Services, Office of Information 
Services, Information Technology Investment Management Group, Division 
of CMS Enterprise Standards, Room C2-26-17, 7500 Security Boulevard, 
Baltimore, MD 21244-1850, Attn.: John Burke CMS-6002-P.

 And,

Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington. DC 
20503, Attn: Brenda Aguilar, CMS Desk Officer.

VII. Regulatory Impact Analysis

    We have examined the impacts of this proposed rule under Executive 
Order (E.O.) 12866, the Unfunded Mandate Reform Act of 1995, and the 
Regulatory Flexibility Act. E.O. 12866 directs agencies to assess all 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits. In addition, a Regulatory Impact Analysis must be 
prepared for major rules with economically significant effects ($100 
million or more in any one year). This proposed rule would establish in 
regulations specific provider and supplier initial enrollment 
procedures and the periodic revalidation of eligibility. It is not 
expected to have an impact that would meet the threshold criteria to be 
considered economically significant.
    The Unfunded Mandate Reform Act of 1995, in section 202, requires 
that agencies prepare an assessment of anticipated costs and benefits 
before proposing any rule that may result in an annual expenditure by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $110 million adjusted for inflation. The rule has no 
consequential adverse impact on State, local, or tribal governments. 
This rule may reduce some State burdens since they will no longer 
certify providers that are not qualified to participate in the Medicare 
program. The impact on the private sector is well below the threshold.
    Consistent with the Regulatory Flexibility Act, we prepare a 
Regulatory Flexibility Analysis (RFA) unless we certify that a rule 
would not have a

[[Page 22079]]

significant economic impact on a substantial number of small entities. 
The RFA is to include a justification of why action is being taken, the 
kinds and number of small entities that the proposed rule will affect, 
and an explanation of any considered meaningful options that achieve 
the objectives and would lessen any significant adverse economic impact 
on the small entities. For purposes of the RFA, entities with annual 
revenues of $5 million to $25 million depending on the type of health 
care provider and non-profit organizations are considered to be small 
entities. Because of the scope of this rule, all small entities that 
participate in the Medicare program are considered providers and 
suppliers and will be affected, but we do not expect that effect to be 
of a significant nature. As we show in section B of this impact 
analysis, the annual burden on providers and suppliers for completing 
the CMS 855 forms would not rise to the level of a significant burden.
    The following analysis, together with the rest of this preamble, 
explains the rationale, purpose, and alternatives considered in the 
proposed rule. This is an administrative initiative that may result in 
Medicare program savings but at this time those savings are 
inestimable. We believe the probable costs providers or suppliers would 
incur as a result of this rule to be negligible.

A. Rationale, Purpose, and Alternatives Considered

    As noted elsewhere in this preamble, we are responsible for 
protecting the Medicare trust fund by ensuring that unqualified, 
fraudulent, or excluded providers and suppliers do not bill the 
Medicare program. Past experience with a number of program integrity 
efforts have identified that granting billing privileges to entities 
that do not exercise sound business practices can result in 
uncollectable overpayments. The ease of obtaining a billing number in 
the past has paved the way for unscrupulous businesses to defraud the 
government deliberately by billing for services never furnished or 
furnished at inflated prices.
    The provisions of this proposed rule supplement, but do not replace 
or nullify, existing regulations concerning the establishment of 
provider or supplier agreements, the issuance of provider or supplier 
billing numbers, and payment for Medicare covered services or supplies 
to eligible providers and suppliers. Basically, this rule consolidates 
current regulations found throughout the Code of Federal Regulations 
and more clearly defines what Medicare expects from providers and 
suppliers rendering services to the Medicare beneficiaries. Moreover, 
we have revised the ``Provider Supplier Enrollment Application (CMS 
855)'' which will greatly decrease the current burden to the provider 
or supplier when applying for billing privileges. We expect this rule 
to ensure that the Medicare program has adequate information on those 
who seek to bill the program for services. Furthermore, it assures us 
that information will be periodically updated and reviewed. We believe 
that establishing the foundation for a sound business relationship with 
providers and suppliers will minimize billing problems and otherwise 
protect the Medicare trust fund. Similarly, we believe it is necessary 
for us to impose the requirements of this regulation on existing 
providers and suppliers and to establish safeguards that enable us to 
deny enrollment of unqualified providers and suppliers, and to revoke 
the billing privileges of egregious offenders whose actions place the 
Medicare trust fund at risk.
    The primary goal of this rule, through standard enrollment 
requirements and periodic revalidation of the enrollment information, 
is to allow us to collect and maintain (keep current) a unique and 
equal data set on all current and future providers and suppliers that 
are or will bill the Medicare program for services rendered to our 
beneficiaries. By achieving this goal, we will be better positioned to 
combat and reduce the number of fraudulent and abusive providers and 
suppliers in the Medicare program, thereby protecting the trust fund 
and the Medicare beneficiaries. This rule will also allow us to 
develop, implement, and enforce national provider and supplier 
enrollment procedures to be administered uniformly by all Medicare 
contractors. Over time, we strongly believe that any current burden 
imposed on the providers and suppliers will be greatly diminished 
through the use of computer storage and web based internet technology.
    Studies performed by our contractors, the GAO and OIG have shown 
numerous instances of fictitious applicants being granted Medicare 
billing numbers. This proposed rule would integrate the request for 
enrollment with sufficient data to substantiate an appropriate level of 
performance on the part of a new or continuing business. In prior 
studies, the OIG has found applicants who had submitted applications 
with nonexistent addresses. In some instances suppliers had no 
inventory of goods to be sold, lacked business licenses, had no 
financial investment, or lacked any experience in the business venture.
    The GAO report concluded: ``Weaknesses in CMS' current provider 
enrollment process have made Medicare vulnerable to dishonest 
providers. To protect the integrity of Medicare, CMS and its 
contractors must have effective practices for reviewing applicants to 
verify that they are eligible for enrollment in the program, as well as 
the authority to deny or revoke enrollment to those that are not.'' 
This report also concluded that, ``: Periodic revalidation of provider 
enrollment data should be a valuable means of ensuring that CMS has 
current, useful data on active providers and that providers no longer 
eligible to participate in Medicare are dropped from the program.'' 
Therefore, based on the above recommendation and our own successes with 
our 3-year re-enrollment policy currently in effect for DME suppliers, 
we are seeking to expand this requirement to all providers and 
suppliers billing the Medicare program.
    We have already stepped up our efforts to seek more uniformity in 
the enrollment process. However, our experience clearly shows that the 
best means for preventing payment errors and, in worst cases, abuse by 
providers and suppliers, is to discourage and prevent their entry into 
the Medicare program through this rule and the authority to deny 
enrollment or revoke their billing number.
    We realize that some entities will perceive our proposed 
requirements as a barrier to their access to serving Medicare 
beneficiaries. We do not believe that bona fide businesses will 
experience any difficulty in obtaining or maintaining a Medicare 
billing number. We also do not believe that the impact of these 
proposed requirements would fall any more heavily on underserved areas 
than on major metropolitan areas. We estimate that furnishing the 
requested information would require no more than 8 hours of a provider 
or supplier's time. Most businesses should have the information readily 
available.

B. Rural Hospital Impact Statement

    Section 1102(b) of the Act requires us to prepare a regulatory 
impact analysis if a rule may have a significant impact on the 
operations of a substantial number of small rural hospitals. Such an 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. As noted above, there is 
a minimum amount of time needed to gather data and provide the 
information requested on the CMS 855

[[Page 22080]]

when initially enrolling or when resubmitting enrollment information to 
obtain and maintain a Medicare billing number. We are not preparing a 
rural impact statement since we have determined, and certify, that we 
do not expect this rule to impose any additional burden or otherwise 
significantly impact the operations of a substantial number of small 
rural hospitals. By default, due to their smaller size, the burden to 
small rural hospitals would actually be less than the average provider.
    There are currently about 1.2 million providers (hospitals, home 
health agencies, rural health clinics, skilled nursing facilities, 
etc.) and suppliers (physicians, nurses, ambulance companies, clinical 
laboratories, durable medical equipment suppliers, etc.) enrolled in 
the Medicare program. In addition, about 74,000 new providers and 
suppliers apply to enroll in Medicare each year. Listed below is the 
current estimated annual burden on the affected public in both hours 
and dollars.
1. Estimated Costs for Completion of CMS 855 Forms for Initial 
Enrollment
    Assumptions:
    a. The monetary cost to the respondents is calculated as follows 
based on the following assumptions:
    [sbull] The CMS 855I and CMS 855R will be completed by clerical 
staff (secretary), and
    [sbull] The CMS 855A, CMS 855B, and CMS 855S will be completed by 
professional staff (attorney or accountant).
    b. Estimated Cost per Form
    The monetary cost to the respondent to complete and submit the 
necessary CMS 855 form is:
    [sbull] $600 for the CMS 855A, CMS 855B, and CMS 855S
    [sbull] $60 for the CMS 855I, and
    [sbull] $3 for the CMS 855R
    c. Estimated Hourly Wage for Staff Completing Forms. The cost per 
respondent per form has been determined using the following wages:
    [sbull] $12.00 per hour (clerical wage)
    [sbull] $75.00 per hour (professional wage)

               Current Estimated Hours for Completion of CMS 855 Forms for Initial New Enrollments
----------------------------------------------------------------------------------------------------------------
                                           Estimated       Estimated time for      Total number   Total costs in
            CMS form number                number of         completion per        of hours for       dollars
                                          respondents          respondent           completion       (million)
----------------------------------------------------------------------------------------------------------------
855A..................................           5,000  8 Hours.................          40,000              $3
855B..................................          10,000  8 Hours.................          80,000              $6
855I..................................          50,000  5 Hours.................         250,000              $3
855R..................................         100,000  15 Minutes..............          25,000             $.3
855S..................................           9,000  8 Hours.................          72,000            $5.4
---------------------------------------
    Total Estimated Hourly and                                                           467,000           $17.7
     Financial Burden.
----------------------------------------------------------------------------------------------------------------

    The estimated number of respondents is based on current Medicare 
contractor workload reports.
2. Completing Forms to Report Changes to Enrollment Information
    The hourly burden and monetary cost estimate for this activity for 
all forms is:
    [sbull] 100,000 respondents X 1 hour each = 100,000 hours

Average cost per respondent = $420
Total cost for all respondents = $42 million
3. Completing Forms to Re-Certify Enrollment Information (3 yr cycle)
    The hourly burden and monetary cost estimate for this activity for 
all forms is:
    [sbull] 330,000 respondents X 2 hours each = 660,000 hours Average 
cost per respondent = $40
    Total cost for all respondents = $13.2 million
    Based on the above, the estimated current total annual hour burden 
for all classes of providers (hospitals, home health agencies, rural 
health clinics, skilled nursing facilities, etc.) and suppliers 
(physicians, nurses, ambulance companies, clinical laboratories, 
durable medical equipment suppliers, etc.) is 1,227,000 hours.
    Based on the above, the estimated current annual monetary burden 
for all classes of providers (hospitals, home health agencies, rural 
health clinics, skilled nursing facilities, etc.) and suppliers 
(physicians, nurses, ambulance companies, clinical laboratories durable 
medical equipment suppliers, etc.) is $32.9 million. The 1997 revenue 
receipts for all classes of providers and suppliers is $913.7 billion. 
The cost of obtaining and maintaining billing privileges in the 
Medicare program on average is less than 1 percent of the total 
revenue.
    Although it is possible that a few entities may be significantly 
affected by these proposed rules, we do not expect that a substantial 
number of affected entities will experience a significant increase in 
the reporting burden; therefore, the Secretary certifies that this rule 
is not expected to impose any additional burden or otherwise 
significantly impact a substantial number of small entities. We also 
invite comments on our impact analysis and regulatory flexibility 
analysis.

C. Alternatives Considered

    Since this proposed rule is a codification of our current policies 
on provider and supplier enrollment, with the exception of imposing a 
cyclical revalidation process, we did not seek alternatives to this 
process. However, the current process was reviewed and, when possible, 
proposed or made that would reduce the current burden, such as the time 
frame for reporting changes.
    Although we do not expect this rule to have a significant economic 
impact, we are revising the requirements for reporting changes to the 
provider or supplier's enrollment information to reduce the current 
burden. Currently, provides and suppliers must report any changes to 
their enrollment information within 30-days. We are proposing to change 
this requirement to 90-days (or quarterly). We considered retaining the 
current requirement but determined the 30-day timeframe as too 
stringent in light of the rapid changes seen in today's health care 
industry. This change is expected to reduce the administrative burden 
for the providers, suppliers, our contractors, and us.
    In accordance with the provisions of Executive Order 12866, this 
rule was reviewed by OMB.

VIII. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the DATES 
section of this preamble, and, if we proceed with a subsequent 
document, we will

[[Page 22081]]

respond to the major comments in the preamble to that document.

List of Subjects

42 CFR Part 420

    Fraud, Health facilities, Health professions, Medicare.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
Medicare.

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 498

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.
    For the reasons set forth in this preamble, 42 CFR chapter IV is 
proposed to be amended as set forth below:

PART 420--PROGRAM INTEGRITY: MEDICARE

    1. The authority citation for part 420 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. In Sec.  420.201, the definition for managing employee is 
revised to read as follows:
* * * * *
    Managing employee means a general manager, business manager, 
administer, director, or other individual that exercises operational or 
managerial control over, or who directly or indirectly conducts, the 
day-to-day operation of the institution, organization, or agency, 
either under contract or through some other arrangement, whether or not 
the individual is a W-2 employee.
* * * * *

PART 424--CONDITIONS FOR MEDICARE PAYMENT

    1. The authority citation for part 424 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. In Sec.  424.1, the introductory text to paragraph (a)(1) is 
republished, and the following statutory reference is added to 
paragraph (a)(1) in numerical order to read as follows:


Sec.  424.1  Basis and scope.

    (a) Statutory basis. (1) This part is based on the indicated 
provisions of the following sections of the Act:
* * * * *
    1833(e)--Requirement to furnish information to determine payment.
* * * * *
    3. Subparts N and O are added and reserved.
    4. Subpart P is added to read as follows:

Subpart P--Requirements for Establishing and Maintaining Medicare 
Billing Privileges

Sec.
424.500 Scope.
424.502 Definitions.
424.505 Basic enrollment requirement.
424.510 Requirements for obtaining a billing number and Medicare 
billing privileges.
424.515 Requirements for reporting changes and updates to, and the 
periodic revalidation of, Medicare enrollment information.
424.520 Additional provider and supplier requirements for enrolling 
and maintaining active enrollment status in the Medicare program.
424.525 Rejection of a provider or supplier's CMS 855 for Medicare 
enrollment.
424.530 Denial of enrollment.
424.535 Revocation of enrollment and billing privileges in the 
Medicare program.
424.540 Deactivation of Medicare billing privileges.
424.545 Provider and supplier appeal rights.
424.550 Prohibitions on the sale or transfer of billing privileges.
424.555 Payment liability.

Subpart P--Requirements for Establishing and Maintaining Medicare 
Billing Privileges


Sec.  424.500  Scope.

    The provisions of this subpart contain the requirements for 
enrollment, periodic resubmission and certification of enrollment 
information for revalidation, and timely reporting of updates and 
changes to enrollment information. These requirements apply to all 
providers and suppliers except for physicians and practitioners who 
have entered into a private contract with a beneficiary as described in 
part 405, subpart D of this chapter. Providers and suppliers must meet 
and maintain these enrollment requirements to bill either the Medicare 
program or its beneficiaries.


    Note to Sec.  424.500: Throughout subpart P, references to 
``supplier'' or ``suppliers'' do not include those physicians or 
practitioners who have elected to ``opt-out'' of Medicare as 
described in part 405, subpart D of this chapter.

Sec.  424.502  Definitions.

    As used in this subpart, unless the context indicates otherwise--
    Approve/Approval means the enrolling provider or supplier has been 
determined to be eligible under Medicare rules and regulations to 
receive a Medicare billing number and Medicare billing privileges.
    Authorized official means an appointed official (for example, chief 
executive officer, chief financial officer, general partner, chairman 
of the board, or direct owner) to whom the organization has granted the 
legal authority to enroll it in the Medicare program, to make changes 
or updates to the organization's status in the Medicare program, and to 
commit the organization to fully abide by the laws, regulations, and 
program instruction of the Medicare program.
    Deactivate means that the provider or supplier's billing privileges 
have been temporarily stopped, but can be restored upon the submission 
of updated information.
    Delegated official means an individual who has been delegated by 
the ``Authorized official'', the authority to report changes and 
updates to the enrollment record. The delegated official must be an 
individual with ownership or control interest in, or be a W-2 managing 
employee of the provider or supplier.
    Deny/Denial means the enrolling provider or supplier has been 
determined to be ineligible to receive Medicare billing privileges for 
Medicare covered services provided to Medicare beneficiaries. Providers 
and suppliers who have been denied Medicare enrollment cannot bill for 
Medicare covered services.
    Enroll/Enrollment means the process that Medicare uses to--
    (1) Identify a provider or supplier;
    (2) Validate its eligibility to provide services to Medicare 
beneficiaries;
    (3) Identify and confirm the provider or supplier's practice 
location(s) and owner(s); and
    (4) Grant the provider or supplier Medicare billing privileges.
    Managing employee means a general manager, business manager, 
administrator, director, or other individual that exercises operational 
or managerial control over, or who directly or indirectly conducts, the 
day-to-day operation of the provider or supplier, either under contract 
or through some other arrangement, whether or not the individual is a 
W-2 employee of the provider or supplier.

[[Page 22082]]

    Operational means the provider or supplier has a qualified physical 
practice location, is open to the public for the purpose of providing 
health care related services, is prepared to submit valid Medicare 
claims, and is properly staffed, equipped, and stocked (as applicable, 
based on the type of facility or organization, provider or supplier 
specialty, or the services or supplies being rendered), to furnish 
these services.
    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 section 1124A(a) of the Act.
    Reject/Rejected means that the provider or supplier's enrollment 
application has not been processed due to incomplete information or 
that additional information or corrected information was not received 
from the provider or supplier within 60 days after it was requested.
    Revoke/Revocation means that the provider or supplier's billing 
privileges have been terminated.


Sec.  424.505  Basic enrollment requirement.

    To receive payment for covered Medicare services from either 
Medicare (in the case of assigned claims) or a Medicare beneficiary (in 
the case of unassigned claims), a provider or supplier must have a 
valid Medicare billing number and been granted billing privileges for 
the date the service or supplies were furnished.


Sec.  424.510  Requirements for obtaining a billing number and Medicare 
billing privileges.

    Providers and suppliers must submit enrollment information via the 
applicable form CMS 855 for verification by the Medicare program to 
obtain a Medicare billing number and be granted billing privileges. 
Upon the provider or supplier's successful completion of the enrollment 
process, including State survey and certification, accreditation, and 
approval of the CMS 855, The Centers for Medicare & Medicaid Services 
(CMS) issues a billing number and grants billing privileges that enable 
the provider or supplier to bill the Medicare program or the Medicare 
beneficiaries for Medicare covered services. Currently, the effective 
dates for reimbursement can be found at Sec.  489.13 of this chapter 
for providers and suppliers requiring State survey or certification or 
accreditation, Sec.  424.5 and Sec.  424.44 for non-surveyed or 
certified/accredited suppliers, and Sec.  424.57 and section 
1834(j)(1)(A) of the Act for DMEPOS suppliers. For those providers and 
suppliers seeking accreditation from a CMS approved accreditation 
organization, the effective date for reimbursement will be the later of 
the date accreditation was received or the final approval of the CMS 
855. CMS will not issue Medicare billing numbers or grant Medicare 
billing privileges retroactive to the date that the provider or 
supplier received final approval of their enrollment application (CMS 
855). To obtain a billing number and be granted billing privileges, the 
following enrollment requirements must be met:
    (a) Form CMS 855. A provider or supplier must submit to CMS the 
applicable completed CMS 855--Medicare Health Care Provider/Supplier 
Enrollment Application. The completed form will provide information for 
the purpose of establishing eligibility to receive payment for covered 
services furnished to Medicare beneficiaries. The information obtained 
uniquely identifies the provider and supplier for the purpose of 
enumeration, and provides information to CMS necessary for CMS to 
verify that the provider or supplier is not, and should not be, 
excluded from participation in the Medicare program, and that it 
renders services covered by the Medicare program.
    (1) Content. The submitted CMS 855 must include the following:
    (i) Complete, accurate, and truthful responses to all information 
requested within each section as applicable to the provider or supplier 
type.
    (ii) Any documentation required by CMS under this or other 
statutory or regulatory authority to uniquely identify the provider or 
supplier. This documentation may include, but is not limited to, proof 
of the legal business name, practice location, social security number 
(SSN), tax identification number (TIN), and owners of the business.
    (iii) Any documentation required by CMS under this or other 
statutory or regulatory authority to establish the provider or 
supplier's eligibility to furnish services to beneficiaries in the 
Medicare program, including copies of pertinent licenses.
    (2) Signature(s). The certification statement found on the CMS 855 
must be signed by an individual who has the authority to bind the 
provider or supplier, both legally and financially, to the requirements 
set forth in this chapter. This person must also have an ownership or 
control interest in the provider or supplier, as that term is defined 
in section 1124(a)(3) of the Act, such as, be the general partner, 
chairman of the board, chief financial officer, chief executive 
officer, president, or hold a position of similar status and authority 
within the provider or supplier organization. The signature attests 
that the information submitted is accurate and that the provider or 
supplier is aware of, and will abide by, all applicable Medicare laws, 
regulations, and program instructions.
    (i) Requirements. The signature requirements set forth below 
outline who must sign the CMS 855 for an enrolling provider or 
supplier:
    (A) In the case of an individual practitioner, the applying 
practitioner.
    (B) In the case of a sole proprietorship, the applying sole 
proprietor.
    (C) In the case of a corporation, partnership, group, limited 
liability company, or other organization (hereafter referred to 
collectively in this section as an organization), an authorized 
official, as defined in Sec.  424.502. When an authorized official 
signs the certification statement on behalf of an organization, the 
signed statement is considered legally binding upon the organization.
    (ii) Delegation of Authority. The original CMS 855 submitted for an 
organization's initial enrollment and all subsequent CMS 855s submitted 
for periodic revalidation of the organization's enrollment data (as 
required to maintain enrollment in the Medicare program) must be signed 
by an authorized official. Any updates or changes reported outside of 
the initial enrollment or periodic revalidation process may be signed 
by a delegated official(s) of the organization. The delegated 
official's signature binds the organization both legally and 
financially, as if the signature was that of the authorized official. 
Before the delegation of authority is established, the only acceptable 
signature on the CMS 855 to report updates or changes to the enrollment 
information will be that of the authorized official currently on file 
with Medicare. Once the delegation of authority is established, the 
only acceptable signatures on correspondence to report updates or 
changes to the enrollment information will be those of the authorized 
official and the person(s) to whom this authority has been delegated in 
accordance with the procedures detailed herein. Individual 
practitioners and sole proprietors can not delegate signature authority 
when submitting a CMS 855 for any reason. All CMS 855s submitted by 
individual practitioners and sole proprietors must be signed by the 
enrolling/enrolled individual. Each delegation of authority to a 
delegated official must--

[[Page 22083]]

    (A) Be assigned by the authorized official currently on file with 
CMS;
    (B) Be submitted to CMS via the CMS 855;
    (C) Include the title of each person delegated authority to update 
or change the organization's enrollment information;
    (D) Include the SSN of the delegated individual where that 
individual has an ownership or control interest in the organization or 
is a W-2 managing employee as defined in section 1126(b) of the Act; 
and
    (E) Be signed by the authorized official and the delegated 
official(s) of the organization.
    (1) Verification of information. The information submitted by the 
provider or supplier on the applicable CMS 855 must be such that CMS 
can validate it for accuracy as of the time of submission.
    (2) Completion of any applicable State surveys, certifications, and 
provider agreements. The providers or suppliers who are mandated under 
the provision in Part 488 of this chapter to be surveyed or certified 
by the State Survey and Certification Agency, and to also enter into 
and sign a provider agreement as outlined in part 489 of this chapter, 
must also meet those requirements as part of the process to obtain 
Medicare billing privileges.
    (3) Ability to furnish Medicare covered services or supplies. The 
provider or supplier must be operational to furnish Medicare covered 
services and/or supplies before being granted Medicare billing 
privileges.
    (4) Additional requirements. Providers and suppliers must meet the 
provisions of Sec.  424.520 regarding additional compliance and 
reporting requirements.
    (5) On-site inspections. CMS reserves the right, when we deem 
necessary, to perform on-site inspections of a provider or supplier to 
verify that the enrollment information submitted to CMS or its agents 
is accurate and to determine compliance with Medicare enrollment 
requirements. Site visits for enrollment purposes will not affect those 
site visits performed for establishing conditions of participation.
    (b) [Reserved]


Sec.  424.515  Requirements for reporting changes and updates to, and 
the periodic revalidation of, Medicare enrollment information.

    To maintain Medicare billing privileges a provider or supplier must 
resubmit and re-certify as to the accuracy via an authorized signature, 
its enrollment information for validation no more than once every 3 
years. Initially, all providers and suppliers currently in or initially 
enrolling in the Medicare program will be required to complete the 
applicable CMS 855 at least once. The provider or supplier will enter 
the three-year revalidation cycle once a completed CMS 855 has been 
submitted and validated. (Ambulance service providers will continue to 
resubmit enrollment information in accordance with Sec.  410.41(c)(2) 
and DME suppliers will continue to renew enrollment in accordance with 
Sec.  424.57(e) of this chapter). The requirements for the 
resubmission, recertification and reverification of enrollment 
information include the following:
    (a) Submission of form CMS 855 and supporting documentation. The 
provider or supplier must meet the submission, content, signature, 
verification, operational, inspection, and other requirements outlined 
in Sec.  424.510.
    (b) Processing time. A provider or supplier must submit to us the 
applicable CMS 855 with complete and accurate information and 
applicable supporting documentation within 60 calendar days of our 
notification to resubmit and certify to the accuracy of its enrollment 
information.
    (c) Completion of any applicable State surveys, certifications and 
provider agreements. A new survey and certification and a new provider 
agreement are not required for the purpose of resubmission and 
certification for revalidation of enrollment information. Providers and 
suppliers must continue to meet the requirements of parts 488 and 489 
of this subchapter, if applicable.
    (d) On-site inspections. CMS reserves the right to perform on-site 
inspections of a provider or supplier to verify that the information 
submitted to CMS or its agents is accurate and to determine compliance 
with Medicare enrollment requirements. Site visits for enrollment 
purposes will not affect those site visits performed for establishing 
conditions of participation.
    (e) Adjustments to 3-year re-validation cycle and non-routine re-
validations. (1) Revalidation of enrollment information will occur no 
more than once every 3 years. CMS reserves the right to adjust this 
schedule if it is determined that revalidation should occur on a more 
frequent basis due to complaints or evidence received indicating non-
compliance with the Medicare statute or regulations by specific 
provider or supplier types. The schedule may also be on a less frequent 
basis if it is determined that the integrity of and compliance with the 
Medicare statute and regulations by specific provider or supplier types 
indicate that less frequent validation is justified. CMS will continue 
to revalidate enrollment information for Ambulance Service Suppliers in 
accordance with regulations set forth at Sec.  410.41(c)(2) of this 
chapter (Requirements for ambulance suppliers), and DME suppliers will 
continue to renew enrollment in accordance with regulations set forth 
at Sec.  424.57(e) (Special payment rules for items furnished by DMEPOS 
suppliers and issuance of DMEPOS supplier billing numbers).
    (2) CMS also reserves the right to perform non-routine revalidation 
and request the provider or supplier to re-certify as to the accuracy 
of the enrollment information when warranted to assess and confirm the 
validity of the enrollment information. Non-routine revalidation may be 
triggered as a result of random checks, information indicating local 
problems, national initiatives, complaints, or other reasons that cause 
CMS to question the integrity of the provider or supplier in its 
relationship with the Medicare program. Like routine revalidation, non-
routine revalidation may or may not be accompanied by site visits.


Sec.  424.520  Additional provider and supplier requirements for 
enrolling and maintaining active enrollment status in the Medicare 
program.

    (a) Certifying compliance. CMS enrolls and maintains an active 
enrollment status for a provider or supplier when that provider or 
supplier certifies that it meets, and continues to meet, and CMS 
verifies that it meets, and continues to meet, all of the following 
requirements:
    (1) Compliance with Title XVIII of the Social Security Act and 
applicable Medicare regulations.
    (2) Compliance with Federal and State licensure, certification and 
regulatory requirements, as required, based on the type of services or 
supplies the provider or supplier type will furnish and bill Medicare.
    (3) Not employing or contracting with individuals or entities--
    (i) Excluded from participation in any Federal health care 
programs, for the provision of items and services covered under the 
programs, in violation of section 1128A(a)(6) of the Act; or
    (ii) Debarred by the General Services Administration (GSA) from any 
other Executive Branch procurement or non-procurement programs or 
activities, in accordance with the Federal Acquisition and Streamlining 
Act of 1994, and with

[[Page 22084]]

the HHS Common Rule at 45 CFR part 76.
    (b) Reporting requirements. Following enrollment, a provider or 
supplier must report to CMS any changes to the information furnished on 
the CMS 855 or supporting documentation within 90 calendar days of the 
change, with the exception of changes in ownership or control of the 
provider or supplier which must be reported within 30 calendar days. 
Failure to do so may result in the deactivation or revocation of the 
provider or supplier's Medicare billing number.


Sec.  424.525  Rejection of a provider or supplier's CMS 855 for 
Medicare Enrollment

    (a) Reasons for rejection. CMS rejects a provider or supplier's CMS 
855 for the following reasons:
    (1) The provider or supplier fails to furnish complete information 
within 60 calendar days of CMS's request for the information as 
required.
    (2) The provider or supplier fails to furnish supporting 
documentation within 60 calendar days of CMS's request for the 
documentation as required.
    (b) Extension of 60-day period. CMS will not reject any provider or 
supplier enrollment application if the provider or supplier is actively 
communicating with CMS to resolve any issues regardless of the length 
of time it takes to resolve those issues.
    (c) Resubmission after rejection. To enroll in Medicare and obtain 
a Medicare billing number and billing privileges after notification of 
a rejected CMS 855, the provider or supplier must complete and submit a 
new CMS 855 and all applicable documentation for CMS review and 
approval.


Sec.  424.530  Denial of enrollment.

    (a) Reasons for denial. CMS may deny a provider or supplier's 
enrollment in the Medicare program for the following reasons:
    (1) Compliance. The provider or supplier at any time is found not 
to be in compliance with the Medicare enrollment requirements described 
in the CMS 855 enrollment form applicable to the type of provider or 
supplier enrolling, and has not submitted a plan of corrective action 
as outlined in part 488 of this chapter and under section 1819(h)(2)(c) 
of the Act.
    (2) Provider or supplier conduct. The provider or supplier, or any 
owner, managing employee, or an authorized or delegated official; or 
any medical director, supervising physician, or other health care 
personnel furnishing Medicare reimbursable services who is required to 
be reported on the CMS 855, in accordance with section 1862(e)(1) of 
the Act,--
    (i) Is excluded from the Medicare, Medicaid and any other Federal 
health care programs, as defined in Sec.  1001.2 of this title, in 
accordance with section 1128 or 1156 of the Act; or
    (ii) Is debarred, suspended, or otherwise excluded from 
participating in any other Federal procurement or non-procurement 
activity in accordance with FASA section 2455; or
    (3) Felonies. The provider, supplier, or any owner of the provider 
or supplier, has been convicted of a Federal or State felony offense 
that CMS has determined to be detrimental to the best interests of the 
program and its beneficiaries. The conviction must have occurred within 
the last 10 years or more and CMS will consider the severity of the 
underlying offense.
    (i) Offenses include--
    (A) Felony crimes against persons (such as rape, murder, or 
assault) and other similar crimes for which the individual was 
convicted, including guilty pleas and adjudicated pre-trial diversions.
    (B) Financial crimes, such as extortion, embezzlement, income tax 
evasion, insurance fraud and other similar crimes for which the 
individual was convicted, including guilty pleas and adjudicated pre-
trial diversions.
    (C) Any felony that placed the Medicare program or its 
beneficiaries at immediate risk (such as a malpractice suit that 
results in a conviction of criminal neglect or misconduct).
    (D) Any felonies outlined in section 1128 of the Act.
    (ii) Denials based on felony convictions are for a period to be 
determined by the Secretary, but not less than 10 years from the date 
of conviction if the individual has been convicted on one previous 
occasion for one or more offenses.
    (4) False or misleading information. The provider or supplier has 
submitted false or misleading information on the CMS 855 to gain 
enrollment in the Medicare program. (Offenders may be referred to the 
Office of Inspector General for investigation and possible criminal, 
civil, or administrative sanctions).
    (5) Onsite review. Upon onsite review or other reliable evidence--
    (i) There are repeated instances in which we do not find present or 
available those medical professionals required under the Medicare 
statute and regulations to supervise treatment of, or provide Medicare 
covered services for, Medicare patients; or
    (ii) We determine that the provider or supplier is not operational 
to furnish Medicare covered services.
    (b) Resubmission after denial. A provider or supplier that is 
denied enrollment in the Medicare program must not submit a new CMS 855 
until the following has occurred:
    (1) If the denial was not appealed, the provider or supplier may 
reapply after its appeal rights have lapsed.
    (2) If the denial was appealed, the provider or supplier may 
reapply after CMS notification that the original determination has been 
upheld.
    (c) Reversal of denial. If the denial was due to adverse activity 
(sanction, exclusion, debt, felony) of an owner, managing employee, or 
an authorized or delegated official; or of a medical director, 
supervising physician, or other health care personnel of the provider 
or supplier furnishing Medicare reimbursable services, the denial may 
be reversed if the provider or supplier terminates and submits proof 
that it has terminated its business relationship with that individual 
or organization within 30 days of the denial notification.
    (d) Additional review. When a provider or supplier is denied 
enrollment in Medicare, CMS automatically reviews all other related 
Medicare enrollment files that the denied provider or supplier has an 
association with (for example, as an owner or managing employee) to 
determine if the denial warrants an adverse action of the associated 
Medicare provider or supplier.


Sec.  424.535  Revocation of enrollment and billing privileges in the 
Medicare program.

    (a) Reasons for revocation. We may revoke a currently enrolled 
provider or supplier's Medicare billing privileges and any 
corresponding provider agreement for the following reasons:
    (1) Non-compliance. The provider or supplier, at any time is 
determined not to be in compliance with the enrollment requirements 
described in the CMS 855 enrollment form applicable to its provider or 
supplier type and has not submitted a plan of corrective action as 
outlined in part 488 of this chapter and under section 1819(h)(2)(C) of 
the Act. All providers and suppliers will be granted an opportunity to 
correct the deficient compliance requirement prior to a final 
determination to revoke billing privileges.
    (i) CMS may request additional documentation from the provider or 
supplier to determine compliance if adverse information is received or 
otherwise found concerning the provider or supplier.

[[Page 22085]]

    (ii) Requested additional documentation must be submitted within 60 
calendar days of request.
    (2) Provider or supplier conduct. The provider or supplier, or any 
owner, managing employee, authorized or delegated official, medical 
director, supervising physician, or other health care personnel of the 
provider or supplier is--
    (i) Excluded from the Medicare, Medicaid, and any other Federal 
health care program, as defined in Sec.  1001.2 of this title, in 
accordance with section 1128 or 1156 of the Act; or
    (ii) Is debarred, suspended, or otherwise excluded from 
participating in any other Federal procurement or nonprocurement 
program or activity in accordance with the Federal Acquisition 
Streamlining Act implementing regulations and the Department of Health 
and Human Services nonprocurement common rule at 45 CFR part 76.
    (3) Felonies. The provider, supplier, or any owner of the provider 
or supplier, has been convicted of a Federal or State felony offense 
that CMS has determined to be detrimental to the best interests of the 
program and its beneficiaries. The conviction must have occurred within 
the last 10 years or more and CMS will consider the severity of the 
underlying offense.
    (i) Offenses include--
    (A) Felony crimes against persons (such as rape, murder, or 
assault) and other similar crimes for which the individual was 
convicted, including guilty pleas and adjudicated pre-trial diversions.
    (B) Financial crimes, such as extortion, embezzlement, income tax 
evasion, insurance fraud and other similar crimes for which the 
individual was convicted, including guilty pleas and adjudicated pre-
trial diversions.
    (C) Any felony that placed the Medicare program or its 
beneficiaries at immediate risk, such as a malpractice suit that 
results in a conviction of criminal neglect or misconduct.
    (D) Any felonies outlined in section 1128 of the Act.
    (ii) Denials based on felony convictions are for a period to be 
determined by the Secretary, but not less than 10 years from the date 
of conviction if the individual has been convicted on one previous 
occasion for one or more offenses.
    (4) False or misleading information. The provider or supplier 
certified as ``true'' false or misleading information on the CMS 855 to 
be enrolled or maintain enrollment in the Medicare program. (Offenders 
may be subject to either fines or imprisonment, or both, in accordance 
with current law and regulations.)
    (5) Onsite review. CMS determines, upon onsite review, that the 
provider or supplier is no longer operational to furnish Medicare 
covered services or supplies, or we do not find present or available 
those professionals required under Medicare statute or regulation to 
supervise treatment of, or to provide Medicare covered services for, 
Medicare patients.
    (6) Inadequate re-verification information. The provider or 
supplier fails to furnish complete and accurate information and any 
applicable documentation within 60 calendar days of the provider or 
supplier's notification from CMS to resubmit and certify to the 
accuracy of its enrollment information.
    (7) Misuse of billing number. The provider or supplier knowingly 
sells to or allows another individual or entity to use its billing 
number. This does not include those providers or suppliers who enter 
into a valid reassignment of benefits as outlined in Sec.  424.80.
    (b) Effect of revocation on provider agreements. When a provider's 
or supplier's billing privilege has been revoked, any provider 
agreement in effect at the time of revocation will be terminated 
effective with the date of revocation.
    (c) Re-enrollment after revocation. If a provider or supplier seeks 
to re-establish enrollment in the Medicare program after notification 
that its billing number and billing privileges have been revoked 
(either after the appeals process is exhausted or in place of the 
appeals process) the following conditions apply:
    (1) The provider or supplier must re-enroll in the Medicare program 
through the completion and submission of a new applicable CMS 855 and 
applicable documentation, as a new provider or supplier, for validation 
by CMS.
    (2) Providers must be re-surveyed and/or re-certified by the State 
Survey Agency as a new provider and must establish a new provider 
agreement with CMS's Regional Office.
    (d) Reversal of revocation. If the revocation was due to adverse 
activity (sanction, exclusion, debt, or felony) against an owner, 
managing employee, or an authorized or delegated official; or a medical 
director, supervising physician, or other personnel of the provider or 
supplier furnishing Medicare reimbursable services, the revocation may 
be reversed if the provider or supplier terminates and submits proof 
that it has terminated its business relationship with that individual 
within 30 days of the revocation notification.
    (e) Additional review. When a provider or supplier is revoked from 
the Medicare program, CMS automatically reviews all other related 
Medicare enrollment files that the revoked provider or supplier has an 
association with (for example, as an owner or managing employee) to 
determine if the revocation warrants an adverse action of the 
associated Medicare provider or supplier.


Sec.  424.540  Deactivation of Medicare billing privileges.

    (a) Reasons for deactivation. CMS deactivates a provider or 
supplier's Medicare billing privileges for the following reasons:
    (1) The provider or supplier does not submit any Medicare claims 
for two consecutive calendar quarters (6 months), unless current policy 
or regulations specify otherwise for your provider or supplier type.
    (2) The provider or supplier does not report a change to the 
information supplied on its CMS 855 within 90 calendar days of when the 
change occurred. Changes that must be reported include, but are not 
limited to, a change in practice location, a change of any managing 
employee, and a change in billing services. A change in ownership or 
control must be reported within 30 calendar days as stated in 
Sec. Sec.  424.520(b) and 424.550(b).
    (b) Reactivation of billing privileges. The provider or supplier 
must either complete and submit a new CMS 855 to reactivate its 
Medicare billing number and billing privileges or, at a minimum, re-
certify that the enrollment information currently on file with Medicare 
is correct. The provider or supplier must meet all current Medicare 
requirements in place at the time of reactivation, and be prepared to 
submit a valid Medicare claim. Reactivation of a Medicare billing 
number does not require a new survey and certification of the provider 
or supplier by the State Survey Agency or the establishment of a new 
provider agreement.
    (c) Effect of deactivation. Deactivation of Medicare billing 
privileges is considered a temporary action to protect the provider or 
supplier from misuse of Medicare billing numbers and to protect the 
Medicare trust fund from unnecessary overpayments. The temporary 
deactivation of a Medicare billing number will not have any effect on a 
provider or supplier's participation agreement or any conditions of 
participation.

[[Page 22086]]

Sec.  424.545  Provider and supplier appeal rights.

    (a) A provider or supplier that has been denied enrollment in the 
Medicare program or whose Medicare enrollment has been revoked may 
appeal CMS's decision in accordance with part 405, subpart H, for 
suppliers, or part 498, subpart A for providers, of this chapter, which 
set forth the appeals process for providers and suppliers. When 
revocation of billing privileges also results in the termination of a 
corresponding provider agreement, the provider may appeal CMS's 
decision in accordance with part 489 with the final decision of the 
appeal applying to both the billing privileges and the provider 
agreement. No payment will be made during the appeals process. If the 
provider or supplier is successful in overturning a denial or 
revocation unpaid claims for services furnished during the overturned 
period may be resubmitted.
    (b) A provider or supplier whose billing privileges have been 
deactivated may file a rebuttal in accordance with Sec.  405.374 of 
this chapter.


Sec.  424.550  Prohibitions on the sale or transfer of billing 
privileges.

    (a) General rule. A provider or supplier is prohibited from selling 
its Medicare billing number or privileges to any individual or entity, 
or allowing another individual or entity to use its Medicare billing 
number.
    (b) Change of ownership. In the case of a provider undergoing a 
change of ownership in accordance with part 489, subpart A of this 
chapter, the current owner and the prospective new owner must complete 
and submit a CMS 855 before completion of the change of ownership. If 
the current owner fails to complete and submit a CMS 855 to report the 
change, they may be sanctioned or penalized, even after the date of 
ownership change, in accordance with Sec. Sec.  424.520, 424.540, and 
489.53 of this chapter. If the prospective new owner fails to submit a 
new CMS 855 containing information concerning the new owner within 30 
days of the change of ownership, CMS may deactivate the Medicare 
billing number. If an incomplete CMS 855 is submitted, CMS may also 
deactivate the Medicare billing number based upon material omissions on 
the submitted CMS 855, or based on preliminary information received or 
determined by CMS that makes CMS question whether the new owner will be 
ultimately granted a final transference of the provider agreement.
    (c) Providers and suppliers not covered by part 489 of this 
chapter. For those providers and suppliers not covered by part 489, any 
change in the ownership or control of the provider or supplier must be 
reported on their CMS 855 within 30 days of the change as noted in 
Sec.  424.540(a)(2). Generally, a change of ownership which also 
changes the tax identification number will require the completion and 
submission of a new CMS 855 from the new owner.


Sec.  424.555  Payment liability.

    (a) No payment may be made for services furnished to a Medicare 
beneficiary by suppliers of durable medical equipment, prosthetics, 
orthotics, and other supplies unless the supplier obtains (and renews, 
as set forth in section 1834(j) of the Act) Medicare billing 
privileges.
    (b) No payment may be made for covered services furnished to a 
Medicare beneficiary by a provider or supplier if the billing 
privileges of the provider or supplier have been deactivated, denied, 
or revoked. The Medicare beneficiary has no financial responsibility 
for such expenses, and the provider or supplier must refund on a timely 
basis to the Medicare beneficiary any amounts collected from the 
Medicare beneficiary for these covered services.
    (c) If any provider or supplier furnishes a service for which 
payment may not be made by reason of paragraph (b) of this section, any 
expense incurred for such service shall be the responsibility of the 
provider or supplier. The provider or supplier may also be criminally 
liable for pursuing payments that may not be made by reason of 
paragraph (b) of this section, in accordance with section 1128A(a)(6) 
of the Act.

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

    7. The authority citation for part 489 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).
    8. In Sec.  489.53, paragraph (a)(15) is added to read as follows:


Sec.  489.53  Termination by CMS.

    (a) * * *
    (15) It had its enrollment in the Medicare program revoked pursuant 
to Sec.  424.535 of this chapter.
* * * * *

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT 
PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT 
AFFECT THE PARTICIPATION OF ICFS/MR AND CERTAIN NFS IN THE MEDICARE 
PROGRAM

    9. The authority citation for part 498 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).
    10. In Sec.  498.3, paragraph (b)(16) is added to read as follows:


Sec.  498.3  Scope and applicability.

* * * * *
    (b) * * *
    (16) Whether a provider or supplier has had its Medicare enrollment 
revoked pursuant to Sec.  424.535 of this chapter.
* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.774, 
Medicare--Supplementary Medical Insurance Program.)
    Dated: October 19, 2001.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.

    Approved: January 10, 2003.
Tommy G. Thompson,
Secretary.
BILLING CODE 4120-01-P

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[Federal Register: April 25, 2003 (Volume 68, Number 80)]
[Proposed Rules]               
[Page 22113-22162]
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[DOCID:fr25ap03-15]                         
 
[[pp. 22113-22162]] Medicare Program; Requirements for Establishing and Maintaining 
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[Federal Register: April 25, 2003 (Volume 68, Number 80)]
[Proposed Rules]               
[Page 22163-22212]
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[DOCID:fr25ap03-16]                         
 
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[Federal Register: April 25, 2003 (Volume 68, Number 80)]
[Proposed Rules]               
[Page 22213-22262]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25ap03-17]                         
 
[[pp. 22213-22262]] Medicare Program; Requirements for Establishing and Maintaining 
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[[Continued on page 22263]]

[Federal Register: April 25, 2003 (Volume 68, Number 80)]
[Proposed Rules]               
[Page 22263-22265]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25ap03-18]                         
 
[[pp. 22263-22265]] Medicare Program; Requirements for Establishing and Maintaining 
Medicare Billing Privileges

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[FR Doc. 03-9943 Filed 4-24-03; 8:45 am]
BILLING CODE 4120-01-P