[Federal Register Volume 72, Number 139 (Friday, July 20, 2007)]
[Rules and Regulations]
[Pages 39746-39756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-13535]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 402

[CMS-6146-F; CMS-6019-F]
RINS 0938-AM98; 0938-AN48


Medicare Program; Revised Civil Money Penalties, Assessments, 
Exclusions, and Related Appeals Procedures

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

ACTION: Final rule.

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SUMMARY: This final rule establishes the procedures for imposing 
exclusions for certain violations of the Medicare program and is based 
on the procedures that the Office of Inspector General has published 
for civil money penalties, assessments, and exclusions under their 
delegated authority. Implementation of this final rule protects 
beneficiaries from persons (that is, health care providers and 
entities) found in noncompliance with Medicare regulations, and 
otherwise improves the safeguard provisions under the Medicare statute. 
This final rule also establishes procedures that enable a person 
targeted for exclusion from the Medicare program to request the Centers 
for Medicare & Medicaid Services to act on its behalf to recommend to 
the Inspector General that the exclusion from Medicare be waived due to 
hardship that would be placed on Medicare beneficiaries as a result of 
the person's exclusion.

DATES: Effective Date: This final rule is effective on August 20, 2007.

FOR FURTHER INFORMATION CONTACT: Joel Cohen, (410) 786-3349. Joe 
Strazzire, (410) 786-2775.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Statutory and Regulatory History

    Section 2105 of the Omnibus Budget Reconciliation Act of 1981 (Pub. 
L. 97-35) added section 1128A to the Social Security Act (the Act) to 
authorize the Secretary of Health and Human Services (HHS) to impose 
civil money penalties (CMPs), assessments, and exclusions from the 
Medicare program for certain persons (that is, health care facilities, 
practitioners, suppliers, or other entities) under certain 
circumstances. Exclusion provides the ultimate enforcement tool for 
agencies attempting to establish compliance with legal and program 
standards, and is used in addition to potential civil, criminal, and 
other administrative proceedings.
    Since 1981, the Congress has significantly increased both the 
number and types of circumstances under which the Secretary may impose 
the exclusion of a person from the Medicare and State health care 
programs. The Secretary has delegated the authority for these 
provisions to either the Office of the Inspector General (OIG) or CMS 
(October 20, 1994 rule, 59 FR 52967). The exclusion authorities 
delegated to the OIG for the most part address fraud, 
misrepresentation, or falsification, while those that address 
noncompliance with programmatic or regulatory requirements are 
delegated to CMS. However, the OIG has the authority to impose 
exclusions and to prosecute cases involving exclusions that were 
delegated to CMS, if CMS and the OIG jointly determine it to be in the 
interest of economy, efficiency, or effective coordination of 
activities. The determination may be made either on a case-by-case 
basis, or for all cases brought under a particular listed authority.
    In the December 14, 1998 Federal Register (63 FR 68687), we 
published a final rule entitled ``Medicare and Medicaid Program; Civil 
Money Penalties, Assessments, Exclusions, and Related Appeals 
Procedures.'' That rule set forth the procedures for pursuing civil 
money penalties (CMPs) and assessments, and added a new part 402 to 
title 42, chapter IV of the Code of Federal Regulations (CFR) to 
incorporate our CMP and assessment authorities. However, we did not 
address exclusions in that final rule. Instead, we reserved subpart C 
for exclusions so that we could incorporate the relevant regulations at 
a future date.
    In the December 14, 1998 final rule, we indicated that our 
procedures for imposing the CMPs and assessment authorities delegated 
to CMS were based on the procedures that the OIG had delineated in 42 
CFR part 1003. We also made the OIG's hearing and appeal procedures set 
forth in 42 CFR part 1005 applicable to the CMP, assessment, and 
exclusion authorities delegated to us.
    In the July 23, 2004 Federal Register (69 FR 43956), we published a 
proposed rule entitled ``Medicare Program; Revised Civil Money 
Penalties, Assessments, Exclusions, and Related Appeals Procedures.'' 
This proposed rule would amend subpart C by establishing the procedures 
for imposing exclusions for certain violations of the Medicare program. 
The proposed rule would incorporate the general requirements and 
procedures that are common to the imposition of an exclusion from the 
Medicare program.
    In the August 4, 2005 Federal Register (70 FR 44879), we published 
a proposed rule entitled ``Medicare Program; Revised Civil Money 
Penalties, Assessments, Exclusions and Related Appeals Procedures'' 
that would implement section 949 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). 
Section 949 of the MMA amended section 1128(c)(3)(B) of the Act to 
indicate that ``[s]ubject to

[[Page 39747]]

subparagraph (g), in the case of an exclusion under subsection (a), the 
minimum period of exclusion shall be not less than 5 years, except 
that, upon the request of the administrator of a Federal health care 
program (as defined in section 1128B(f)) who determines that the 
exclusion would impose a hardship on individuals entitled to benefits 
under Part A of title XVIII or enrolled under Part B of such title, or 
both, the Secretary may, after consulting with the Inspector General of 
the Department of Health and Human Services, waive the exclusion under 
subsection (a)(1), (a)(3), or (a)(4) with respect to that program in 
the case of an individual or entity that is the sole community 
physician or sole source of essential specialized services in the 
community.'' The Conference Agreement accompanying the MMA clarifies 
the intent of the statutory requirement that a hardship determination 
be made before a waiver is approved. In short, we proposed the general 
requirements and procedures that would allow certain providers and 
entities identified for exclusion from the Medicare program to request 
that we act on their behalf to recommend to the OIG that their 
exclusion from Medicare be waived because of a hardship that would 
result on Medicare beneficiaries. We also stated in this proposed rule 
our intent to respond to the public comments we received from the July 
23, 2004 proposed rule and this proposed rule in a single final rule.

B. Timelines for Publication of This Medicare Final Rule

    Section 902 of the MMA amended section 1871(a) of the Act and 
requires the Secretary, in consultation with the Director of the Office 
of Management and Budget, to establish and publish timelines for the 
publication of Medicare final rules based on the previous publication 
of a Medicare proposed or interim final rule. Section 902 of the MMA 
also states that the timelines for these rules may vary, but must not 
exceed 3 years after publication of the preceding proposed or interim 
final rule, except under exceptional circumstances.
    This final rule finalizes provisions set forth in the July 23, 2004 
and the August 4, 2005 proposed rules. In addition, this final rule 
will be published within the 3-year time limit imposed by section 902 
of the MMA. Therefore, this final rule will be published in accordance 
with the Congress' intent for ensuring timely publication of final 
rules.

II. Provisions of the Proposed Rules and Analysis and Responses to 
Public Comments

A. Provisions of the July 23, 2004 Proposed Rule

    This proposed rule would amend part 402, subpart C, (Exclusions) to 
incorporate the rules concerning exclusions associated with the CMP 
violations identified in part 402. Subpart C contains the general 
requirements and procedures that are common to the imposition of an 
exclusion from Medicare, Medicaid, and (where applicable) other Federal 
health care programs. (These regulations do not materially impact the 
hearing and appeals procedures currently available to any person on 
whom we could impose an exclusion.)
    We proposed adding the following provisions under part 402 subpart 
C.
1. Basis and Purpose (Proposed Sec.  402.200)
    Section 402.200 provides the basis and purpose for the imposition 
of an exclusion from Medicare, Medicaid, and (where applicable) other 
Federal health care programs based on noncompliance with the respective 
provisions of part 402 subpart A, Sec.  402.1(e). This subpart also 
sets forth the appeal rights of a person subject to exclusion, as well 
as the procedures for a person's reinstatement following an exclusion. 
(This subpart is based on Sec.  1003.102, Sec.  1003.105, Sec.  
1003.107, and Sec.  1003.109 of the OIG's regulations.)
2. Length of Exclusion (Proposed Sec.  402.205)
    This section describes the duration of exclusion from Medicare, 
Medicaid, and (where applicable) other Federal health care programs for 
the applicable violation. Currently, there are four general categories 
for which violations may cause exclusions. These categories involve 
noncompliance with assignment billings, noncompliance with charge or 
service limits, failure to provide information, or improperly providing 
information.
    Some exclusion provisions provide that the exclusion is imposed in 
accordance with section 1842(j)(2) of the Act, which provides for 
exclusion from participation in programs under the Act. These 
exclusions may not exceed 5 years. For these exclusion provisions, we 
propose using our discretion to set a duration for the exclusion, up to 
5 years, after considering aggravating and mitigating circumstances as 
described in the July 23, 2004 proposed rule (69 FR 43956).
    By contrast, many other exclusion provisions extend to all Federal 
health care programs, and do not address the minimum or maximum 
duration of the exclusion. Instead, they simply refer to applying the 
provisions of section 1128A of the Act or section 1128(c) of the Act 
for imposition of the exclusion. However, neither section 1128A of the 
Act, nor section 1128(c) of the Act, address the specific duration of 
an exclusion for any of the title XVIII exclusion provisions described 
in this proposed rule. Therefore, where the duration of an exclusion is 
not specifically addressed by statute for a specific exclusion 
provision, we proposed using our discretion to apply a time period we 
believed was justified, taking into account appropriate aggravating and 
mitigating factors that are described in the July 23, 2004 proposed 
rule (69 FR 43956).
    While several provisions of title XVIII of the Act refer on their 
face only to CMPs, they also make cross-references to section 1128A of 
the Act, from which we assert that our exclusion authority derives. 
This is the case with both sections 1877 and 1882 of the Act. Each of 
these provisions incorporates by reference portions of section 1128A of 
the Act, articulating with specificity which section 1128A provisions 
are applicable. In each case, this includes section 1128A's exclusion 
authority (and, in the case of section 1877 of the Act, the exclusion 
authority is made even more clear with the term ``exclusion'' being 
found in the section heading). The applicable provision of section 
1128A of the Act is the provision's last sentence, explicitly made 
applicable to all the foregoing, which provides that the Secretary 
``may make a determination in the same [CMP] proceeding to exclude the 
person from participation in Federal health care programs.''
3. Factors Considered in Determining Whether To Exclude, and the Length 
of Exclusion (Proposed Sec.  402.208)
    The statute specifies the grounds for imposition of the various 
exclusions, but offers little detail regarding the adjudicatory 
processes inherent in administering them. Instead, the statute vests us 
with broad administrative discretion. We are sensitive to the fact that 
the nature of grounds for imposition of exclusions vary widely.
    Proposed Sec.  402.208 would provide the specific details of the 
aggravating and mitigating circumstances that may be considered. (This 
section is based on the corresponding OIG sections of 42 CFR parts 1001 
and 1003.) We note that our application of aggravating and

[[Page 39748]]

mitigating factors flows both as a natural result of a statutory scheme 
that contemplates exclusions of varying lengths, as well as the 
Secretary's rulemaking authority specified in section 1871 of the Act.
4. Scope and Effect of Exclusion (Proposed Sec.  402.209)
    Proposed Sec.  402.209 would provide the general scope and effect 
of an exclusion. Generally, an excluded person may not directly or 
indirectly submit claims, or cause claims to be submitted, to the 
Medicare program. A person who submits (or causes to be submitted) 
claims during the course of an exclusion risks other possible 
sanctions, including civil and criminal liability. Medicare will not 
pay claims for beneficiaries who elect to see an excluded person, 
except, perhaps, for the first claim, which will be accompanied by a 
notification to the beneficiary that the person has been excluded from 
participation in Medicare, and that no further Medicare payments will 
be made on the beneficiary's behalf. (This section is based on criteria 
provided by the OIG in Sec.  1001.1901.) We note in Sec.  402.209(b)(3) 
that because in some cases the maximum exclusion time limit may 
preclude us from applying the specified prohibited conduct as the basis 
for denying reinstatement to the Medicare program, the fact that an 
excluded person has engaged in prohibited conduct may give rise to a 
new exclusion action by the initiating agency (CMS or OIG) that will 
have the practical effect of denying the person reinstatement into the 
Medicare program.
5. Notice of Exclusion (Proposed Sec.  402.210)
    Proposed Sec.  402.210 would specify the contents of respective 
notices and specifically, the timing for release of--(1) the written 
notice of intent to exclude (that is, the proposed determination); and 
(2) the written notice of exclusion. At a minimum, the written notice 
of intent to exclude provides the person with information as to the 
reason why it is noncompliant with the statute, the length of the 
proposed exclusion, and instructions for responding to the notice, 
including providing argument against exclusion for the agency to 
consider. The written notice to exclude is sent to the person in the 
same manner as the written notice of intent to exclude if the agency 
determines that the exclusion is warranted. This notice would also 
provide the person with information on its appeal rights regarding the 
exclusion. (This section is based on criteria provided by the OIG in 
Sec.  1001.2001, Sec.  1001.2002, Sec.  1001.2004, and Sec.  1003.109.)
6. Response to Notice of Proposed Exclusion (Proposed Sec.  402.212)
    Proposed Sec.  402.212 would state the general process and 
procedure for a person to follow when presenting an oral or written 
response to the notice of intent to exclude (that is, the proposed 
determination). We would accept for consideration any supportive 
information the person provides. We would not limit nor suggest what 
type of information should be presented. The burden to present 
convincing information is left to the person's discretion. Even though 
this section is based on the process and procedures delineated by the 
OIG in Sec.  1003.109, to encourage timely communication between the 
person and the initiating agency, we have added an additional element 
whereby the initiating agency would contact the person within 15 days 
of receipt of the person's request to establish a mutually agreed upon 
time and place for the oral presentation and discussion.
7. Appeal of Exclusion (Proposed Sec.  402.214)
    Proposed Sec.  402.214 would specify the general appeal process for 
requesting a hearing before an administrative law judge, and details 
the required elements of the written request for appeal. (This section 
is based on criteria provided by the OIG in Sec.  1005.) Generally, the 
elements of the written request must include the basis for the 
disagreement with the exclusion, the general basis for the person's 
defense, and reasons why the proposed length of exclusion should be 
modified. (This section is based on criteria provided by the OIG in 
Sec.  1001.2003 and Sec.  1001.2007.)
8. Request for Reinstatement (Proposed Sec.  402.300)
    In proposed Sec.  402.300, we specified the request for 
reinstatement. In Sec.  402.300(a), we described the written request 
for reinstatement. We stated that an excluded person may submit a 
written request for reinstatement to the initiating agency no sooner 
than 120 days prior to the terminal date of exclusion as specified in 
the notice of exclusion. The written request for reinstatement would be 
required to include documentation demonstrating that the person has met 
the standards set forth in Sec.  402.302. We also state that obtaining 
or reactivating a Medicare provider number (or equivalent) would not 
constitute reinstatement.
    Proposed Sec.  402.300(b) would specify that, upon receipt of a 
written request for reinstatement, the initiating agency may require 
the person to furnish additional, specific information and 
authorization to obtain information from private health insurers, peer 
review organizations, and others, as necessary, to determine whether 
reinstatement is granted.
    In Sec.  402.300(c), we would state that failure to submit a 
written request for reinstatement or to furnish the required 
information or authorization would result in the continuation of the 
exclusion, unless the exclusion has been in effect for 5 years. In that 
case, reinstatement would be automatic.
    Proposed Sec.  402.300(d) specifies that, if a period of exclusion 
is reduced on appeal (regardless of whether further appeal is pending), 
the excluded person would be permitted to request and apply for 
reinstatement within 120 days of the expiration of the reduced 
exclusion period. A written request for the reinstatement would include 
the same standards specified in Sec.  402.300(b). (This section is 
based on criteria provided by the OIG in Sec.  1001.3001.)
9. Basis for Reinstatement (Proposed Sec.  402.302)
    In proposed Sec.  402.302, we would specify that the initiating 
agency would authorize reinstatement if the agency determines that--(1) 
The period of exclusion has expired; (2) there are reasonable 
assurances that the types of actions that formed the basis for the 
original exclusion will not recur; and (3) there is no additional basis 
under title XVIII of the Act that will justify the continuation of the 
exclusion.
    We also stated that the initiating agency would not authorize 
reinstatement if the basis for denying reinstatement lies in an 
excluded person continuing either to submit claims (or causing claims 
to be submitted) or to receive and accept payments from the Medicare 
program for items or services it has furnished, ordered, or prescribed. 
This section would apply, regardless of whether the excluded person has 
obtained a Medicare provider number (or equivalent), either as an 
individual or as a member of a group, before being reinstated.
    In making a determination regarding reinstatement, the initiating 
agency would consider--(1) The conduct of the excluded provider 
occurring before the date of the notice of the exclusion, if that 
conduct was not known to the initiating agency at the time of the 
exclusion; (2) the conduct of the excluded person after the date of the

[[Page 39749]]

exclusion; (3) whether all fines and all debts due and owing (including 
overpayments) to any Federal, State, or local government that relate to 
Medicare, Medicaid, or (where applicable) any Federal, State, or local 
health care program were paid in full, or alternatively that 
satisfactory arrangements were made to fulfill these obligations; (4) 
whether the excluded person complied with, or had made satisfactory 
arrangements to fulfill, all of the applicable conditions of 
participation or conditions of coverage under the Medicare statutes and 
regulations; and (5) whether the excluded person had, during the period 
of exclusion, submitted claims (or caused claims to be submitted) or 
payment to be made by Medicare, Medicaid, and (where applicable) any 
other Federal health care program for items or services furnished, 
ordered, or prescribed, and the conditions under which these actions 
occurred.
    We proposed that reinstatement would not be effective until the 
initiating agency grants the request and provides notice under Sec.  
402.304. Reinstatement would be effective as provided in the notice. A 
determination for a denial of reinstatement will not be appealable or 
reviewable, except as provided in Sec.  402.306.
    We also proposed that an ALJ cannot require reinstatement of an 
excluded person according to this chapter as specified in Sec.  
402.306(d). (The content of this section is based on the criteria 
provided by the OIG in Sec.  1001.3002.)
10. Approval of Request for Reinstatement (Proposed Sec.  402.304)
    With regard to approval of a request for reinstatement (Sec.  
402.304), we would state that, if the initiating agency grants a 
request for reinstatement, then the initiating agency would--(1) Give 
written notice to the excluded person specifying the date of 
reinstatement; and (2) notify appropriate Federal and State agencies, 
and, to the extent possible, all others that were originally notified 
of the exclusion, that the person has been reinstated into the Medicare 
program.
    A determination by the initiating agency to reinstate an excluded 
person would have no effect if Medicare, Medicaid, or (where 
applicable) any other Federal health care program has imposed a longer 
period of exclusion under its own authorities. (The content of this 
section is based on the procedures provided by the OIG in Sec.  
1001.3003.)
11. Denial of Request for Reinstatement (Proposed Sec.  402.306)
    In proposed Sec.  402.306, we specified that if a request for 
reinstatement is denied, the initiating agency would provide written 
notice to the excluded person. Within 30 days of the date of this 
notice, the excluded person may submit to the initiating agency: (1) 
Documentary evidence and a written argument challenging the 
reinstatement denial; or (2) a written request to present written 
evidence or oral argument to an official of the initiating agency.
    If this written request is received timely by the initiating 
agency, the initiating agency, within 15 days of receipt of the 
excluded provider or entity's request, would initiate communication 
with the excluded person to establish a time and place for the 
requested meeting.
    After evaluating any additional evidence submitted by the excluded 
person (or at the end of the 30-day period described above, if no 
documentary evidence or written request was submitted), the initiating 
agency would send written notice to the excluded person either 
confirming the denial, or approving the reinstatement as set forth in 
proposed Sec.  402.304. If the initiating agency elects to uphold its 
denial decision, the written notice would also indicate that a 
subsequent request for reinstatement would not be considered until at 
least 1 year after the date of the written denial notice.
    The decision to deny reinstatement would not be subject to 
administrative review. (The content of this section is based on the 
procedures provided by the OIG in Sec.  1001.3004.)
    We received 11 comments related to the July 23, 2004 proposed rule. 
The following is a summary of the comments received and our responses 
to them.
    Comment: Commenters expressed concern over the discretion that we 
may apply in setting the duration of exclusion when duration is not 
addressed by statute.
    Response: The statute does not specifically set the duration of 
exclusion. Therefore, we will consider any and all factors, as listed 
in Sec.  402.208, presented when weighing our decision on the length of 
the exclusion. We believe the circumstances and facts presented will 
provide a basis for determining the appropriate duration on a case-by-
case basis.
    Comment: Commenters stated that wrongful conduct that occurred at a 
time otherwise barred by the statute of limitations should not be 
considered as a factor.
    Response: It is our intent to consider any and all applicable 
factors in making a determination of exclusion from the Medicare 
program, including past wrongful conduct unrelated to the specific 
conduct at issue. Unlike the imposition of civil monetary penalties 
that are only applied to the conduct at issue, we take a different 
position on imposing an exclusion from the Medicare program.
    Comment: One commenter indicated the financial loss to the program 
associated as an aggravating or mitigating factor was too small. The 
commenter used as an example a single hospital claim whereby the value 
of a single claim is typically more than the loss proposed in the rule.
    Response: We have drafted this final rule to be adopted as a 
generic template to account for all types of healthcare providers (for 
example, hospitals, physicians, and suppliers). The financial factors 
proposed for aggravating and mitigating circumstances provide us with 
the ability to consider a low dollar tolerance that would be applicable 
to both institutional and non-institutional providers.
    Comment: One commenter suggested that instead of considering it a 
mitigating factor when the noncompliance resulted from an unintentional 
or unrecognized error in a request for payment, and the person took 
prompt corrective steps once the error was discovered, that this 
circumstance should mean that no exclusion was warranted.
    Response: The circumstances described by the commenter would most 
likely result in a favorable determination. We would likely consider 
those particular circumstances as mitigating factors. We will look at 
all factors and degrees of timeliness and promptness of changing the 
noncompliant activity before rendering a determination on whether to 
exclude a person from the Medicare program and the duration of the 
exclusion period.
    Comment: One commenter suggested adding as a mitigating 
circumstance the fact that the person has an effective compliance 
program in place.
    Response: We agree that an effective compliance program could be 
considered a mitigating circumstance under Sec.  402.208(b)(3). 
However, the compliance program would not be considered effective if a 
violation occurred during the time the program was in effect, and the 
violation was not identified and remedied by the person prior to CMS 
identifying the noncompliance. The remedial step of

[[Page 39750]]

establishing an effective compliance program may result in the period 
of exclusion being modified.
    Comment: One commenter questioned the knowledge of furnishing 
services at the request of or direction of an excluded person, and 
whether, for example, a hospital has any obligation to check the list 
of excluded persons when furnishing services at the request of another 
entity.
    Response: We believe the exceptions described in Sec.  402.209 
address how we view the knowledge factor. With regard to an obligation 
to check the list of excluded persons, we are not aware of any 
statutory requirement of this type. While it is not obligatory to check 
the exclusions list, a provider may wish to voluntarily add this 
element as part of its compliance program to ensure that all claims for 
services of this type will be paid.
    Comment: One commenter regarded the provision that the exclusion 
effective date would not be delayed if an appeal was filed timely would 
deprive the person of economic existence. Therefore, the commenter 
recommended that the exclusion be stayed until the appeal process had 
been concluded.
    Response: As specified in Sec.  402.210(a), before written notice 
of the exclusion is sent, the person would receive a notice of proposed 
determination. The person has the opportunity at this time to present 
to CMS documentary evidence and a written response, or to make an oral 
presentation as to why the exclusion should not be imposed. In 
response, we may not impose the exclusion if we find that the exclusion 
is unwarranted. Although the commenter may feel that the appeal process 
is unfair because the exclusion is not delayed, we intend to remain 
consistent with the process that governs the other Federal agencies.
    Comment: One commenter suggested removing or revising the 
requirement of providing additional information when applying for 
reinstatement, because that requirement is too onerous, or the 
additional information requested may include protected information.
    Response: If we request additional information, it is the excluded 
person's decision whether to provide the information. A person who 
seeks reinstatement should be prepared to provide evidence it deems 
appropriate to support the reinstatement as defined in Sec.  402.302. 
However, we would base our determinations on the information that we 
have been provided.
    Comment: One commenter requested that the provision regarding our 
upholding the initial appeal determination to deny reinstatement should 
have appeal rights.
    Response: In reviewing the provision, the excluded person has two 
opportunities to present evidence to CMS that may meet the conditions 
for reinstatement as set forth in Sec.  402.302. These two 
opportunities to present evidence are detailed in Sec.  402.300(a) and 
Sec.  402.306(a). Failing to present convincing evidence, the excluded 
person is again afforded the opportunity 1 year later, as detailed in 
Sec.  402.306(c). We believe these situations provide an excluded 
person with adequate opportunity to be heard, and decline to add 
additional appeal rights.
    Comment: One commenter expressed that there was conflict between 
Sec.  402.210(a) and Sec.  402.212(b) regarding the time period for 
submitting a request for oral argument.
    Response: We reviewed the provisions and have revised the time 
period in Sec.  402.212(b) to be consistent with the 30-day period in 
Sec.  402.210(a) for submitting a request to present oral arguments.
    Comment: One commenter suggested that the exclusions related to the 
provisions of section 1882 of the Act are not intended for issuers of 
Medigap insurance or Medigap insurance policies. The commenter 
suggested that the Congress did clearly apply civil monetary penalties 
to the provisions, but made no explicit application or reference to 
exclusions.
    Response: As we discussed previously, section 1882 of the Act cross 
references section 1128A of the Act, articulating with specificity the 
applicable portions of the latter statute, which in each case includes 
section 1128A's exclusion authority. We believe that we have the legal 
authority to impose exclusions associated with violations of section 
1882 of the Act.

B. Provisions of the August 4, 2005 Proposed Rule

    This proposed rule would amend part 402, subpart C, (Exclusions) to 
set forth the general requirements and procedures that would allow 
persons targeted for exclusion from the Medicare program to request 
that CMS act on their behalf to recommend to the Inspector General that 
their exclusion from Medicare be waived because of a hardship that 
would result on Medicare beneficiaries. These requirements and 
procedures implement section 949 of the MMA.
    We proposed adding the following provisions under subpart C:
1. Waiver of Exclusions (Proposed Sec.  402.308)
    In Sec.  402.308, we stated that persons who have been excluded by 
the Inspector General may request that CMS act on their behalf to 
recommend to the Inspector General that their exclusion from the 
Medicare program be waived. We would recommend waiver if we determine 
that the person's exclusion from the Medicare program would place a 
hardship on Medicare beneficiaries. Our decision to make the 
recommendation of a waiver to the Inspector General is not subject to 
administrative or judicial review. Additionally, our recommendation of 
waiver is not tantamount to the automatic granting of a waiver, because 
it is the Inspector General who will make the final decision on whether 
a waiver should be granted to the excluded person.
    We received 2 comments related to the August 4, 2005 proposed rule 
(CMS-6019-P). Below is a summary of the comments received and our 
responses to them.
    Comment: One commenter indicated it was unable to identify the 
delegation of section 949 of the MMA waiver authority from the 
Secretary to the OIG; therefore, the commenter is opposed to the 
delegation.
    Response: Our authority to request a waiver under section 949 of 
the MMA is specified in Sec.  402.209 of this final rule. The authority 
of the OIG to grant or deny a request for a waiver is outside the scope 
of this final rule.
    Comment: One commenter requested that we provide a definition with 
greater clarity for the terms used to describe persons eligible for the 
exclusion waiver.
    Response: We have revised Sec.  402.308(a) to refer to Sec.  1001.2 
of the OIG regulations, which define ``sole community physician'' and 
``sole source of essential specialized services'' in the Medicare 
community.

III. Provisions of the Final Regulations

    We are adopting all of the provisions of the proposed rules as 
final with the following changes.
    Due to a typographical error, we are replacing Sec.  
402.105(d)(2)(xix) with Sec.  402.105(d)(2)(ix).
    In Sec.  402.308, we are adding the terms ``sole community 
physician'' and ``sole source of essential specialized services in the 
community'' to the list of definitions. For each term, we are 
referencing those terms as they are defined by the OIG regulations at 
Sec.  1001.2. In addition, in Sec.  402.308(b), we are revising the 
text, ``For purposes of

[[Page 39751]]

this part'' to read as ``For purposes of this subpart''.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.

Scope and Effect of Exclusion (Sec.  402.209)

    Section 402.209(c)(2) states that payment may be made for certain 
emergency items or services furnished by an excluded person, or under 
the medical direction or on the request of an excluded person during 
the period of exclusion. In order to be paid, a claim for the emergency 
items or services must be accompanied by a sworn statement of the 
person furnishing the items or services, specifying the nature of the 
emergency and the reason that the items or services were not furnished 
by a person eligible to furnish or order the items or services.
    The burden associated with this requirement is the time and effort 
associated with drafting and submitting a document containing a sworn 
statement that explains the circumstances under which services were 
furnished by an excluded individual. While this requirement does impose 
a burden, we believe it is exempt from the PRA as defined in 5 CFR 
1320.4; information collected during the conduct of a criminal 
investigation or civil action or during the conduct of an 
administrative action, investigation, or audit involving an agency 
against specific individuals or entities is not subject to the PRA.

Response to Notice of Proposed Determination to Exclude (Sec.  
402.212).

    Section 412.212 outlines the procedures an individual must follow 
to submit a response to the notice of intent to exclude. Specifically, 
Sec.  402.212(a) states that within 60 days of the receipt of the 
notice, a person may present to the initiating agency a written 
response to dispute whether the proposed exclusion is appropriate. In 
addition, the person submitting the written response to the notice may 
provide additional supportive documentation. The burden associated with 
this requirement is the time and effort associated with drafting and 
submitting a written response to the notice.
    Section 402.212(b) states that recipient of a notice of intent to 
exclude is also afforded an opportunity to be heard by the initiating 
agency in order to make an oral presentation concerning whether the 
proposed exclusion is warranted. The person must submit the request for 
an oral presentation within 60 days of the receipt of the notice. The 
burden associated with this requirement is the time and effort 
associated with submitting a request for an oral presentation.
    While the requirements listed in Sec.  402.212(a) and (b) do impose 
burdens, we believe they are exempt from the PRA as defined in 5 CFR 
1320.4; information collected during the conduct of a criminal 
investigation or civil action or during the conduct of an 
administrative action, investigation, or audit involving an agency 
against specific individuals or entities is not subject to the PRA.

Appeal of Exclusion (Sec.  402.214)

    Section 402.214(b) lists the conditions under which an excluded 
person may file a request for a hearing before an administrative law 
judge (ALJ). Section 402.214(d) states that an excluded person must 
file a request for a hearing within 60 days from the receipt of the 
notice of exclusion. Section 402.214(e) lists the required content of 
the written request for a hearing.
    The burden associated with these requirements is the time and 
effort necessary to draft and submit a request for a hearing with an 
ALJ as stated in Sec.  402.214(d). In addition, the person must ensure 
that the request contains all of the information outlined in Sec.  
402.214(e). While these requirements do impose burdens, we believe they 
are exempt from the PRA as defined in 5 CFR 1320.4; information 
collected during the conduct of a criminal investigation or civil 
action or during the conduct of an administrative action, 
investigation, or audit involving an agency against specific 
individuals or entities is not subject to the PRA.

Request for Reinstatement (Sec.  402.300)

    Section 402.300(a) explains that an excluded person may submit a 
request for reinstatement to the agency initiating the exclusion. An 
excluded person must submit a written request no sooner than 120 days 
prior to the terminal date of exclusion as specified in the notice of 
exclusion. Section 402.300(d) explains the request for reinstatement 
process for an excluded person that had the period of exclusion reduced 
on appeal. The excluded person must submit a written request and apply 
for reinstatement within 120 days of the expiration date of the reduced 
exclusion period.
    The burden associated with these requirements is the time and 
effort necessary to draft and submit the request for reinstatement and 
to apply for reinstatement. While these requirements do impose burdens, 
we believe they are exempt from the PRA as defined in 5 CFR 1320.4; 
information collected during the conduct of a criminal investigation or 
civil action or during the conduct of an administrative action, 
investigation, or audit involving an agency against specific 
individuals or entities is not subject to the PRA.

Denial of Request for Reinstatement (Sec.  402.306)

    Section 402.306(a) explains that if a request for reinstatement is 
denied, the initiating agency must notify the excluded person in 
writing. This section also states that within 30 days of the date of 
the notice of denial, the excluded person may submit to the initiating 
agency--documentary evidence and a written argument challenging the 
reinstatement denial; or a written request to present written evidence 
or oral argument to an official of the initiating agency.
    The burden associated with this requirement is the time and effort 
necessary for the excluded person to provide the aforementioned 
information. While this requirement imposes burden, we believe it is 
exempt from the PRA as defined in 5 CFR 1320.4; information collected 
during the conduct of a criminal investigation or civil action or 
during the conduct of an administrative action, investigation, or audit 
involving an agency against specific individuals or entities is not 
subject to the PRA.

Waivers of Exclusions (Sec.  402.308)

    Section 402.308 discusses the process involved in obtaining a 
waiver of exclusions. Section 402.308(a) states that persons may 
request of CMS to present, on their behalf, a request to the Office of 
the Inspector General (OIG) for

[[Page 39752]]

a waiver of the exclusion. The request must be in writing and will only 
be considered if it meets the criteria listed in this section. If the 
individual or entity meet the criteria, the written request for a 
waiver of exclusion must provide, at a minimum, the information listed 
under Sec.  402.308(b).
    The burden associated with this requirement is the time and effort 
necessary to prepare and submit to CMS the written document requesting 
a waiver of exclusion. While this requirement imposes burden, we 
believe it is exempt from the PRA as defined in 5 CFR 1320.4; 
information collected during the conduct of a criminal investigation or 
civil action or during the conduct of an administrative action, 
investigation, or audit involving an agency against specific 
individuals or entities is not subject to the PRA.

V. Regulatory Impact Statement

    We have examined the impacts of this final rule as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review), 
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or in any 1 year). This rule does not 
reach the economic threshold and thus is not considered a major rule. 
Any impact that may occur would only affect those limited few persons 
that engage in prohibited behavior. We do not anticipate any savings or 
costs as a result of this final rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small government 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$6 million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this rule will not 
have a significant economic impact on a substantial number of small 
entities. We believe that any impact as a result of the final rule will 
be minimal, since the only persons affected would be those limited few 
who engage in prohibited conduct. Since the vast majority of program 
participants comply with statutory and regulatory requirements, any 
aggregate economic impact would not be significant.
    In addition, 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. This 
analysis must conform to the provisions of section 604 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. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined that 
this rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
is currently approximately $120 million. This rule will have no 
consequential effect on State, local, or tribal governments, or by the 
private sector since the majority of program participants comply with 
statutory and regulatory requirements.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it publishes a final rule that imposes 
substantial direct requirement costs on State and local governments, 
preempts State law, or otherwise has Federalism implications. Since 
this regulation does not impose any costs on State or local 
governments, the requirements of E.O. 13132 are not applicable.
    In accordance with the provisions of Executive Order 12866, the 
Office of Management and Budget reviewed this regulation.

List of Subjects in 42 CFR Part 402

    Administrative practice and procedure, Medicaid, Medicare, 
Penalties.

0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR chapter IV part 402 as set forth below:

PART 402--CIVIL MONEY PENALTIES, ASSESSMENTS, AND EXCLUSIONS

0
1. The authority citation for part 402 continues to read as follows:

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

Subpart A--General Provisions


Sec.  402.1  [Amended]

0
2. In Sec.  402.3, add the definition of ``initiating agency'' in 
alphabetical order to read:


Sec.  402.3  Definitions.

* * * * *
    Initiating agency means whichever agency (CMS or the OIG) initiates 
the interaction with the person.
* * * * *

Subpart B--Civil Money Penalties and Assessments

0
3. In Sec.  402.105, redesignate paragraph (d)(1)(xix) as paragraph 
(d)(1)(ix).
0
4. In part 402, add a new subpart C to read as follows:
Subpart C--Exclusions
Sec.
402.200 Basis and purpose.
402.205 Length of exclusion.
402.208 Factors considered in determining whether to exclude, and 
the length of exclusion.
402.209 Scope and effect of exclusion.
402.210 Notices.
402.212 Response to notice of proposed determination to exclude.
402.214 Appeal of exclusion.
402.300 Request for reinstatement.
402.302 Basis for reinstatement.
402.304 Approval of request for reinstatement.
402.306 Denial of request for reinstatement.
402.308 Waivers of exclusions.

Subpart C--Exclusions


Sec.  402.200  Basis and purpose.

    (a) Basis. This subpart is based on the sections of the Act that 
are specified in Sec.  402.1(e).
    (b) Purpose. This subpart--
    (1) Provides for the imposition of an exclusion from the Medicare 
and Medicaid programs (and, where applicable, other Federal health care 
programs) against persons that violate the provisions of the Act 
provided in Sec.  402.1(e) (and further described in Sec.  402.1(c)); 
and
    (2) Sets forth the appeal rights of persons subject to exclusion 
and the procedures for reinstatement following exclusion.


Sec.  402.205  Length of exclusion.

    The length of exclusion from participation in Medicare, Medicaid,

[[Page 39753]]

and, where applicable, other Federal health care programs, is 
contingent upon the specific violation of the Medicare statute. A full 
description of the specific violations identified in the sections of 
the Act are cross-referenced in the regulatory sections listed in the 
table in paragraph (a) of this section.
    (a) In no event will the period of exclusion exceed 5 years for 
violation of the following sections of the Act:

------------------------------------------------------------------------
                                           Code of Federal Regulations
     Social Security Act  paragraph                  section
------------------------------------------------------------------------
1833(h)(5)(D) in repeated cases........  Sec.   402.1(c)(1)
1833(q)(2)(B) in repeated cases........  Sec.   402.1(c)(3)
1834(a)(11)(A).........................  Sec.   402.1(c)(4)
1834(a)(18)(B).........................  Sec.   402.1(c)(5)
1834(b)(5)(C)..........................  Sec.   402.1(c)(6)
1834(c)(4)(C)..........................  Sec.   402.1(c)(7)
1834(h)(3).............................  Sec.   402.1(c)(8)
1834(j)(4).............................  Sec.   402.1(c)(10)
1834(k)(6).............................  Sec.   402.1(c)(31)
1834(l)(6).............................  Sec.   402.1(c)(32)
1842(b)(18)(B).........................  Sec.   402.1(c)(11)
1842(k)................................  Sec.   402.1(c)(12)
1842(l)(3).............................  Sec.   402.1(c)(13)
1842(m)(3).............................  Sec.   402.1(c)(14)
1842(n)(3).............................  Sec.   402.1(c)(15)
1842(p)(3)(B) in repeated cases........  Sec.   402.1(c)(16)
1848(g)(1)(B) in repeated cases........  Sec.   402.1(c)(17)
1848(g)(3)(B)..........................  Sec.   402.1(c)(18)
1848(g)(4)(B)(ii) in repeated cases....  Sec.   402.1(c)(19)
1879(h)................................  Sec.   402.1(c)(23)
------------------------------------------------------------------------

    (b) For violation of the following sections, there is no maximum 
time limit for the period of exclusion.

------------------------------------------------------------------------
                                           Code of Federal Regulations
     Social Security Act  paragraph                  section
------------------------------------------------------------------------
1834(a)(17)(c) for a pattern of          Sec.   402.1(e)(2)(i)
 contacts.
1834(h)(3) for a pattern of contacts...  Sec.   402.1(e)(2)(ii)
1877(g)(5).............................  Sec.   402.1(c)(22)
1882(a)(2).............................  Sec.   402.1(c)(24)
1882(p)(8).............................  Sec.   402.1(c)(25)
1882(p)(9)(C)..........................  Sec.   402.1(c)(26)
1882(q)(5)(C)..........................  Sec.   402.1(c)(27)
1882(r)(6)(A)..........................  Sec.   402.1(c)(28)
1882(s)(4).............................  Sec.   402.1(c)(29)
1882(t)(2).............................  Sec.   402.1(c)(30)
------------------------------------------------------------------------

    (c) For a person excluded under any of the grounds specified in 
paragraph (a) of this section, notwithstanding any other requirements 
in this section, reinstatement occurs--
    (1) At the expiration of the period of exclusion, if the exclusion 
was imposed for a period of 5 years; or
    (2) At the expiration of 5 years from the effective date of the 
exclusion, if the exclusion was imposed for a period of less than 5 
years and the initiating agency did not receive the appropriate written 
request for reinstatement as specified in Sec.  402.300.


Sec.  402.208  Factors considered in determining whether to exclude, 
and the length of exclusion.

    (a) General factors. In determining whether to exclude a person and 
the length of exclusion, the initiating agency considers the following:
    (1) The nature of the claims and the circumstances under which they 
were presented.
    (2) The degree of culpability, the history of prior offenses, and 
the financial condition of the person presenting the claims.
    (3) The total number of acts in which the violation occurred.
    (4) The dollar amount at issue (Medicare Trust Fund dollars or 
beneficiary out-of-pocket expenses).
    (5) The prior history of the person insofar as its willingness or 
refusal to comply with requests to correct said violations.
    (6) Any other facts bearing on the nature and seriousness of the 
person's misconduct.
    (7) Any other matters that justice may require.
    (b) Criteria to be considered. As a guideline for taking into 
account the general factors listed in paragraph (a) of this section, 
the initiating agency may consider any one or more of the circumstances 
listed in paragraphs (b)(1) and (b)(2) of this section, as applicable. 
The respondent, in his or her written response to the notice of intent 
to exclude (that is, the proposed exclusion), may provide information 
concerning potential mitigating circumstances.
    (1) Aggravating circumstances. An aggravating circumstance may be 
any of the following:
    (i) The services or incidents were of several types and occurred 
over an extended period of time.
    (ii) There were numerous services or incidents, or the nature and 
circumstances indicate a pattern of claims or requests for payment or a 
pattern of incidents, or whether a specific segment of the population 
was targeted.
    (iii) Whether the person was held liable for criminal, civil, or 
administrative sanctions in connection with a program covered by this 
part or any other public or private program of payment for health care 
items or services at any time before the incident or whether the person 
presented any claim or made any request for payment that included an 
item or service subject to a determination under Sec.  402.1.
    (iv) There is proof that the person engaged in wrongful conduct, 
other than the specific conduct upon which liability is based, relating 
to government programs and in connection with the delivery of a health 
care item or service. The statute of limitations governing civil money 
penalty proceedings at section 1128A(c)(1) of the Act does not apply to 
proof of other wrongful conducts as an aggravating circumstance.
    (v) The wrongful conduct had an adverse impact on the financial 
integrity of the Medicare program or its beneficiaries.
    (vi) The person was the subject of an adverse action by any other 
Federal, State, or local government agency or board, and the adverse 
action is based on the same set of circumstances that serves as a basis 
for the imposition of the exclusion.
    (vii) The noncompliance resulted in a financial loss to the 
Medicare program of at least $5,000.
    (viii) The number of instances for which full, accurate, and 
complete disclosure was not made as required, or provided as requested, 
and the significance of the undisclosed information.
    (2) Mitigating circumstances. A mitigating circumstance may be any 
of the following:
    (i) All incidents of noncompliance were few in nature and of the 
same type, occurred within a short period of time, and the total amount 
claimed or requested for the items or services provided was less than 
$1,500.
    (ii) The claim(s) or request(s) for payment for the item(s) or 
service(s) provided by the person were the result of an unintentional 
and unrecognized error in the person's process for presenting claims or 
requesting payment, and the person took corrective steps promptly after 
the error was discovered.
    (iii) Previous cooperation with a law enforcement or regulatory 
entity resulted in convictions, exclusions, investigations, reports for 
weaknesses, or civil money penalties against other persons.
    (iv) Alternative sources of the type of health care items or 
services furnished by the person are not available to the Medicare 
population in the person's immediate area.
    (v) The person took corrective action promptly upon learning of the 
noncompliance from the person's employee or contractor, or by the 
Medicare contractor.
    (vi) The person had a documented mental, emotional, or physical 
condition before or during the

[[Page 39754]]

commission of the noncompliant act(s) and that condition reduces the 
person's culpability for the acts in question.
    (vii) The completeness and timeliness of refunding to the Medicare 
Trust Fund or Medicare beneficiaries any inappropriate payments.
    (viii) The degree of culpability of the person in failing to 
provide timely and complete refunds.
    (3) Other matters as justice may require. Other circumstances of an 
aggravating or mitigating nature are taken into account if, in the 
interest of justice, those circumstances require either a reduction or 
increase in the sanction to ensure achievement for the purposes of this 
subpart.
    (4) Initiating agency authority. Nothing in this section limits the 
authority of the initiating agency to settle any issue or case as 
provided by Sec.  402.17, or to compromise any penalty and assessment 
as provided by Sec.  402.115.


Sec.  402.209  Scope and effect of exclusion.

    (a) Scope of exclusion. Under this title, persons may be excluded 
from the Medicare, Medicaid, and, where applicable, any other Federal 
health care programs.
    (b) Effect of exclusion on a person(s). (1) Unless and until an 
excluded person is reinstated into the Medicare program, no payment is 
made by Medicare, Medicaid, and, where applicable, any other Federal 
health care programs for any item or service furnished by the excluded 
person or at the direction or request of the excluded person when the 
person furnishing the item or service knew or had reason to know of the 
exclusion, on or after the effective date of the exclusion as specified 
in the notice of exclusion.
    (2) An excluded person may not take assignment of a Medicare 
beneficiary's claim on or after the effective date of the exclusion.
    (3) An excluded person that submits, or causes to be submitted, 
claims for items or services furnished during the exclusion period is 
subject to civil money penalty liability under section 1128A(a)(1)(D) 
of the Act, and criminal liability under section 1128B(a)(3) of the 
Act. In addition, submission of claims, or the causing of claims to be 
submitted for items or services furnished, ordered, or prescribed, by 
an excluded person may serve as the basis for denying reinstatement to 
the Medicare program.
    (c) Exceptions. (1) If a Medicare beneficiary or other person 
(including a supplier) submits an otherwise payable claim for items or 
services furnished by an excluded person, or under the medical 
direction or on the request of an excluded person after the effective 
date of the exclusion, CMS pays the first claim submitted by the 
beneficiary or other person and immediately notifies the claimant of 
the exclusion. CMS does not pay a beneficiary or other person 
(including a supplier) for items or services furnished by, or under, 
the medical direction of an excluded person more than 15 days after the 
date on the notice to the beneficiary or other person (including a 
supplier), or after the effective date of the exclusion, whichever is 
later.
    (2) Notwithstanding the other provisions of this section, payment 
may be made for certain emergency items or services furnished by an 
excluded person, or under the medical direction or on the request of an 
excluded person during the period of exclusion. To be payable, a claim 
for the emergency items or services must be accompanied by a sworn 
statement of the person furnishing the items or services, specifying 
the nature of the emergency and the reason that the items or services 
were not furnished by a person eligible to furnish or order the items 
or services. No claim for emergency items or services is payable if 
those items or services were provided by an excluded person that, 
through employment, contractual, or under any other arrangement, 
routinely provides emergency health care items or services.


Sec.  402.210  Notices.

    (a) Notice of proposed determination to exclude. When the 
initiating agency proposes to exclude a person from participation in a 
Federal health care program in accordance with this part, notice of the 
proposed determination to exclude must be given in writing, and 
delivered or sent by certified mail, return receipt requested. The 
written notice must include, at a minimum--
    (1) Reference to the statutory basis for the exclusion.
    (2) A description of the claims, requests for payment, or incidents 
for which the exclusion is proposed.
    (3) The reason why those claims, requests for payments, or 
incidents subject the person to an exclusion.
    (4) The length of the proposed exclusion.
    (5) A description of the circumstances that were considered when 
determining the period of exclusion.
    (6) Instructions for responding to the notice, including a specific 
statement of the person's right to submit documentary evidence and a 
written response concerning whether the exclusion is warranted, and any 
related issues such as potential mitigating circumstances. The notice 
must specify that--
    (i) The person has the right to request an opportunity to meet with 
an official of the initiating agency to make an oral presentation; and
    (ii) The request to make an oral presentation must be submitted 
within 30 days of the receipt of the notice of intent to exclude.
    (7) If a person fails, within the time permitted under Sec.  
402.212, to exercise the right to respond to the notice of proposed 
determination to exclude, the initiating agency may initiate actions 
for the imposition of the exclusion.
    (b) Notice of exclusion. Once the initiating agency determines that 
the exclusion is warranted, a written notice of exclusion is sent to 
the person in the same manner as described in paragraph (a) of this 
section. The exclusion is effective 20 days from the date of the 
notice. The written notice must include, at a minimum, the following:
    (1) The basis for the exclusion.
    (2) The length of the exclusion and, when applicable, the factors 
considered in setting the length.
    (3) The effect of exclusion.
    (4) The earliest date on which the initiating agency considers a 
request for reinstatement.
    (5) The requirements and procedures for reinstatement.
    (6) The appeal rights available to the excluded person under part 
1005 of this title.
    (c) Amendment to the notice of exclusion. No later than 15 days 
before the final exhibit exchanges required under Sec.  1005.8 of this 
title, the initiating agency may amend the notice of exclusion if 
information becomes available that justifies the imposition of a period 
of exclusion other than the one proposed in the original written 
notice.


Sec.  402.212  Response to notice of proposed determination to exclude.

    (a) A person that receives a notice of intent to exclude (that is, 
the proposed determination) as described in Sec.  402.210, may present 
to the initiating agency a written response stating whether the 
proposed exclusion is warranted, and may present additional supportive 
documentation. The person must submit this response within 60 days of 
the receipt of notice. The initiating agency reviews the materials 
presented and initiates a response to the person regarding the argument 
presented, and any changes to the determination, if appropriate.
    (b) The person is also afforded an opportunity to make an oral 
presentation to the initiating agency concerning whether the proposed

[[Page 39755]]

exclusion is warranted and any related matters. The person must submit 
this request within 30 days of the receipt of notice. Within 15 days of 
receipt of the person's request, the initiating agency initiates 
communication with the person to establish a mutually agreed upon time 
and place for the oral presentation and discussion.


Sec.  402.214  Appeal of exclusion.

    (a) The procedures in part 1005 of this title apply to all appeals 
of exclusions. References to the Inspector General in that part apply 
to the initiating agency.
    (b) A person excluded under this subpart may file a request for a 
hearing before an administrative law judge (ALJ) only on the issues of 
whether--
    (1) The basis for the imposition of the exclusion exists; and
    (2) The duration of the exclusion is unreasonable.
    (c) When the initiating agency imposes an exclusion for a period of 
1 year or less, paragraph (b)(2) of this section does not apply.
    (d) The excluded person must file a request for a hearing within 60 
days from the receipt of notice of exclusion. The effective date of an 
exclusion is not delayed beyond the date stated in the notice of 
exclusion simply because a request for a hearing is timely filed (see 
paragraph (g) of this section).
    (e) A timely filed written request for a hearing must include--
    (1) A statement as to the specific issues or findings of fact and 
conclusions of law in the notice of exclusion with which the person 
disagrees.
    (2) Basis for the disagreement.
    (3) The general basis for the defenses that the person intends to 
assert.
    (4) Reasons why the proposed length of exclusion should be 
modified.
    (5) Reasons, if applicable, why the health or safety of Medicare 
beneficiaries receiving items or services does not warrant the 
exclusion going into or remaining in effect before the completion of an 
ALJ proceeding in accordance with part 1005 of this title.
    (f) If the excluded person does not file a written request for a 
hearing as provided in paragraph (d) of this section, the initiating 
agency notifies the excluded person, by certified mail, return receipt 
requested, that the exclusion goes into effect or continues in 
accordance with the notice of exclusion. The excluded person has no 
right to appeal the exclusion other than as described in this section.
    (g) If the excluded person files a written request for a hearing, 
and asserts in the request that the health or safety of Medicare 
beneficiaries does not warrant the exclusion going into or remaining in 
effect before completion of an ALJ hearing, then the initiating agency 
may make a determination as to whether the exclusion goes into effect 
or continues pending the outcome of the ALJ hearing.


Sec.  402.300  Request for reinstatement.

    (a) An excluded person may submit a written request for 
reinstatement to the initiating agency no sooner than 120 days prior to 
the terminal date of exclusion as specified in the notice of exclusion. 
The written request for reinstatement must include documentation 
demonstrating that the person has met the standards set forth in Sec.  
402.302. Obtaining or reactivating a Medicare provider number (or 
equivalent) does not constitute reinstatement.
    (b) Upon receipt of a written request for reinstatement, the 
initiating agency may require the person to furnish additional, 
specific information, and authorization to obtain information from 
private health insurers, peer review organizations, and others as 
necessary to determine whether reinstatement is granted.
    (c) Failure to submit a written request for reinstatement or to 
furnish the required information or authorization results in the 
continuation of the exclusion, unless the exclusion has been in effect 
for 5 years. In this case, reinstatement is automatic.
    (d) If a period of exclusion is reduced on appeal (regardless of 
whether further appeal is pending), the excluded person may request and 
apply for reinstatement within 120 days of the expiration of the 
reduced exclusion period. A written request for the reinstatement 
includes the same standards as noted in paragraph (b) of this section.


Sec.  402.302  Basis for reinstatement.

    (a) The initiating agency authorizes reinstatement if it determines 
that--
    (1) The period of exclusion has expired;
    (2) There are reasonable assurances that the types of actions that 
formed the basis for the original exclusion did not recur and will not 
recur; and
    (3) There is no additional basis under title XVIII of the Act that 
justifies the continuation of the exclusion.
    (b) The initiating agency does not authorize reinstatement if it 
determines that submitting claims or causing claims to be submitted or 
payments to be made by the Medicare program for items or services 
furnished, ordered, or prescribed, may serve as a basis for denying 
reinstatement. This section applies regardless of whether the excluded 
person has obtained a Medicare provider number (or equivalent), either 
as an individual or as a member of a group, before being reinstated.
    (c) In making a determination regarding reinstatement, the 
initiating agency considers the following:
    (1) Conduct of the excluded person occurring before the date of the 
notice of the exclusion, if that conduct was not known to the 
initiating agency at the time of the exclusion;
    (2) Conduct of the excluded person after the date of the exclusion;
    (3) Whether all fines and all debts due and owing (including 
overpayments) to any Federal, State, or local government that relate to 
Medicare, Medicaid, or, where applicable, any Federal, State, or local 
health care program are paid in full, or satisfactory arrangements are 
made to fulfill these obligations;
    (4) Whether the excluded person complies with, or has made 
satisfactory arrangements to fulfill, all of the applicable conditions 
of participation or conditions of coverage under the Medicare statutes 
and regulations; and
    (5) Whether the excluded person has, during the period of 
exclusion, submitted claims, or caused claims to be submitted or 
payment to be made by Medicare, Medicaid, and, where applicable, any 
other Federal health care program, for items or services furnished, 
ordered, or prescribed, and the conditions under which these actions 
occurred.
    (d) Reinstatement is not effective until the initiating agency 
grants the request and provides notices under Sec.  402.304. 
Reinstatement is effective as provided in the notice.
    (e) A determination for a denial of reinstatement is not appealable 
or reviewable except as provided in Sec.  402.306.
    (f) An ALJ may not require reinstatement of an excluded person in 
accordance with this chapter.


Sec.  402.304  Approval of request for reinstatement.

    (a) If the initiating agency grants a request for reinstatement, 
the initiating agency--
    (1) Gives written notice to the excluded person specifying the date 
of reinstatement; and
    (2) Notifies appropriate Federal and State agencies, and, to the 
extent possible, all others that were originally notified of the 
exclusion, that the person is reinstated into the Medicare program.
    (b) A determination by the initiating agency to reinstate an 
excluded person has no effect if Medicare, Medicaid, or, where 
applicable, any other Federal

[[Page 39756]]

health care program has imposed a longer period of exclusion under its 
own authorities.


Sec.  402.306  Denial of request for reinstatement.

    (a) If a request for reinstatement is denied, the initiating agency 
provides written notice to the excluded person. Within 30 days of the 
date of this notice, the excluded person may submit to the initiating 
agency:
    (1) Documentary evidence and a written argument challenging the 
reinstatement denial; or
    (2) A written request to present written evidence or oral argument 
to an official of the initiating agency.
    (b) If a written request as described in paragraph (a)(2) of this 
section is received timely by the initiating agency, the initiating 
agency, within 15 days of receipt of the excluded person's request, 
initiates communication with the excluded person to establish a time 
and place for the requested meeting.
    (c) After evaluating any additional evidence submitted by the 
excluded person (or at the end of the 30-day period described in 
paragraph (a) of this section, if no documentary evidence or written 
request is submitted), the initiating agency sends written notice to 
the excluded person either confirming the denial, or approving the 
reinstatement in the manner set forth in Sec.  402.304. If the 
initiating agency elects to uphold its denial decision, the written 
notice also indicates that a subsequent request for reinstatement will 
not be considered until at least 1 year after the date of the written 
denial notice.
    (d) The decision to deny reinstatement is not subject to 
administrative review.


Sec.  402.308  Waivers of exclusions.

    (a) Basis. Section 1128(c)(3)(B) of the Act specifies that in the 
case of an exclusion from participation in the Medicare program based 
upon section 1128(a)(1), (a)(3), or (a)(4) of the Act, the individual 
may request that CMS present, on his or her behalf, a request to the 
OIG for a waiver of the exclusion.
    (b) Definitions. For purposes of this section:
    Excluded person has the same meaning as a ``person'' as defined in 
Sec.  402.3 who meets for the purposes of this subpart, the definition 
of the term ``exclusion'' in Sec.  402.3.
    Hardship for purposes of this section means something that 
negatively affects Medicare beneficiaries and results from the 
imposition of an exclusion because the excluded person is the sole 
community physician or sole source of essential specialized services in 
the Medicare community.
    Sole community physician has the same meaning as that term is 
defined Sec.  1001.2 of this title.
    Sole source of essential specialized services in the community has 
the same meaning as that term defined by the Sec.  1001.2 of this 
title.
    (c) General rule. If CMS determines that a hardship as defined in 
paragraph (b)(2) of this section results from exclusion of an affected 
person from the Medicare program, CMS may consider and may make a 
request to the Inspector General for waiver of the Medicare exclusion.
    (d) Submission and content of a waiver of exclusion request. An 
excluded person must submit a request for waiver of exclusion in 
writing to CMS that includes the following:
    (1) A copy of the exclusion notice from the OIG.
    (2) A statement requesting that CMS present a waiver of exclusion 
request to the OIG on his or her behalf.
    (3) A statement that he or she is the sole community physician or 
sole source of essential specialized services in the community.
    (4) Documentation to support the statement in paragraph (d)(3) of 
this section.
    (e) Processing of waiver of exclusion requests. CMS processes a 
request for a waiver of exclusion as follows:
    (1) Notifies the submitter that the waiver of exclusion request has 
been received.
    (2) Reviews and validates all submitted documents.
    (3) During its analysis, CMS may require additional, specific 
information, and authorization to obtain information from private 
health insurers, peer review organizations (including, but not limited 
to, Quality Improvement Organizations), and others as necessary to 
determine validity.
    (4) Makes a determination regarding whether or not to submit the 
waiver of exclusion request to the OIG based on review and validation 
of the submitted documents.
    (5) If CMS elects to submit the waiver of exclusion request to the 
OIG, CMS copies the excluded person on the request.
    (6) If CMS denies the request, then CMS notifies the excluded 
person of the decision and specifies the reason(s) for the decision.
    (f) Administrative or judicial review. A determination rendered 
under paragraph (e)(4) of this section is not subject to administrative 
or judicial review.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: December 14, 2006.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: March 26 2007.
Michael O. Leavitt,
Secretary.

    Editorial Note: This document was received at the Office of the 
Federal Register on July 9, 2007.

 [FR Doc. E7-13535 Filed 7-19-07; 8:45 am]
BILLING CODE 4120-01-P