[Federal Register Volume 73, Number 125 (Friday, June 27, 2008)]
[Rules and Regulations]
[Pages 36448-36463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-14440]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 424, and 498

[CMS-6003-F]
RIN 0938-AI49


Medicare Program; Appeals of CMS or CMS Contractor Determinations 
When a Provider or Supplier Fails to Meet the Requirements for Medicare 
Billing Privileges

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

ACTION: Final rule.

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SUMMARY: This final rule implements a number of regulatory provisions 
that are applicable to all providers and suppliers, including durable 
medical equipment, prosthetics, orthotics, and supplies (DMEPOS) 
suppliers. This final rule establishes appeals processes for all 
providers and suppliers whose enrollment, reenrollment or revalidation 
application for Medicare billing privileges is denied and whose 
Medicare billing privileges are revoked. It also establishes timeframes 
for deciding enrollment appeals by an Administrative Law Judge (ALJ) 
within the Department of Health and Human Services (DHHS) or the 
Departmental Appeals Board (DAB), or Board, within the DHHS; and 
processing timeframes for CMS' Medicare fee-for-service (FFS) 
contractors.
    In addition, this final rule allows Medicare FFS contractors to 
revoke Medicare billing privileges when a provider or supplier submits 
a claim or claims for services that could not have been furnished to a 
beneficiary. This final rule also specifies that a Medicare contractor 
may establish a Medicare enrollment bar for any provider or supplier 
whose billing privileges have been revoked.
    Lastly, the final rule requires that all providers and suppliers 
receive Medicare payments by electronic funds transfer (EFT) if the 
provider or supplier, is submitting an initial enrollment application 
to Medicare, changing their enrollment information, revalidating or re-
enrolling in the Medicare program.

DATES: Effective Date: These regulations are effective on August 26, 
2008.

FOR FURTHER INFORMATION CONTACT: August Nemec, (410) 786-0612.

SUPPLEMENTARY INFORMATION:

I. Background

    A Medicare beneficiary may obtain covered Medicare items or 
services from any person, or institution that is enrolled in the 
Medicare program and is qualified to furnish those services. Various 
provisions of the statute and regulations establish conditions of 
participation or standards that a healthcare provider or supplier must 
meet in order to receive Medicare payment. These standards differ 
depending on the type of provider or supplier involved and whether the 
services are furnished under Parts A or B of the Medicare statute. 
There are also differences in qualifications between providers and 
suppliers of services, and differences among the various types of 
suppliers, in how they are enrolled in the Medicare program. For some 
classifications of providers and suppliers, an on-site survey is 
required. For other individuals or entities, a determination can be 
made based largely on the information provided by the applicant.
    The Medicare regulations in 42 CFR part 498 provide appeal rights 
for providers and suppliers that have been found to not meet certain 
conditions of participation or established standards. For the purposes 
of part 498, these suppliers include, but are not limited to, 
independent laboratories; suppliers of portable x-ray services; rural 
health clinics; federally qualified health centers; ambulatory surgical 
centers; entities approved by CMS to furnish outpatient diabetes self-
management training or end-stage renal disease treatment facilities. 
For the purposes of part 498, the term ``provider'' refers to a 
hospital, critical access hospital (CAH), skilled nursing facility, 
comprehensive outpatient rehabilitation facility (CORF), home health 
agency or hospice (HHA), religious nonmedical health care institutions 
(RNHCIs) that has in effect an agreement to participate in Medicare; or 
a clinic, rehabilitation agency, or public health agency that has in 
effect a similar agreement but only to furnish outpatient physical 
therapy or speech pathology services.
    In addition, Sec.  405.874 provides an appeals process for 
suppliers of DMEPOS that wish to contest a denial of an application for 
billing privileges or the revocation of existing billing privileges. It 
also affords DMEPOS suppliers the right to a carrier or Medicare 
Administrative Contractor (MAC) hearing before an official who was not 
involved in the original determination, and the right to seek a review 
before a CMS official designated by the CMS Administrator.

[[Page 36449]]

    In December 1998, we issued CMS Ruling 98-1, which outlined the 
appeals process that Medicare carriers must provide to physicians, 
nonphysician practitioners, and to certain entities that receive 
reassigned benefits from physicians and nonphysician practitioners. CMS 
Rulings are decisions of the Administrator that serve as precedent for 
final opinions and orders and statements of policy and interpretation. 
They provide clarification and interpretation of complex or ambiguous 
provisions of statute or regulations relating to Medicare, Medicaid, 
Utilization and Quality Control Peer Review, private health insurance, 
and related matters. CMS Rulings are binding on all our components, 
Medicare contractors, the Provider Reimbursement Review Board, the 
Medicare Geographic Classification Review Board, and ALJs who hear 
Medicare appeals. These Rulings promote consistency in interpretation 
of policy and adjudication of disputes. This final rule is different 
from the clarification of appeals procedures found in CMS Ruling 98-1, 
because it adds provisions in order to comply with the MMA. Whereas the 
ruling followed the procedures in Sec.  405.874, this final rule would 
grant suppliers the right, after denial or revocation of a supplier's 
Medicare billing privileges, to a hearing by an ALJ after an adverse 
decision at the reconsideration level, as well as judicial review.
    In the October 25, 1999 Federal Register (64 FR 57431), we 
published a proposed rule Appeals of Carrier Terminations that a 
Supplier Fails to Meet the Requirements for Medicare Billing Privileges 
that would revise Sec.  405.874 by extending appeal rights to all 
suppliers whose enrollment applications for Medicare billing privileges 
are disallowed by a carrier or whose Medicare billing privileges are 
revoked, except for those suppliers covered under existing appeals 
provisions of our regulations.
    Since we did not publish our earlier rulemaking effort within 3 
years as required by section 902 of the MMA, we published a new 
proposed rule on March 2, 2007. This proposed rule included changes 
mandated by section 936(a) and (b) of the MMA.

II. Provisions of the March 2, 2007 Proposed Rule

    In the March 2, 2007 Federal Register (72 FR 9479), we published a 
proposed rule that set forth standard provider and supplier appeal 
procedures as established in section 936 of the MMA and proposed 
certain other provisions associated with Medicare's provider and 
supplier enrollment process. We proposed to maintain Sec.  405.874, 
which specifies provisions that would apply to certain suppliers as 
defined in Sec.  405.802. In Sec.  405.802, we proposed to define 
prospective supplier and suppliers by specifying the provisions of 
Sec.  405.874 that would apply. In Sec.  405.874(a), we proposed that 
if a CMS contractor (that is, a carrier, fiscal intermediary or 
Medicare administrative contractor (MAC)) denies a supplier's 
enrollment application, the CMS contractor must notify the supplier by 
certified mail. The notice must include the following: (1) The reason 
for the denial in sufficient detail to allow the supplier to understand 
the nature of its deficiencies; (2) the right to appeal in accordance 
with part 498; and (3) the address to which the written appeal must be 
mailed.
    In Sec.  405.874(b)(1), we proposed to clarify that if a carrier 
revokes a supplier's Medicare billing privileges that the carrier must 
notify the supplier by certified mail and that the notice must 
include--(1) The reason for the revocation in sufficient detail for the 
supplier to understand the nature of its deficiencies; (2) the right to 
appeal in accordance with part 498 of this chapter; (3) the address to 
which the written appeal must be mailed.
    In Sec.  405.874(b)(2), we proposed to separate the procedures in 
existing Sec.  405.874(a) and Sec.  405.874(b). In Sec.  405.874(b)(2), 
we proposed clarifying that a revocation of a supplier billing 
privileges that is based on a Federal exclusion or debarment is 
effective with the effective date of the exclusion or debarment, 
regardless of the date of the notice from the carrier that the billing 
privileges are revoked. Moreover, if CMS, or one of its designated 
contractors revokes Medicare billing privileges, we would not revoke an 
individual or organization's National Provider Identifier (NPI).
    In Sec.  405.874(b)(3), we proposed clarifying that suppliers are 
not paid for items or services furnished during a period in which a 
supplier does not have billing privileges or its billing privileges 
have been revoked. Concerning DMEPOS suppliers, section 1834(j)(1) of 
the Social Security Act (the Act) states that, with the exception of 
medical equipment and supplies furnished incident to a physician's 
service, no payment may be made by Medicare for items and supplies 
unless the supplier has active Medicare billing privileges. We further 
proposed that claims submitted to CMS contractors for items or services 
furnished during a period of supplier ineligibility are to be rejected 
by the CMS contractor, not denied.
    In Sec.  405.874(c)(1), we proposed that a supplier's appeal rights 
would follow the processes detailed in part 498. In Sec.  405.874(d), 
we proposed to revise this section to reflect that claims for services 
furnished to Medicare beneficiaries during a period in which the 
supplier's billing privileges were not effective are rejected and not 
denied. If a provider or supplier is determined not to have qualified 
for billing privileges in one period but qualified in another, 
contractors process claims for services furnished to beneficiaries 
during the period for which the provider or supplier was Medicare-
qualified. Subpart C of this part sets forth the requirements for 
recovery of overpayments. The appeals process for denied claims should 
not apply if a provider or supplier does not have billing privileges.
    In Sec.  405.874(d)(3), we proposed if a revocation of a provider's 
or supplier's billing privileges is reversed upon appeal, the 
provider's or supplier's billing privileges are reinstated back to the 
date that the revocation became effective.
    In Sec.  405.874(d)(4), we proposed that if a denial of a 
provider's or supplier's billing privileges is reversed upon appeal, 
then the appeal decision establishes the date that the provider's or 
supplier's billing privileges will become effective.
    In Sec.  405.874(e), we proposed that if a provider or supplier 
completes a corrective action plan and provides sufficient evidence to 
the CMS contractor that it has complied fully with Medicare 
requirements, the CMS contractor may reinstate the supplier's billing 
privileges.
    In Sec.  405.874(f), we proposed revising the effective date for 
DMEPOS supplier's billing privileges. If a carrier, carrier hearing 
officer, or ALJ determines that a DMEPOS supplier's denied enrollment 
application meets the standards in Sec.  424.57 of this chapter and any 
other requirements that may apply (for example, reinstatement after an 
OIG exclusion), the determination establishes the effective date of the 
billing privileges as not earlier than the date the CMS contractor made 
the determination to deny the supplier's enrollment application. Claims 
are rejected for services furnished before that effective date.
    In Sec.  405.874(g), we proposed that a provider or supplier 
succeeding in having its enrollment application denial or billing 
privileges revocation reversed, or in having its billing privileges 
reinstated, may submit claims to the

[[Page 36450]]

CMS contractor for services furnished during periods of Medicare 
qualification, subject to the limitations in Sec.  424.44 of this 
chapter, regarding the timely filing of claims.
    In Sec.  405.874(h), we proposed establishing deadlines for the 
adjudication of provider enrollment actions. We proposed that 
contractors adjudicate initial determinations and revalidations within 
180 days of receipt and carriers adjudicate change-of-information and 
reassignment of payment request within 90 days of receipt. In addition, 
we proposed to establish timeframes for each administrative level of 
appeal. The following table identifies who makes the determinations and 
the associated timeframes in which each determination is made.

------------------------------------------------------------------------
                                                             Proposed
                                           Timeframe to       maximum
      Medicare provider enrollment        file an appeal   adjudication
              determination                    (days)        timeframe
                                                              (days)
------------------------------------------------------------------------
Initial.................................              60             180
Reconsideration.........................              60              60
Administrative Law Judge Review.........              60             180
Departmental Appeals Board Review.......              60             180
Federal District Court..................             N/A             N/A
------------------------------------------------------------------------

    In Sec.  424.510(d)(2)(iv), we proposed that at the time of 
enrollment, an enrollment change request or revalidation, providers and 
suppliers shall submit the CMS-588 form to receive payments via 
electronic funds transfer.
    In Sec.  424.545(a), we proposed the following:
     Redesignating the first sentence of current paragraph (a) 
as the introductory text and revising that text to remove the reference 
to part 405 subpart H.
     Redesignating the second sentence of current paragraph (a) 
as paragraph (a)(1)(i).
     Adding paragraph (a)(1)(ii) to clarify that if a provider 
appeals both of these sanctions, then both matters will be resolved 
using a single appeals process.
     Redesignating the last sentence of current paragraph (a) 
as paragraph (a)(2).
    In Sec.  424.525(a)(1) and (a)(2), we proposed potential reasons 
for rejecting enrollment applications by reducing the amount of time 
that a provider or supplier must furnish complete information requested 
by a contractor from 60 to 30 days. Additionally, we proposed a 
reduction from 60 to 30 days for the period allowed to furnish all 
supporting documentation for submitting their enrollment application.
    We proposed rejecting an application that is submitted by a 
provider or supplier if it is incomplete or if it fails to include all 
required supporting documentation on the enrollment application within 
30 days of receipt.
    In Sec.  424.535(a)(8), we proposed allowing Medicare FFS 
contractors, under the direction of CMS, to revoke Medicare billing 
privileges when a provider or supplier submits a claim or claims for 
services that could not have been furnished to a beneficiary.
    In Sec.  424.535(b)(2), we proposed a timeframe to wait for 
reapplication to the Medicare program when a provider or supplier is 
revoked. Specifically, we proposed that when a provider or supplier, 
including all authorized officials, delegating officials and 
practitioners, is revoked for any of the reasons listed at Sec.  
424.535 that the provider, supplier, delegated official or authorizing 
official be prohibited from enrolling for 3 years.
    In Sec.  498.1(g), we proposed to establish an ALJ hearing, and 
judicial review for any provider or supplier whose application for 
enrollment or reenrollment in Medicare has been denied.
    In Sec.  498.2, we proposed revising the definition of a 
``supplier'' to--(1) Include a supplier of DMEPOS; ambulance service 
provider; independent diagnostic testing facility; physician; and other 
practitioner such as physician assistant; and (2) remove the reference 
to ``prospective supplier.''
    In Sec.  498.2, we proposed adding a new definition for 
``prospective supplier.''
    We also proposed removing the definition of the ``Office of 
Hearings and Appeals (OHA)'' because the function of this office has 
been moved from the Social Security Administration to the DHHS. We also 
proposed to revise the definition of ``affected party'' to specify that 
it includes CMS or a CMS contractor.
    In Sec.  498.5, we proposed revising this section by adding a new 
paragraph (l) that would be used to clarify the administrative process 
that a prospective provider, existing provider, prospective supplier or 
existing supplier dissatisfied with an initial determination or revised 
initial determination related to the denial or revocation of Medicare 
billing privileges.
    We proposed revising Sec.  498.5(f)(2) to be consistent with the 
change in Sec.  498.1(g). This would implement the mandate of section 
936(a)(2) of the MMA regarding judicial review. We proposed these 
standards because the FFS contractors need sufficient time to 
adjudicate the facts and make a reasoned decision. Moreover, while we 
are establishing an outside limit for processing these applications, 
the vast majority of these decisions are made within 120 days.
    We proposed revising Sec.  498.22(a) to add that we have delegated 
authority to our contractors to reconsider an initial determination. We 
also proposed revising Sec.  498.22(b)(1) to state that a 
reconsideration request is to be filed with CMS or with the State 
survey agency, or, in the case of prospective suppliers, the entity 
specified in the notice of initial determination.
    We proposed revising Sec.  498.44 to remove the term Associate 
Commissioner for Hearings and Appeals, and we replaced it with the 
Secretary, because this function is no longer under the Social Security 
Administration; it is now under the Department of Health and Human 
Services.
    In Sec.  405.874(c)(2), we proposed clarifying that a provider or 
supplier is required to prove that it is in compliance with all 
Medicare requirements for billing privileges, and that the Medicare FFS 
contractor incorrectly denied or revoked the supplier's billing 
privileges. In Sec.  498.56, we proposed adding a new paragraph (e) 
that specifies the ``good cause'' exception to the admission of new 
evidence at the ALJ and DAB appeal levels. Accordingly, we proposed 
revising Sec.  498.56 and Sec.  498.86 to prohibit providers and 
suppliers from submitting new provider enrollment

[[Page 36451]]

issues or evidence at the ALJ and DAB levels of review.
    In Sec.  498.78(a), we proposed to delete the provision that an 
affected party concur in writing or on the record with a CMS or 
Department of Health and Human Services Office of Inspector General 
(OIG) request for remand. We believe that the appeals process can be 
enhanced by allowing an ALJ to remand a provider enrollment case to the 
Medicare FFS contractor when CMS requests a remand. Further, we believe 
that a remand request could result in either a favorable decision to 
the appellant or an administrative record that is complete.
    In Sec.  498.79, we proposed that an ALJ must issue a decision, 
dismissal order or remand to CMS, as appropriate, no later than 180 
days after the initial request for a hearing.
    Finally, in Sec.  498.88(g), we proposed that the Board must issue 
a decision, dismissal order or remand to the ALJ, as appropriate, no 
later than 180 days after the appeal was received by the Board.

III. Analysis of and Responses to Public Comments

    We received approximately 30 comments in response to the March 2, 
2007 proposed rule. The following is a summary of the comments received 
and our responses.
    Comment: Several commenters recommended that we clarify whether the 
provisions of the proposed rule apply to all providers and suppliers.
    Response: The provisions of the proposed and this final rule apply 
to all the providers and suppliers described in the Sec.  405.802 or 
Sec.  498.2. Therefore, in response to comments received, we are adding 
definitions for ``prospective supplier'' and ``prospective provider'' 
to Sec.  405.802 and Sec.  498.2. Since applicants (prospective 
provider and suppliers) who are not enrolled in the Medicare program 
still are afforded appeal rights based on an enrollment denial, we 
maintain that it is important to clarify that any prospective applicant 
(provider or supplier) is afforded appeal rights through this process.
    Comment: One commenter recommended that we separately define 
``prospective provider'' and modify the definition of provider 
accordingly.
    Response: We agree with the commenter's recommendations and have 
included a definition of ``prospective provider'' in Sec.  405.802 and 
498.2 and have revised the definition of ``provider'' at Sec.  405.802 
and Sec.  498.2.
    Comment: One commenter suggested that we change the definition of 
supplier to include occupational therapists in private practice.
    Response: This comment falls outside the scope of the proposed 
rule. Therefore, we believe it would be inappropriate for us to address 
this comment in this final rule.
    Comment: Several commenters recommended that we clarify whether a 
provider or supplier who uses a corrective action plan (CAP) is 
precluded from also appealing the contractor, carrier, MAC, or FI 
decision.
    Response: A CAP is the plan that allows a provider or supplier an 
opportunity to correct deficiencies (if possible) that resulted in a 
denial or revocation of billing privileges. The CAP should provide 
evidence that the provider or supplier is in compliance with Medicare 
enrollment requirements. A provider or supplier that uses a CAP is not 
precluded from also appealing the FFS contractor's (that is in a MAC, 
FI, or carrier) decision. The Medicare FFS contractor, including the 
National Supplier Clearinghouse (NSC), will accept the submission of a 
corrective action plan for revoked billing privileges if the corrective 
action plan is submitted within 15 days from the date of the notice for 
DMEPOS suppliers or within 30 days from the date of the notice for all 
other providers and suppliers.
    Comment: Several commenters recommended that we clarify that an 
independent contractor hearing officer will conduct the reconsideration 
of an adverse enrollment decision.
    Response: For the purpose of this final rule, the term an 
independent contractor hearing officer means that a reconsideration 
will be handled by a hearing officer not involved in the initial 
determination. We believe this will ensure that the appellant receives 
a fair and impartial reconsideration. It is also important to note that 
while the claims appeals process uses a ``qualified independent 
contractor'' to conduct reviews, the provider enrollment appeals 
process does not use a ``qualified independent contractor.''
    Comment: Several commenters recommended that we clarify when a 
provider or supplier may resubmit a new initial enrollment application 
after an enrollment denial.
    Response: Since the denial of enrollment application conveys appeal 
rights, a provider or supplier cannot resubmit a new initial enrollment 
application until after the 60 day appeal period has ended. This will 
ensure that the Medicare contractor is not processing an initial 
application during the timely filing period of an appeal. In addition, 
if a provider or supplier submits a new initial enrollment application 
during the timely appeals filing period, the Medicare contractor will 
return the application to the applicant.
    Comment: One commenter recommended that we change our proposed 
language concerning a remand by an ALJ to specify that CMS does not 
have authority to request a remand when the Agency is also a party to 
an ALJ proceeding.
    Response: We believe that we should have all the rights afforded to 
an appellant. Further, by allowing CMS to request a remand, we believe 
that the designated contractor or CMS Regional Office will be able to 
review or re-examine the administrative record to update or provide 
documentation to establish a complete administrative record. By doing 
so, we believe higher levels of appeal will have the information needed 
to effectuate a timely decision. Therefore, we do not agree with the 
commenter's recommendation to revise the language to prohibit our 
authority to request a remand.
    Comment: One commenter recommended that we adopt a 45-day time 
period for adjudication of ALJ and DAB decisions.
    Response: We believe that a 45-day time period is not practical. 
While we understand the desire to establish an efficient appeals 
process, we are adopting similar time frames as had been established 
for deciding a claims appeal before an ALJ or DAB (see Sec.  
405.1016(c)). As stated previously, the early presentation of evidence 
will allow the contractor hearing officer or the CMS Regional Office to 
make decisions using all relevant facts as applied to the appeal. In 
doing so, the hearing officer or regional office will issue their 
findings to establish a complete administrative record for the future 
appeal levels. We believe that a complete administrative record will 
help facilitate decision making at higher levels of appeal.
    Comment: Several commenters stated that a reconsideration is an 
unnecessary delay in the appeals process, and that applicants should be 
able to appeal directly to an ALJ.
    Response: We determined that the most effective way to implement 
the requirements of section 936(j)(2) of the MMA was to amend the 
existing appeals procedures in part 498. The appeals procedures under 
part 498 include reconsideration as a level of review before an appeal 
is made to an ALJ. We believe that the reconsideration level provides 
an additional opportunity for the matter to be resolved prior to the 
filing of an appeal to an ALJ.

[[Page 36452]]

    Comment: One commenter requested clarification of Sec.  
405.874(c)(2), which discussed the reconsideration of a determination 
to deny or revoke a provider or supplier's Medicare billing privileges.
    Response: The reconsideration of a determination to deny or revoke 
a provider or supplier's Medicare billing privileges will be handled by 
a carrier hearing officer not involved in the initial determination or 
a CMS Regional Office for a Part A determination.
    There are distinct appeals provisions for claims processing and 
provider enrollment. While the claims process uses claims determination 
and qualified independent contractors (QICs) as part of the appeals 
process, the provider enrollment process does not. The first level of 
appeal of adverse actions is to either a contractor hearing officer for 
noncertified suppliers or to the CMS Regional Office for certified 
providers or suppliers. Subsequently, appellants may appeal adverse 
provider enrollment determinations by a hearing officer or regional 
office to an ALJ, then the DAB, and then to Federal District Court.
    Comment: One commenter recommended that Sec.  498.86(a) concerning 
evidence admissible on review by the DAB, adopt and follow the good 
cause exception set forth in proposed Sec.  498.56(e) for ALJ 
proceedings.
    Response: By the time the DAB hears the provider enrollment appeal, 
the applicant has been afforded ample opportunity to submit any 
evidence germane to the adverse determination. Accordingly, we do not 
believe it is efficient or administratively effective to establish a 
``good cause'' provision within the language at Sec.  498.86(a).
    Comment: While we received a number of comments supporting our 
proposal to prohibit providers and suppliers from submitting new 
evidence during the ALJ and DAB levels of appeal, several commenters 
stated they were opposed to this proposal.
    Response: Consistent with the provisions of our April 21, 2006 
final rule titled ``Requirements for Establishing and Maintaining 
Medicare Billing Privileges and Provider Enrollment Process'' (71 FR 
20754), we believe all providers and suppliers must meet and maintain 
all Federal and State requirements for their provider or supplier type 
to enroll or maintain their enrollment in the Medicare Program.
    When a Medicare contractor makes an adverse enrollment 
determination (for example, enrollment denial or revocation of billing 
privileges), providers and suppliers are afforded appeal rights. 
However, these appeal rights are limited to provider or supplier 
eligibility at the time the Medicare contractor made the adverse 
determination. Thus, if a Medicare contractor determines that a 
provider or supplier does not meet State licensure requirements on June 
1, 2007, it is the provider's responsibility to demonstrate during the 
appeals process that State licensure requirements were met on June 1, 
2007. Conversely, if a provider only can demonstrate that State 
licensure requirements were met on a later date; such as, August 16, 
2007, we believe that the contractor made the correct determination, 
and that the provider or supplier may reapply for Medicare billing 
privileges. Accordingly, a provider or supplier is required to furnish 
the evidence that demonstrates that the Medicare contractor made an 
error at the time an adverse determination was made, not that the 
provider or supplier is now in compliance. Thus, we believe that it is 
essential that providers and suppliers submit documentation that 
supports their eligibility to participate in the Medicare program 
during the reconsideration step of the provider enrollment appeals 
process. This will allow a hearing officer to review and make a 
decision using all applicable facts. Moreover, the early presentation 
of evidence will help to ensure an efficient and effective 
administrative appeals process.
    Finally, in order to expedite the provider enrollment appeals 
process, we believe that applicants must present all relevant facts and 
supporting documentation prior to or during the first level of appeal 
(that is, reconsideration). This will enable a contractor hearing 
officer or the CMS Regional Office personnel to review and make a 
determination based on all available facts. Moreover, the early 
presentation of facts and supporting documentation can be used to build 
the administrative record and help facilitate timely decisions at 
higher levels of appeals.
    Comment: One commenter suggested that we continue to follow the 
existing ALJ and DAB procedures in part 498 to allow for consideration 
and for submission of additional evidence related to a provider or 
supplier enrollment appeal after the initial information is submitted.
    Response: As stated previously in this final rule, in order to 
expedite the provider enrollment appeals process, we believe that 
applicants must present all relevant facts and supporting documentation 
prior to or during the first level of appeal (that is, 
reconsideration). This will enable a contractor hearing officer or the 
CMS Regional Office personnel to review and make a determination based 
on all available facts. Moreover, the early presentation of facts and 
supporting documentation can be used to build the administrative record 
and help facilitate timely decisions at higher levels of appeals.
    Comment: Several commenters stated that we used the terms ``billing 
number'' and ``billing privileges'' interchangeably in the proposed 
rule and that caused confusion.
    Response: We appreciate these comments and will revise the final 
rule to use the term ``billing privileges'' throughout. With the 
implementation of the National Provider Identifier on May 23, 2008, 
Medicare will no longer issue a billing number to providers and 
suppliers, but will, in fact, convey billing privileges to a provider 
or supplier if they meet and maintain all Federal and/or State 
requirements to enroll or remain enrolled in the Medicare program.
    Comment: Several commenters recommended that physicians be allowed 
to appeal rejected claims once Medicare billing privileges are granted.
    Response: Physicians, as well as providers and other suppliers, are 
required to enroll in the Medicare program before submitting a Medicare 
claim. Accordingly, if a claim is rejected because the physician is not 
enrolled, a physician must resubmit the claims after he or she is 
enrolled in the Medicare program in compliance with Medicare's 
provision for timely filing (Sec.  424.44).
    Comment: One commenter recommended that we not require the 
submission of the Electronic Funds Transfer Authorization Agreement 
(EFT) form (CMS-588) if a provider or supplier is already receiving 
payments electronically.
    Response: We agree with this commenter. We believe an enrolled 
provider or supplier who is already receiving Medicare payments 
electronically is not required to submit the CMS-588 with a change in 
enrollment unless the provider or supplier is seeking to change its 
depository information.
    Comment: Several commenters recommended that we address concerns 
regarding operational issues associated with the requirement to obtain 
payments electronically. Specifically, these commenters recommended 
that we address in this final rule the practice of reversing entry 
procedures where we may overpay the provider or supplier and then later 
reclaim that overpayment.

[[Page 36453]]

    Response: We appreciate this comment and understand this concern; 
however, this issue is outside the scope of the proposed rule.
    Comment: Several commenters stated that the provisions of this rule 
eliminated a physician's right to retroactively bill for services as is 
the current practice for some physicians.
    Response: This rule did not propose a change in the current 
provisions regarding retroactive billing; therefore, we believe this 
comment is outside the scope of the proposed rule.
    Comment: Several commenters supported our proposal to reduce from 
60 to 30 days for information required to process an enrollment 
application, and they wanted to know if they could retroactively apply 
the provision to pending inventories.
    Response: We appreciate the support for our proposal to reduce the 
time allotted to produce the necessary documentation to process 
enrollment applications from 60 days to 30 days before allowing a 
contractor to reject an enrollment application. However, we will 
prohibit our contractors from retroactively applying this change to 
pending inventories. Accordingly, any applications received after the 
effective date of this final rule will be subject to its provisions.
    Comment: Several commenters recommended that we not reduce the 
amount of time providers or suppliers have to respond to a request from 
Medicare FFS contractor, (that is, carrier, FI, or MAC) for additional 
information from 60 days to 30 days as proposed in Sec.  425.525(a)(2).
    Response: We continue to believe that it is essential that 
providers and suppliers submit a complete application, including all 
supporting documentation, at the time of filing or at a minimum, 
respond to a contractor's request for information in a timely manner. 
Accordingly, absent the submission of a complete application, we 
believe that it is appropriate that providers and suppliers respond to 
a contractor's request for additional information in a timely manner. 
We believe that allowing a provider or supplier 30 days is more than 
enough time to obtain and submit the requested information or 
documentation. Finally, we believe that this change will lead to 
processing efficiencies for not only the Medicare program but also for 
those providers and suppliers who seek to enroll or make a change in 
their existing Medicare enrollment information.
    Comment: One commenter requested that we clarify our requirement 
for furnishing requested enrollment documentation with respect to the 
30-day timeframe before the rejection of an enrollment application.
    Response: We believe that a contractor may reject the provider or 
supplier's enrollment application if the provider or supplier fails to 
respond to a request for information in a complete and timely manner 
(that is, within 30 days of the contractor request for additional 
information.)
    For example, assume that an applicant submits an enrollment 
application on May 1, 2008. While processing the enrollment application 
the contractor determines that the applicant did not complete section 3 
of the application and did not submit the required supporting 
documentation to receive payments electronically. On May 16, 2008, the 
contractor notifies the applicant about the missing documentation. 
Assuming that the applicant does not submit all requested information 
by June 15, 2008 (that is, 30 days from the contractor request), the 
contractor may reject the application.
    Comment: Several commenters stated that the proposed enrollment 
application processing timeframes stated in proposed Sec.  405.874(h) 
were too long and would inhibit suppliers from enrolling or re-
enrolling in the Medicare Program.
    Response: We are also concerned about delays associated with the 
enrollment process. However, we recognize that many of the delays are 
the result of providers and suppliers not submitting a complete 
application at the time of filing or failing to submit complete and 
timely responses to a contractor's request for information.
    In addition, we believe that it is appropriate to establish 
meaningful Medicare contractor processing timeliness standards and, as 
necessary, update or revise processing standards through the manual 
instructions and through contracts with Medicare contractors. Finally, 
while this final rule establishes an outer boundary for processing 
enrollment application, we fully expect that most enrollment 
applications will be processed in accordance with CMS processing 
requirements found in Publication 100-8, Chapter 10 of the Program 
Integrity Manual (PIM). The PIM establishes processing standards for 
initial applications, changes of information, and reassignments that 
all Medicare contractors must follow. Specifically, we currently 
require Medicare contractors to process 80 percent of initial 
applications within 60 days, 90 percent of initial applications within 
120 days, and 99 percent of initial applications within 180 days. We 
also require Medicare contractors to process 80 percent of changes of 
information and reassignments within 45 days, 90 percent of changes of 
information and reassignments within 60 days and 99 percent of such 
applications within 90 calendar days of receipt.
    With the implementation of the Provider Enrollment, Chain and 
Ownership System (PECOS) Web, an Internet version of the Medicare 
enrollment process, in FY 2008, we have established more stringent 
contractor processing timeliness standards for applications for 
enrollment submitted via PECOS Web. On January 4, 2008, we revised the 
processing requirements in Publication 100-8, Section 2, Chapter 10 of 
the PIM to establish the following processing requirements for PECOS 
Web applications:
    Specifically, we will require Medicare contractors to process 90 
percent of initial applications within 45 days, 95 percent of initial 
applications within 60 days, and 99 percent of initial applications 
within 90 days. We also require Medicare contractors to process 80 
percent of changes of information and reassignments within 45 days, 90 
percent of changes of information and reassignments within 60 days and 
99 percent of such applications within 90 calendar days of receipt.
    Since PECOS Web will improve the accuracy of applications submitted 
to contractors and reduce the time necessary to receive, verify and 
make a final determination regarding an enrollment action, we believe 
that the public should benefit from these processing efficiencies. 
Accordingly, we maintain that establishing a separate processing time 
standard for applications submitted via PECOS Web is appropriate.
    Comment: Several commenters raised concerns as to whether we will 
be changing the processing standards to non-tiered percentages for 
processing initial applications (including revalidations), as well as 
with regard to changes of information (including reassignments not 
submitted in conjunction with an initial enrollment package).
    Response: While we will maintain a tiered system we are 
establishing an outer boundary for the number of days for processing 
Medicare enrollment applications in this final rule, we will maintain 
more specific processing standards in Chapter 10 of the PIM.
    Comment: One commenter asked if the proposed regulation will change 
the processing standard found in Section 2 of Chapter 10 of the PIM.
    Response: This final rule does not change the provider enrollment

[[Page 36454]]

processing standards found in Section 2 of Chapter 10 of the PIM.
    Comment: One commenter agreed with the 30-day timeframe for 
submitting supporting information as long as our contractors are 
required to follow this same timeframe for processing enrollment 
applications.
    Response: While we are proposing an outside limit of 180 days for 
processing applications, we have established shorter processing 
timeframes in manual guidance which must be adhered to by CMS 
contractors. However, we believe that 30 days does not provide 
contractors with sufficient time to process all enrollment 
applications. While we believe in holding contractors responsible for 
meeting our defined processing standards, it is essential that 
providers and suppliers submit a complete application at the time of 
filing in order to lessen processing timeframes.
    Comment: One commenter asked for clarifications as to whether the 
90-day timeframe requirement for change of information and reassignment 
of payment requests submitted applies to both fiscal intermediaries, as 
well as carriers.
    Response: The 90-day processing standard applies to changes in 
information submitted to a fiscal intermediary/MAC or a change of 
information or reassignment submitted to a carrier/MAC. Therefore, 
Sec.  405.874(h)(3) applies to both providers and suppliers. We note 
that DMEPOS suppliers are required to submit changes in information to 
the NSC within 30 days of the changes as specified in Sec.  
424.57(c)(2).
    Comment: One commenter recommended that we allow academic medical 
centers to submit enrollment applications at least 6 months in advance 
of a physician's start date.
    Response: By submitting a complete enrollment application and all 
supporting documentation at the time of filing, a physician can 
efficiently enroll in the Medicare program. Additionally, with the 
implementation of PECOS Web, we believe that physicians will be able to 
enroll in a more efficient manner. Finally, since we require our 
contractors to verify the information provided in the enrollment 
application, and this cannot be accomplished if the physician is not 
yet working at the academic medical center, we are not able to adopt 
this recommendation.
    Comment: One commenter suggested that the 180-day processing time 
for enrollment decisions was not workable for providers undergoing a 
change of ownership (CHOW) as specified in Sec.  489.18.
    Response: Since Medicare contractors can only process applications 
that are complete at the time of filing and have the necessary 
supporting documentation, it is essential that CHOWs are complete when 
submitted. When completed applications are submitted, Medicare 
contractors will encounter fewer obstacles in processing an 
application. While we are establishing an outside processing timeframe 
in this rule, we have established more stringent processing 
requirements in the manual. We recognize the importance of processing 
CHOWs in a timely manner and will continue to establish processing 
standards in the manual which seek to ensure continuity of payment.
    Comment: While several commenters offered support for our proposal 
in Sec.  424.535 to preclude provider or supplier billing for a period 
of 3 years after Medicare billing privileges are revoked, several 
commenters stated that a 3-year ban is too long.
    Response: We agree that Medicare contractors should consider the 
reason associated with revocation before determining whether the 
contractor should establish a re-enrollment bar for a provider or 
supplier. The goal of the re-enrollment bar is to ensure that Medicare 
billing privileges are given to trustworthy providers and suppliers. 
Consequently, if a Medicare contractor determines that a provider's or 
supplier's Medicare billing privileges should be revoked, then we 
believe that establishing an enrollment bar is appropriate. We will 
provide contractors with guidance on the establishment of an enrollment 
bar via manual instructions. With this guidance, we believe that the 
contractor has discretion to establish a re-enrollment bar from 1 to 3 
years depending on the severity of the basis for revocation. For 
example, failure to respond to revalidation request may warrant a 1-
year ban whereas failure to report an adverse legal action that could 
preclude payment would warrant a 3-year ban.
    In addition, if a contractor makes a decision to revoke Medicare 
billing privileges, we believe that the duration of the re-enrollment 
bar should not be less than 1 year. Finally, while we believe that 
providers and suppliers can appeal the revocation determination, we do 
not believe that providers and suppliers can appeal the duration of the 
re-enrollment bar for Medicare billing privilege. We also believe that 
providers and suppliers have an obligation to maintain their billing 
privileges and to report changes that would preclude enrollment or 
continued enrollment in accordance with Sec.  410.33(g), Sec.  
424.57(c)(2), and Sec.  424.520(b). In addition, we believe that 
establishing a re-enrollment bar for Medicare billing privileges that 
have been revoked will help protect the Medicare Trust Funds, and 
beneficiaries from potentially unqualified providers and suppliers.
    Comment: One commenter stated that the 3-year waiting period in 
proposed Sec.  424.502 was a punitive action and is not within our 
legal authority, and that only the OIG has been granted legal authority 
to exclude individuals and entities from the Medicare program.
    Response: We believe that we have the obligation to protect the 
Medicare Trust Funds when billing privileges are revoked. We believe 
providers and suppliers whose billing privileges are revoked should be 
prevented from immediately re-entering the program. Accordingly, we 
believe that establishing a re-enrollment bar is appropriate and within 
our authority. Unlike OIG exclusions which apply government-wide and 
which generally last for 5 years or longer, the re-enrollment bar only 
applies to those billing the Medicare program.
    Comment: Several commenters recommended that we do not revoke a 
physician's billing privileges for 3 years because the physician did 
not respond to a revalidation request.
    Response: In the April 21, 2006 final rule, providers and suppliers 
learned about our intent to begin a revalidation process. Specifically, 
Sec.  424.515 states that a provider or supplier (other than a DMEPOS 
supplier), must resubmit and recertify the accuracy of its enrollment 
information every 5 years. Therefore, providers and suppliers that 
enrolled in the Medicare program prior to 2003, but who have not 
completed a Medicare enrollment application since then, have had more 
than 2 years to come into voluntary compliance with our enrollment 
criteria by submitting a complete enrollment application. With this 
final rule, we are again notifying physicians, providers, and suppliers 
that they may voluntarily complete and submit a Medicare enrollment 
application and the necessary supporting documentation prior to our 
formal request for revalidation. Accordingly, providers and suppliers 
who choose not to come into voluntary compliance or fail to respond to 
a revalidation request in a complete and timely manner fail to satisfy 
our enrollment criteria and may be subject to revocation of their 
billing privileges.
    Comment: Several commenters recommended that we allow providers and 
suppliers to participate in the Medicare program if their revocation is

[[Page 36455]]

successfully overturned at a higher level of appeal.
    Response: Section 405.874(d)(3) states a provider or supplier's 
billing privileges will be reinstated back to the date that their 
revocation became effective if it was reversed at a higher level of 
appeal.
    Comment: Several commenters recommended that we clarify that the 
period of provider or supplier ineligibility be linked to the date on 
which the supplier had provided a service to a beneficiary and not the 
date that a claim would be received or processed by a carrier.
    Response: We are clarifying that this is our intent. Revocation 
actions concerning provider and supplier ineligibility are based upon 
the date on which the provider or supplier had furnished a service to a 
beneficiary and not the date that a claim was received or processed by 
a carrier or MAC.
    For example, if a provider submits a claim for services provided on 
June 22, 2007, and the beneficiary dies on June 23, 2007, but the claim 
for the June 22, 2007 services was not received until August 1, 2007, 
if any action is taken regarding this claim, it would be with regard to 
the June 22, 2007 date.
    Comment: One commenter suggested that there are several instances 
where the date of service being billed could actually be the day after 
the date of death and that an honest billing of the service could be 
perceived as fraud, and therefore cause a provider or supplier to be 
incorrectly revoked.
    Response: We understand that there are certain situations when the 
date of service may legitimately be the day after the date of death of 
the beneficiary. Accordingly, Medicare contractors and CMS will review 
the specific details associated with each claim before taking any 
revocation action.
    Comment: We received several comments regarding implementation of 
the proposed changes to be set forth at Sec.  424.535(a)(8) which 
allows Medicare contractors to revoke Medicare billing privileges when 
a provider or supplier submits a claim or claims for services that 
could not have been furnished to a beneficiary, where the commenter 
believed there was not enough guidance given to the contractors to 
filter these claims which could cause overburdened contractors to 
implement this policy too widely.
    Response: CMS, not a Medicare contractor, will make the 
determination for revocation under the authority at Sec.  
424.535(a)(8). We will direct contractors to use this basis of 
revocation after identifying providers or suppliers that have these 
billing issues. We have found numerous examples of situations where a 
physician claims to have furnished a service to a beneficiary more than 
a month after their recorded death, or when the provider or supplier 
was out of State when the supposed services had been furnished. In 
these instances, the provider has billed the Medicare program for 
services which were not provided and has submitted Medicare claims for 
service to a beneficiary who could not have received the service which 
was billed. This revocation authority is not intended to be used for 
isolated occurrences or accidental billing errors. Rather, this basis 
for revocation is directed at providers and suppliers who are engaging 
in a pattern of improper billing.
    In making a revocation determination under Sec.  424.535(a)(8), we 
will make the revocation determination based upon information presented 
by a Medicare contractor, a CMS Regional Office, or one of our Program 
Integrity field offices. We believe that it is both appropriate and 
necessary that we have the ability to revoke billing privileges when 
services could not have been furnished by a provider or supplier. We 
recognize the impact that this revocation has, and a revocation will 
not be issued unless sufficient evidence demonstrates abusive billing 
patterns. Accordingly, we will not revoke billing privileges under 
Sec.  424.535(a)(8) unless there are multiple instances, at least 
three, where abusive billing practices have taken place. Furthermore, 
providers and suppliers may appeal a contractor revocation using the 
process outlined in part 498 if they believe that they were unduly 
revoked. In conclusion, we believe that providers and suppliers are 
responsible for the claims they submit or the claims submitted on their 
behalf. We believe that it is essential that providers and suppliers 
take the necessary steps to ensure they are billing appropriately for 
services furnished to Medicare beneficiaries.
    Comment: Several commenters believed that contractors would be 
issuing revocations based upon the submission of claims for services 
that could not be delivered.
    Response: As stated above, we will instruct Medicare contractors to 
issue a revocation under Sec.  424.535(a)(8).
    Comment: One commenter suggested several procedural changes 
regarding the processing of enrollment applications; such as, 
withdrawing an application and reopening a closed enrollment decision, 
be included in this regulation as opposed to our original procedural 
proposals.
    Response: As outlined in Sec.  424.510, the current enrollment 
application procedures allow providers and suppliers a clear means to 
complete and submit enrollment applications with the necessary 
documentation to participate in the Medicare program. Prospective 
providers or suppliers are responsible for obtaining the necessary 
documentation that demonstrates that they meet the program requirements 
for their provider or supplier type. If a provider or supplier cannot 
supply the necessary documentation at the time of filing or in response 
to a contractor request, then the contractor is required to reject 
their application and the prospective provider or supplier must begin 
the enrollment process anew. Finally, a prospective provider or 
supplier may withdraw their Medicare enrollment application at any time 
by informing the designated contractor in writing of the withdrawal of 
the application. A withdrawal request must be made by the applicant or 
the Authorized Official as defined in Sec.  424.502 and in the Medicare 
enrollment application (CMS-855).
    Unlike the claims appeals process where minor errors and omissions 
can be resolved though the reopening process in an effective and 
efficient manner, the issues involved in Provider Enrollment denials 
and revocations do not readily lend themselves to the reopening 
process. Accordingly, we have not adopted a reopening procedure in this 
final rule.
    Comment: One commenter recommended that we revise our 2002 ``Do Not 
Forward'' policy because of the change in processing timeframes for 
enrollment applications.
    Response: We believe this issue is outside the scope of the 
proposed rule and can not be addressed in this final rule.
    Comment: One commenter recommended that if we make a change in the 
Medicare enrollment application that we use the processing guidelines 
in effect at the time of the postmark date so that the application will 
be treated as submitted prior to the implementation date.
    Response: If we make a change in the Medicare enrollment 
application in the future, we will establish a transition period 
between the use of the prior version of the application and the new 
version of the application.
    Comment: One commenter stated that electronic funds transfer (EFT) 
should be developed in concert with the CMS-855 transaction standard to 
ensure that there is a clear connection between the two files.

[[Page 36456]]

    Response: We believe this issue is outside the scope of the 
proposed rule and can not be addressed in this final rule.
    Comment: One commenter urged us to clarify that the reassignment 
exception still exists with regard to EFT which currently exempts 
individuals reassigning their benefits to a group practice from the EFT 
requirement.
    Response: Individuals reassigning all of their benefits to a group 
practice are still exempt from the EFT requirement. We will update its 
manuals to state that only individuals and organizations receiving 
payments directly must receive them through EFT.
    Comment: One commenter suggested that we consult with hospital-
based faculty practices to determine the best way to implement EFT in 
this particular setting.
    Response: We will continue to conduct outreach efforts to ensure 
that all providers and suppliers are informed about EFT policies.
    Comment: One commenter recommended that adequate notification and 
education be provided to all who have chosen or are required to accept 
funds via EFT.
    Response: We will continue to conduct outreach efforts to ensure 
that all providers and suppliers are informed about EFT policies. We 
believe this issue is outside the scope of the proposed rule and can 
not be addressed in this final rule.
    Comment: One commenter recommended that notice of precertification 
completion be provided to group practices prior to the payment of funds 
via EFT.
    Response: We believe this issue is outside the scope of the 
proposed rule and can not be addressed in this final rule.
    Comment: One commenter stated we should not terminate a provider 
agreement when billing privileges are revoked.
    Response: In the April 21, 2006 final rule, we stated in Sec.  
424.545(a) that the termination of both the provider agreement and 
billing privileges will happen concurrently. Accordingly, we believe 
that a provider cannot retain a provider agreement if its billing 
privileges have been revoked.
    Comment: One commenter suggested that we amend the definition of 
supplier because they believed that the term ambulance service provider 
may not include suppliers of ambulance services.
    Response: While we are not adopting this recommendation, we clarify 
in section IV. of this final rule (Provisions of the Final Regulation) 
that an ambulance service provider includes all providers and suppliers 
of ambulance services.
    Comment: One commenter recommended that we conduct increased 
outreach and education efforts for providers, suppliers and contractor 
enrollment staff.
    Response: We will undertake the necessary steps to ensure that our 
contractors understand these new provisions and apply them 
consistently. In addition to publishing this final rule, we will issue 
operational guidance to our Medicare contractors.

IV. Provisions of the Final Regulation

    Based on public comments, we are adopting the provisions of the 
proposed rule as final with the following changes: We are amending the 
provisions of this final rule to apply to all providers and suppliers, 
including DMEPOS suppliers.
    In Sec.  405.802, we have added a definition of prospective 
provider.
    In Sec.  405.874(a), we amended the proposed language and adopted 
the provision that if a carrier, fiscal intermediary, National Supplier 
Clearinghouse (NSC) or MAC denies a provider's or supplier's enrollment 
application, then the carrier, fiscal intermediary, NSC or MAC must 
notify the provider or supplier by mail. The notice must include the 
following: (1) The reason for denial in sufficient detail to allow the 
provider or supplier to understand the nature of its deficiencies; (2) 
the right to appeal in accordance with part 498; and (3) the address to 
which the written appeal must be mailed.
    In Sec.  405.874(b)(1), we adopted the provision which clarified 
that if CMS or a CMS contractor, (that is, a carrier, fiscal 
intermediary, NSC or MAC) revokes a provider's or supplier's Medicare 
billing privileges, then CMS or its contractor must notify the provider 
or supplier by mail and that the notice must include--(1) The reason 
for the revocation in sufficient detail for the provider or supplier to 
understand the nature of its deficiencies; (2) the right to appeal in 
accordance with part 498 of this chapter; (3) the address to which the 
written appeal must be mailed.
    In Sec.  405.874(b)(2), we adopted the provision to separate the 
procedures in existing Sec.  405.874(a) and Sec.  405.874(b). In 
addition, we adopted the provision clarifying that a revocation of 
provider's or supplier's billing privileges that is based on a Federal 
exclusion or debarment is effective with the effective date of the 
exclusion or debarment. Moreover, if CMS or a CMS contractor revokes 
Medicare billing privileges, then we would not revoke an individual or 
organization's National Provider Identifier (NPI).
    In Sec.  405.874(b)(3), we modified our proposed provision to 
clarify that providers and suppliers are not paid for items or services 
furnished after the effective date of revocation. We removed proposed 
Sec.  405.874(b)(3)(i) because it was not applicable to revocation of 
billing privileges. Concerning DMEPOS suppliers, section 1834(j)(1) of 
the Act states that, with the exception of medical equipment and 
supplies furnished incident to a physician's service, no payment may be 
made by Medicare for items and supplies unless the supplier has active 
Medicare billing privileges. We also adopted the provision that claims 
submitted to carriers, fiscal intermediaries, NSC or MACs for items or 
services furnished during a period of provider or supplier 
ineligibility are to be rejected by the carrier or fiscal intermediary 
and not denied.
    In Sec.  405.874(c)(1), we adopted the provision that a provider's 
or supplier's appeal rights would follow the processes detailed in part 
498. Generally denials or revocations issued by a fiscal intermediary 
would be handled by a CMS regional office (RO), and denials and 
revocations by carriers, including the NSC, would be handled by a 
carrier hearing officer. In those cases where a MAC issues a denial or 
revocation, the reconsideration would be handled by the CMS RO or a 
contractor hearing officer depending upon the provider or supplier 
type. The CMS RO's will generally be handling the Medicare Part A 
reconsiderations and the contractor hearing officer will generally be 
handling the Medicare Part B reconsiderations.
    In Sec.  405.874(d), we adopted the revisions to this section to 
reflect that claims for services furnished to Medicare beneficiaries 
during a period in which the provider's or supplier's billing 
privileges were not effective are rejected and not denied. If a 
provider or supplier is determined not to have qualified for billing 
privileges in one period but qualified in another, contractors process 
claims for services furnished to beneficiaries during the period for 
which the provider or supplier was Medicare-qualified. Subpart C of 
this part sets forth the requirements for the recovery of overpayments. 
The appeals process for denied claims should not apply if a provider or 
supplier does not have billing privileges.
    In Sec.  405.874(d)(3), we adopted the provision that when 
revocation of a provider's or supplier's billing privileges are 
reversed upon appeal, the

[[Page 36457]]

provider's or supplier's billing privileges are reinstated back to the 
date that the revocation became effective.
    In Sec.  405.874(d)(4), we adopted the provision that if a denial 
of a provider's or supplier's billing privileges is reversed upon 
appeal, then the appeal decision establishes the date that the 
provider's or supplier's billing privileges will become effective.
    In Sec.  405.874(e), we adopted the provision that if a provider or 
supplier completes a corrective action plan and provides sufficient 
evidence to the carrier, fiscal intermediary, NSC or MAC that it has 
complied fully with the Medicare requirements, the carrier, fiscal 
intermediary or MAC may reinstate the supplier's billing privileges.
    In Sec.  405.874(f) we adopted the provision changing the effective 
date for DMEPOS supplier's billing privileges. If the NSC, NSC hearing 
officer, or ALJ determines that a DMEPOS supplier's denied enrollment 
application meets the standards in Sec.  424.57 of this chapter and any 
other requirements that may apply (for example, reinstatement after an 
OIG exclusion), the determination establishes the effective date of the 
billing privileges as not earlier than the date the carrier made the 
determination to deny the supplier's enrollment application. Claims are 
rejected for services furnished before that effective date.
    In Sec.  405.874(g), we adopted the provision that a provider or 
supplier succeeding in having its enrollment application denial or 
billing privileges revocation reversed, or in having its billing 
privileges reinstated, may submit claims to the CMS contractor for 
services furnished during periods of Medicare qualification, subject to 
the limitations in Sec.  424.44 of this chapter, regarding the timely 
filing of claims.
    In Sec.  424.510(d)(2)(iv), we adopted the provision that at the 
time of enrollment, an enrollment change request or revalidation, 
including reenrollment of DMEPOS suppliers, providers and suppliers 
shall submit the CMS-588 form to receive payments via electronic funds 
transfer (EFT) if they are not already receiving payments via EFT.
    Consistent with the authority under 31 U.S.C. 3332(f)(1), all 
Federal payments, including Medicare payments to providers and 
suppliers, shall be made by electronic funds transfer (EFT). Further, 
under 31 U.S.C. 3332(g), each recipient of Federal payments required to 
be made by electronic funds transfer shall designate 1 or more 
financial institutions or other authorized agents to which the payments 
shall be made and provide the information to CMS. While the statutory 
provisions at 31 CFR part 208 govern the Department of Treasury, they 
apply to all Federal government agencies.
    Consequently, we want to clarify that the EFT requirement applies 
to providers and suppliers enrolling in the Medicare program or making 
changes to enrollment. We are requiring EFT payments for the following: 
(1) Providers and suppliers initially enrolling in the Medicare 
program; (2) providers and suppliers submitting a CMS-855 change 
request who are not currently receiving payments via EFT; (3) provider 
and suppliers responding to a revalidation or DMEPOS re-enrollment 
request; and (4) when CMS changes a Medicare contractor for a State or 
contracting jurisdiction and the provider or supplier was already 
receiving payments via EFT. We believe that providers and suppliers 
already receiving payments via EFT should continue to receive payments 
via EFT when CMS changes a Medicare contractor for a State or 
contracting jurisdiction. We believe that requiring providers and 
suppliers who were already receiving Medicare payments via EFT prior to 
a change in Medicare contractors is consistent with the provisions of 
the proposed rule and does not impose a consequential burden on these 
providers and suppliers. In addition, we believe an enrolled provider 
or supplier who is already receiving Medicare payments electronically 
is not required to submit the CMS-588 with a change in enrollment 
unless the provider or supplier is seeking to change its depository 
information. Finally, we will continue to encourage all providers and 
suppliers to switch to EFT payments voluntarily.
    In Sec.  424.545(a), we adopted the following provisions:
     Redesignated the first sentence of current paragraph (a) 
as the introductory text and revised that text to remove the reference 
to part 405 subpart H.
     Redesignated the second sentence of current paragraph (a) 
as paragraph (a)(1)(i).
     Added paragraph (a)(1)(ii) to clarify that if a provider 
or supplier appeals both of these sanctions, then both matters will be 
resolved using a single appeals process.
     Redesignated the last sentence of current paragraph (a) as 
paragraph (a)(2).
    In Sec.  405.874(h), we adopted the provision that established 
deadlines for the processing of provider enrollment actions. We adopted 
the provision that contractors will process initial determinations and 
revalidations within 180 days of receipt and that carriers, fiscal 
intermediaries or MACs process change-of-information and reassignment 
of payment requests within 90 days of receipt.
    In Sec.  424.525(a)(1) and (a)(2), we adopted the provisions that 
state the reasons for rejecting enrollment applications by reducing the 
amount of time that a provider or supplier must furnish complete 
information requested by a contractor from 60 to 30 days. Additionally, 
we adopted the provision for a reduction from 60 to 30 days for the 
period allowed to furnish all supporting documentation for submitting 
their enrollment application. In this final rule, we are also making 
conforming changes in paragraph (b) of this section (that is, changing 
60 days to 30 days).
    In Sec.  424.535(a)(8), we adopted the provision that allows 
Medicare FFS contractors to revoke Medicare billing privileges when 
instructed to do so by CMS when a provider or supplier submits a claim 
or claims for services that could not have been furnished to a 
beneficiary. We have found numerous examples of situations where a 
physician or other practitioner has billed for services furnished to 
beneficiaries that are undeliverable, including but not limited to 
situations where the beneficiary was deceased, the directing physician 
or beneficiary was not in the State or country when services were 
furnished, or when the beneficiary was in another setting where these 
services could not be administered, or the equipment necessary for 
testing was not present where the testing is said to have occurred.
    We believe that this new revocation authority is consistent with 
the other types of revocations already used by CMS and its contractors 
under Sec.  424.535. Further, providers and suppliers may appeal a 
contractor revocation using the process outlined in part 498.
    This basis for revocation is essential to the efficient operation 
of the Medicare program, because it will enable us to take an important 
step in protecting the expenditure of public monies for service 
providers whose motive and billing practices are questionable, at best, 
and at worst, of a sort that might prompt an aggressive response from 
the law enforcement community. We also want to alert providers and 
suppliers that we may be proposing other provisions related to 
revocation of providers and suppliers in the calendar year 2009 
physician fee schedule proposed rule.

[[Page 36458]]

    In Sec.  424.535(b)(2), we adopted the provision to establish a re-
enrollment bar of not less than 1 year and not greater than 3 years 
when a provider or supplier's Medicare billing privileges are revoked. 
Specifically, we adopted the provision that when a provider or 
supplier, including all authorized officials, delegated officials and 
practitioners, is revoked for any of the reasons listed at Sec.  
424.535, that the provider, supplier, delegated official or authorizing 
official be prohibited from enrolling in the Medicare program for a 
period of not less than 1 year but not greater than 3 years. While we 
have adopted a provision to establish a re-enrollment bar for 1 year 
but not greater than 3 years, this enrollment bar does not preclude CMS 
or its contractor from denying re-enrollment if a provider or supplier 
was convicted of felony within the preceding 10-year period as 
described in Sec.  424.530(a)(3) or is not in compliance with any other 
enrollment criteria.
    In Sec.  498.1(g), we adopted the provision for an ALJ hearing, and 
judicial review for any provider or supplier whose application for 
enrollment or reenrollment in Medicare has been denied or whose billing 
privileges have been revoked.
    In Sec.  498.2--
     Finalizing our definition of a ``supplier'' to include the 
following: (1) A supplier of DMEPOS; ambulance service provider; 
independent diagnostic testing facility; physician; and other 
practitioner such as physician assistant; and (2) remove the reference 
to ``prospective supplier.'' To further clarify the provisions 
applicable to providers and suppliers, we have added the definition of 
provider and prospective provider to Sec.  405.802. We also note that 
we made technical edits to the definitions of supplier in Sec.  405.802 
and Sec.  498.2.
     Revised the definition of provider to (1) remove the 
reference to prospective provider; and (2) make technical changes. 
These technical changes include correcting the term ``hospital 
transplant center'' to read ``hospital, transplant center'' and 
removing the phrase ``that has in effect an agreement to participate in 
Medicare''.
     Added new definitions for ``prospective supplier,'' 
``prospective provider,'' largely based upon comments received. Since 
applicants (prospective provider and suppliers) who are not enrolled in 
the Medicare program, still are afforded appeal rights based on an 
enrollment denial, we maintain that it is important to clarify that any 
prospective applicant (provider or supplier) is afforded appeal rights 
through this process.
    We also adopted the provision to remove the definition of the 
``Office of Hearings and Appeals (OHA)'' because the function of this 
office has been moved from the Social Security Administration to the 
DHHS. Additionally, we adopted the provision that revised the 
definition of ``affected party'' to specify that it includes CMS or a 
CMS contractor.
    In Sec.  498.5, we adopted the provision that revised this section 
by adding a new paragraph (l) to clarify the administrative process 
that would be used by a prospective provider, existing provider, 
prospective supplier or existing supplier dissatisfied with an initial 
determination or revised initial determination related to the denial or 
revocation of Medicare billing privileges.
    In Sec.  498.5(f)(2), we adopted the provision to be consistent 
with the change in Sec.  498.1(g). This implements the mandate of 
section 936(a)(2) of the MMA regarding judicial review. We have adopted 
these standards because the FFS contractors need sufficient time to 
adjudicate the facts and make a reasoned Medicare enrollment decision. 
Moreover, while we established an outside limit for processing these 
applications, the vast majority of these decisions are made within 120 
days.
    In Sec.  498.22(a), we adopted the provision to add that we have 
delegated authority to our contractors to reconsider an initial 
determination. We also are adopting the provision to revise Sec.  
498.22(b)(1) to state that a reconsideration request is to be filed 
with CMS or with the State survey agency, or, in the case of 
prospective suppliers, the entity specified in the notice of initial 
determination. Additionally, we adopted the provision at Sec.  498.44 
to remove the term ``Associate Commissioner for Hearings and Appeals,'' 
and we have replaced it with the term ``Secretary,'' because this 
function is no longer under the Social Security Administration; it is 
now under the DHHS.
    In Sec.  405.874(c)(2), we adopted the provision which clarifies 
that a provider or supplier is required to prove that it is in 
compliance with all Medicare requirements for billing privileges, and 
that the Medicare FFS contractor incorrectly denied or revoked the 
supplier's billing privileges. At Sec.  498.56, we added a new 
paragraph (e) that specifies the ``good cause'' exception to the 
admission of new evidence at the ALJ level of appeal.
    In Sec.  498.78(a), we adopted the proposal to delete the provision 
that an affected party concur in writing or on the record with a CMS or 
OIG request for remand. We contend that the appeals process is enhanced 
by allowing an ALJ to remand a provider enrollment case to the Medicare 
FFS contractor when CMS requests a remand. Further, we believe that a 
remand request could result in either a favorable decision to the 
appellant or in the administrative record being complete.
    In Sec.  498.79, we adopted the provision that when a request for 
an ALJ hearing is filed after CMS or a FFS contractor has denied an 
enrollment application, that an ALJ must issue a decision, dismissal 
order or remand to CMS, as appropriate, no later than 180 days after 
the initial request for a hearing.
    We revised Sec.  498.86 to prohibit providers and suppliers from 
submitting new provider enrollment issues or evidence at the DAB level 
of review.
    Finally, in Sec.  498.88(g), we adopted the provision that when a 
request for a Board review is filed after an ALJ has issued a decision 
or dismissal order, that the Board must issue a decision, dismissal 
order or remand to the ALJ, as appropriate, no later than 180 days 
after the appeal was received by the Board.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), agencies are 
required to provide a 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 PRA requires 
that we solicit comments on the following issues:
     Whether the information collection is necessary and useful 
to carry out the proper functions of the agency;
     The accuracy of the agency's estimate of the information 
collection burden;
     The quality, utility, and clarity of the information to be 
collected; and
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques. However, we believe the information collection activities 
referenced in Sec.  405.874 are exempt under the terms of the PRA for 
the following reasons:
     As defined in 5 CFR 1320.4(a)(2), information collections 
conducted or sponsored during the conduct of criminal or civil action, 
or during the conduct of an administrative action, investigation, or 
audit involving an

[[Page 36459]]

agency against specific individuals or entities are exempt from the 
PRA.
     As described in 5 CFR 1320.3(h)(9), facts or opinions 
obtained or solicited through nonstandardized follow-up questions 
designed to clarify responses to approved collections, are exempt from 
the PRA; and
     Nonstandardized information collections directed to less 
than 10 persons do not constitute information collections as outlined 
in 5 CFR 1320.3(c)(4).
    We believe that the collection requirements are part of the 
administrative process, and collected in a nonstandardized manner. 
Since each case will be different, based on the reasons for denial or 
revocation, and evidence presented, they fall under these exceptions.
    If you comment on any of these information collection and 
recordkeeping requirements, please mail copies directly to the 
following: Centers for Medicare and Medicaid Services, Office of 
Strategic Operations and Regulatory Affairs, Regulations Development 
Group, Attn.: William Parham, CMS-6003-F, Room C4-26-05, 7500 Security 
Boulevard, Baltimore, MD 21244-1850; and Office of Information and 
Regulatory Affairs, Office of Management and Budget, Room 10235, New 
Executive Office Building, Washington, DC 20503. Attn.: Carolyn Lovett, 
CMS Desk Officer, CMS-6003-F, [email protected]. Fax (202) 
395-6974.

VI. Regulatory Impact Statement

    We have examined the impact of this 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 on 
Federalism, and the Congressional Review Act (U.S.C. 804(s)).
    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 more in any 1 year). This rule 
does not reach the economic threshold and thus is not considered a 
major rule.
    The RFA requires agencies to analyze options for regulatory relief 
for small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6.5 to 
$31.5 million in any one 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 maintain that this final rule would not have an adverse impact 
on small entities; in fact, it would afford small suppliers a measure 
of protection against adverse actions by us, and extend protection to a 
larger group of suppliers beyond the DMEPOS suppliers currently covered 
under Sec.  405.874. Because this final rule would merely clarify, 
expand, and update our current policy and administrative appeal rights, 
we anticipate slight, if any, economic impact on small entities.
    According to data submitted to us by carriers in calendar year 
2003, approximately 166,500 enrollment applications were submitted to 
the Medicare carriers by suppliers seeking to receive billing 
privileges. We believe that a vast majority of these applicants were 
small businesses. Of those applications, approximately 2,000 were 
denied, and approximately 200 applicants requested a reconsideration. 
Because we have already granted appeal rights to the affected suppliers 
via instructions to carriers, we estimate that this regulation would 
have minimal impact on carrier workloads.
    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 final rule will not have a significant impact on the operations of 
a substantial number of small rural hospitals. There is no negative 
impact on the program or on small businesses.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $120 million. This rule does not mandate expenditures by 
either the governments mentioned or the private sector, therefore no 
analysis is required.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
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, this 
regulation was reviewed by the Office of Management and Budget.

Lists of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, X-rays.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
Medicare Reporting and recordkeeping requirements.

42 CFR Part 498

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.

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

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority citation for Part 405, subpart H, continues to read as 
follows:

    Authority: Sections 1102, 1842(b)(3)(C), 1869(b), and 1871 of 
the Social Security Act (42 U.S.C. 1302, 1395u(b)(3)(C), 1395ff(b) 
and 1395hh).

Subpart H--Appeals Under the Medicare Part B Program

0
2. Section 405.802 is amended by adding the definitions of 
``provider'', ``prospective provider'', ``prospective supplier'' and 
``supplier'' in alphabetical order to read as follows:


Sec.  405.802  Definitions.

* * * * *

[[Page 36460]]

    Prospective provider means any of the entities specified in the 
definition of provider under Sec.  498.2 of this chapter that seeks to 
be approved for coverage of its services by Medicare.
    Prospective supplier means any of the listed entities specified in 
the definition of supplier specified in this section that seeks to be 
approved for coverage of its services under Medicare.
    Provider means either of the following:
    (1) Any of the following entities that have in effect an agreement 
to participate in Medicare:
    (i) Hospital.
    (ii) Transplant center.
    (iii) Critical access hospital (CAH).
    (iv) Skilled nursing facility (SNF).
    (v) Comprehensive outpatient rehabilitation facility (CORF).
    (vi) Home health agency (HHA).
    (vii) Hospice.
    (viii) Religious nonmedical health care institution (RNHCI).
    (2) Any of the following entities that have in effect an agreement 
to participate in Medicare but only to furnish outpatient physical 
therapy or outpatient speech pathology services.
    (i) Clinic.
    (ii) Rehabilitation agency.
    (iii) Public health agency.
* * * * *
    Supplier means any of the following entities:
    (1) An independent laboratory.
    (2) Supplier of durable medical equipment Prosthetics, orthotics, 
or supplies (DMEPOS).
    (3) Ambulance service provider.
    (4) Independent diagnostic testing facility.
    (5) Physician or other practitioner such as physician assistant.
    (6) Physical therapist in independent practice.
    (7) Clinical laboratories.
    (8) Supplier of portable X-ray services.
    (9) Rural health clinic (RHC).
    (10) Federally qualified health center (FQHC).
    (11) Ambulatory surgical center (ASC).
    (12) An entity approved by CMS to furnish outpatient diabetes self-
management training.
    (13) End-stage renal disease (ESRD) treatment facility that is 
approved by CMS as meeting the conditions for coverage of its services.
* * * * *

0
3. Section 405.874 is revised to read as follows:


Sec.  405.874  Appeals of CMS or a CMS contractor.

    A CMS contractor's (that is, a carrier, Fiscal Intermediary or 
Medicare Administrative Contractor (MAC)) determination that a provider 
or supplier fails to meet the requirements for Medicare billing 
privileges.
    (a) Denial of a provider or supplier enrollment application. If CMS 
or a CMS contractor denies a provider's or supplier's enrollment 
application, CMS or the CMS contractor must notify the provider or 
supplier by certified mail. The notice must include the following:
    (1) The reason for the denial in sufficient detail to allow the 
provider or supplier to understand the nature of its deficiencies.
    (2) The right to appeal in accordance with part 498 of this 
chapter.
    (3) The address to which the written appeal must be mailed.
    (b) Revocation of Medicare billing privileges--
    (1) Notice of revocation. If CMS or a CMS contractor revokes a 
provider's or supplier's Medicare billing privileges, CMS or a CMS 
contractor must notify the supplier by certified mail. The notice must 
include the following:
    (i) The reason for the revocation in sufficient detail for the 
provider or supplier to understand the nature of its deficiencies.
    (ii) The right to appeal in accordance with part 498 of this 
chapter.
    (iii) The address to which the written appeal must be mailed.
    (2) Effective date of revocation. The revocation of a provider's or 
supplier's billing privileges is effective 30 days after CMS or the CMS 
contractor mails the notice of its determination to the provider or 
supplier. A revocation based on a Federal exclusion or debarment is 
effective with the date of the exclusion or debarment.
    (3) Payment after revocation. Medicare does not pay and the CMS 
contractor rejects claims for services submitted with a service date on 
or after the effective date of a provider's or supplier's revocation.
    (c) Appeal rights. (1) A provider or supplier may appeal the 
initial determination to deny a provider or supplier's enrollment 
application, or if applicable, to revoke current billing privileges by 
following the procedures specified in part 498 of this chapter.
    (2) The reconsideration of a determination to deny or revoke a 
provider or supplier's Medicare billing privileges will be handled by a 
CMS Regional Office or a contractor hearing officer not involved in the 
initial determination.
    (3) Providers and suppliers have the opportunity to submit evidence 
related to the enrollment action. Providers and suppliers must, at the 
time of their request, submit all evidence that they want to be 
considered.
    (4) If supporting evidence is not submitted with the appeal 
request, the contractor contacts the provider or supplier to try to 
obtain the evidence.
    (5) If the provider or supplier fails to submit this evidence 
before the contractor issues its decision, the provider or supplier is 
precluded from introducing new evidence at higher levels of the appeals 
process.
    (d) Impact of reversal of contractor determinations on claims 
processing.
    (1) Claims for services furnished to Medicare beneficiaries during 
a period in which the supplier billing privileges were not effective 
are rejected.
    (2) If a supplier is determined not to have qualified for billing 
privileges in one period but qualified in another, Medicare contractors 
process claims for services furnished to beneficiaries during the 
period for which the supplier was Medicare-qualified. Subpart C of this 
part sets forth the requirements for the recovery of overpayments.
    (3) If a revocation of a supplier's billing privilege is reversed 
upon appeal, the supplier's billing privileges are reinstated back to 
the date that the revocation became effective.
    (4) If the denial of a supplier's billing privileges is reversed 
upon appeal and becomes binding, then the appeal decision establishes 
the date that the supplier's billing privileges become effective.
    (e) Reinstatement of provider or supplier billing privileges 
following corrective action. If a provider or supplier completes a 
corrective action plan and provides sufficient evidence to the CMS 
contractor that it has complied fully with the Medicare requirements, 
the CMS contractor may reinstate the provider's or supplier's billing 
privileges. The CMS contractor may pay for services furnished on or 
after the effective date of the reinstatement. The effective date is 
based on the date the provider or supplier is in compliance with all 
Medicare requirements. A CMS contractor's refusal to reinstate a 
supplier's billing privileges based on a corrective action plan is not 
an initial determination under part 498 of this chapter.
    (f) Effective date for DMEPOS supplier's billing privileges. If a 
CMS contractor, contractor hearing officer, or ALJ determines that a 
DMEPOS supplier's denied enrollment application meets the standards in 
Sec.  424.57 of this chapter and any other requirements that may apply, 
the determination establishes the effective date of the billing 
privileges as not earlier than the date the carrier made

[[Page 36461]]

the determination to deny the DMEPOS supplier's enrollment application. 
Claims are rejected for services furnished before that effective date.
    (g) Submission of claims. A provider or supplier succeeding in 
having its enrollment application denial or billing privileges 
revocation reversed in a binding decision, or in having its billing 
privileges reinstated, may submit claims to the CMS contractor for 
services furnished during periods of Medicare qualification, subject to 
the limitations in Sec.  424.44 of this chapter, regarding the timely 
filing of claims. If the claims previously were filed timely but were 
rejected, they are considered filed timely upon resubmission. 
Previously denied claims for items or services rendered during a period 
of denial or revocation may be resubmitted to CMS within 1 year after 
the date of reinstatement or reversal.
    (h) Deadline for processing provider enrollment initial 
determinations. Contractors approve or deny complete provider or 
supplier enrollment applications to approval or denial within the 
following timeframes:
    (1) Initial enrollments. Contractors process new enrollment 
applications within 180 days of receipt.
    (2) Revalidation of existing enrollments. Contractors process 
revalidations within 180 days of receipt.
    (3) Change-of-information and reassignment of payment request. 
Contractors process change-of-information and reassignment of payment 
requests within 90 days of receipt.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
4. 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).


0
5. Section 424.510 is amended by adding new paragraphs (d)(2)(iv) and 
(e) to read as follows:


Sec.  424.510  Requirements for enrolling in the Medicare program.

* * * * *
    (d) * * *
    (2) * * *
    (iv) At the time of enrollment, an enrollment change request, 
revalidation or change of Medicare contractors where the provider or 
supplier was already receiving payments via EFT, providers and 
suppliers must agree to receive Medicare payments via EFT, if not 
already receiving payment through EFT. In order to receive Medicare 
payments via EFT, providers and suppliers must submit the CMS-588 form.
* * * * *
    (e) Providers and suppliers must--
    (1) Agree to receive Medicare payment via electronic funds transfer 
(EFT) at the time of enrollment, revalidation, change of Medicare 
contractors where the provider or supplier was already receiving 
payments via EFT or submission of an enrollment change request; and
    (2) Submit the CMS-588 form to receive Medicare payment via 
electronic funds transfer.

0
6. Section 424.525 is amended by--
0
A. Republishing paragraph (a) introductory text.
0
B. Revising paragraphs (a)(1), (a)(2) and (b).
    The revisions read as follows:


Sec.  424.525  Rejection of a provider or supplier's enrollment 
application for Medicare enrollment.

    (a) Reasons for rejection. CMS contractors may reject a prospective 
provider's or supplier's enrollment application for the following 
reasons:
    (1) The prospective provider or supplier fails to furnish complete 
information on the provider/supplier enrollment application within 30 
calendar days from the date of the contractor request for the missing 
information.
    (2) The prospective provider or supplier fails to furnish all 
required supporting documentation within 30 calendar days of submitting 
the enrollment application.
    (b) Extension of 30-day period. CMS, at its discretion, may choose 
to extend the 30 day period if CMS determines that the prospective 
provider or supplier is actively working with CMS to resolve any 
outstanding issues.
* * * * *

0
7. Section 424.535 is amended by--
0
A. Adding a new paragraph (a)(8).
0
B. Redesignating paragraphs (c) through (f) as (d) through (g).
0
C. Adding a new paragraph (c).
    The addition and revision read as follows:


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

    (a) * * *.
    (8) Abuse of billing privileges. The provider or supplier submits a 
claim or claims for services that could not have been furnished to a 
specific individual on the date of service. These instances include but 
are not limited to situations where the beneficiary is deceased, the 
directing physician or beneficiary is not in the State or country when 
services were furnished, or when the equipment necessary for testing is 
not present where the testing is said to have occurred.
    (b) * * *
    (c) Reapplying after revocation. After a provider, supplier, 
delegated official, or authorizing official has had their billing 
privileges revoked, they are barred from participating in the Medicare 
program from the effective date of the revocation until the end of the 
re-enrollment bar. The re-enrollment bar is a minimum of 1 year, but 
not greater than 3 years depending on the severity of the basis for 
revocation.
* * * * *

0
8. Section 424.545 is amended by revising paragraph (a) to read as 
follows:


Sec.  424.545  Provider and supplier appeal rights.

    (a) General. A prospective provider or supplier that is denied 
enrollment in the Medicare program, or a provider or supplier whose 
Medicare enrollment has been revoked may appeal CMS' decision in 
accordance with part 498, subpart A of this chapter.
    (1) Appeals resulting in the termination of a provider agreement. 
(i) When revocation of billing privileges also results in the 
termination of a corresponding provider agreement, the provider may 
appeal CMS' decision in accordance with part 498 of this chapter with 
the final decision of the appeal applying to both the billing 
privileges and the provider agreement.
    (ii) When a provider appeals the revocation of billing privileges 
and the termination of its provider agreement, there will be one 
appeals process which will address both matters. The appeal procedures 
for revocation of Medicare billing privileges will apply.
    (2) Payment of unpaid claims. Payment is not 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.
* * * * *

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 MEDICAID 
PROGRAM

0
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).

[[Page 36462]]

Subpart A--General Provisions

0
10. Section 498.1 is amended by revising paragraph (g) to read as 
follows:


Sec.  498.1  Statutory basis.

* * * * *
    (g) Section 1866(j) of the Act provides for a hearing and judicial 
review for any provider or supplier whose application for enrollment or 
reenrollment in Medicare is denied or whose billing privileges are 
revoked.
* * * * *

0
11. Section 498.2 is amended by--
0
A. Revising the definition of ``affected party''.
0
B. Removing the definition of ``OHA''.
0
C. Adding the definitions of ``prospective provider'' and ``prospective 
supplier''.
0
D. Revising the definitions of ``provider'' and ``supplier''.
    The addition and revisions read as follows:


Sec.  498.2  Definitions.

* * * * *
    Affected party means a provider, prospective provider, supplier, 
prospective supplier, or practitioner that is affected by an initial 
determination or by any subsequent determination or decision issued 
under this part, and ``party'' means the affected party or CMS, as 
appropriate. For provider or supplier enrollment appeals, an affected 
party includes CMS or a CMS contractor.
* * * * *
    Prospective provider means any of the entities specified in the 
definition of provider under this section that seeks to be approved for 
coverage of its services by Medicare or to have any facility or 
organization determined to be a department of the provider or provider-
based entity under Sec.  413.65 of this chapter.
    Prospective supplier means any of the listed entities specified in 
the definition of supplier in this section that seek to be approved for 
coverage of its services by Medicare.
    Provider means either of the following:
    (1) Any of the following entities that have in effect an agreement 
to participate in Medicare:
    (i) Hospital.
    (ii) Transplant center.
    (iii) Critical access hospital (CAH).
    (iv) Skilled nursing facility (SNF).
    (v) Comprehensive outpatient rehabilitation facility (CORF).
    (vi) Home health agency (HHA).
    (vii) Hospice.
    (viii) Religious nonmedical health care institution (RNHCI).
    (2) Any of the following entities that have in effect an agreement 
to participate in Medicare but only to furnish outpatient physical 
therapy or outpatient speech pathology services.
    (i) Clinic.
    (ii) Rehabilitation agency.
    (iii) Public health agency.
    Supplier means any of the following entities that have in effect an 
agreement to participate in Medicare:
    (1) An independent laboratory.
    (2) Supplier of durable medical equipment prosthetics, orthotics, 
or supplies (DMEPOS).
    (3) Ambulance service provider.
    (4) Independent diagnostic testing facility.
    (5) Physician or other practitioner such as physician assistant.
    (6) Physical therapist in independent practice.
    (7) Supplier of portable X-ray services.
    (8) Rural health clinic (RHC).
    (9) Federally qualified health center (FQHC).
    (10) Ambulatory surgical center (ASC).
    (11) An entity approved by CMS to furnish outpatient diabetes self-
management training.
    (12) End-stage renal disease (ESRD) treatment facility that is 
approved by CMS as meeting the conditions for coverage of its services.

0
12. Section 498.5 is amended by--
0
A. Revising paragraph (f)(2).
0
B. Adding a new paragraph (l).
    The revision and addition read as follows:


Sec.  498.5  Appeal rights.

* * * * *
    (f) * * *
    (2) A supplier or prospective supplier dissatisfied with an ALJ 
decision may request Board review, and has a right to seek judicial 
review of the Board's decision.
* * * * *
    (l) Appeal rights related to provider enrollment.
    (1) Any prospective provider, an existing provider, prospective 
supplier or existing supplier dissatisfied with an initial 
determination or revised initial determination related to the denial or 
revocation of Medicare billing privileges may request reconsideration 
in accordance with Sec.  498.22(a).
    (2) CMS, a CMS contractor, any prospective provider, an existing 
provider, prospective supplier, or existing supplier dissatisfied with 
a reconsidered determination under paragraph (l)(1) of this section, or 
a revised reconsidered determination under Sec.  498.30, is entitled to 
a hearing before an ALJ.
    (3) CMS, a CMS contractor, any prospective provider, an existing 
provider, prospective supplier, or existing supplier dissatisfied with 
a hearing decision may request Board review, and any prospective 
provider, an existing provider, prospective supplier, or existing 
supplier has a right to seek judicial review of the Board's decision.

Subpart B--Initial, Reconsidered, and Revised Determinations

0
13. Section 498.22 is amended by revising paragraphs (a) and (b)(1) to 
read as follows:


Sec.  498.22  Reconsideration.

    (a) Right to reconsideration. CMS or one of its contractors 
reconsiders an initial determination that affects a prospective 
provider or supplier, or a hospital seeking to qualify to claim payment 
for all emergency hospital services furnished in a calendar year, if 
the affected party files a written request in accordance with 
paragraphs (b) and (c) of this section. For denial or revocation of 
enrollment, prospective providers and suppliers and providers and 
suppliers have a right to reconsideration.
    (b) * * *
    (1) With CMS or with the State survey agency, or in the case of 
prospective supplier the entity specified in the notice of initial 
determination;
* * * * *

Subpart D--Hearings

0
14. Section 498.40 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  498.40  Request for hearing.

    (a) * * *
    (1) An affected party entitled to a hearing under Sec.  498.5 may 
file a request for a hearing with the ALJ office identified in the 
determination letter.
* * * * *

0
15. Section 498.44 is revised to read as follows:


Sec.  498.44  Designation of hearing official.

    (a) The Secretary or his or her delegate designates an ALJ or a 
member or members of the Board to conduct hearings.
    (b) If appropriate, the Secretary or the delegate may designate 
another ALJ or another member or other members of the Board to conduct 
the hearing.
    (c) As used in this part, ``ALJ'' includes any ALJ of the 
Department of

[[Page 36463]]

Health and Human Services or members of the Board who are designated to 
conduct a hearing.

0
16. Section 498.56 is amended by--
0
A. Revising paragraph (a)(2).
0
B. Adding a new paragraph (e).
    The revision and addition read as follows:


Sec.  498.56  Hearing on new issues.

* * * * *
    (a) * * *
    (2) Except for provider or supplier enrollment appeals which are 
addressed in Sec.  498.56(e), the ALJ may consider new issues even if 
CMS or the OIG has not made initial or reconsidered determinations on 
them, and even if they arose after the request for hearing was filed or 
after the prehearing conference.
* * * * *
    (e) Provider and supplier enrollment appeals: Good cause 
requirement. (1) Examination of any new documentary evidence. After a 
hearing is requested but before it is held, the ALJ will examine any 
new documentary evidence submitted to the ALJ by a provider or supplier 
to determine whether the provider or supplier has good cause for 
submitting the evidence for the first time at the ALJ level.
    (2) Determining if good cause exists.
    (i) If good cause exists. If the ALJ finds that there is good cause 
for submitting new documentary evidence for the first time at the ALJ 
level, the ALJ must include evidence and may consider it in reaching a 
decision.
    (ii) If good cause does not exist. If the ALJ determines that there 
was not good cause for submitting the evidence for the first time at 
the ALJ level, the ALJ must exclude the evidence from the proceeding 
and may not consider it in reaching a decision.
    (2) Notification to all parties. As soon as possible, but no later 
than the start of the hearing, the ALJ must notify all parties of any 
evidence that is excluded from the hearing.

0
17. Section 498.78 is amended by revising paragraph (a) to read as 
follows:


Sec.  498.78  Remand by the Administrative Law Judge.

    (a) If CMS requests a remand, the ALJ may remand any case properly 
before him or her to CMS.
* * * * *

0
18. A new Sec.  498.79 is added to subpart D to read as follows:


Sec.  498.79  Timeframes for deciding an enrollment appeal before an 
ALJ.

    When a request for an ALJ hearing is filed after CMS or a FFS 
contractor has denied an enrollment application, the ALJ must issue a 
decision, dismissal order or remand to CMS, as appropriate, no later 
than the end of the 180-day period beginning from the date the appeal 
was filed with an ALJ.

Subpart E--Departmental Appeals Board Review

0
19. Section 498.86 is amended by revising paragraph (a) to read as 
follows:


Sec.  498.86  Evidence admissible on review.

    (a) Except for provider or supplier enrollment appeals, the Board 
may admit evidence into the record in addition to the evidence 
introduced at the ALJ hearing (or the documents considered by the ALJ 
if the hearing was waived) if the Board considers that the additional 
evidence is relevant and material to an issue before it.
* * * * *

0
20. Section 498.88 is amended by adding a new paragraph (g) to read as 
follows:


Sec.  498.88  Decision or remand by the Departmental Appeals Board.

* * * * *
    (g) When a request for Board review of a denial of an enrollment 
application is filed after an ALJ has issued a decision or dismissal 
order, the Board must issue a decision, dismissal order or remand to 
the ALJ, as appropriate, no later than 180 days after the appeal was 
received by the Board.


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

    Dated: November 16, 2007.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: March 17, 2008.
Michael O. Leavitt,
Secretary.

    Editorial Note: This document was received in the Office of the 
Federal Register on June 20, 2008.
[FR Doc. E8-14440 Filed 6-26-08; 8:45 am]
BILLING CODE 4120-01-P