Physicians and Other Providers Beware! - Do You Know How Affiliated Entities are Billing Medicare Using Your Provider Number? You Should.

Health Law Bulletin

Physicians and Other Providers Beware! - Do You Know How Affiliated Entities are Billing Medicare Using Your Provider Number?  You Should.

April 3, 2012

The Office of Inspector General ("OIG") of the Department of Health & Human Services ("HHS") recently issued a Fraud Alert captioned: "OIG Alerts Physicians to Exercise Caution When Reassigning Their Medicare Payments - Physicians May Be Liable for False Claims Submitted by Entities Receiving Reassigned Medicare Payments" (February 8, 2012)(  In this Fraud Alert OIG warns that physicians who reassign their right to bill the Medicare program by executing a CMS-855R application may expose themselves to liability under the False Claims Act ("FCA") for claims submitted to the Medicare program by entities to which they reassigned the right to payment by the program.

The Fraud Alert reported that settlements were reached recently with eight physicians who were found to have caused false claims to be submitted to Medicare.  As independent contractors who were granted medical directorship positions, each of the physicians had reassigned their right to receive Medicare payments to physical medicine companies, which submitted the alleged false claims.  The OIG warned that physicians who execute a CMS-855R application to reassign their payment right may be liable for false claims submitted by the assignee (this would apply with equal force to other health care practitioners).  Under the facts presented in the OIG Alert, the reassignment was under a contractual arrangement, not an employer/employee relationship.

Though not suggested in the Fraud Alert, the fact that the physicians were independent contractors and not employees is key.  With limited exceptions, the Medicare payment rules only allow payment for a covered service to the patient or the Medicare-enrolled individual or entity that actually furnishes a service.  Only exempted from this general rule are assignments of payments by a physician or practitioner to be made to an employer and payment for certain services provided under a contractual arrangement.  (See Medicare Claims Processing Manual, Ch.1 Section 30.2.1).

Independent Contractor Reassignment

The Medicare Modernization Act of 2003 ("MMA") expanded the Medicare reassignment rules to allow a reassignment between independent contractors.  Federal regulations were revised to incorporate corporate integrity provisions that require that a supplier that assigns his/its right to collect Medicare payments is jointly and severally responsible for any Medicare overpayment to the assignee entity.  Further, the rules provide that the practitioner who actually furnishes the service has unrestricted access to claims submitted by the assignee entity for services provided by the assignor.  (42 C.F.R. Section 424.80 (d)).  In providing this access (and potential for liability), the program integrity provisions place a duty on the physician or practitioner to inquire and confirm that claims are accurately and appropriately submitted.

Employee-Employer Reassignment

Under a long standing doctrine, employed practitioners may assign their right to Medicare payments to their employer, and the terms of employment must provide that the employer has been granted the right to receive the Medicare payment.  To perfect their right to Medicare payments, such employers may simply submit a reassignment or CMS 855R form to the program.  (See Medicare Claims Processing Manual, Ch. 1 Section 30.2.6).  Importantly, under a bona fide employment relationship the Medicare regulations place the duty to file a clean claim on the employer, not the employee, and, hence, the Medicare regulations do not pass FCA liability to the employee.

Though not specifically stated in the Fraud Alert, the warning would appear to be specific to contractual reassignments, which are evermore common as complex arrangements among health care organizations increase in this age of ACOs and other multi-entity healthcare delivery structures.  Nevertheless, employed practitioners are forewarned that if they try to turn a blind eye to fraudulent or other problematic arrangements, enforcement authorities may seek to use other tools to ferret out unwanted activities.

Please contact Gary Fields at (516) 944-8200 or if you have any questions.

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