Medicaid

Published on: August 18, 2025

Dangers of PPEO Audits

Medicare-enrolled hospice providers are under increasingly close scrutiny. Due to concerns regarding hospice compliance and with fraud, waste, and abuse by hospice providers, both the Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services Office of Inspector General (“OIG”) have stepped up audits, investigations, and enforcement actions against hospice providers. One of these measures are Provisional Period of Enhanced Oversight (“PPEO”) audits of Medicare-enrolled hospices. Providers should be aware that the stakes in a PPEO audit can be unexpectedly high, while the margin for error unexpectedly low.

CMS implemented PPEO audits as a direct response to concerns regarding hospice fraud and compliance issues. Pursuant to the PPEO program, since mid-2023, CMS audits all “newly-enrolled” hospice providers in Arizona, California, Nevada, and Texas. “Newly-enrolled” is not limited to hospice providers enrolling in Medicare for the first time, but also includes those that undergo a Change of Ownership (“CHOW”) as that term is defined under the Medicare program, those that undergo a 100% change in ownership, and those reactivating Medicare enrollment after being in a deactivated status.

PPEO audits have been compared to Targeted Probe and Educate (“TPE”) audits because, like a TPE audit, a PPEO audit can include multiple rounds of review between which the provider may receive education and an opportunity to address the issue or issues identified by the review. However, this comparison only goes so far and in practice TPE and PPEO are often very different. TPE generally consists of three rounds of review, occasionally four, and the contractor conducting the review is required by CMS rules to offer education to the provider and to wait between rounds of review to give the provider a chance to implement changes and address any issues that have been identified. Further, under TPE, providers are generally not referred to CMS for sanctions until they have failed three consecutive rounds of review by demonstrating consistently high error rates across all three rounds. TPE can, and often does, result in revocation of billing privileges, but generally not before the provider has failed three rounds of review.

Published on: August 11, 2025

Medicare Deactivation Versus Revocation

by Wachler & Associates, P.C.

Medicare-enrolled providers have seen a recent increase in the number of deactivations issued by the Centers for Medicare & Medicaid Services (CMS) and its contractors. A deactivation of Medicare billing privileges effectively turns off a provider’s ability to bill Medicare and at first glance may appear to be similar to a Medicare revocation. However, the two are very different in practice and in how a provider may respond.

A revocation of Medicare billing privileges has long been a punitive measure to remove a provider or supplier’s ability to bill Medicare. CMS usually imposes these based on alleged misconduct by the provider, such as repeatedly billing claims that do not comply with Medicare requirements or being convicted of a felony. CMS will generally impose a bar of how long the provider must wait before it can attempt to re-enroll with Medicare, usually ten years. A Medicare revocation may also lead to a provider’s termination by other payors, including Medicaid and Medicare Advantage plans. A revocation can be a very serious sanction.

A deactivation of Medicare billing privileges is often more administrative in nature. It removes a provider’s ability to bill Medicare, but generally on different grounds, such as not billing Medicare for six months, not reporting a change in information, or not being in full compliance with all enrollment requirements, among others. When a provider is deactivated, it can generally reactivate its billing privileges by correcting the administrative issue and recertifying that its enrollment information is correct. Some provider types, especially home health agencies, may have additional requirements. Where a “gap” exists between when the provider’s billing privileges are deactivated and when they are reactivated, Medicare will likely deny claims from that period. The provider may consider whether to appeal the deactivation itself, in addition to any reactivation. The provider may also need to appeal any denied claims from such a period.

Published on: July 16, 2025

Heightened FCA Scrutiny for Providers: DOJ and HHS Renew Enforcement Task Force

by Wachler & Associates, P.C.

The False Claims Act (FCA) remains a crucial focus for healthcare providers and hot-button issue under the current Administration. On July 2, 2025, the U.S. Department of Justice (DOJ) and the Department of Health and Human Services (HHS) announced they are teaming up once again. This signals a resurgence of the DOJ-HHS False Claims Act (FCA) Working Group and a revival of another healthcare enforcement initiative from the past. The main goal of the Working Group is to move fast, improve interagency collaboration, and strengthen FCA oversight with advanced data analysis tools, all focused on healthcare.

What Providers Need to Know: Enforcement Priorities

The Working Group will be co-led by senior officials from HHS’s Office of the General Counsel (OGC), the HHS Office of Inspector General (OIG), and DOJ’s Commercial Litigation Branch. U.S. Attorneys’ Offices and CMS’s Center for Program Integrity will also be actively involved.

Published on: June 30, 2025

Increasing Scrutiny of Medicare Hospice Providers

by Wachler & Associates, P.C.

The Department of Health and Human Services Office of Inspector General (“OIG”) recently announced that it would closely examine data relating to new Medicare hospice provider enrollments. These efforts build on existing practices by the Centers for Medicare & Medicaid Services (“CMS”) to increase oversight of certain Medicare hospice providers.

Hospice provides palliative care and support for patients who are terminally ill and for their families. Medicare covers hospice care only where certain criteria are met, including that a qualifying physician has certified that the patient has a terminal illness and a life expectancy of six months or less. Medicare-enrolled hospice providers are also required to be certified by CMS, be licensed as required by State and local law, and meet Medicare Conditions of Participation to receive payment.

For the past several years CMS has been concerned with hospice compliance and with fraud, waste, and abuse by hospice providers. To this end, CMS has increased audits of hospice providers, adjusted the 36-month rule restricting certain sales of hospice providers, and implemented the Provisional Period of Enhanced Oversight (“PPEO”) pilot program. Pursuant to the PPEO program, since mid-2023, CMS audits all “newly-enrolled” hospice providers in Arizona, California, Nevada, and Texas. “Newly-enrolled” is not limited to hospice providers enrolling in Medicare for the first time, but also includes those that undergo a Change of Ownership (“CHOW”) as that term is defined under the Medicare program, those that undergo a 100% change in ownership, and those reactivating Medicare enrollment after being in a deactivated status. PPEO audits function similar to TPE audits, but tend to be more rushed and less forgiving in terms of the education provided to the hospice under review. Hospices under PPEO audits should treat them with due caution and take measures to ensure that their claims and documentation meet Medicare requirements.

Published on: June 24, 2025

Are Medicare DME Surety Bond Requirements About to Go Up?

by Wachler & Associates, P.C.

The Department of Health and Human Services Office of Inspector General (“OIG”) recently announced that it would conduct a detailed review of the use of surety bonds by the Centers for Medicare & Medicaid Services (“CMS”) in regard to suppliers of durable medical equipment (“DME”).

Medicare-enrolled DME suppliers are required to maintain a surety bond against which CMS and its contractors can make claims and collect alleged Medicare overpayments. The required amount for the posted surety bond is generally $50,000 for each NPI the supplier maintains, but can be increased in certain circumstances. In theory, the bond provides a ready pool of funds from which CMS can collect overpayments without having to rely on recouping Medicare payments or forcing the supplier to pay the debt.

OIG asserts that it has long-raised concerns about fraudulent practices among DME suppliers and has reported that CMS underutilized surety bonds as a tool to protect Medicare from overpayments to DME suppliers. For example, OIG cites that CMS recovered only $263,000 from surety bonds of $50 million in overpayments identified for collection between October 2009 and April 2011. It is unclear why OIG is citing such out-of-date data or whether more recent data is available.

Published on: April 18, 2025

Congress Again Extends Telemedicine Flexibilities

by Wachler & Associates, P.C.

Congress recently passed another limited extension of certain flexibilities relating to Medicare coverage of telemedicine. While the current extension is another stop-gap measure that expires September 30, 2025, it may further signal Congressional acknowledgement of the importance of these flexibilities to healthcare providers and patients across the country and an intent to eventually make them permanent.

Prior to the COVID-19 Public Health Emergency (PHE), Medicare coverage of services provided by telemedicine was very limited. Two of the most important limitations related to the “originating site” of the telemedicine service, that is, where the patient is located while receiving the service via telemedicine. Specifically, Medicare would only cover telemedicine services where the originating site (1) was located in specified rural area and (2) was a specified clinical setting, such as a physician’s office or other facility. These rules generally precluded the use of telemedicine in urban or suburban areas and precluded nearly all patients from receiving telemedicine services in their homes.

During the COVID-19 PHE, the Centers for Medicare & Medicaid Services (CMS) waived these requirements and allowed telemedicine services in more settings, including in patients’ homes and in more than just rural areas. When the PHE ended, so too did CMS’ authority to continue these regulatory flexibilities. However, by that point, telemedicine services had become widespread and providers and patients acknowledged that it had a valuable role to play in the delivery of healthcare services. Therefore, Congress by statute extended these flexibilities past the end of the PHE, but at the time included an expiration date of December 31, 2024.

Published on: April 16, 2025

HHS OIG Discovers What Medicare Providers Have Long Known

by Wachler & Associates, P.C.

The US Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) recently released a report wherein it found what Medicare providers have long known, that Medicare Administrative Contractors (“MACs”) frequently commit significant errors and do not comply with Medicare requirements when they conduct audits of Medicare providers.

Specifically, OIG reviewed MAC audits of Medicare costs reports and found that, for federal fiscal years 2019–2021, each of the 12 MAC jurisdictions failed to comply with the contract requirements for audit and reimbursement desk review and audit quality for at least 1 of the 3 years. The Centers for Medicare & Medicaid Services (“CMS”) also identified 287 total audit issues among all MAC jurisdictions during that period, including MACs not performing proper reviews; inadequate review of graduate medical education and indirect medical education reimbursement; improper review of allocation, grouping, or reclassification of charges to cost centers; improper calculation and reimbursement for nursing and allied health programs; and inadequate review of bad debts.

Issues with MAC reviews are nothing new to Medicare providers. In addition to auditing cost reports, MACs also audit claims under Medicare fee-for-service and perform the first level of claims appeals, referred to as Redetermination. In regard to audits, MACs are often criticized for misinterpreting criteria, applying the wrong criteria, using nurse reviewers with little to no experience in the clinical area under review, and taking excessive amounts of time to complete reviews. However, MAC audit issues might not present such a significant issue if MACs did not also perform the first level of appeal – Redetermination – of their own audits.

Published on: April 1, 2025

What Do Changes at HHS Mean for Medicare Appeals and Compliance?

by Wachler & Associates, P.C.

Multiple changes have been announced or proposed at the federal Department of Health and Human Services (“HHS”), which will likely impact healthcare providers engaged in Medicare audit appeals and regulatory compliance activities. Although, in some ways, these changes may simply be a return to the status quo experience 5 to 10 years ago.

HHS has announced that that it will further reduce its head count and rearrange some of its many divisions. Specifically, it will cut another 10,000 full-time employees in addition to the approximately 10,000 employees that have left the department since January. The bulk of the new cuts will be to the FDA, CDC, and NIH. The Centers for Medicare and Medicaid Services (“CMS”), which oversees the Medicare program and the many Medicare contractors, is expected to lose about 300 employees. While the reduction at CMS may be small relative to other divisions, the loss of experienced decision-makers is being keenly felt as established agency norms, contacts, and priorities can no longer be relied upon. For CMS to change is not necessarily a bad thing in the long term, but it in the short term, it creates significant uncertainty among providers.

Several divisions relating to Medicare appeals and compliance are also being rearranged. The Health Resources and Services Administration (“HRSA”) is being combined with several other divisions into the new Administration for a Healthy America (“AHA”). HRSA has administered – often poorly – the Provider Relief Fund (“PRF”) and the many provider disputes related thereto. It is not clear whether this change will reinvigorate HRSA’s handling of PRF disputes, but given the policy statements of the new AHA, PRF disputes do not appear to be a priority. Further, two divisions closely related to Medicare appeals, the Office of Medicare Hearings and Appeals (“OMHA”) and the Departmental Review Board (“DAB”), will both be reassigned under a new assistant secretary of enforcement. OMHA and DAB already work together closely, so providers in the various Medicare appeals processes are unlikely to experience significant disruption from this change.

Published on: March 10, 2025

The Evolution from Medicare Audits to FCA Claims: What Healthcare Providers Need to Know in 2025

by Wachler & Associates, P.C.

Healthcare providers are no strangers to Medicare audits and the havoc they can impose, but with careful billing, attention to detail, and adequate documentation, it is possible to turn the tide. However, a recent trend indicates that these audits are being examined much more closely and are quickly morphing into something far more serious—an investigation under the False Claims Act (FCA).

The Medicare audit process typically involves a review of healthcare claims, medical records, billing codes, and supporting documentation. When alleged discrepancies are found—such as improper coding, overbilling, or inaccurate claims—providers may face repayment demands and other related consequences, usually contained within the administrative Medicare framework and not escalated to a matter under the FCA… Until now.

What is the False Claims Act (FCA)?

Published on: December 9, 2024

Can We Settle This Audit Overpayment?

by Wachler & Associates, P.C.

When a healthcare provider’s claims are reviewed or audited by a payor or insurance plan, the payor often asserts various deficiencies in the provider’s claims or documentation. The payor then alleges that the provider has received an overpayment for those claims and demands the provider pay it back. Appealing claims audit determinations can be a costly and tedious endeavor, leading a provider to wonder: Can we negotiate and settle this, like we would most other commercial disputes? The answer generally depends on who the payor is.

Medicare overpayments, in general, are unlikely to be subject to settlement. While there is statutory authority for federal agencies, such as Health and Human Services (HHS) and Treasury, to settle debts allegedly owed to the federal government, they are authorized to do so only in a few narrow circumstances and are generally very hesitant to actually do so. The Centers for Medicare & Medicaid Services (CMS) are particularly resistant to settling overpayments in most cases. Providers are generally left to choose between appealing the overpayment on the merits or applying for an Extended Repayment Schedule (ERS), under which CMS may agree to a payment plan, but generally will not reduce the amount owed. Simply ignoring or paying back a Medicare overpayment without contesting the findings is generally not advisable as it can be construed as an admission of non-compliance that can be used against the provider later.

Medicaid overpayments are also unlikely to be subject to settlement. Even where a state Medicaid agency acknowledges that an overpayment demand will bankrupt the provider and the Medicaid program is unlikely to ever collect, the agency may nonetheless be restricted from settling by the “federal share.” The federal share is the 50% to 80% of Medicaid reimbursement that is funded by the federal government. Because it is the federal government’s money, the federal government generally requires the state Medicaid program to repay the full amount of the “federal share” to the federal government for denied claims, regardless of the state’s desire to settle. That is, a state Medicaid program generally will not settle, even if it wants to, because it has to repay the full “federal share” whether it collects the full amount from the provider or not.