Health Law Daily Wrap Up, ADMINISTRATION OF MEDICARE/MEDICAID PROGRAMS—DAB DECISIONS: Medicare enrollment revoked for felony conviction, (Sep 6, 2024)

By WK Editorial Staff

Enrollment process requires precision and compliance to regulations.

According to the HHS Departmental Appeals Board (DAB), CMS properly used its regulatory authority to revoke a supplier's Medicare enrollment and billing privileges, citing multiple grounds for its decision. The supplier was convicted of a felony within the last 10 years, which CMS determined to be detrimental to the best interests of the Medicare program and its beneficiaries. Specifically, the supplier pled guilty to conspiracy to engage in the wholesale distribution of drugs in violation of federal law. The conviction, classified as a “financial crime” under 42 C.F.R. § 424.535(a)(3)(ii)(B), which includes offenses such as extortion, embezzlement, and insurance fraud (Vaysberg, DAB No. CR6444, Doc. No. C-23-181(Mar 14, 2024)).

Medicare regulations stipulate that certain felony convictions, including financial crimes, provide a per se basis for revocation without evaluation by CMS. The supplier's conviction for conspiracy to distribute prescription drugs from illicit sources and resell the drugs as if they were legitimately obtained fell withing this category. According to the DAB, the activity not only defrauded the federal government but also posed a significant risk to public health by circumventing regulations designed to ensure the safety of marketed drugs. Consequently, the DAB concluded that the supplier's actions rendered him untrustworthy to provide care to Medicare beneficiaries.

The second ground for revocation was the supplier's failure to report his felony conviction to CMS within the required 30-day period, as mandated by 42 C.F.R. § 424.516(d)(1)(ii). The DAB noted the omission alone constituted grounds for revocation under 42 C.F.R. § 424.535(a)(9).

The third basis for revocation was the supplier's exclusion from the California Medicaid program. The state's Medicaid agency had revoked the supplier's billing privileges, and the revocation was upheld after the supplier exhausted his state appeal rights. Under 42 C.F.R. § 424.535(a)(12), a state-level revocation of Medicaid billing privileges provides CMS with the authority to revoke Medicare enrollment as well.

The supplier argued that CMS should show leniency and not revoke his Medicare privileges, contending that his conviction did not mandate exclusion under section 1128(a) of the Social Security Act. However, this argument was dismissed as irrelevant. CMS's authority to revoke Medicare enrollment is not limited to convictions that mandate exclusion under section 1128(a); it extends to any felony deemed detrimental to the Medicare program.

Moreover, the administrative law judge emphasized that he lacked the authority to grant leniency. CMS's decision to revoke the supplier's enrollment and billing privileges was within its discretionary power, and the judge could not question this exercise of discretion as long as CMS acted within its regulatory authority.

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