Criminal Actors Beware: Healthcare Provider Enrollment Rules Just Got More Stringent & Penalties Much Higher

Topics: Criminal Enforcement, Financial Crime, Fraud, Government, Government Fraud, Government Regulation, Medicare Fraud, Money Laundering, Risk Management

medical fraud

In the fight against healthcare fraud, the federal government is stepping it up — in a major way. The Centers for Medicare & Medicaid Services (CMS) announced new rules to strengthen the agency’s ability to prevent fraud before it happens by keeping unscrupulous providers out of programs like Medicare, Medicaid, or CHIP.

The new rule, Program Integrity Enhancements to the Provider Enrollment Process, creates new revocation and denial authorities, including a new “affiliations” authority that allows the CMS to identify individuals and organizations that pose an increased risk of fraud based on their relationships with other previously sanctioned providers. What does that mean? Simply put, certain providers may be precluded from participating in Medicare and Medicaid based on several risk indicators.

What Providers Need to Disclose at Enrollment

During the enrollment process providers and suppliers must disclose to the CMS any current or previous “affiliation” with a provider or supplier that:

  • has uncollected debt of any amount;
  • has been or is subject to a payment suspension under a federal health care program;
  • has been excluded by the Office of the Inspector General (OIG) from Medicare, Medicaid, or CHIP; or
  • has had its Medicare, Medicaid, or CHIP billing privileges denied, either voluntarily or involuntarily.

According to CMS Administrator Seema Verma, the new rules give the CMS the “tools to stop criminals before the can steal from taxpayers.” And having the ability to stop fraud before it happens is critical to controlling healthcare costs and maintaining access to quality services.

Recent High-Profile Cases

Recent high-profile arrests have further underscored the need for stronger screening at the enrollment stage. For example, in a coordinated enforcement action, 53 individuals were arrested on allegations they had defrauded federal and state agencies of more than $250 million:

  • In Michigan, 20 individuals were arrested for their alleged involvement in Medicare fraud schemes resulting in $144.8 million in false billing;
  • In Illinois, 12 individuals were arrested for their alleged role in Medicare fraud resulting in $103 million in false billing; and
  • In Minnesota, 21 individuals were charged with defrauding the state’s Medicaid program of almost $3 million.

The allegations involved fraud schemes to bill Medicare, Medicaid, and private insurance companies for medically unnecessary procedures — medical procedures that were never provided and prescription medications that were not purchased nor were distributed to beneficiaries. One of the Michigan schemes involved a conspiracy to conceal an individual’s ownership in subsidiary pharmacies and to falsify contracts to conceal his ownership interest. The scheme resulted in $80 million in false claims. And an Illinois scheme involving concealed ownership of home health agencies, nominee owners, and fake aliases, resulted in $40 million in fraudulent claims.


Want to learn how Thomson Reuters is at the forefront in the fight to prevent healthcare fraud? Join us October 15-19 at the NHCAA Institute for Health Care Fraud Prevention’s Annual Training Conference in Nashville, Tenn.


It is common for providers or suppliers that have been excluded from Medicare or Medicaid to attempt to relaunch their businesses using family or friends as nominee owners or create shell corporations to hide their ownership in the business. And that presents a huge challenge for fraud investigators.

How Technology Can Further Aide in the Fight Against Healthcare Fraud

Analytical tools are one way that healthcare fraud enforcement agencies could identify nominee owners and the true owners that operate behind these shell corporations, says Dr. David Botsko of David Botsko Consulting in Charlotte, N.C. Finding these relationships and excluding providers before they enroll in government-funded insurance programs such as Medicare and Medicaid can help stop healthcare fraud before it happens.

According to Dr. Botsko, fraud prevention tools make searching across multiple databases for common names, addresses, and relationships possible in a way that just was not feasible before. “Searches that might have taken days or weeks in the past can now be completed in minutes,” Dr. Botsko explains. “And also make it apparent when providers who have been previously excluded are trying to get back into healthcare by hiding behind the names of family or friends.”

Another recent enforcement action in the Northeast involved more than $800 million in losses and the distribution of more than 3.25 million opioid pills through “pill mill” clinics. The government’s enforcement action resulted in charges against 48 defendants for their roles in submitting $160 million in fraudulent claims or for their roles in diverting opioids. Also, in Texas, 58 individuals recently were charged for the alleged involvement in Medicare fraud schemes and networks of pill mill clinics that resulted in $66 million in fraudulent billing for 6.2 million pills. The schemes also resulted in false claims to other federal programs and the Texas Medicaid program.

Dr. Botsko said that identity verification tools played a key role in identifying the physicians behind these schemes. “The tools helped in the prosecution of a pill mill operator who was billing Medicaid for seeing 120 to 140 patients a day while writing opioid prescriptions for cash only,” he notes. “The tools allowed investigators to find expensive vehicles, homes, and association memberships that showed the physician and his family were living well beyond the means of a normal physician.”

Another recent fraud scheme targeting seniors resulted in charges against 35 defendants who allegedly submitted fraudulent billing to Medicare for more than $2.1 billion. The scheme relied on a network of dozens of telemedicine companies and cancer genetic testing (CGx) laboratories. Under the scheme, CGx laboratories were paying illegal kickbacks and bribes to the telemedicine companies in exchange for the referral of Medicare beneficiaries for expensive cancer genetic tests that were medically unnecessary.

The scheme lured hundreds of thousands of Medicare beneficiaries from across the nation into the scheme. Dr. Botsko also cites investigative tools as a way for agencies to identify trends that can point to such widespread healthcare fraud. “These tools allow agencies to compare general practitioner billing practices with other practitioners in their own ZIP code to focus on providers whose billing is extreme compared to others in the same area,” he adds.

As federal and state healthcare fraud enforcement agencies continue to aggressively target fraud, waste and abuse, having tools that make that task possible is essential.