CMS Tactics Used to Exclude Providers: How One Physician Can Sink the Whole Group

While some may still question whether it is true that “one bad apple can spoil the bunch,” when it comes to doctors, group practices, and Medicare, this well-known adage is true. Surprisingly, there are instances when a single doctor’s conduct, can result in dire consequences for the practice’s Medicare privileges. Under the regulations governing revocation of Medicare privileges, the Centers for Medicare and Medicaid Services (CMS) can revoke Medicare privileges of an entire practice when a provider in the practice has been convicted of a felony that CMS determines to be detrimental to the Medicare program. Conviction is broadly defined under the regulations to include a guilty plea or nolo contendere, or participation in deferred adjudication or similar programs. This applies to both individuals and entities. In addition to requiring the reporting of a felony conviction, Medicare regulations also require reporting of any “adverse legal action.”

What is less well-known, is that Medicare requires physicians and physician practitioner organizations to report any adverse legal action to their Medicare contractor within 30 days of the action. Critically, CMS has revoked Medicare privileges based upon a doctor and/or the practice’s failure to report an individual doctor’s felony conviction. We have seen cases where an entire practice’s Medicare privileges were revoked based solely on one individual doctor’s felony conviction. This can occur even in the absence of the group’s knowledge of the individual doctor’s conviction. Additionally, CMS can revoke a practice’s privileges even when an individual doctor’s adverse conduct or conviction did not transpire in connection with his/her affiliation with the practice. For example, a doctor who moonlights for a separate and unaffiliated practice and is convicted for activities relating to the moonlighting, can taint his/her practice and subject it to Medicare revocation.

Most simply stated, if an individual doctor has been involved in any adverse legal action as defined under the corresponding regulations, it must be reported to CMS by both the individual doctor and any affiliated practice group. While these reporting obligations cannot be avoided, adverse consequences stemming from the failure of an individual doctor to advise his/her practice of adverse legal action can be accounted for by way of contract. Various remedies can be included in the practice’s operating agreement as well as employment contracts to ensure that a practice has some recourse in the event its Medicare privileges are revoked, or other adverse consequences arise, based upon an individual doctor’s adverse legal action. Setting your practice up to avoid the potential consequences of CMS regulations is essential to the foundation and success of your practice. Contact Frier Levitt to learn more about how we can help.

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