Medicare Program; Appeals of CMS or CMS Contractor Determinations When a Provider or Supplier Fails to Meet the Requirements for Medicare Billing Privileges, 36448-36463 [E8-14440]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 73, Number 125 (Friday, June 27, 2008)]
[Rules and Regulations]
[Pages 36448-36463]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-14440]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 424, and 498

[CMS-6003-F]
RIN 0938-AI49


Medicare Program; Appeals of CMS or CMS Contractor Determinations 
When a Provider or Supplier Fails to Meet the Requirements for Medicare 
Billing Privileges

AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule implements a number of regulatory provisions 
that are applicable to all providers and suppliers, including durable 
medical equipment, prosthetics, orthotics, and supplies (DMEPOS) 
suppliers. This final rule establishes appeals processes for all 
providers and suppliers whose enrollment, reenrollment or revalidation 
application for Medicare billing privileges is denied and whose 
Medicare billing privileges are revoked. It also establishes timeframes 
for deciding enrollment appeals by an Administrative Law Judge (ALJ) 
within the Department of Health and Human Services (DHHS) or the 
Departmental Appeals Board (DAB), or Board, within the DHHS; and 
processing timeframes for CMS' Medicare fee-for-service (FFS) 
contractors.
    In addition, this final rule allows Medicare FFS contractors to 
revoke Medicare billing privileges when a provider or supplier submits 
a claim or claims for services that could not have been furnished to a 
beneficiary. This final rule also specifies that a Medicare contractor 
may establish a Medicare enrollment bar for any provider or supplier 
whose billing privileges have been revoked.
    Lastly, the final rule requires that all providers and suppliers 
receive Medicare payments by electronic funds transfer (EFT) if the 
provider or supplier, is submitting an initial enrollment application 
to Medicare, changing their enrollment information, revalidating or re-
enrolling in the Medicare program.

DATES: Effective Date: These regulations are effective on August 26, 
2008.

FOR FURTHER INFORMATION CONTACT: August Nemec, (410) 786-0612.

SUPPLEMENTARY INFORMATION:

I. Background

    A Medicare beneficiary may obtain covered Medicare items or 
services from any person, or institution that is enrolled in the 
Medicare program and is qualified to furnish those services. Various 
provisions of the statute and regulations establish conditions of 
participation or standards that a healthcare provider or supplier must 
meet in order to receive Medicare payment. These standards differ 
depending on the type of provider or supplier involved and whether the 
services are furnished under Parts A or B of the Medicare statute. 
There are also differences in qualifications between providers and 
suppliers of services, and differences among the various types of 
suppliers, in how they are enrolled in the Medicare program. For some 
classifications of providers and suppliers, an on-site survey is 
required. For other individuals or entities, a determination can be 
made based largely on the information provided by the applicant.
    The Medicare regulations in 42 CFR part 498 provide appeal rights 
for providers and suppliers that have been found to not meet certain 
conditions of participation or established standards. For the purposes 
of part 498, these suppliers include, but are not limited to, 
independent laboratories; suppliers of portable x-ray services; rural 
health clinics; federally qualified health centers; ambulatory surgical 
centers; entities approved by CMS to furnish outpatient diabetes self-
management training or end-stage renal disease treatment facilities. 
For the purposes of part 498, the term ``provider'' refers to a 
hospital, critical access hospital (CAH), skilled nursing facility, 
comprehensive outpatient rehabilitation facility (CORF), home health 
agency or hospice (HHA), religious nonmedical health care institutions 
(RNHCIs) that has in effect an agreement to participate in Medicare; or 
a clinic, rehabilitation agency, or public health agency that has in 
effect a similar agreement but only to furnish outpatient physical 
therapy or speech pathology services.
    In addition, Sec.  405.874 provides an appeals process for 
suppliers of DMEPOS that wish to contest a denial of an application for 
billing privileges or the revocation of existing billing privileges. It 
also affords DMEPOS suppliers the right to a carrier or Medicare 
Administrative Contractor (MAC) hearing before an official who was not 
involved in the original determination, and the right to seek a review 
before a CMS official designated by the CMS Administrator.

[[Page 36449]]

    In December 1998, we issued CMS Ruling 98-1, which outlined the 
appeals process that Medicare carriers must provide to physicians, 
nonphysician practitioners, and to certain entities that receive 
reassigned benefits from physicians and nonphysician practitioners. CMS 
Rulings are decisions of the Administrator that serve as precedent for 
final opinions and orders and statements of policy and interpretation. 
They provide clarification and interpretation of complex or ambiguous 
provisions of statute or regulations relating to Medicare, Medicaid, 
Utilization and Quality Control Peer Review, private health insurance, 
and related matters. CMS Rulings are binding on all our components, 
Medicare contractors, the Provider Reimbursement Review Board, the 
Medicare Geographic Classification Review Board, and ALJs who hear 
Medicare appeals. These Rulings promote consistency in interpretation 
of policy and adjudication of disputes. This final rule is different 
from the clarification of appeals procedures found in CMS Ruling 98-1, 
because it adds provisions in order to comply with the MMA. Whereas the 
ruling followed the procedures in Sec.  405.874, this final rule would 
grant suppliers the right, after denial or revocation of a supplier's 
Medicare billing privileges, to a hearing by an ALJ after an adverse 
decision at the reconsideration level, as well as judicial review.
    In the October 25, 1999 Federal Register (64 FR 57431), we 
published a proposed rule Appeals of Carrier Terminations that a 
Supplier Fails to Meet the Requirements for Medicare Billing Privileges 
that would revise Sec.  405.874 by extending appeal rights to all 
suppliers whose enrollment applications for Medicare billing privileges 
are disallowed by a carrier or whose Medicare billing privileges are 
revoked, except for those suppliers covered under existing appeals 
provisions of our regulations.
    Since we did not publish our earlier rulemaking effort within 3 
years as required by section 902 of the MMA, we published a new 
proposed rule on March 2, 2007. This proposed rule included changes 
mandated by section 936(a) and (b) of the MMA.

II. Provisions of the March 2, 2007 Proposed Rule

    In the March 2, 2007 Federal Register (72 FR 9479), we published a 
proposed rule that set forth standard provider and supplier appeal 
procedures as established in section 936 of the MMA and proposed 
certain other provisions associated with Medicare's provider and 
supplier enrollment process. We proposed to maintain Sec.  405.874, 
which specifies provisions that would apply to certain suppliers as 
defined in Sec.  405.802. In Sec.  405.802, we proposed to define 
prospective supplier and suppliers by specifying the provisions of 
Sec.  405.874 that would apply. In Sec.  405.874(a), we proposed that 
if a CMS contractor (that is, a carrier, fiscal intermediary or 
Medicare administrative contractor (MAC)) denies a supplier's 
enrollment application, the CMS contractor must notify the supplier by 
certified mail. The notice must include the following: (1) The reason 
for the denial in sufficient detail to allow the supplier to understand 
the nature of its deficiencies; (2) the right to appeal in accordance 
with part 498; and (3) the address to which the written appeal must be 
mailed.
    In Sec.  405.874(b)(1), we proposed to clarify that if a carrier 
revokes a supplier's Medicare billing privileges that the carrier must 
notify the supplier by certified mail and that the notice must 
include--(1) The reason for the revocation in sufficient detail for the 
supplier to understand the nature of its deficiencies; (2) the right to 
appeal in accordance with part 498 of this chapter; (3) the address to 
which the written appeal must be mailed.
    In Sec.  405.874(b)(2), we proposed to separate the procedures in 
existing Sec.  405.874(a) and Sec.  405.874(b). In Sec.  405.874(b)(2), 
we proposed clarifying that a revocation of a supplier billing 
privileges that is based on a Federal exclusion or debarment is 
effective with the effective date of the exclusion or debarment, 
regardless of the date of the notice from the carrier that the billing 
privileges are revoked. Moreover, if CMS, or one of its designated 
contractors revokes Medicare billing privileges, we would not revoke an 
individual or organization's National Provider Identifier (NPI).
    In Sec.  405.874(b)(3), we proposed clarifying that suppliers are 
not paid for items or services furnished during a period in which a 
supplier does not have billing privileges or its billing privileges 
have been revoked. Concerning DMEPOS suppliers, section 1834(j)(1) of 
the Social Security Act (the Act) states that, with the exception of 
medical equipment and supplies furnished incident to a physician's 
service, no payment may be made by Medicare for items and supplies 
unless the supplier has active Medicare billing privileges. We further 
proposed that claims submitted to CMS contractors for items or services 
furnished during a period of supplier ineligibility are to be rejected 
by the CMS contractor, not denied.
    In Sec.  405.874(c)(1), we proposed that a supplier's appeal rights 
would follow the processes detailed in part 498. In Sec.  405.874(d), 
we proposed to revise this section to reflect that claims for services 
furnished to Medicare beneficiaries during a period in which the 
supplier's billing privileges were not effective are rejected and not 
denied. If a provider or supplier is determined not to have qualified 
for billing privileges in one period but qualified in another, 
contractors process claims for services furnished to beneficiaries 
during the period for which the provider or supplier was Medicare-
qualified. Subpart C of this part sets forth the requirements for 
recovery of overpayments. The appeals process for denied claims should 
not apply if a provider or supplier does not have billing privileges.
    In Sec.  405.874(d)(3), we proposed if a revocation of a provider's 
or supplier's billing privileges is reversed upon appeal, the 
provider's or supplier's billing privileges are reinstated back to the 
date that the revocation became effective.
    In Sec.  405.874(d)(4), we proposed that if a denial of a 
provider's or supplier's billing privileges is reversed upon appeal, 
then the appeal decision establishes the date that the provider's or 
supplier's billing privileges will become effective.
    In Sec.  405.874(e), we proposed that if a provider or supplier 
completes a corrective action plan and provides sufficient evidence to 
the CMS contractor that it has complied fully with Medicare 
requirements, the CMS contractor may reinstate the supplier's billing 
privileges.
    In Sec.  405.874(f), we proposed revising the effective date for 
DMEPOS supplier's billing privileges. If a carrier, carrier hearing 
officer, or ALJ determines that a DMEPOS supplier's denied enrollment 
application meets the standards in Sec.  424.57 of this chapter and any 
other requirements that may apply (for example, reinstatement after an 
OIG exclusion), the determination establishes the effective date of the 
billing privileges as not earlier than the date the CMS contractor made 
the determination to deny the supplier's enrollment application. Claims 
are rejected for services furnished before that effective date.
    In Sec.  405.874(g), we proposed that a provider or supplier 
succeeding in having its enrollment application denial or billing 
privileges revocation reversed, or in having its billing privileges 
reinstated, may submit claims to the

[[Page 36450]]

CMS contractor for services furnished during periods of Medicare 
qualification, subject to the limitations in Sec.  424.44 of this 
chapter, regarding the timely filing of claims.
    In Sec.  405.874(h), we proposed establishing deadlines for the 
adjudication of provider enrollment actions. We proposed that 
contractors adjudicate initial determinations and revalidations within 
180 days of receipt and carriers adjudicate change-of-information and 
reassignment of payment request within 90 days of receipt. In addition, 
we proposed to establish timeframes for each administrative level of 
appeal. The following table identifies who makes the determinations and 
the associated timeframes in which each determination is made.

------------------------------------------------------------------------
                                                             Proposed
                                           Timeframe to       maximum
      Medicare provider enrollment        file an appeal   adjudication
              determination                    (days)        timeframe
                                                              (days)
------------------------------------------------------------------------
Initial.................................              60             180
Reconsideration.........................              60              60
Administrative Law Judge Review.........              60             180
Departmental Appeals Board Review.......              60             180
Federal District Court..................             N/A             N/A
------------------------------------------------------------------------

    In Sec.  424.510(d)(2)(iv), we proposed that at the time of 
enrollment, an enrollment change request or revalidation, providers and 
suppliers shall submit the CMS-588 form to receive payments via 
electronic funds transfer.
    In Sec.  424.545(a), we proposed the following:
     Redesignating the first sentence of current paragraph (a) 
as the introductory text and revising that text to remove the reference 
to part 405 subpart H.
     Redesignating the second sentence of current paragraph (a) 
as paragraph (a)(1)(i).
     Adding paragraph (a)(1)(ii) to clarify that if a provider 
appeals both of these sanctions, then both matters will be resolved 
using a single appeals process.
     Redesignating the last sentence of current paragraph (a) 
as paragraph (a)(2).
    In Sec.  424.525(a)(1) and (a)(2), we proposed potential reasons 
for rejecting enrollment applications by reducing the amount of time 
that a provider or supplier must furnish complete information requested 
by a contractor from 60 to 30 days. Additionally, we proposed a 
reduction from 60 to 30 days for the period allowed to furnish all 
supporting documentation for submitting their enrollment application.
    We proposed rejecting an application that is submitted by a 
provider or supplier if it is incomplete or if it fails to include all 
required supporting documentation on the enrollment application within 
30 days of receipt.
    In Sec.  424.535(a)(8), we proposed allowing Medicare FFS 
contractors, under the direction of CMS, to revoke Medicare billing 
privileges when a provider or supplier submits a claim or claims for 
services that could not have been furnished to a beneficiary.
    In Sec.  424.535(b)(2), we proposed a timeframe to wait for 
reapplication to the Medicare program when a provider or supplier is 
revoked. Specifically, we proposed that when a provider or supplier, 
including all authorized officials, delegating officials and 
practitioners, is revoked for any of the reasons listed at Sec.  
424.535 that the provider, supplier, delegated official or authorizing 
official be prohibited from enrolling for 3 years.
    In Sec.  498.1(g), we proposed to establish an ALJ hearing, and 
judicial review for any provider or supplier whose application for 
enrollment or reenrollment in Medicare has been denied.
    In Sec.  498.2, we proposed revising the definition of a 
``supplier'' to--(1) Include a supplier of DMEPOS; ambulance service 
provider; independent diagnostic testing facility; physician; and other 
practitioner such as physician assistant; and (2) remove the reference 
to ``prospective supplier.''
    In Sec.  498.2, we proposed adding a new definition for 
``prospective supplier.''
    We also proposed removing the definition of the ``Office of 
Hearings and Appeals (OHA)'' because the function of this office has 
been moved from the Social Security Administration to the DHHS. We also 
proposed to revise the definition of ``affected party'' to specify that 
it includes CMS or a CMS contractor.
    In Sec.  498.5, we proposed revising this section by adding a new 
paragraph (l) that would be used to clarify the administrative process 
that a prospective provider, existing provider, prospective supplier or 
existing supplier dissatisfied with an initial determination or revised 
initial determination related to the denial or revocation of Medicare 
billing privileges.
    We proposed revising Sec.  498.5(f)(2) to be consistent with the 
change in Sec.  498.1(g). This would implement the mandate of section 
936(a)(2) of the MMA regarding judicial review. We proposed these 
standards because the FFS contractors need sufficient time to 
adjudicate the facts and make a reasoned decision. Moreover, while we 
are establishing an outside limit for processing these applications, 
the vast majority of these decisions are made within 120 days.
    We proposed revising Sec.  498.22(a) to add that we have delegated 
authority to our contractors to reconsider an initial determination. We 
also proposed revising Sec.  498.22(b)(1) to state that a 
reconsideration request is to be filed with CMS or with the State 
survey agency, or, in the case of prospective suppliers, the entity 
specified in the notice of initial determination.
    We proposed revising Sec.  498.44 to remove the term Associate 
Commissioner for Hearings and Appeals, and we replaced it with the 
Secretary, because this function is no longer under the Social Security 
Administration; it is now under the Department of Health and Human 
Services.
    In Sec.  405.874(c)(2), we proposed clarifying that a provider or 
supplier is required to prove that it is in compliance with all 
Medicare requirements for billing privileges, and that the Medicare FFS 
contractor incorrectly denied or revoked the supplier's billing 
privileges. In Sec.  498.56, we proposed adding a new paragraph (e) 
that specifies the ``good cause'' exception to the admission of new 
evidence at the ALJ and DAB appeal levels. Accordingly, we proposed 
revising Sec.  498.56 and Sec.  498.86 to prohibit providers and 
suppliers from submitting new provider enrollment

[[Page 36451]]

issues or evidence at the ALJ and DAB levels of review.
    In Sec.  498.78(a), we proposed to delete the provision that an 
affected party concur in writing or on the record with a CMS or 
Department of Health and Human Services Office of Inspector General 
(OIG) request for remand. We believe that the appeals process can be 
enhanced by allowing an ALJ to remand a provider enrollment case to the 
Medicare FFS contractor when CMS requests a remand. Further, we believe 
that a remand request could result in either a favorable decision to 
the appellant or an administrative record that is complete.
    In Sec.  498.79, we proposed that an ALJ must issue a decision, 
dismissal order or remand to CMS, as appropriate, no later than 180 
days after the initial request for a hearing.
    Finally, in Sec.  498.88(g), we proposed that the Board must issue 
a decision, dismissal order or remand to the ALJ, as appropriate, no 
later than 180 days after the appeal was received by the Board.

III. Analysis of and Responses to Public Comments

    We received approximately 30 comments in response to the March 2, 
2007 proposed rule. The following is a summary of the comments received 
and our responses.
    Comment: Several commenters recommended that we clarify whether the 
provisions of the proposed rule apply to all providers and suppliers.
    Response: The provisions of the proposed and this final rule apply 
to all the providers and suppliers described in the Sec.  405.802 or 
Sec.  498.2. Therefore, in response to comments received, we are adding 
definitions for ``prospective supplier'' and ``prospective provider'' 
to Sec.  405.802 and Sec.  498.2. Since applicants (prospective 
provider and suppliers) who are not enrolled in the Medicare program 
still are afforded appeal rights based on an enrollment denial, we 
maintain that it is important to clarify that any prospective applicant 
(provider or supplier) is afforded appeal rights through this process.
    Comment: One commenter recommended that we separately define 
``prospective provider'' and modify the definition of provider 
accordingly.
    Response: We agree with the commenter's recommendations and have 
included a definition of ``prospective provider'' in Sec.  405.802 and 
498.2 and have revised the definition of ``provider'' at Sec.  405.802 
and Sec.  498.2.
    Comment: One commenter suggested that we change the definition of 
supplier to include occupational therapists in private practice.
    Response: This comment falls outside the scope of the proposed 
rule. Therefore, we believe it would be inappropriate for us to address 
this comment in this final rule.
    Comment: Several commenters recommended that we clarify whether a 
provider or supplier who uses a corrective action plan (CAP) is 
precluded from also appealing the contractor, carrier, MAC, or FI 
decision.
    Response: A CAP is the plan that allows a provider or supplier an 
opportunity to correct deficiencies (if possible) that resulted in a 
denial or revocation of billing privileges. The CAP should provide 
evidence that the provider or supplier is in compliance with Medicare 
enrollment requirements. A provider or supplier that uses a CAP is not 
precluded from also appealing the FFS contractor's (that is in a MAC, 
FI, or carrier) decision. The Medicare FFS contractor, including the 
National Supplier Clearinghouse (NSC), will accept the submission of a 
corrective action plan for revoked billing privileges if the corrective 
action plan is submitted within 15 days from the date of the notice for 
DMEPOS suppliers or within 30 days from the date of the notice for all 
other providers and suppliers.
    Comment: Several commenters recommended that we clarify that an 
independent contractor hearing officer will conduct the reconsideration 
of an adverse enrollment decision.
    Response: For the purpose of this final rule, the term an 
independent contractor hearing officer means that a reconsideration 
will be handled by a hearing officer not involved in the initial 
determination. We believe this will ensure that the appellant receives 
a fair and impartial reconsideration. It is also important to note that 
while the claims appeals process uses a ``qualified independent 
contractor'' to conduct reviews, the provider enrollment appeals 
process does not use a ``qualified independent contractor.''
    Comment: Several commenters recommended that we clarify when a 
provider or supplier may resubmit a new initial enrollment application 
after an enrollment denial.
    Response: Since the denial of enrollment application conveys appeal 
rights, a provider or supplier cannot resubmit a new initial enrollment 
application until after the 60 day appeal period has ended. This will 
ensure that the Medicare contractor is not processing an initial 
application during the timely filing period of an appeal. In addition, 
if a provider or supplier submits a new initial enrollment application 
during the timely appeals filing period, the Medicare contractor will 
return the application to the applicant.
    Comment: One commenter recommended that we change our proposed 
language concerning a remand by an ALJ to specify that CMS does not 
have authority to request a remand when the Agency is also a party to 
an ALJ proceeding.
    Response: We believe that we should have all the rights afforded to 
an appellant. Further, by allowing CMS to request a remand, we believe 
that the designated contractor or CMS Regional Office will be able to 
review or re-examine the administrative record to update or provide 
documentation to establish a complete administrative record. By doing 
so, we believe higher levels of appeal will have the information needed 
to effectuate a timely decision. Therefore, we do not agree with the 
commenter's recommendation to revise the language to prohibit our 
authority to request a remand.
    Comment: One commenter recommended that we adopt a 45-day time 
period for adjudication of ALJ and DAB decisions.
    Response: We believe that a 45-day time period is not practical. 
While we understand the desire to establish an efficient appeals 
process, we are adopting similar time frames as had been established 
for deciding a claims appeal before an ALJ or DAB (see Sec.  
405.1016(c)). As stated previously, the early presentation of evidence 
will allow the contractor hearing officer or the CMS Regional Office to 
make decisions using all relevant facts as applied to the appeal. In 
doing so, the hearing officer or regional office will issue their 
findings to establish a complete administrative record for the future 
appeal levels. We believe that a complete administrative record will 
help facilitate decision making at higher levels of appeal.
    Comment: Several commenters stated that a reconsideration is an 
unnecessary delay in the appeals process, and that applicants should be 
able to appeal directly to an ALJ.
    Response: We determined that the most effective way to implement 
the requirements of section 936(j)(2) of the MMA was to amend the 
existing appeals procedures in part 498. The appeals procedures under 
part 498 include reconsideration as a level of review before an appeal 
is made to an ALJ. We believe that the reconsideration level provides 
an additional opportunity for the matter to be resolved prior to the 
filing of an appeal to an ALJ.

[[Page 36452]]

    Comment: One commenter requested clarification of Sec.  
405.874(c)(2), which discussed the reconsideration of a determination 
to deny or revoke a provider or supplier's Medicare billing privileges.
    Response: The reconsideration of a determination to deny or revoke 
a provider or supplier's Medicare billing privileges will be handled by 
a carrier hearing officer not involved in the initial determination or 
a CMS Regional Office for a Part A determination.
    There are distinct appeals provisions for claims processing and 
provider enrollment. While the claims process uses claims determination 
and qualified independent contractors (QICs) as part of the appeals 
process, the provider enrollment process does not. The first level of 
appeal of adverse actions is to either a contractor hearing officer for 
noncertified suppliers or to the CMS Regional Office for certified 
providers or suppliers. Subsequently, appellants may appeal adverse 
provider enrollment determinations by a hearing officer or regional 
office to an ALJ, then the DAB, and then to Federal District Court.
    Comment: One commenter recommended that Sec.  498.86(a) concerning 
evidence admissible on review by the DAB, adopt and follow the good 
cause exception set forth in proposed Sec.  498.56(e) for ALJ 
proceedings.
    Response: By the time the DAB hears the provider enrollment appeal, 
the applicant has been afforded ample opportunity to submit any 
evidence germane to the adverse determination. Accordingly, we do not 
believe it is efficient or administratively effective to establish a 
``good cause'' provision within the language at Sec.  498.86(a).
    Comment: While we received a number of comments supporting our 
proposal to prohibit providers and suppliers from submitting new 
evidence during the ALJ and DAB levels of appeal, several commenters 
stated they were opposed to this proposal.
    Response: Consistent with the provisions of our April 21, 2006 
final rule titled ``Requirements for Establishing and Maintaining 
Medicare Billing Privileges and Provider Enrollment Process'' (71 FR 
20754), we believe all providers and suppliers must meet and maintain 
all Federal and State requirements for their provider or supplier type 
to enroll or maintain their enrollment in the Medicare Program.
    When a Medicare contractor makes an adverse enrollment 
determination (for example, enrollment denial or revocation of billing 
privileges), providers and suppliers are afforded appeal rights. 
However, these appeal rights are limited to provider or supplier 
eligibility at the time the Medicare contractor made the adverse 
determination. Thus, if a Medicare contractor determines that a 
provider or supplier does not meet State licensure requirements on June 
1, 2007, it is the provider's responsibility to demonstrate during the 
appeals process that State licensure requirements were met on June 1, 
2007. Conversely, if a provider only can demonstrate that State 
licensure requirements were met on a later date; such as, August 16, 
2007, we believe that the contractor made the correct determination, 
and that the provider or supplier may reapply for Medicare billing 
privileges. Accordingly, a provider or supplier is required to furnish 
the evidence that demonstrates that the Medicare contractor made an 
error at the time an adverse determination was made, not that the 
provider or supplier is now in compliance. Thus, we believe that it is 
essential that providers and suppliers submit documentation that 
supports their eligibility to participate in the Medicare program 
during the reconsideration step of the provider enrollment appeals 
process. This will allow a hearing officer to review and make a 
decision using all applicable facts. Moreover, the early presentation 
of evidence will help to ensure an efficient and effective 
administrative appeals process.
    Finally, in order to expedite the provider enrollment appeals 
process, we believe that applicants must present all relevant facts and 
supporting documentation prior to or during the first level of appeal 
(that is, reconsideration). This will enable a contractor hearing 
officer or the CMS Regional Office personnel to review and make a 
determination based on all available facts. Moreover, the early 
presentation of facts and supporting documentation can be used to build 
the administrative record and help facilitate timely decisions at 
higher levels of appeals.
    Comment: One commenter suggested that we continue to follow the 
existing ALJ and DAB procedures in part 498 to allow for consideration 
and for submission of additional evidence related to a provider or 
supplier enrollment appeal after the initial information is submitted.
    Response: As stated previously in this final rule, in order to 
expedite the provider enrollment appeals process, we believe that 
applicants must present all relevant facts and supporting documentation 
prior to or during the first level of appeal (that is, 
reconsideration). This will enable a contractor hearing officer or the 
CMS Regional Office personnel to review and make a determination based 
on all available facts. Moreover, the early presentation of facts and 
supporting documentation can be used to build the administrative record 
and help facilitate timely decisions at higher levels of appeals.
    Comment: Several commenters stated that we used the terms ``billing 
number'' and ``billing privileges'' interchangeably in the proposed 
rule and that caused confusion.
    Response: We appreciate these comments and will revise the final 
rule to use the term ``billing privileges'' throughout. With the 
implementation of the National Provider Identifier on May 23, 2008, 
Medicare will no longer issue a billing number to providers and 
suppliers, but will, in fact, convey billing privileges to a provider 
or supplier if they meet and maintain all Federal and/or State 
requirements to enroll or remain enrolled in the Medicare program.
    Comment: Several commenters recommended that physicians be allowed 
to appeal rejected claims once Medicare billing privileges are granted.
    Response: Physicians, as well as providers and other suppliers, are 
required to enroll in the Medicare program before submitting a Medicare 
claim. Accordingly, if a claim is rejected because the physician is not 
enrolled, a physician must resubmit the claims after he or she is 
enrolled in the Medicare program in compliance with Medicare's 
provision for timely filing (Sec.  424.44).
    Comment: One commenter recommended that we not require the 
submission of the Electronic Funds Transfer Authorization Agreement 
(EFT) form (CMS-588) if a provider or supplier is already receiving 
payments electronically.
    Response: We agree with this commenter. We believe an enrolled 
provider or supplier who is already receiving Medicare payments 
electronically is not required to submit the CMS-588 with a change in 
enrollment unless the provider or supplier is seeking to change its 
depository information.
    Comment: Several commenters recommended that we address concerns 
regarding operational issues associated with the requirement to obtain 
payments electronically. Specifically, these commenters recommended 
that we address in this final rule the practice of reversing entry 
procedures where we may overpay the provider or supplier and then later 
reclaim that overpayment.

[[Page 36453]]

    Response: We appreciate this comment and understand this concern; 
however, this issue is outside the scope of the proposed rule.
    Comment: Several commenters stated that the provisions of this rule 
eliminated a physician's right to retroactively bill for services as is 
the current practice for some physicians.
    Response: This rule did not propose a change in the current 
provisions regarding retroactive billing; therefore, we believe this 
comment is outside the scope of the proposed rule.
    Comment: Several commenters supported our proposal to reduce from 
60 to 30 days for information required to process an enrollment 
application, and they wanted to know if they could retroactively apply 
the provision to pending inventories.
    Response: We appreciate the support for our proposal to reduce the 
time allotted to produce the necessary documentation to process 
enrollment applications from 60 days to 30 days before allowing a 
contractor to reject an enrollment application. However, we will 
prohibit our contractors from retroactively applying this change to 
pending inventories. Accordingly, any applications received after the 
effective date of this final rule will be subject to its provisions.
    Comment: Several commenters recommended that we not reduce the 
amount of time providers or suppliers have to respond to a request from 
Medicare FFS contractor, (that is, carrier, FI, or MAC) for additional 
information from 60 days to 30 days as proposed in Sec.  425.525(a)(2).
    Response: We continue to believe that it is essential that 
providers and suppliers submit a complete application, including all 
supporting documentation, at the time of filing or at a minimum, 
respond to a contractor's request for information in a timely manner. 
Accordingly, absent the submission of a complete application, we 
believe that it is appropriate that providers and suppliers respond to 
a contractor's request for additional information in a timely manner. 
We believe that allowing a provider or supplier 30 days is more than 
enough time to obtain and submit the requested information or 
documentation. Finally, we believe that this change will lead to 
processing efficiencies for not only the Medicare program but also for 
those providers and suppliers who seek to enroll or make a change in 
their existing Medicare enrollment information.
    Comment: One commenter requested that we clarify our requirement 
for furnishing requested enrollment documentation with respect to the 
30-day timeframe before the rejection of an enrollment application.
    Response: We believe that a contractor may reject the provider or 
supplier's enrollment application if the provider or supplier fails to 
respond to a request for information in a complete and timely manner 
(that is, within 30 days of the contractor request for additional 
information.)
    For example, assume that an applicant submits an enrollment 
application on May 1, 2008. While processing the enrollment application 
the contractor determines that the applicant did not complete section 3 
of the application and did not submit the required supporting 
documentation to receive payments electronically. On May 16, 2008, the 
contractor notifies the applicant about the missing documentation. 
Assuming that the applicant does not submit all requested information 
by June 15, 2008 (that is, 30 days from the contractor request), the 
contractor may reject the application.
    Comment: Several commenters stated that the proposed enrollment 
application processing timeframes stated in proposed Sec.  405.874(h) 
were too long and would inhibit suppliers from enrolling or re-
enrolling in the Medicare Program.
    Response: We are also concerned about delays associated with the 
enrollment process. However, we recognize that many of the delays are 
the result of providers and suppliers not submitting a complete 
application at the time of filing or failing to submit complete and 
timely responses to a contractor's request for information.
    In addition, we believe that it is appropriate to establish 
meaningful Medicare contractor processing timeliness standards and, as 
necessary, update or revise processing standards through the manual 
instructions and through contracts with Medicare contractors. Finally, 
while this final rule establishes an outer boundary for processing 
enrollment application, we fully expect that most enrollment 
applications will be processed in accordance with CMS processing 
requirements found in Publication 100-8, Chapter 10 of the Program 
Integrity Manual (PIM). The PIM establishes processing standards for 
initial applications, changes of information, and reassignments that 
all Medicare contractors must follow. Specifically, we currently 
require Medicare contractors to process 80 percent of initial 
applications within 60 days, 90 percent of initial applications within 
120 days, and 99 percent of initial applications within 180 days. We 
also require Medicare contractors to process 80 percent of changes of 
information and reassignments within 45 days, 90 percent of changes of 
information and reassignments within 60 days and 99 percent of such 
applications within 90 calendar days of receipt.
    With the implementation of the Provider Enrollment, Chain and 
Ownership System (PECOS) Web, an Internet version of the Medicare 
enrollment process, in FY 2008, we have established more stringent 
contractor processing timeliness standards for applications for 
enrollment submitted via PECOS Web. On January 4, 2008, we revised the 
processing requirements in Publication 100-8, Section 2, Chapter 10 of 
the PIM to establish the following processing requirements for PECOS 
Web applications:
    Specifically, we will require Medicare contractors to process 90 
percent of initial applications within 45 days, 95 percent of initial 
applications within 60 days, and 99 percent of initial applications 
within 90 days. We also require Medicare contractors to process 80 
percent of changes of information and reassignments within 45 days, 90 
percent of changes of information and reassignments within 60 days and 
99 percent of such applications within 90 calendar days of receipt.
    Since PECOS Web will improve the accuracy of applications submitted 
to contractors and reduce the time necessary to receive, verify and 
make a final determination regarding an enrollment action, we believe 
that the public should benefit from these processing efficiencies. 
Accordingly, we maintain that establishing a separate processing time 
standard for applications submitted via PECOS Web is appropriate.
    Comment: Several commenters raised concerns as to whether we will 
be changing the processing standards to non-tiered percentages for 
processing initial applications (including revalidations), as well as 
with regard to changes of information (including reassignments not 
submitted in conjunction with an initial enrollment package).
    Response: While we will maintain a tiered system we are 
establishing an outer boundary for the number of days for processing 
Medicare enrollment applications in this final rule, we will maintain 
more specific processing standards in Chapter 10 of the PIM.
    Comment: One commenter asked if the proposed regulation will change 
the processing standard found in Section 2 of Chapter 10 of the PIM.
    Response: This final rule does not change the provider enrollment

[[Page 36454]]

processing standards found in Section 2 of Chapter 10 of the PIM.
    Comment: One commenter agreed with the 30-day timeframe for 
submitting supporting information as long as our contractors are 
required to follow this same timeframe for processing enrollment 
applications.
    Response: While we are proposing an outside limit of 180 days for 
processing applications, we have established shorter processing 
timeframes in manual guidance which must be adhered to by CMS 
contractors. However, we believe that 30 days does not provide 
contractors with sufficient time to process all enrollment 
applications. While we believe in holding contractors responsible for 
meeting our defined processing standards, it is essential that 
providers and suppliers submit a complete application at the time of 
filing in order to lessen processing timeframes.
    Comment: One commenter asked for clarifications as to whether the 
90-day timeframe requirement for change of information and reassignment 
of payment requests submitted applies to both fiscal intermediaries, as 
well as carriers.
    Response: The 90-day processing standard applies to changes in 
information submitted to a fiscal intermediary/MAC or a change of 
information or reassignment submitted to a carrier/MAC. Therefore, 
Sec.  405.874(h)(3) applies to both providers and suppliers. We note 
that DMEPOS suppliers are required to submit changes in information to 
the NSC within 30 days of the changes as specified in Sec.  
424.57(c)(2).
    Comment: One commenter recommended that we allow academic medical 
centers to submit enrollment applications at least 6 months in advance 
of a physician's start date.
    Response: By submitting a complete enrollment application and all 
supporting documentation at the time of filing, a physician can 
efficiently enroll in the Medicare program. Additionally, with the 
implementation of PECOS Web, we believe that physicians will be able to 
enroll in a more efficient manner. Finally, since we require our 
contractors to verify the information provided in the enrollment 
application, and this cannot be accomplished if the physician is not 
yet working at the academic medical center, we are not able to adopt 
this recommendation.
    Comment: One commenter suggested that the 180-day processing time 
for enrollment decisions was not workable for providers undergoing a 
change of ownership (CHOW) as specified in Sec.  489.18.
    Response: Since Medicare contractors can only process applications 
that are complete at the time of filing and have the necessary 
supporting documentation, it is essential that CHOWs are complete when 
submitted. When completed applications are submitted, Medicare 
contractors will encounter fewer obstacles in processing an 
application. While we are establishing an outside processing timeframe 
in this rule, we have established more stringent processing 
requirements in the manual. We recognize the importance of processing 
CHOWs in a timely manner and will continue to establish processing 
standards in the manual which seek to ensure continuity of payment.
    Comment: While several commenters offered support for our proposal 
in Sec.  424.535 to preclude provider or supplier billing for a period 
of 3 years after Medicare billing privileges are revoked, several 
commenters stated that a 3-year ban is too long.
    Response: We agree that Medicare contractors should consider the 
reason associated with revocation before determining whether the 
contractor should establish a re-enrollment bar for a provider or 
supplier. The goal of the re-enrollment bar is to ensure that Medicare 
billing privileges are given to trustworthy providers and suppliers. 
Consequently, if a Medicare contractor determines that a provider's or 
supplier's Medicare billing privileges should be revoked, then we 
believe that establishing an enrollment bar is appropriate. We will 
provide contractors with guidance on the establishment of an enrollment 
bar via manual instructions. With this guidance, we believe that the 
contractor has discretion to establish a re-enrollment bar from 1 to 3 
years depending on the severity of the basis for revocation. For 
example, failure to respond to revalidation request may warrant a 1-
year ban whereas failure to report an adverse legal action that could 
preclude payment would warrant a 3-year ban.
    In addition, if a contractor makes a decision to revoke Medicare 
billing privileges, we believe that the duration of the re-enrollment 
bar should not be less than 1 year. Finally, while we believe that 
providers and suppliers can appeal the revocation determination, we do 
not believe that providers and suppliers can appeal the duration of the 
re-enrollment bar for Medicare billing privilege. We also believe that 
providers and suppliers have an obligation to maintain their billing 
privileges and to report changes that would preclude enrollment or 
continued enrollment in accordance with Sec.  410.33(g), Sec.  
424.57(c)(2), and Sec.  424.520(b). In addition, we believe that 
establishing a re-enrollment bar for Medicare billing privileges that 
have been revoked will help protect the Medicare Trust Funds, and 
beneficiaries from potentially unqualified providers and suppliers.
    Comment: One commenter stated that the 3-year waiting period in 
proposed Sec.  424.502 was a punitive action and is not within our 
legal authority, and that only the OIG has been granted legal authority 
to exclude individuals and entities from the Medicare program.
    Response: We believe that we have the obligation to protect the 
Medicare Trust Funds when billing privileges are revoked. We believe 
providers and suppliers whose billing privileges are revoked should be 
prevented from immediately re-entering the program. Accordingly, we 
believe that establishing a re-enrollment bar is appropriate and within 
our authority. Unlike OIG exclusions which apply government-wide and 
which generally last for 5 years or longer, the re-enrollment bar only 
applies to those billing the Medicare program.
    Comment: Several commenters recommended that we do not revoke a 
physician's billing privileges for 3 years because the physician did 
not respond to a revalidation request.
    Response: In the April 21, 2006 final rule, providers and suppliers 
learned about our intent to begin a revalidation process. Specifically, 
Sec.  424.515 states that a provider or supplier (other than a DMEPOS 
supplier), must resubmit and recertify the accuracy of its enrollment 
information every 5 years. Therefore, providers and suppliers that 
enrolled in the Medicare program prior to 2003, but who have not 
completed a Medicare enrollment application since then, have had more 
than 2 years to come into voluntary compliance with our enrollment 
criteria by submitting a complete enrollment application. With this 
final rule, we are again notifying physicians, providers, and suppliers 
that they may voluntarily complete and submit a Medicare enrollment 
application and the necessary supporting documentation prior to our 
formal request for revalidation. Accordingly, providers and suppliers 
who choose not to come into voluntary compliance or fail to respond to 
a revalidation request in a complete and timely manner fail to satisfy 
our enrollment criteria and may be subject to revocation of their 
billing privileges.
    Comment: Several commenters recommended that we allow providers and 
suppliers to participate in the Medicare program if their revocation is

[[Page 36455]]

successfully overturned at a higher level of appeal.
    Response: Section 405.874(d)(3) states a provider or supplier's 
billing privileges will be reinstated back to the date that their 
revocation became effective if it was reversed at a higher level of 
appeal.
    Comment: Several commenters recommended that we clarify that the 
period of provider or supplier ineligibility be linked to the date on 
which the supplier had provided a service to a beneficiary and not the 
date that a claim would be received or processed by a carrier.
    Response: We are clarifying that this is our intent. Revocation 
actions concerning provider and supplier ineligibility are based upon 
the date on which the provider or supplier had furnished a service to a 
beneficiary and not the date that a claim was received or processed by 
a carrier or MAC.
    For example, if a provider submits a claim for services provided on 
June 22, 2007, and the beneficiary dies on June 23, 2007, but the claim 
for the June 22, 2007 services was not received until August 1, 2007, 
if any action is taken regarding this claim, it would be with regard to 
the June 22, 2007 date.
    Comment: One commenter suggested that there are several instances 
where the date of service being billed could actually be the day after 
the date of death and that an honest billing of the service could be 
perceived as fraud, and therefore cause a provider or supplier to be 
incorrectly revoked.
    Response: We understand that there are certain situations when the 
date of service may legitimately be the day after the date of death of 
the beneficiary. Accordingly, Medicare contractors and CMS will review 
the specific details associated with each claim before taking any 
revocation action.
    Comment: We received several comments regarding implementation of 
the proposed changes to be set forth at Sec.  424.535(a)(8) which 
allows Medicare contractors to revoke Medicare billing privileges when 
a provider or supplier submits a claim or claims for services that 
could not have been furnished to a beneficiary, where the commenter 
believed there was not enough guidance given to the contractors to 
filter these claims which could cause overburdened contractors to 
implement this policy too widely.
    Response: CMS, not a Medicare contractor, will make the 
determination for revocation under the authority at Sec.  
424.535(a)(8). We will direct contractors to use this basis of 
revocation after identifying providers or suppliers that have these 
billing issues. We have found numerous examples of situations where a 
physician claims to have furnished a service to a beneficiary more than 
a month after their recorded death, or when the provider or supplier 
was out of State when the supposed services had been furnished. In 
these instances, the provider has billed the Medicare program for 
services which were not provided and has submitted Medicare claims for 
service to a beneficiary who could not have received the service which 
was billed. This revocation authority is not intended to be used for 
isolated occurrences or accidental billing errors. Rather, this basis 
for revocation is directed at providers and suppliers who are engaging 
in a pattern of improper billing.
    In making a revocation determination under Sec.  424.535(a)(8), we 
will make the revocation determination based upon information presented 
by a Medicare contractor, a CMS Regional Office, or one of our Program 
Integrity field offices. We believe that it is both appropriate and 
necessary that we have the ability to revoke billing privileges when 
services could not have been furnished by a provider or supplier. We 
recognize the impact that this revocation has, and a revocation will 
not be issued unless sufficient evidence demonstrates abusive billing 
patterns. Accordingly, we will not revoke billing privileges under 
Sec.  424.535(a)(8) unless there are multiple instances, at least 
three, where abusive billing practices have taken place. Furthermore, 
providers and suppliers may appeal a contractor revocation using the 
process outlined in part 498 if they believe that they were unduly 
revoked. In conclusion, we believe that providers and suppliers are 
responsible for the claims they submit or the claims submitted on their 
behalf. We believe that it is essential that providers and suppliers 
take the necessary steps to ensure they are billing appropriately for 
services furnished to Medicare beneficiaries.
    Comment: Several commenters believed that contractors would be 
issuing revocations based upon the submission of claims for services 
that could not be delivered.
    Response: As stated above, we will instruct Medicare contractors to 
issue a revocation under Sec.  424.535(a)(8).
    Comment: One commenter suggested several procedural changes 
regarding the processing of enrollment applications; such as, 
withdrawing an application and reopening a closed enrollment decision, 
be included in this regulation as opposed to our original procedural 
proposals.
    Response: As outlined in Sec.  424.510, the current enrollment 
application procedures allow providers and suppliers a clear means to 
complete and submit enrollment applications with the necessary 
documentation to participate in the Medicare program. Prospective 
providers or suppliers are responsible for obtaining the necessary 
documentation that demonstrates that they meet the program requirements 
for their provider or supplier type. If a provider or supplier cannot 
supply the necessary documentation at the time of filing or in response 
to a contractor request, then the contractor is required to reject 
their application and the prospective provider or supplier must begin 
the enrollment process anew. Finally, a prospective provider or 
supplier may withdraw their Medicare enrollment application at any time 
by informing the designated contractor in writing of the withdrawal of 
the application. A withdrawal request must be made by the applicant or 
the Authorized Official as defined in Sec.  424.502 and in the Medicare 
enrollment application (CMS-855).
    Unlike the claims appeals process where minor errors and omissions 
can be resolved though the reopening process in an effective and 
efficient manner, the issues involved in Provider Enrollment denials 
and revocations do not readily lend themselves to the reopening 
process. Accordingly, we have not adopted a reopening procedure in this 
final rule.
    Comment: One commenter recommended that we revise our 2002 ``Do Not 
Forward'' policy because of the change in processing timeframes for 
enrollment applications.
    Response: We believe this issue is outside the scope of the 
proposed rule and can not be addressed in this final rule.
    Comment: One commenter recommended that if we make a change in the 
Medicare enrollment application that we use the processing guidelines 
in effect at the time of the postmark date so that the application will 
be treated as submitted prior to the implementation date.
    Response: If we make a change in the Medicare enrollment 
application in the future, we will establish a transition period 
between the use of the prior version of the application and the new 
version of the application.
    Comment: One commenter stated that electronic funds transfer (EFT) 
should be developed in concert with the CMS-855 transaction standard to 
ensure that there is a clear connection between the two files.

[[Page 36456]]

    Response: We believe this issue is outside the scope of the 
proposed rule and can not be addressed in this final rule.
    Comment: One commenter urged us to clarify that the reassignment 
exception still exists with regard to EFT which currently exempts 
individuals reassigning their benefits to a group practice from the EFT 
requirement.
    Response: Individuals reassigning all of their benefits to a group 
practice are still exempt from the EFT requirement. We will update its 
manuals to state that only individuals and organizations receiving 
payments directly must receive them through EFT.
    Comment: One commenter suggested that we consult with hospital-
based faculty practices to determine the best way to implement EFT in 
this particular setting.
    Response: We will continue to conduct outreach efforts to ensure 
that all providers and suppliers are informed about EFT policies.
    Comment: One commenter recommended that adequate notification and 
education be provided to all who have chosen or are required to accept 
funds via EFT.
    Response: We will continue to conduct outreach efforts to ensure 
that all providers and suppliers are informed about EFT policies. We 
believe this issue is outside the scope of the proposed rule and can 
not be addressed in this final rule.
    Comment: One commenter recommended that notice of precertification 
completion be provided to group practices prior to the payment of funds 
via EFT.
    Response: We believe this issue is outside the scope of the 
proposed rule and can not be addressed in this final rule.
    Comment: One commenter stated we should not terminate a provider 
agreement when billing privileges are revoked.
    Response: In the April 21, 2006 final rule, we stated in Sec.  
424.545(a) that the termination of both the provider agreement and 
billing privileges will happen concurrently. Accordingly, we believe 
that a provider cannot retain a provider agreement if its billing 
privileges have been revoked.
    Comment: One commenter suggested that we amend the definition of 
supplier because they believed that the term ambulance service provider 
may not include suppliers of ambulance services.
    Response: While we are not adopting this recommendation, we clarify 
in section IV. of this final rule (Provisions of the Final Regulation) 
that an ambulance service provider includes all providers and suppliers 
of ambulance services.
    Comment: One commenter recommended that we conduct increased 
outreach and education efforts for providers, suppliers and contractor 
enrollment staff.
    Response: We will undertake the necessary steps to ensure that our 
contractors understand these new provisions and apply them 
consistently. In addition to publishing this final rule, we will issue 
operational guidance to our Medicare contractors.

IV. Provisions of the Final Regulation

    Based on public comments, we are adopting the provisions of the 
proposed rule as final with the following changes: We are amending the 
provisions of this final rule to apply to all providers and suppliers, 
including DMEPOS suppliers.
    In Sec.  405.802, we have added a definition of prospective 
provider.
    In Sec.  405.874(a), we amended the proposed language and adopted 
the provision that if a carrier, fiscal intermediary, National Supplier 
Clearinghouse (NSC) or MAC denies a provider's or supplier's enrollment 
application, then the carrier, fiscal intermediary, NSC or MAC must 
notify the provider or supplier by mail. The notice must include the 
following: (1) The reason for denial in sufficient detail to allow the 
provider or supplier to understand the nature of its deficiencies; (2) 
the right to appeal in accordance with part 498; and (3) the address to 
which the written appeal must be mailed.
    In Sec.  405.874(b)(1), we adopted the provision which clarified 
that if CMS or a CMS contractor, (that is, a carrier, fiscal 
intermediary, NSC or MAC) revokes a provider's or supplier's Medicare 
billing privileges, then CMS or its contractor must notify the provider 
or supplier by mail and that the notice must include--(1) The reason 
for the revocation in sufficient detail for the provider or supplier to 
understand the nature of its deficiencies; (2) the right to appeal in 
accordance with part 498 of this chapter; (3) the address to which the 
written appeal must be mailed.
    In Sec.  405.874(b)(2), we adopted the provision to separate the 
procedures in existing Sec.  405.874(a) and Sec.  405.874(b). In 
addition, we adopted the provision clarifying that a revocation of 
provider's or supplier's billing privileges that is based on a Federal 
exclusion or debarment is effective with the effective date of the 
exclusion or debarment. Moreover, if CMS or a CMS contractor revokes 
Medicare billing privileges, then we would not revoke an individual or 
organization's National Provider Identifier (NPI).
    In Sec.  405.874(b)(3), we modified our proposed provision to 
clarify that providers and suppliers are not paid for items or services 
furnished after the effective date of revocation. We removed proposed 
Sec.  405.874(b)(3)(i) because it was not applicable to revocation of 
billing privileges. Concerning DMEPOS suppliers, section 1834(j)(1) of 
the Act states that, with the exception of medical equipment and 
supplies furnished incident to a physician's service, no payment may be 
made by Medicare for items and supplies unless the supplier has active 
Medicare billing privileges. We also adopted the provision that claims 
submitted to carriers, fiscal intermediaries, NSC or MACs for items or 
services furnished during a period of provider or supplier 
ineligibility are to be rejected by the carrier or fiscal intermediary 
and not denied.
    In Sec.  405.874(c)(1), we adopted the provision that a provider's 
or supplier's appeal rights would follow the processes detailed in part 
498. Generally denials or revocations issued by a fiscal intermediary 
would be handled by a CMS regional office (RO), and denials and 
revocations by carriers, including the NSC, would be handled by a 
carrier hearing officer. In those cases where a MAC issues a denial or 
revocation, the reconsideration would be handled by the CMS RO or a 
contractor hearing officer depending upon the provider or supplier 
type. The CMS RO's will generally be handling the Medicare Part A 
reconsiderations and the contractor hearing officer will generally be 
handling the Medicare Part B reconsiderations.
    In Sec.  405.874(d), we adopted the revisions to this section to 
reflect that claims for services furnished to Medicare beneficiaries 
during a period in which the provider's or supplier's billing 
privileges were not effective are rejected and not denied. If a 
provider or supplier is determined not to have qualified for billing 
privileges in one period but qualified in another, contractors process 
claims for services furnished to beneficiaries during the period for 
which the provider or supplier was Medicare-qualified. Subpart C of 
this part sets forth the requirements for the recovery of overpayments. 
The appeals process for denied claims should not apply if a provider or 
supplier does not have billing privileges.
    In Sec.  405.874(d)(3), we adopted the provision that when 
revocation of a provider's or supplier's billing privileges are 
reversed upon appeal, the

[[Page 36457]]

provider's or supplier's billing privileges are reinstated back to the 
date that the revocation became effective.
    In Sec.  405.874(d)(4), we adopted the provision that if a denial 
of a provider's or supplier's billing privileges is reversed upon 
appeal, then the appeal decision establishes the date that the 
provider's or supplier's billing privileges will become effective.
    In Sec.  405.874(e), we adopted the provision that if a provider or 
supplier completes a corrective action plan and provides sufficient 
evidence to the carrier, fiscal intermediary, NSC or MAC that it has 
complied fully with the Medicare requirements, the carrier, fiscal 
intermediary or MAC may reinstate the supplier's billing privileges.
    In Sec.  405.874(f) we adopted the provision changing the effective 
date for DMEPO