The Affordable Care Act, in a largely overlooked provision, bestowed broad powers on the Centers for Medicare and Medicaid Services (CMS) to impose a moratorium on the enrollment of new Medicare or Medicaid providers, including whole categories of providers in certain geographic locations. Significantly, providers may be denied enrollment in Medicare and Medicaid not because of any fraud or illegality on their part but based on alleged fraud committed by other providers in the same sector operating in the same geographic location. Specifically, the final rules implementing this new provision allow CMS to impose a six-month moratorium on newly enrolling Medicare or Medicaid providers if CMS determines that there is a significant potential for fraud, waste or abuse with respect to a particular provider type and/or geographic location. To make its determination, CMS relies on ongoing and emerging fraud trends pursued through the enforcement activities of the Department of Justice (DOJ) and the Office of the Inspector General for the Department of Health and Human Services (OIG), as confirmed by CMS’ own data analysis. CMS also bases its decision on the experiences of the DOJ/OIG’s Health Care Fraud Prevention and Enforcement Teams (HEAT Teams) which use advanced data analysis techniques to identify aberrant billing patterns in certain locations. The presence of a HEAT Team near a particular geographic area is one factor CMS considers in making its determination to impose an enrollment moratorium.
On January 30, 2014, CMS wielded this new power to impose a moratorium on the enrollment of new home health agencies (HHA) in four geographic areas, all counties contained in or adjacent to a HEAT Team location. CMS determined that a high risk for fraud existed in each area based on recent criminal prosecutions of HHAs and HHA owners in the area and oversaturation of/overbilling by HHAs in the affected counties relative to other locations. Specifically, CMS put a halt to Medicare and Medicaid enrollment of new HHAs in:
Dallas County, which includes the City of Dallas, and the six surrounding Texas counties of Collin, Denton, Ellis, Kaufman, Rockwall and Tarrant;
Harris County, which includes the City of Houston, and the seven surrounding Texas counties of Brazoria, Chambers, Fort Bend, Galveston, Liberty, Montgomery and Waller;
Broward County, Florida, which includes the City of Fort Lauderdale; and
Wayne County, which includes the City of Detroit, and the four surrounding Michigan counties of Macomb, Monroe, Oakland and Washtenaw.
Among the findings leading to this moratorium, CMS noted that the ratio of HHAs to beneficiaries was 369 percent greater in Dallas County, Texas than in comparison counties, and that payments to HHAs in Dallas County were 38 percent higher than the average for HHAs in comparison counties. CMS also noted that in 2012, a federal grand jury indicted a Dallas-based doctor in a $374 million home healthcare scheme, the largest fraud case by dollar amount ever charged against a single doctor. With respect to Houston, CMS found that ratio of HHAs to beneficiaries was 277 percent greater in Harris County, Texas than in comparison counties, and that payments to HHAs in Harris County were 45 percent higher than the average for HHAs in comparison counties. CMS made similar findings with respect to Broward County, Florida and the affected Michigan counties.
Under the regulations, the temporary moratorium does not apply to changes in practice locations, changes in provider information (such as phone or address) or changes in ownership, except for changes in ownership of HHAs that are subject to the 36 Month Rule. Once a six-month moratorium is issued, CMS may continue the moratorium in six-month increments if it determines the risk for fraud or abuse persists with respect to the particular provider type and/or geographic location. A provider denied enrollment in Medicare or Medicaid during the moratorium has no appeal rights other than the right to appeal whether it falls with the category of providers subject to the moratorium (i.e., whether it is an HHA). Given the sharp rise in investigations and enforcement actions against HHAs in recent years, it is likely that CMS will extend this current moratorium for an additional six months when it is set to expire in July 2014.
Waller has an interdisciplinary team of lawyers with extensive experience representing HHAs in government investigations and litigation, regulatory matters, acquisitions, joint ventures and other strategic transactions. If you would like more information about this topic or any other topic affecting HHAs, please contact Brent Hill at 615.850.8602, firstname.lastname@example.org or Jennifer Weaver at 615.850.8116, email@example.com, or any member of Waller’s Healthcare Department.
 See 42 C.F.R. § 424.570 (Medicare) and 42 C.F.R. § 455.470 (Medicaid).
 HEAT Teams are located in Miami, Tampa, Los Angeles, Detroit, Houston, Dallas, Brooklyn, Baton Rouge, New Orleans and Chicago.
 CMS, noting the migratory nature of HHA fraud and the ability to provide home health services across county lines, included counties that surround Dallas, Houston and Detroit although there was no specific finding of HHA fraud or oversaturation in those counties. However, it did not do so with respect to Broward County because of a Florida state law that divides the state into eleven home health licensing districts and prevents HHAs from providing services outside their own licensing districts. Broward is the only county in its licensing district.
The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.