Reed Smith Client Alerts

Recently, the Centers for Medicare & Medicaid Services (CMS) published a rarely seen "final rule with comment period" (the Final Rule) that will undoubtedly have significant, negative ramifications for all types of health care providers and suppliers enrolled in Medicare, any state Medicaid program, and the Children’s Health Insurance Program (CHIP), as well as possibly investors in the health care industry. Specifically, in what CMS calls an effort to end "pay and chase" in federal health care programs, the Final Rule creates a new system of impracticable disclosure and monitoring obligations for newly enrolling and enrolled providers and suppliers and, at the same time, heightens CMS' authority to deny or revoke enrollment status. This change comes with little due process or consideration for law-abiding enrollees.

Below, we summarize key provisions of the Final Rule that you need to know about CMS' new expansive disclosure requirements that take effect in less than two weeks, on November 4, 2019, and highlight areas of opportunity for comment to CMS, which must be submitted by that same day.

CMS issued a rulemaking on March 1, 2016 (the Proposed Rule) that proposed a broad new regulatory scheme, including a new and extensive affiliations disclosure and monitoring requirement, a broadening of CMS' authority to revoke or deny enrollment, and increased and severe penalties for failure to comply with certain enrollment requirements. Stakeholders characterized these proposals as misguided, unduly burdensome, and impracticable. The Final Rule "doubles-down" on these concepts and much of the rulemaking is dedicated to recapping public comments and concerns, which CMS largely disregards or to which it provides unresponsive "responses" (required, of course, under the law), seemingly dead-set on implementing these highly problematic provisions. The only concession is a proposed phase-in of certain obligations, likely an attempt to deflect criticism while retaining the scheme as proposed; in spite of this "concession," enrollees will generally be subject to the new requirements beginning November 4.

In the Final Rule, many questions remain unanswered and regulatory standards undefined, and CMS defers to future subregulatory guidance that it may (or may not) develop. For now, providers, suppliers, investors, and other stakeholders can still provide CMS with feedback and recommendations via public comment by November 4, 2019. And while CMS has limited topics for comment, specifically seeking feedback on certain operational matters for the implementation of the Final Rule, CMS cannot prevent commenters from raising any issues they would like. Given the Final Rule's consequences on federal health care program enrollees and their investors, we expect businesses may consider legal action against CMS, and should consider preserving their rights in commentary, as appropriate. In past instances, CMS has argued that a regulated entity's failure to raise arguments in regulatory comments constitutes a waiver.