HHS anti-fraud program to mean new scrutiny, fees for physicians

March 4, 2011

Physicians who wish to provide covered services or products under Medicare or other federally sponsored health insurance programs will face more rigorous screening beginning next month, as part of a new U.S. Department of Health & Human Services (HHS) effort to crack down on health care fraud and abuse that was authorized last year under the Affordable Care Act (ACA).

Those who wish to provide durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) – including eyeglasses – will also be required to pay new $500-plus application fees.

The new screening program is drawing fire from a range of health care practitioner organizations – including the AOA, the American Medical Association (AMA), and the American Academy of Ophthalmology (AAO) – who emphasized during a meeting with key HHS officials last fall that the ACA health reform law specifically exempts physicians from the planned new fees.

“We asked Congress to recognize that physicians who supply DMEPOS as part of their practice should not be subject to heightened scrutiny.  We also specifically asked for HHS to recognize that optometrists, ophthalmologists, and opticians who solely supply eyeglasses should not be part of this crackdown,” said AOA Advocacy Group Director Jon Hymes.

The new anti-fraud initiative takes effect March 25, 2011. Under the program:

  • Practitioners enrolling or re-enrolling to provide covered services under Medicare by filing forms CMS 855I or CMS 855B, or applying to state agencies to provide services under Medicaid or state Children’s Health Insurance Programs (CHIP), will be more thoroughly screened to ensure they hold valid professional licenses and National Provider Identifiers (NPIs), they are registered in the National Practitioner Data Bank (NPDB), they have not been formally excluded from federal health insurance programs, or are not working under an assumed identity (see Box 1).
  • Practitioners enrolling or re-enrolling to provide covered DMEPOS – including eyeglasses – under Medicare by filing form CMS 855S, or applying to state agencies to provide health care products under Medicaid or a CHIP, will be subject to site visits by federal officials as well as a new enrollment fee of at least $512 to help pay for them.

Practitioners applying to become DMEPOS suppliers for the first time will also be subject to fingerprinting and criminal background checks.

Because DMEPOS providers must periodically revalidate their enrollment, virtually all will be subject to the increased screening standards and fees over the coming years. DMEPOS providers variously must revalidate enrollment every three or five years, the HHS notes.  Fee payments and the mandated checks will be required with each revalidation.
 Submission of fingerprints and criminal background checks will be accomplished using the FD-258 fingerprint card, which is recognized as a standard form by law enforcement agencies.

Most local, county or state law enforcement agencies will supply the card and take the fingerprints for a fee, the HHS notes.

The new program was authorized under the ACA last year to help federal officials prevent fraud and abuse by weeding out unscrupulous providers in advance.

In addition to stepped-up provider screening, the legislation gives the HHS new power to track billing trends that could indicate fraud or abuse and immediately halt payment when a credible allegation of fraud is being investigated (see Box 2).  

The measures are designed primarily to target large institutional durable medical equipment suppliers that have been determined by HHS to represent a “moderate” or “high” risk for fraud and abuse. Physicians have generally been determined to represent a “low” risk, the HHS acknowledges.  Under the new anti-fraud program, doctors who supply DMEPOS will be treated as moderate or high risk for that part of their practice.

“The ACA specifically excluded physicians and nonphysician practitioners from paying the application fee,” the HHS notes in its official announcement of the new anti-fraud program in the Federal Register. However, by enrolling as DMEPOS providers under Medicare using the CMS 855S form, physicians effectively classify themselves as suppliers and are therefore subject to higher levels of scrutiny – and fees – under the anti-fraud initiative, even if they have also enrolled as Medicare service providers, the HHS reasons.

During a meeting with key officials at the HHS’ Centers for Medicare & Medicaid Services (CMS) last fall, the AOA and other organization representing physicians who sometimes dispense DMEPOS called on the HHS to exempt “dually enrolled physicians” from the higher-level screening requirements and fees.

The AOA specifically asked that eye care practitioners be exempt.

“Ophthalmologists, optometrists, and opticians who only bill as DMEPOS suppliers for post-cataract glasses and lenses should fall into the limited screening level,” the AOA noted in formal written comments to the HHS last fall. “Classifying DMEPOS suppliers that are physician-owned as high risk could pose a significant disincentive to office-based physicians to continue offering DMEPOS supplies to their patients. There has been little to no documentation of fraud, waste, or abuse in this category of DMEPOS, and these suppliers should be exempted from the high-risk level of screening.”

Physicians who provide DMEPOS under more than one federally sponsored health care program will only be required to pay the application fee once. The fee, or proof of previous payment, will now be required with all Medicare, Medicaid, or CHIP enrollment applications.

When enacted last year, the ACA set the application fee at $500, authorizing increases based on the Consumer Price Index each year thereafter. The fee is set at $512 this year with increases anticipated annually.

A fact sheet on the new anti-fraud measures can be accessed on the HHS’ HealthCare Web site at www.healthcare.gov/news/factsheets.

Box 1

New HHS provider/ supplier screening levels

“Limited” level for screening for providers/suppliers
(Includes physician or non-physician practitioners as defined by Medicare)

  • Verification of any provider/supplier-specific requirements established by Medicare
  • Conduct license verifications, (may include licensure checks across states)
  • Database Checks (to verify Social Security Number (SSN); the National Provider Identifier (NPI); the National Practitioner Data Bank (NPDB) licensure; an OIG exclusion; taxpayer identification number; death of individual practitioner, owner, authorized official, delegated official, or supervising physician.

“Moderate” level for screening for providers/suppliers
(Includes currently enrolled DMEPOS suppliers)

  • Unscheduled or unannounced site visits

“High” level for screening for providers/suppliers
(Includes prospective [newly enrolling] suppliers of DMEPOS)

  • Fingerprint-based criminal history record check of law enforcement repositories

Box 2

New HHS fraud prevention program

New fraud and abuse prevention powers authorized under the federal Affordable Care Act will allow the U.S. Department of Health & Human Services to:

  • Create a rigorous screening process for providers and suppliers enrolling Medicare, Medicaid and CHIP to keep fraudulent providers out of those programs.  Types of providers and suppliers that have been identified in the past as posing a higher risk of fraud (for example, durable medical equipment suppliers) will be subject to a more thorough screening process. 
  • Require a new enrollment process for Medicaid and CHIP providers.  Under the Affordable Care Act, states will have to screen providers who order and refer to Medicaid beneficiaries to determine if they have a history of defrauding government.  Providers that have been kicked out of Medicare or another state’s Medicaid or CHIP will be barred from all Medicaid and CHIP programs.
  • Temporarily stop enrollment of new providers and suppliers. Medicare and state agencies will be on the look out for trends that may indicate health care fraud – including using advanced predictive modeling software, such as that used to detect credit card fraud.  If a trend is identified in a category of providers or geographic area, the program can temporarily stop enrollment as long as that will not impact access to care for patients.
  • Temporarily stop payments to providers and suppliers in cases of suspected fraud. Under the new rules, if there has been a credible fraud allegation, payments can be suspended while an action or investigation is under way.


  1. […] Despite strong opposition from AOA and other physician organizations, newly enrolling or re-enrolling physician suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) – including post-cataract eyeglasses – will face more rigorous screening and a $500+ application fee starting March 25 as a result of a new federal effort to crack down on health care fraud and abuse. For more information, read the latest from AOA News.  […]

  2. We are Medicare participating providers and have been enrolled with DMERC for 35+ years. Do we have to re-enroll with DMEPOS? If so, how do we get application. Thank you,

    • All physicians and all DMEPOS suppliers in Medicare will have to re-enroll between 2011 and 2015, but you only have to pay the $500+ enrollment fee for DMEPOS. The AOA and CMS recommend waiting for Medicare to contact you when it’s time for you to re-enroll as a physician or as a supplier. Medicare will send you a letter and require you to re-enroll within 60 days. At that point, you will be able to use the appropriate paper CMS-855 form, or re-enroll online using Internet-based PECOS.

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