Tests of reasonableness authorized by sections 1833(a) and 1861(v)(1)(A) of the Act may be established by HCFA or the carrier with respect to direct or indirect overall costs, costs of specific items and services, or costs of groups of items and services. Those tests include, but are not limited to, screening guidelines and payment limitations.

(d) Screening guidelines. (1) Costs in excess of amounts established by the guidelines will not be included unless the clinic provides reasonable justification satisfactory to the carrier.

(2) Screening guidelines will be used to assess:

(i) Compensation for the professional and supervisory services of physicians and for the services of physician assistants, nurse practitioners, nurse midwives and specialized nurse practitioners;

(ii) Physician, physician assistant, nurse practitioner, specialized nurse practitioner, nurse midwife, and visiting nurse productivity;

(iii) The level of admininstrative and general expenses;

(iv) Staffing (e.g., the ratio of other clinic personnel to physicians, physician assistants, and nurse practitioners); and

(v) The reasonableness of payments for services purchased by the clinic, subject to the limitation that the costs of physicians' services purchased by the clinic may not exceed the reasonable charges for these services as determined under Subpart E of this part.

(e) Payment limitations. Limits on payments may be set by HCFA, on the basis of costs estimated to be reasonable for the provision of such services.

§ 405.2429 Reports and maintenance of records.

(a) Maintenance and availability of records. The rural health clinic shall:

(1) Maintain adequate financial and statistical records, in the form and containing the data required by HCFA, to allow the carrier to determine payment for covered services furnished to Medicare beneficiaries in accordance with this subpart.

(2) Make the records available for verification and audit by HEW or the General Accounting Office;

(3) Maintain financial data on an accrual basis, unless it is part of a governmental institution that uses a cash basis of accounting. In the latter case, appropriate depreciation on capital assets will be allowable rather than the expenditure for the capital asset.

(b) Adequacy of records. (1) The carrier may suspend reimbursement if it determines that the clinic does not maintain records that provide an adequate basis to determine payments under Medicare.

(2) The suspension will continue until the clinic demonstrates to the carrier's satisfaction that it does, and will continue to, maintain adequate records.

(c) Reporting requirements—(1) Initial report. At the beginning of its initial reporting period, the clinic shall submit an estimate of budgeted costs and visits for rural health clinic services for the reporting period, in the form and detail required by HCFA, and such other information as HCFA may require to establish the payment rate.

(2) Annual reports. Within 90 days after the end of its reporting period, the clinic shall submit, in such form and detail as may be required by HCFA, a report of:

(i) Its operations, including the allowable costs actually incurred for the period and the actual number of visits for rural health clinic services furnished during the period; and

(ii) The estimated costs and visits for rural health clinic services for the succeeding reporting period, and such other information as HCFA may require to establish the payment rate.

(3) Late reports. If the clinic does not submit an adequate annual report on time, the carrier may reduce or suspend payments to preclude excess payment to the clinic.

(4) Inadequate reports. If the clinic does not furnish a report or furnishes a report that is inadequate for the carrier to make a determination of program payment, HCFA may deem all payments for the reporting period to be overpayments.

(5) Postponement of due date. For good cause shown by the clinic, the carrier may, with HCFA's approval,

grant a 30-day postponement of the due date for the annual report.

(6) Termination of agreement or change of ownership. The report from a clinic which voluntarily or involuntarily ceases to participate in the Medicare program or experiences a change in ownership is due no later than 45 days following the effective date of the termination of agreement or change of ownership.

§ 405.2430 Beneficiary appeals.

A beneficiary may request a hearing by a carrier (subject to the limitations and conditions set forth in Subpart H of this part) if:

(a) The beneficiary is dissatisfied with a carrier's determination denying a request for payment made on his or her behalf by a rural health clinic; or (b) The beneficiary is dissatisfied with the amount of payment; or

(c) The beneficiary believes the request for payment is not being acted upon with reasonable promptness.

Sec. 420.206 Disclosure of identities of persons having ownership, financial, or control interest.

AUTHORITY: Secs. 1102, 1862(d)(1), (2), (3), and (4), 1862(e), 1866(b)(2) (D), (E), and (F), 1871, 1902(a)(39), and 1903(i)(2) of the Social Security Act (42 U.S.C. 1302, 1395y(d), 1395cc, 1395hh, 1396a, and 1396b). SOURCE: 44 FR 31142, May 30, 1979, unless otherwise noted.

Subpart A-General Provisions

§ 420.1 Scope and purpose.

This part sets forth provisions for the detection and prevention of fraud and abuse in the Medicare program. It implements statutory sections, specifically identified in each subpart, aimed at protecting the integrity of the Medicare program.

§ 420.2 Definitions.

"Convicted" means that a judgment of conviction has been entered by a Federal, State, or local court, regardless of whether an appeal from that judgment is pending.

"Exclusion" means that items or services furnished by a specified practitioner, provider, or other supplier of services will not be reimbursed under Medicare.

"Furnished" refers to items and services provided directly by, or under the direct supervision of, a practitioner (either as an employee or in his own capacity as a practitioner), a provider, or other supplier of services. It does not refer to services ordered by one party but billed for and provided by or under the supervision of another.

"Medicaid agency" means the single State agency designated to administer, or supervise the administration of, the State Medicaid plan approved under Title XIX of the Social Security Act.

"Practitioner" means a physician or other health care professional, licensed under State law to practice his or her profession, who may be eligible to receive reimbursement under the Medicare program.

"Provider" means a hospital, a skilled nursing facility, c a home health agency and, for the limited purposes of furnishing outpatient physical therapy or speech pathology

services, a clinic, rehabilitation agency, or public health agency.

"PSRO" stands for Professional Standards Review Organization.

§ 420.3 Applicability of other regulations.

Part 405, Subpart O of this chapter, contains detailed procedures for hearings and reviews that are made available under this part for exclusions and terminations. Policies applicable to suspension are specified in §420.113.

Subpart B-Exclusion of Practitioners, Providers, and Other Suppliers of Services and Suspension of Practitioners

§ 420.100 Basis and scope.

This subpart implements Sections 1862(d) and 1862(e) of the Act. It sets forth criteria and procedures for excluding practitioners, providers, and other suppliers of services who have defrauded or abused the Medicare program and for suspending practitioners convicted of crimes related to their participation in Medicare or Medicaid. It also specifies the appeals rights and the procedures for reinstatement in these programs. The procedures set forth in §§ 420.101-103 of this subpart also apply to terminations of provider agreements under § 405.614(a)(5) of this chapter.

§ 420.101 Bases for exclusion; exceptions. (a) Payment will not be made under Medicare for items or services furnished by a practitioner, provider, or other supplier of services that HCFA determines has:

(1) Knowingly and willfully made or caused to be made any false statement or misrepresentation of a material fact in a request for payment under Medicare or for use in determining the right to payment under Medicare;

(2) Furnished items or services that are substantially in excess of the beneficiary's needs or of a quality that does not meet professionally recognized standards of health care; or

(3) Submitted or caused to be submitted bills or requests for payment containing charges (or costs) that are substantially in excess of its customary charges (or costs).

(b) HCFA's determination under paragraph (a)(2) of this section, that the items or services furnished were excessive or of unacceptable quality, will be made on the basis of reports, including sanction reports, from the following sources:

(1) The PSRO for the area served by the practitioner, provider, or other supplier of services;

(2) State or local licensing or certification authorities;

(3) Peer review committees of fiscal agents or contractors;

(4) State or local professional societies; or

(5) Other sources deemed appropriate by HCFA.

(c) Exceptions. (1) Notwithstanding the circumstances specified in paragraph (a)(2) of this section, HCFA will not deny Medicare payments if it has waived a disallowance on the grounds that the beneficiary and the practitioner, provider, or other supplier of services coud not reasonably be expected to know that payment would not be made for a particular item or service. (See section 1879(a) of the Act (42 U.S.C. 1395pp(a)).)

(2) HCFA will not deny Medicare payment for bills or requests that are substantially in excess of customary charges or costs, if it finds the excess charges are justified by unusual circumstances or medical complications requiring additional time, effort, or expense in localities in which it is accepted medical practice to make an extra charge in such case.

§ 420.102 Exclusion procedures.

(a) Notice of proposed exclusion or termination. (1) If HCFA proposes to deny reimbursement in accordance with § 420.101, or to terminate a provider agreement in accordance with § 405.614(a)(5) of this chapter, it will send written notice of its intent and the reasons for the proposed exclusion or termination to the practitioner, provider or other supplier of services.

(2) Within 30 days of the date on the notice, the party may submit: (i) documentary evidence and written argument against the proposed action; or (ii) a written request to present evidence or argument orally to a HCFA official.

(3) For good cause shown by the party, HCFA may extend the 30-day period.

(b) Notice of exclusion or termination. (1) If, after exhaustion of the procedures specified in paragraph (a) of this section, HCFA decides to exclude a party under § 420.101 or to terminate a provider agreement under § 405.614(a)(5) of this chapter, it will send written notice of its decision to the affected party at least 15 days before the decision becomes effective.

(2) The notice will state (i) the reasons for the decision; (ii) the effective date; (iii) the extent of its applicability to participation in the Medicare program; (iv) the earliest date on which HCFA will accept a request for reinstatement; (v) the requirements and procedures for reinstatement; and (vi) the appeal rights available to the excluded party.

(3) This decision and notice constitute an "initial determination" and a "notice of initial determination" for purposes of the administrative appeals procedures specified in Part 405, Subpart O of this chapter.

(4) HCFA will also give notice of exclusion or termination and the effective date to the public, to beneficiaries (in accordance with § 420.103(c)) and, as appropriate, to:

(i) State Medicaid and title V agencies, State Medicaid Fraud Control Units, and PSROS;

(ii) Hospitals, skilled nursing facilities, home health agencies and health maintenance organizations (HMOs);

(iii) Medical societies and other professional organizations;

(iv) Contractors, health care prepayment plans and other affected agencies and organizations; and

(v) The State or local authority responsible for licensing or certifying the excluded party.

§ 420.103 Duration and effect of exclusion. (a) Duration of exclusion. (1) Exclusion will continue until the excluded practitioner, provider, or other supplier of services is reinstated in accordance with § 420.120.

(2) The exclusion notice will specify the earliest date on which the excluded party may seek reinstatement.

In setting that date, HCFA will consid

er:

(i) The number and nature of the program violations and other related offenses;

(ii) The nature and extent of any adverse impact the violations have had on beneficiaries;

(iii) The amount of any damages incurred by the Medicare program;

(iv) Whether there are any mitigating circumstances; and

(v) Any other facts bearing on the nature and seriousness of the violations or related offenses.

(b) Denial of payments during exclusion. (1) Except as provided in paragraph (b)(3) of this section, payment will not be made to an excluded practitioner, provider, or other supplier of services (that has accepted assignment of beneficiary claims) for items or services furnished on or after the effective date of exclusion specified in the exclusion notice.

(2) An assignment of a beneficiary's claim that is made on or after the effective date of exclusion will not be valid.

(3) Exceptions. (i) In the case of inpatient hospital services or posthospital extended care services furnished to a beneficiary who was admitted to a hospital or skilled nursing facility before the effective date of exclusion, payment will be available for up to 30 days after that date; and

(ii) In the case of home health services furnished under a plan established before the effective date of exclusion, payment will be available for services furnished through the end of the calendar year in which exclusion became effective.

(c) Denial of payment to beneficiaries. If a beneficiary submits claims for items or services furnished by an excluded practitioner, provider, or other supplier of services after the effective date of the exclusion:

(1) HCFA will pay the first claim submitted by the beneficiary and immediately give notice of the exclusion. (2) HCFA will not pay the beneficiary for items or services furnished by an excluded party more than 15 days after the date on the notice to the beneficiary or after the effective date of the exclusion, which ever is later.

(d) Effective date of termination of agreement. For the effective date of termination of a provider's agreement under § 405.614(a)(5), see § 405.615 of this chapter.

§ 420.110 Basis for suspension.

An individual practitioner who has been convicted, on or after October 25, 1977, of a criminal offense related to his involvement in the Medicare or Medicaid program will be suspended from participation in the Medicare program.

§ 420.111 Suspension procedures.

(a) Notice to practitioner. (1) Whenever HCFA has conclusive information that a practitioner has been convicted of a crime related to this involvement in the Medicare or Medicaid program, it will give him written notice that he is suspended from the Medicare program, beginning 15 days from the date on the notice.

(2) The written notice will set forth: (i) The basis for the suspension; (ii) The duration of the suspension and the factors considered in setting the duration;

(iii) The requirements and procedure for reinstatement;

(iv) The appeal rights; and

(v) The fact that the State Medicaid agency is required to suspend the practitioner from Medicaid for at least as long as he is suspended from Medi

care.

(b) Notice to others. (1) HCFA will concurrently notify:

(i) The State Medicaid agencies in order that they can promptly suspend the practitioner from participation in the Medicaid program (see § 455.212 of this chapter);

(ii) The State or local authority responsible for the licensing or certification of the suspended practitioner;

(iii) The Public Health Service so that it can assess whether the suspension is likely to create a shortage of health manpower in the area of practice of the suspended practitioner; and (iv) Other appropriate entities as described in § 420.102(b)(4).

(2) The notice to the licensing or certifying authority will be accompanied by a request that the authority:

(i) Make appropriate investigations;

(ii) Invoke any sanctions available under State law and the authority's policies; and

(iii) Keep HCFA and the Inspector General of the Department fully and currently informed of any action it takes.

§ 420.112 Duration and effect of suspension.

(a) Duration of suspension. (1) Suspension will continue until the suspended practioner is reinstated in accordance with § 420.120.

(2) The suspension notice will specify the earliest date on which the practitioner may seek reinstatement. In setting that date, HCFA will consider: (i) The number and nature of the program violations and other related offenses;

(ii) The nature and extent of any adverse impact the violations have had on beneficiaries;

(iii) The amount of the damages incurred by the Medicare and Medicaid programs;

(iv) Whether there are any mitigating circumstances;

(v) The length of the sentence imposed by the court; and

(vi) Any other facts bearing on the nature and seriousness of the violations or related offenses.

(b) Effect of suspension. Payment will not be made under the Medicare program for items or services furnished by the suspended practitioner during the period of suspension, except as specified in paragraphs (c)(3) and (d) of this section.

(c) Denial of payments to practitioner. (1) Payment will not be made to a suspended practitioner (who has accepted assignment of the beneficiary's claims) for items or services furnished on or after the effective date of suspension specified in the suspension notice, except as provided in paragraph (c)(3) of this section.

(2) An assignment of a beneficiary's claim that is made to a suspended practitioner on or after the effective date of suspension will not be valid.

(3) Exception. In the case of inpatient hospital services or posthospital extended care services furnished to a beneficiary who was admitted to a hospital or skilled nursing facility before