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Updated Rule Enables CMS to Ban Sanctioned Physicians Who Harmed Patients From Medicare

Health Letter, May 2020

By Azza AbuDagga, M.H.A., Ph.D.

On July 29, 2019, the Centers for Medicare and Medicaid Services (CMS) — the federal agency that administers Medicare and two other major U.S. health care programs — included in its draft 2020 Physician Fee Schedule a new policy that expands the agency’s ability to remove certain problematic physicians (and other eligible health care professionals) from the Medicare program. According to the agency, the purpose of the new policy is to improve overall patient care by preventing these professionals from treating Medicare patients.

During a public comment period, the medical community pushed back against this new policy. Fortunately, CMS retained this policy in the finalized rule that it issued on Nov. 1, 2019, after making some concessions in response to certain comments it received. The new policy went into effect on Jan. 1, 2020.

The new revocation policy

Through existing regulations, CMS has established a “gatekeeping” process for enrolling health care professionals in the Medicare program to prevent unqualified and potentially fraudulent individuals from being able to inappropriately bill Medicare. For physicians, this process has entailed collecting and verifying information pertaining to medical licensing and practice location, as well as felony convictions and exclusions by the Office of Inspector General (a federal agency).

The new policy grants CMS the authority to deny or revoke Medicare billing privileges for troubling physicians who meet two conditions:

(a) The physician has been subject to prior action from a state oversight board (such as a state medical board); federal or state health care program; independent review organization; or any other equivalent governmental body or program that oversees, regulates or administers the provision of health care; and

(b) The underlying facts for the prior action against the physician reflect improper physician conduct that led to patient harm.

In determining whether a denial or revocation is appropriate, CMS noted in the final rule that it will consider the nature of the patient harm and the physician’s conduct as well as the number and type(s) of sanctions or disciplinary actions that have been imposed against the physician by a state medical board or other entities specified in the new policy.

Examples of the prior actions that CMS will consider under the new policy include license restriction(s) pertaining to certain procedures or practices; required compliance appearances before state oversight board members; license restriction(s) regarding the ability to treat certain types of patients, such as not being permitted to be alone with members of a different gender after a sexual offense charge; administrative or monetary penalties; and formal reprimand(s).

Due to resistance from the medical community, CMS excluded two actions that it had previously proposed from the types of sanctions or disciplinary actions that can potentially trigger a denial or revocation of physician enrollment in Medicare: required participation in rehabilitation or mental/behavioral health programs and required abstinence from drugs or alcohol and random drug testing. However, CMS retained the right to remove from Medicare any physician who had either of these actions if they also had an additional sanction that involved patient harm.

CMS stance

To justify its denial or revocation ability, CMS made the case that the prior rules did not grant the agency the authority to act against physicians whose problematic behavior continued for many years despite detection by state medical boards. The agency cited the following example:

[A] physician was placed on probation, fined, and suspended by the state board after multiple accusations by his patients for sexual assault. However, he was permitted to maintain his medical license, during which period he continued to sexually assault additional patients. It was not until multiple years after the initial fine and probation period that the state finally revoked his medical license, and it was only after this license action that CMS was able to revoke the physician’s Medicare enrollment. However, with our new patient harm [policy], CMS could have taken immediate action based on the initial probation, fine [and] suspension, thus perhaps avoiding the subsequent patient abuse that occurred.

The agency also refuted several arguments against the new policy. For example, in response to a comment from the American Medical Association and others that the new denial or revocation policy does not give deference to state medical boards and other oversight entities whose mission is to protect the public, including Medicare beneficiaries, CMS emphasized that these protection functions are not exclusive to these state entities. ”There could be instances where CMS, in its oversight of Medicare, feels compelled to review a matter potentially impacting [Medicare] beneficiaries… This overriding principle, rather than any desire to interfere with or usurp the decisions of state oversight boards, lies behind our patient harm [policy],” added the agency.

In response to a comment that the new policy may result in physician shortages and may impair health care access for Medicare beneficiaries because the patients of revoked physicians would have to seek care elsewhere, CMS indicated that these consequences are unlikely because only a very small number of physicians would be affected by this policy. Nonetheless, the agency noted that it will intervene should such issues arise unexpectedly after implementation of the new policy.

In response to a request to allow physicians subject to the new policy some form of due process before their enrollment is denied or revoked, CMS asserted that instances of patient harm covered by the new policy can represent a particularly serious danger to Medicare beneficiaries, thus requiring rapid action from the agency. However, CMS noted that it will ensure that it has enough information on hand to make a fair and well-informed determination about all denial or revocation cases.

Our position

Public Citizen’s Health Research Group (HRG) commends CMS for creating this new policy to protect Medicare beneficiaries from dangerous physicians and health care professionals.

However, we do not expect this policy will translate into substantial public protection. As acknowledged by CMS, only a very small number of problematic professionals will be affected. Specifically, only about 4,300 of the nation’s approximately one million physicians (0.4%) are disciplined by state licensure boards each year, according to an analysis of the National Practitioner Data Bank (NPDB) — a national flagging system of disciplinary actions taken against, and malpractice payments made for, physicians and other health care professionals.

CMS should expand the grounds of its denial or revocation policy to include, in addition to actions by state medical boards, any patient-harm-related sanctions by hospitals, other health care organizations and insurers against physicians and other health care professionals, as well as settled or litigated malpractice claims for these professionals that resulted in payments to patient victims.

Adding these grounds is necessary because a previous HRG analysis of NPDB data showed that medical boards failed to take disciplinary licensing actions against more than half of 10,672 physicians who had been subjected to serious sanctions by hospitals and other health care organizations (including revocations or restrictions of their clinical privileges) from 1990 to 2009.

We urge CMS to collaborate with the Health Resources and Services Administration, the federal agency that operates the NPDB, to ensure that dangerous physicians are not permitted to harm Medicare patients. This change will also help non-Medicare patients because most health care organizations also remove physicians from their provider network when CMS removes them from the Medicare program.