Health Fraud Rule Withdrawal May Hurt Enforcement Efforts

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By James Swann

Fraud enforcement efforts may be hindered by the Trump administration’s delay of a program integrity final rule that would have toughened provider enrollment in Medicare and Medicaid, health-care attorneys and industry stakeholders told Bloomberg BNA.

The rule’s withdrawal could negatively impact fighting health-care fraud, Louis Saccoccio, chief executive officer of the National Health Care Anti-Fraud Association, told Bloomberg BNA Jan. 30. One of the main challenges of Medicare and Medicaid anti-fraud efforts is the shifting affiliations of fraudsters, Saccoccio said.

The final rule (RIN:0938-AS84) had been reviewed by the Office of Management and Budget but was withdrawn Jan. 27 in accordance with a Jan. 20 White House memo calling for the withdrawal and review of all regulations not yet published in the Federal Register.

Currently, an excluded provider could find a way to continue making money from Medicare by using a front person to start a new company or affiliating with someone who’s able to bill Medicare, Saccoccio said.

The proposed rule, published March 1, 2016, called for strengthening the enrollment process by implementing an Affordable Care Act provision requiring providers to disclose any affiliations with physicians who had been excluded or had their payments suspended by Medicare or Medicaid, among other provisions.

Saccoccio said the proposed rule would also have eliminated arrangements where a provider refused to repay debts to Medicare or Medicaid but still benefited financially through an affiliation with another provider billing Medicare.


The rule withdrawal was followed by a Jan. 30 executive order calling for the elimination of two regulations for every new regulation issued, which could also hurt anti-fraud efforts.

The “two-for-one” order decreases the likelihood that many new fraud and abuse regulations will be issued in the near future, as it is intended to cut back on regulatory costs, Linda Baumann, a health-care attorney with Arent Fox in Washington, told Bloomberg BNA Jan. 30.

The order requires that any costs associated with a new regulation be offset by the elimination of costs associated with two existing regulations, Baumann said.

The order is also likely to face litigation, which could further delay any new regulations, Baumann said.

“The impact over the longer term will depend on how the various ambiguities in the executive order are clarified and implemented,” she said.

Baumann said she anticipated the Trump administration wouldn’t resubmit the final rule in the near future because of its projected cost, as well as the need to repeal two existing regulations upon resubmission.

The proposed rule projected a cost of $298.8 million each year for the first three years of implementation, which is a lot of money to offset through the elimination of existing regulations, Baumann said.

Ellyn Sternfield, a health-care attorney with Mintz Levin in Washington, agreed that the two-for-one order would likely slow down new anti-fraud regulations.

“Frankly, I think at the federal level, everything will be in a holding pattern until there is a better understanding of the administration’s long-term plans for the ACA, and the Medicare and Medicaid funding structure,” Sternfield told Bloomberg BNA.

Business as Usual

Past administrations, including the Obama administration, have similarly withdrawn pending regulations shortly after coming into office, and the Trump withdrawal could be routine and intended to let the administration review all the regulations that are in the pipeline, Thomas S. Crane, a health-care attorney with Mintz Levin in Boston and Washington, told Bloomberg BNA Jan. 30.

“On the other hand, this rule implements a provision of the ACA, so it may have been targeted in view of the goal to repeal the ACA,” Crane said.

Since it took so long for the proposed rule to be released, Crane said, it was hard to see how the withdrawal would hurt fraud-fighting efforts.

“It merely keeps in place the status quo, which we’ve seen has been aggressive fraud enforcement,” he said.

Danielle Sloane, a health-care attorney with Bass, Berry & Sims in Nashville, Tenn., said the proposed rule was too expansive and created significant risks for health-care companies that made any mistakes in the complex Medicare enrollment process.

Sloane said she had hoped the final rule would have eased some of the burdens on providers and simplified the enrollment process, but said the final rule was unlikely to be resubmitted due to the two-for-one executive order and the prospective repeal of the ACA.

To contact the reporter on this story: James Swann in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

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