(January 8, 2018):
Most physicians will progress through their entire career without ever having to respond to a complaint or investigation by their State Medical Board. Unfortunately, that isn’t always the case. An average of 4,309 physicians are disciplined each year by state licensure boards around the country
A recent case aptly illustrates how a state licensure action that merely resulted in probation ultimately led to the revocation of a physician’s Medicare billing privileges.
I. Background Facts:
Dr. Smith (not his real name
), was a Board Certified Family Medicine physician who was first licensed to practice medicine in Tennessee in August 2006. He subsequently joined a cosmetic practice in 2007 and performed liposuction procedures. Although it is unclear how the matter came to the Tennessee Board’s attention, the Board alleged that Dr. Smith violated the Tennessee Medical Practice Act
when he incorrectly used the tumescent liposuction procedure and removed an amount of fat from patients that exceeded the limit allowed for both Level I and Level II office-based surgery.
A. Disciplinary Action Taken by the Tennessee Board of Medical Examiners.
In late 2012, the Tennessee Board reached a settlement with Dr. Smith with respect to his liposuction practices. The terms of the agreement were that Dr. Smith agreed to be on probation for not less than five years, to pay a civil penalty, and to certain restrictions on his performance of cosmetic procedures. Notably, there were no allegations in the Consent Order that suggest that patients were injured by Dr. Smith’s actions. As the Consent Order further notes, the disciplinary action taken would be reported to the Health Integrity and Protection Data Bank
B. Disciplinary Action Taken by the Pennsylvania State Board of Medicine.
Dr. Smith likely expected the matter to be completely resolved with the successful resolution of his case with the Tennessee Board, but unfortunately for him the story did not end there. Since he was also licensed to practice medicine in the Commonwealth of Pennsylvania, it was just a matter of time before the Pennsylvania State Board of Medicine (Pennsylvania Board) initiated reciprocal disciplinary action. While is unclear whether Dr. Smith self-disclosed the action taken by the Tennessee Board or whether the Pennsylvania Board learned of the action through the HIPDB disclosure, in mid-2013, Dr. Smith voluntarily entered into a “Consent Agreement and Order”
with the Pennsylvania Board and agreed to accept the permanent voluntary surrender of his license to practice medicine in Pennsylvania in consideration for no further disciplinary sanction being taken against him.
In March 2015, the Pennsylvania Department of Human Services advised Dr. Smith that based on the voluntary surrender of his Pennsylvania medical license, it was terminating his provider agreement with the Pennsylvania Medical Assistance (MA) Program.
Dr. Smith was reportedly advised that he could appeal the termination of his provider agreement but he did not
pursue such an appeal.
II. Impact of These Collateral State Licensure Actions:
State Medical Board disciplinary actions are serious business that can also cause extensive collateral damage. In this particular case, for example, you can see how a relatively benign disciplinary action that first only resulted in a probation action subsequently led to
more significant adverse actions being taken by another state’s regulatory authorities. But even that wasn’t the end of it. As outlined below, these state-based licensure actions led to even further adverse repercussions, with possibly more to follow in the near future.
A. Revocation of Medicare Billing Privileges Under 42 C.F.R. § 424.535(a)(12).
Under 42 C.F.R. § 424.535
, the various basis’ that may be relied upon by the Centers for Medicare and Medicaid Services (CMS) to revoke a health care provider’s Medicare billing privileges are enumerated.
More specifically, 42 C.F.R. § 424.535(a)(12) provides that if a provider’s Medicaid billing privileges are terminated by a State Medicaid Agency, CMS can revoke a provider’s Medicare billing privileges as well. As the regulation expressly provides:
“(12) Medicaid termination.
(i) Medicaid billing privileges are terminated or revoked by a State Medicaid Agency.
(ii) Medicare may not terminate unless and until a provider or supplier has exhausted all applicable appeal rights.”
In light of the fact that the Pennsylvania Medical Assistance Program had terminated Dr. Smith’s provider agreement, the Medicare Administrative Contractor issued an “Initial Determination” to the physician in 2015 advising him that it was revoking his Medicare enrollment and billing privileges for two years. Dr. Smith filed a timely request for reconsideration appeal. In February 2017, the Provider Enrollment & Oversight Group for CMS upheld Dr. Smith’s revocation based on 42 C.F.R. § 424.535(a)(12).
Understandably, Dr. Smith appealed the reconsidered determination decision that had been upheld by the Provider Enrollment & Oversight Group to the Departmental Appeals Board, Civil Remedies Division. However, the Administrative Law Judge found that CMS had a legitimate basis under 42 C.F.R. § 424.535(a)(12) to revoke Dr. Smith’s Medicare enrollment and billing privileges based on the fact that his participation in the Pennsylvania Medicaid program had been terminated by the Pennsylvania Department of Human Services. Importantly, the effective date of the revocation action was made retroactive to the date of Dr. Smith’s voluntary surrender of his Pennsylvania medical license.
B. Impact of State Medicaid Program Termination Leads to Exclusion Action.
Between state and federal regulatory authorities, there are practically an endless number of administrative sanctions that may be readily assessed or pursued by one of the agencies that have been delegated oversight for one or more aspects of the health care services you currently provide. These sanctions range from the licensure examples discussed above to those based on allegedly unsafe working conditions in your practice. With the exception of the loss of your professional license, perhaps no administrative sanction is more serious than an “exclusion” action. On the federal level, the Department of Health and Human Services, Office of Inspector General (HHS-OIG) has the authority to exclude individuals and entities from federally funded health care programs under Section 1128 of the Social Security Act
, and from Medicare and state health care programs under Section 1156 of the Social Security Act.
Simply put, if a health care provider is excluded from participating in state and federal health care benefits programs, the provider is adversely disadvantaged in two respects. First, an excluded provider is effectively barred from being an enrolled provider in the Medicare and / or Medicaid programs. Second, an excluded provider cannot even work for an entity that participates in the Medicare or Medicaid programs. If a health care organization were to hire an excluded individual, it could expose the organization to significant civil monetary penalties.
The termination of Dr. Smith’s provider agreement in the Pennsylvania Medical Assistance Program ultimately led to his exclusion from the Pennsylvania Medicaid program. To date, Dr. Smith has not been excluded from participation in the Medicare program. However, that does not mean that such an action cannot occur. Although Dr. Smith’s actions would not lead to his “mandatory exclusion” from the Medicare program, there are at least two “permissive exclusion” authorities that could be relied upon by HHS-OIG should it choose to exercise its statutory authority in this regard.
Under 42 U.S.C. § 1320a-7(b)(4), HHS-OIG has the permissive authority to exclude an individual in a case where a provider’s license has been revoked, suspended or surrendered. If HHS-OIG exercises its authority under this permissive authority, the period of exclusion must last for a minimum period of the time imposed by the state licensing authority. In this particular case, Dr. Smith voluntarily surrendered his Pennsylvania medical license on a permanent basis. As a result, if HHS-OIG were to decide to pursue permissive exclusion based on this regulatory authority, the length of the exclusion could conceivably be lifetime.
Under 42 U.S.C. § 1320a-7(b)(5), HHS-OIG can also exercise its permissive exclusion authority if a provider has been excluded or suspended from a federal or state health care program. When this occurs, the period of permissive exclusion must last a minimum of not less than the period imposed by the relevant federal or state health care program. In this case, Dr. Smith’s Medicaid provider agreement was terminated by the Pennsylvania Medical Assistance Program. If HHS-OIG were to argue that the state’s action represents a possible violation under 42 U.S.C. § 1320a-7(b)(5), it could choose to exercise its permissive exclusion authority.
In either of the two examples listed above, HHS-OIG could use either the Pennsylvania Board’s licensure action or the state’s termination of the provider’s Medicaid provider agreement as a predicate for excluding the physician from participation in the Medicare program.
This case also illustrates the importance of conducting a broad, nationwide screening of your employees, staff, vendors, contractors and agents. As mentioned above, even though Dr. Smith is listed as excluded from the Pennsylvania Medicaid program, he is still not listed on HHS-OIG’s List of Excluded Individuals and Entities
(LEIE). A provider’s failure to conduct a complete nationwide search of all Medicare and Medicaid exclusion databases could easily result in the searcher missing one or more adverse findings. A low-cost way to have your employees, staff, vendors, contractors and agents screened against the 40+ federal and state exclusion databases on a monthly basis can be found at: www.exclusionscreening.com.
Paul Weidenfeld and I established this separate company around six years ago. In the illustration above, I used their services to identify the fact that the physician under review was excluded by Pennsylvania but had not been added to the LEIE.
C. Impact of Medicare Revocation on Private Payor Participation Agreements.
It is important to keep in mind that a health care provider’s terms of participation in a private payor insurance plan are set out by contract. As a result, agreements between a participating provider and a private payor may vary from payor to payor and from provider to provider. Although the terms of each particular contract will vary, most of these agreements require that a provider notify the payor of any “adverse action” that is proposed or taken against a provider within 30 to 60 days. The definition of an adverse action is often set out in the provider’s participation agreement is typically quite broad. If a provider fails to notify a payor of a reportable event, the provider’s participation in a payor’s plan can be immediately terminated.
For the sake of argument, let’s assume that Dr. Smith does, in fact, notify private payors of the adverse actions taken. In this case, the adverse actions taken likely include the disciplinary actions against Dr. Smith’s license, the termination of his Medicaid provider agreement and the revocation of his Medicare billing privileges. Unfortunately, any one of these adverse actions would likely serve as a justifiable basis for terminating Dr. Smith’s participation in a payor’s plan.
D. Impact of Medicare Revocation on a Provider’s Hospital Staff Privileges.
To the extent that the nature of a physician’s medical practice requires that he maintain clinical privileges with one or more local hospitals, the by-laws of most hospitals require that in order for a physician to remain credentialed, he or she must remain a participating provider in the Medicare or Medicaid programs. Therefore, the revocation of Dr. Smith’s Medicare billing privileges will likely result in the termination of any hospital clinical privileges he holds as well.
As the facts in the case discussed above show, a relatively minor disciplinary action, where no patient harm was alleged, slowly led to multiple more serious adverse actions being pursued against a physician. While the disciplinary rules every state are different, there were several points in the applicable chain of events where this proverbial “train wreck” may have been avoided. It is therefore imperative that if you are facing a potential state licensing board action, you need to ensure that the various collateral impact of settling a complaint is fully understood and you have taken steps to reduce the likelihood a subsequent, even more grave action arising out of the settlement you have executed.
Robert W. Liles, J.D., M.B.A., M.S., is a health lawyer with the firm Liles Parker. Mr. Liles and the other attorneys at Liles Parker represent health care providers and suppliers around the country in connection with Medicare, Medicaid and private payor regulatory and contractual actions. He also represents licensed professionals in front of state licensure board proceedings. Are you facing a potential adverse action? Call Robert for a complimentary consultation. He can be reached at: 1 (800) 475-1906.
 Tenn Code Ann. § 63-6-101, et seq. and Tenn Comp. R & Regs.
 The Healthcare Integrity and Protection Data Bank (HIPDB) was created as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Notably, the purpose of the HIPDB was to serve as an accessible archive of information that could be used by to help fight health care fraud and abuse. In 2013, the HIPDB was merged into the National Practitioner Databank (NPDB). In contrast to the HIPDB, the NPDB first went live in 1990 and was intended to serve as a repository for adverse licensure, peer review and credentialing actions, medical malpractice payments and similar information. Today, the NPDB maintains a record of all the information previously maintained by both databases.
 As later noted in connection with Dr. Smith’s Medicare revocation appeal, the physician had not practiced in Pennsylvania for many years and had no interest in practicing there in future. He also reportedly thought surrendering the license would be easier and less expensive.
 Medicaid is defined as “Medical Assistance provided under a State Plan approved by HHS under Title XIX of the Social Security Act.”); 55 Pa. Code § 1101.11(b).
 For a more detailed discussion of the various bases relied on by CMS when revoking a provider’s Medicare billing privileges, you may wish to review the article “Medicare Revocation Actions / Medicare Deactivation Actions: How Should You Respond?”
 To further enhance your regulatory compliance efforts, we recommend that you implement an effective reporting system. Call the folks at www.compliancehotline.com for assistance with an inexpensive anonymous hotline service.