The Affordable Care Act mandated that the Centers for Medicare and Medicaid Services (“CMS”) establish risk categories for Medicare enrollment, which are used by CMS to determine what level of scrutiny to give provider enrollment applications, which includes initial enrollment, change of ownership (“CHOW”) applications, and revalidations.  Three risk categories were subsequently created under 42 CFR § 424.518: limited, moderate, and high. Providers in the limited risk category are subject to the lowest scrutiny and those in the high risk category are subject to the most scrutiny.

Since the regulation was first effective in 2011, the providers which have been in the limited category have included physicians, ambulatory surgery centers, hospitals, rural health clinics, and skilled nursing facilities (“SNFs”).  However, on November 18, 2022, CMS published a final rule effective on January 1, 2023, which will move SNFs from the lowest risk category to the highest risk category for both new enrollments and for CHOWs and to the moderate risk category for revalidation.

The most important impact of this change for SNFs is a new fingerprinting requirement for individual owners. If a SNF is being initially enrolled, or undergoes a change of ownership, then each individual who owns, either directly or indirectly, five percent (5%) or more of the SNF must submit fingerprints in connection with the enrollment application. Fingerprinting would also be required in the event an existing SNF reports a new 5% or more direct or indirect owner of the provider.

The new high risk category (and corresponding fingerprinting requirement) will also be applied to several other provider types.  These include enrolled opioid treatment (“OTP”) centers that have not been continuously certified since October 23, 2018 by the Substance Abuse and Mental Health Services Administration (“SAMHSA”), suppliers of durable medical equipment (“DMEPOS”), Medicare Diabetes Prevention Program (“MDPP”) suppliers, and home health agencies (“HHAs”). 

CMS also issued transmittal No. R11701Pl on November 10, 2022, implementing these regulatory changes into Chapter 10 of the Provider Integrity Manual (PIM”) (CMS Publication 100-08; see copy attached) effective January 6, 2023.  Chapter 10 of PIM sets out the instructions by CMS to the MACs for Medicare enrollment.  These changes include the following:

1.         Section 10.2.1.14 states that “effective January 1, 2023, SNF’s that are initially enrolling or undergoing a change in ownership…fall within the “high” screening category under 42 CFR Section 424.518.  SNF revalidations are processed at the “moderate” screening level.

2.         There is a new requirement for site visits for initial applications and revalidations for SNFs.

The transmittal states that the MACs shall implement the new policies for enrollment applications received on or after January 6, 2023.  Based on this, the new risk categories will not be applied to 855 filings which are in the review pipeline as of January 6, 2023, but only to those filed on or after that date.

Fingerprints are taken by a vendor, LiveScan.  In order to submit fingerprints, the owner needs to visit a LiveScan location in his or her area.  LiveScan has contracted with vendors for this purpose nationwide. We have had some experience with enrollments which required fingerprints.  In some cases, the original fingerprint cards have been rejected because the print for one or more fingers did not meet the required standards.

These new requirements are likely to slow down the enrollment process for SNFs and other providers undergoing CHOWs or enrolling as new providers.  This is important to consider when structuring any transaction.  If any SNF providers are needing to add any new owners or will be having a change of ownership at the end of the year, these new requirements can be avoided if the enrollment applications are submitted before January 6, 2023. 

If you have any questions about these changes or need assistance with an enrollment application, Husch Blackwell can provide that assistance for all types of providers in all jurisdictions.