DOJ-HHS False Claims Act Working Group: Concentrate on Medicare Cost Suspensions

In a July 2, 2025, press launch, the U.S. Division of Justice (DOJ) introduced a brand new “DOJ-HHS False Claims Act Working Group” (the Working Group) and recognized a number of precedence enforcement efforts for the Working Group to handle well being care fraud and abuse. (The press launch additionally encourages the submission of ideas and complaints on waste and mismanagement.) Membership within the Working Group will embrace management from the U.S. Division of Well being and Human Providers (HHS) Workplace of Basic Counsel, the Facilities for Medicare & Medicaid Providers (CMS) Middle for Program Integrity, the Workplace of Counsel to the HHS Workplace of Inspector Basic (OIG), and DOJ’s Civil Division. 

As pertinent to this dialogue, DOJ’s press launch famous that as a part of its efforts to handle circumstances, the Working Group “shall talk about concerns bearing on whether or not HHS ought to implement a fee suspension pursuant to 42 C. F.R. § 405.370….” Though CMS has a number of bases upon which it will possibly impose fee suspensions, together with “dependable data that an overpayment exists,” 42 C.F.R. § 405.371, its quickest and most dangerous device within the suspension arsenal is a suspension primarily based on a “credible allegation of fraud.” 

What’s a Medicare Cost Suspension?

As outlined by 42 C.F.R. § 405.370, a Medicare fee suspension is the withholding of fee by a Medicare contractor from a supplier or provider of an accepted Medicare fee quantity earlier than a dedication of the quantity of the overpayment exists, or till the decision of an investigation of a reputable allegation of fraud. A fee suspension could also be utilized towards half or all of Medicare funds. 42 C.F.R. § 405.371(a). Discover to the supplier or provider could also be waived if hurt to the belief fund is suspected. 42 C.F.R. § 405.372. There is no such thing as a administrative course of to enchantment a suspension. 42 C.F.R. § 405.374.

What’s a Credible Allegation of Fraud?

One foundation for a Medicare fee suspension is when there’s a “credible allegation of fraud.”  This foundation for a fee suspension was added by the Inexpensive Care Act and codified at 42 U.S.C. § 1395y(o) for Medicare, with a Medicaid corollary at 42 U.S.C. § 1396b(i)(2). The time period shouldn’t be outlined within the statute, though the statute does say “a fraud hotline tip (as outlined by the Secretary) with out additional proof shall not be handled as ample proof for a reputable allegation of fraud.” 42 U.S.C. § 1395y(o)(4).

In implementing laws at 42 C.F.R. § 405.370, CMS defines a “credible allegation of fraud” as an allegation of fraud from any supply, together with however not restricted to the next: (1) fraud hotline ideas [defined as a complaint or other communications submitted through a fraud reporting phone number or a website intended for the same purpose, e.g., the HHS-OIG Hotline] verified by additional proof; (2) claims information mining; and (3) patterns recognized by means of supplier audits, False Claims Act (FCA) circumstances, and investigations.

By statute, HHS shall seek the advice of with HHS-OIG in figuring out whether or not there’s a credible allegation of fraud towards a supplier of companies or provider. 42 U.S.C. § 1395y(o)(2). 

In a provision of its Program Integrity Guide, CMS notes that fraud suspensions may additionally be used for “causes not usually seen throughout the context of false claims,” e.g., a dedication by the High quality Enchancment Group (QIO) that diagnosis-related teams have been upcoded, suspected violations of the doctor self-referral ban, and credible allegations of kickbacks underlying medically mandatory objects or companies. CMS Program Integrity Guide, Chap. 8, Sec. 8.3.1.1. 

Comparable provisions apply to state Medicaid packages (though Medicaid shouldn’t be addressed in 42 U.S.C. § 405.370, the availability cited within the press launch as the idea for Working Group’s consideration). The State Medicaid company should droop all Medicaid funds to a supplier after the company determines there’s a credible allegation of fraud for which an investigation is pending underneath the Medicaid program towards a person or entity until the company has good trigger to not droop funds or to droop fee solely partly. 42 C.F.R. § 455.23; see additionally 42 C.F.R. § 447.90 (Federal Monetary Participation funding).

How Lengthy Do Medicare Cost Suspensions Final?

Medicare fee suspensions are anticipated to final not than 18 months, though the interval could also be prolonged if the case has been referred to, and is being thought of by, HHS-OIG, or if DOJ submits a written request to proceed the suspension. CMS should consider whether or not there’s good trigger to not proceed a suspension each 180 days after the initiation of a suspension. See 42 C.F.R. § 405.372(d).

Can the Imposition of a Medicare Cost Suspension be Appealed?

As famous above, there isn’t any administrative course of to enchantment a suspension. 42 C.F.R. § 405.374. Suppliers and suppliers can submit a rebuttal, and CMS will think about proof of “good trigger” that will justify a discontinuation of the suspension. The shortage of a proper enchantment course of has resulted in a number of court docket actions in search of short-term restraining orders or different injunctive reduction. These are most frequently unsuccessful resulting from jurisdictional challenges, apart from some chapter court docket actions. 

How Ought to Suppliers or Suppliers Reply if Notified of a Medicare Cost Suspension? 

• Act instantly to determine choices: the method for rebuttal strikes in a short time. Rebuttal is unlikely to achieve success, however the supplier or provider ought to get a response on document. 
• CMS has some latitude to droop funds partly – there could also be a approach to restrict the suspension to a sure stratification and even share of funds, particularly if there’s a beneficiary entry situation. See CMS Program Integrity Guide, Chap. 8, Sec. 8.3.1.1 for a dialogue of “good trigger” exceptions. 
• Determine the considerations behind the “credible allegation” and craft a response, e.g., analyze affected person charts requested for overview post-suspension and be capable of defend them. 
• There could also be some latitude for emergency releases of funds upon a exhibiting of maximum want, e.g., assembly payroll. 

Conclusion

Because the Trump Administration ramps up its enforcement efforts towards fraud, waste, and abuse, suppliers and suppliers are actually expressly on discover to count on that governmental enforcers will place elevated reliance on fee suspensions, almost definitely  these primarily based on credible allegations of fraud. Suspensions in some circumstances could also be imposed with out advance discover, and there’s no pathway for enchantment, though a possibility for rebuttal is obtainable. Suppliers and suppliers topic to such suspensions could face months with out Medicare funds, however in acceptable conditions might be able to work with authorities enforcers to quicken the method and/or restrict the scope. Suppliers and suppliers dealing with fee suspensions must be ready to behave rapidly to reply, and recommendation of skilled counsel is really helpful. 

At Foley, we’re actively advising suppliers throughout the nation on how to reply to this evolving authorized panorama. From coverage growth and compliance technique to enforcement protection, we’re right here to assist. Please attain out to the authors, your Foley relationship companion, or to our Well being Care Observe Group and Well being Care & Life Sciences Sector with any questions.

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