Client Advisory: Is this Notice and Comment? Provision Buried in Massive 2020 Physician Fee Schedule Rule Gives CMS New Ability to Revoke or Deny Medicare Enrollment Following State Board Disciplinary Actions


Effective on January 1, 2020, the 2020 Revisions to Payment Policies Under the Physician Fee Schedule provides numerous updates from the Centers for Medicare and Medicaid Services (“CMS”) concerning Medicare payment rates, documentation and coding, and other requirements. While seemingly unrelated to the rest of the rule and buried within nearly 1,000 pages of text, CMS finalized a new provision that expands CMS’s ability to revoke or deny a health care professional’s Medicare enrollment if that professional has been sanctioned by a state oversight board (such as a Board of Medicine) in a matter involving patient harm. This client advisory will explain and describe ramifications of this expansion of authority.

Denial and Revocation Authority

The new provision states that CMS may revoke or deny enrollment of a Medicare-participating provider if he or she has been subject to a prior action from a state Board of Medicine (or other state oversight board, federal or state health care program, Independent Review Organization, or an equivalent governmental body) based on “underlying facts reflecting improper physician or other eligible professional conduct that led to patient harm.”

When determining if exercising this authority is appropriate, CMS states it will consider:

  • The nature of the patient harm;
  • The nature of the physician’s or other eligible professional’s conduct; and
  • The number and type of sanctions or disciplinary actions that have been imposed against the physician or other eligible professional;[1]
  • If applicable, the nature of the IRO determination; and
  • The number of patients impacted by the conduct and the degree of harm to, or impact upon, those patients.

The final rule restricts CMS from considering actions and orders that solely require participation in rehabilitation or mental/behavioral health programs or that require abstinence from drugs or alcohol and random drug testing. This restriction only applies to actions where treatment, testing, or abstinence are the only sanctions. If any actions or orders include additional sanctions (such as a reprimand, monetary penalty, etc.) CMS may still exercise this new revocation or denial authority. In this provision of the final rule, CMS’s stated goal is to improve patient care by protecting Medicare beneficiaries from harm caused by problematic professionals and practices.

Concerns Raised by Stakeholders

Several stakeholders commented on the Proposed Rule that the appropriate body to regulate and discipline physicians and other professionals for this conduct were the applicable state licensure and regulatory boards. These commenters stated that if a professional’s ability to practice needs to be restricted, state boards are best positioned to make that determination. Stakeholders felt that this rule was an improper encroachment into state regulatory board purview and authority. In response, CMS acknowledged that it typically gives great deference to state oversight boards, but underscored its desire for additional discretion to revoke or deny enrollment on top of state licensure actions.

Many commenters focused on the vagueness of the rule and how it could unfairly punish younger professionals and/or professionals with minor violations. Commenters were particularly concerned that this rule could cause a shortage of services in remote and underserved areas if a Medicare provider in such an area had their enrollment revoked under this authority. In response, CMS stated that it believes that the requirement of “patient harm” protects against the over-exercise of these provisions. CMS stated that they only intend to invoke this authority when the patient harm is “significant in nature.” It remains to be seen which actions involving patient harm CMS will consider “significant” and if CMS is correct in its stated belief that only a small number of providers will be affected by this authority.

Additionally, commenters focused on concerns that the final rule could punish more physicians and professionals than intended, that it did not contain sufficient limiting language to clarify that revocation and denial authority should only be exercised in serious cases, and that the final rule did not contain specific definitions or standards for many important provisions of the rule. CMS declined to include a limiting statement in the regulatory text, instead assuring providers in its responses to comments on the proposed rule that this revocation authority would only be exercised: “(1)[w]ith great care and circumspection; (2) in a non-arbitrary manner; (3) infrequently; and (4) only when the conduct and resulting patient harm were significant in nature.” If this is the case, many providers who fear that relatively minor actions could trigger revocation authority will likely find that these assurances and explanations from CMS fall short.


Through the recently effective Physician Fee Schedule rule, CMS has dramatically expanded its authority to revoke and deny enrollment in the Medicare program to providers and suppliers subject to disciplinary actions by state licensing boards and other governmental bodies. Coupled with the recently finalized “affiliation” disclosure rule,[2] this final rule dramatically changes the risk analysis for enrolled medical professionals who are currently at risk of receiving a state oversight board sanction against their license. Medical professionals and their counsel need to be mindful of these new authorities when seeking to resolve state licensure board disciplinary matters. Any medical professionals potentially subject to discipline should seek legal counsel to ensure that the resolution of the state oversight process mitigates their risk under this revocation authority as much as possible. Overzealous exercise of CMS’s new authority will likely result in judicial review of the otherwise vague new rule.

Should you, your practice, or your organization have any questions or concerns about this final rule, or if you need legal advice concerning the ramifications of a state oversight board licensure action, please contact Peter Mellette, Harrison Gibbs, Elizabeth Dahl Coleman, or Scott Daisley at Mellette PC.

This client advisory is for general educational purposes only. It is not intended to provide legal advice specific to any situation you may have. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice.

[1] Such actions include, but are not limited to: (1) license restriction pertaining to certain procedures or practices; (2) required compliance appearances before state oversight board members; (3) license restriction regarding the ability to treat certain types of patients; (4) administrative or monetary penalties; or (5) formal reprimands.

[2] See the Client Advisory concerning the new “affiliation” disclosure rule at:

Categories: Client Advisory