PART 420—PROGRAM INTEGRITY: MEDICARE Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). Source: 44 FR 31142, May 30, 1979, unless otherwise noted. Subpart A—General Provisions § 420.1 Scope and purpose. This part sets forth requirements for Medicare providers, intermediaries, and carriers to disclose ownership and control information. It also deals with access to records pertaining to certain contracts entered into by Medicare providers. These rules are aimed at protecting the integrity of the Medicare program. The statutory basis for these requirements is explained in each of the other subparts. [51 FR 34787, Sept. 30, 1986] § 420.3 Other related regulations. (a) Appeals procedures. (b) Exclusion, termination, or suspension. [51 FR 34787, Sept. 30, 1986, as amended at 52 FR 22454, June 12, 1987] Subpart B [Reserved] Subpart C—Disclosure of Ownership and Control Information § 420.200 Purpose. This subpart implements sections 1124, 1124A, 1126, and 1861(v)(1)(i) of the Social Security Act. It sets forth requirements for providers, Part B suppliers, intermediaries, and carriers to disclose ownership and control information and the identities of managing employees. It also sets forth requirements for disclosure of information about a provider's or Part B supplier's owners, those with a controlling interest, or managing employees convicted of criminal offenses against Medicare, Medicaid, or the title V (Maternal and Child Health Services) and title XX (Social Services) programs. [57 FR 27306, June 18, 1992, as amended at 60 FR 50442, Sept. 29, 1995] § 420.201 Definitions. As used in this subpart unless the context indicates otherwise: Agent Disclosing entity (1) A provider of services, an independent clinical laboratory, a renal disease facility, a rural health clinic, a Federally qualified health center, or a health maintenance organization (as defined in section 1301(a) of the Public Health Service Act); (2) A carrier or other agency or organization that is acting for one or more providers of services for purposes of part A and part B of Medicare; and (3) A part B supplier, as defined in § 400.202 of this chapter. Group of practitioners Indirect ownership interest Managing employee Other disclosing entity (1) An entity (other than an individual practitioner or group of practitioners) that furnishes, or arranges for the furnishing of, items or services for which payment may be claimed by the entity under any plan or program established under title V of the Social Security Act or under an approved State Medicaid plan; (2) An entity (other than an individual practitioner or group of practitioners) that furnishes, or arranges for the furnishing of, health-related services for which payment may be claimed by the entity under an approved State plan and services program under title XX of the Act; or (3) A Medicaid fiscal agent. Ownership interest Person with an ownership or control interest (1) Has an ownership interest totaling 5 percent or more in a disclosing entity; (2) Has an indirect ownership interest equal to 5 percent or more in a disclosing entity; (3) Has a combination of direct and indirect ownership interests equal to 5 percent or more in a disclosing entity; (4) Owns an interest of 5 percent or more in any mortgage, deed of trust, note, or other obligation secured by the disclosing entity if that interest equals at least 5 percent of the value of the property or assets of the disclosing entity; (5) Is an officer or director of a disclosing entity that is organized as a corporation; or (6) Is a partner in a disclosing entity that is organized as a partnership. Significant business transaction Subcontractor (1) An individual, agency, or organization to which a disclosing entity has contracted or delegated some of its management functions or responsibilities of providing medical care to its patients; or (2) An individual, agency, or organization with which an intermediary or carrier has entered into a contract, agreement, purchase order or lease (or leases of real property) to obtain space, supplies, equipment, or services provided under the Medicare agreement. Wholly owned supplier [44 FR 41642, July 17, 1979, as amended at 57 FR 24982, June 12, 1992; 57 FR 27306, June 18, 1992; 57 FR 35760, Aug. 11, 1992; 71 FR 20775, Apr. 21, 2006] § 420.202 Determination of ownership or control percentages. (a) Indirect ownership interest. (b) Person with an ownership or control interest. § 420.203 Disclosure of hiring of intermediary's former employees. A provider must notify the Secretary promptly if it, or its home office (in the case of a chain organization), employs or obtains the services of an individual who, at any time during the year preceding such employment, was employed in a managerial, accounting, auditing, or similar capacity by an agency or organization which currently serves, or at any time during the preceding year, served as a Medicare fiscal intermediary or carrier for the provider. Similar capacity § 420.204 Principals convicted of a program-related crime. (a) Information required. (1) Has an ownership or control interest in the provider or part B supplier; (2) Is an agent or managing employee of the provider or part B supplier; or (3) Is a person identified in paragraph (a)(1) or (a)(2) of this section and has been convicted of, or was an owner of, had a controlling interest in, or was a managing employee of a corporation that has been convicted of a criminal offense, subjected to any civil monetary penalty, or excluded from the programs for any activities related to involvement in the Medicare, Medicaid, title V or title XX social services program, since the inception of those programs. (b) Refusal to enter into or renew agreement or to issue or reissue billing numbers. (c) Notification of Inspector General. [57 FR 27306, June 18, 1992] § 420.205 Disclosure by providers and part B suppliers of business transaction information. A provider or part B supplier must submit to CMS, within 35 days after the date of a written request, full and complete information on— (a) The ownership of a subcontractor with which the provider or part B supplier has had, during the previous 12 months, business transactions in an aggregate amount in excess of $25,000; (b) Any significant business transactions between the provider or part B supplier and any wholly owned supplier or between the provider or part B supplier and any subcontractor, during the 5 year period ending on the date of the request; (c) The names of managing employees of the subcontractors; (d) The identity of any other entities to which payment may be made by Medicare, which a person with an ownership or control interest or a managing employee in the subcontractor has or has had an ownership or control interest in the 3-year period preceding disclosure; and (e) Any penalties, assessments, or exclusions under sections 1128, 1128A and 1128B of the Act incurred by the subcontractor, its owners, managing employees or those with a controlling interest in the subcontract. [57 FR 27306, June 18, 1992] § 420.206 Disclosure of persons having ownership, financial, or control interest. (a) Information that must be disclosed. (1) The name and address of each person with an ownership or control interest in the entity or in any subcontractor in which the entity has direct or indirect ownership interest totaling 5 percent or more. In the case of a part B supplier that is a joint venture, ownership of 5 percent or more of any company participating in the joint venture should be reported. Any physician who has been issued a Unique Physician Identification Number by the Medicare program must provide this number. (2) Whether any of the persons named, in compliance with paragraph (a)(1) of this section, is related to another as spouse, parent, child, or sibling. (3) The name of any other disclosing entity in which any person with an ownership or control interest, or who is a managing employee in the reporting disclosing entity, has, or has had in the previous three-year period, an ownership or control interest or position as managing employee, and the nature of the relationship with the other disclosing entity. If any of these other disclosing entities has been convicted of a criminal offense or received a civil monetary or other administrative sanction related to participation in Medicare, Medicaid, title V (Maternal and Child Health) or title XX (Social Services) programs, such as penalties assessments and exclusions under sections 1128, 1128A or 1128B of the Act, the disclosing entity must also provide that information. (b) Time and manner of disclosure. (2) Any disclosing entity that is not subject to periodic survey and certification must supply the information specified in paragraph (a) of this section to CMS before entering into a contract or agreement with Medicare or before being issued or reissued a billing number as a part B supplier. (3) A disclosing entity must furnish updated information to CMS at intervals between recertification, or re-enrollment, or contract renewals, within 35 days of a written request. In the case of a part B supplier, the supplier must report also within 35 days, on its own initiative, any changes in the information it previously supplied. (c) Consequences of failure to disclose. (2) CMS terminates any existing agreement or contract with, or withdraws a determination of eligibility for or (in the case of a part B supplier) revokes the billing number of, any disclosing entity that fails to comply with paragraph (b) of this section. (d) Public disclosure. [44 FR 41642, July 17, 1979, as amended at 57 FR 27306, June 18, 1992] Subpart D—Access to Books, Documents, and Records of Subcontractors Source: 47 FR 58267, Dec. 30, 1982, unless otherwise noted. § 420.300 Basis, purpose, and scope. This subpart implements section 1861(v)(1)(I) of the Act, which requires, for Medicare payment under certain provider contracts, access by the Secretary, upon written request, and the Comptroller General, and their duly authorized representatives, to certain contracts for services and to books, documents, and records necessary to verify the costs of the services. The contracts affected are those between providers and their subcontractors, and between the subcontractors and organizations related to the subcontractor by control or common ownership. It also specifies the criteria by which HHS will determine whether to request access to books, documents, and records. § 420.301 Definitions. For purposes of this subpart— Books, documents, and records Common ownership Contract for services Control Provider Related to the subcontractor Subcontractor [47 FR 58267, Dec. 30, 1982, as amended at 49 FR 13703, Apr. 6, 1984; 51 FR 34833, Sept. 30, 1986] § 420.302 Requirement for access clause in contracts. (a) Applicability. (1) Between a provider and a subcontractor and, where subject to section 1861(v)(l)(I)(ii) of the Act, between a subcontractor and an organization related to the subcontractor; (2) Entered into or renewed after December 5, 1980; and (3) For services the cost or value of which is $10,000 or more over a 12-month period, including contracts for both goods and services in which the service component is worth $10,000 or more over a 12-month period. (b) Requirement. (c) Prohibition against Medicare reimbursement. [47 FR 58267, Dec. 30, 1982, as amended at 49 FR 13703, Apr. 6, 1984] § 420.303 HHS criteria for requesting books, documents, and records. HHS will generally request books, documents, and records from a subcontractor only if one of the following situations exists and the question cannot satisfactorily and efficiently be resolved without access to the books, documents, and records: (a) HHS has reason to believe that the costs claimed for services of the subcontractor are excessive or inappropriate. (b) There is insufficient information to judge the appropriateness of the costs. (c) There is a written accusation with suitable evidence against the provider or subcontractor of kickbacks, bribes, rebates, or other illegal activities. (d) There is evidence of a possible nondisclosure of the existence of a related organization. § 420.304 Procedures for obtaining access to books, documents, and records. (a) Contents of the request. (1) Reasonable identification of the books, documents, and records to which access is being requested. (2) Identification of the contract or subcontract in which costs are being questioned as excessive or inappropriate. (3) The reason that the appropriateness of the costs or value of the services of the subcontractor in question cannot be adequately or efficiently determined without access to the subcontractor's books and records. (4) The authority in the statute and regulations for the access requested. (5) To the extent possible, the identification of those individuals who will be visiting the subcontractor to obtain access to the books, documents, and records. (6) The time and date of the scheduled visit. (7) The name of the duly authorized representative of HHS to contact if there are any questions. (b) Subcontractor response to a request for access to books, documents, and records. (2) If the subcontractor believes the request is inadequate because it does not fully meet one or more of the required elements in paragraph (a) of this section, the subcontractor must advise the requesting organization of the additional information needed. (i) The subcontractor must notify the requesting organization within 20 days of the date of the request that it was improperly completed. (ii) The subcontractor must make the books, documents, and records available within 20 days after the date of the requesting organization's response. (3) If the subcontractor believes, for good cause, that the requested books, documents, and records cannot be made available as requested with the 30-day period under paragraph (b)(1) of this section, the subcontractor may request an extension of time within which to comply with the request from the requesting organization. The requesting organization may, at its discretion, grant the request for an extension, in whole or in part, for good cause shown. (4) The subcontractor must make the books, documents, and records available during its regular business hours for inspection, audit, and reproduction. (5) If HHS asks the subcontractor to reproduce books, documents, and records, HHS will pay the reasonable cost of reproduction. However, if the subcontractor reproduces books, documents, and records as a means of making them available, the subcontractor must bear the cost of the reproduction and no Medicare reimbursement will be made for that purpose. (6) HHS reserves the right to examine the originals of any requested contracts, books, documents, and records, if they exist. (c) Refusal by subcontractor to furnish access to records. Subpart E—Rewards for Information Relating to Medicare Fraud and Abuse, and Establishment of a Program to Collect Suggestions for Improving Medicare Program Efficiency and to Reward Suggesters for Monetary Savings Source: 63 FR 31128, June 8, 1998, unless otherwise noted. § 420.400 Basis and scope. This subpart implements sections 203(b) and (c) of Public Law 104-191, which require the establishment of programs to encourage individuals to report suspected cases of fraud and abuse and submit suggestions on methods to improve the efficiency of the Medicare program. Sections 203(b) and (c) of Public Law 104-191 also provide the authority for CMS to reward individuals for reporting fraud and abuse and for submitting suggestions that could improve the efficiency of the Medicare program. This subpart sets forth procedures for rewarding individuals. [64 FR 66401, Nov. 26, 1999] § 420.405 Rewards for information relating to Medicare fraud and abuse. (a) General rule. (b) Information eligible for reward. (2) CMS does not give a reward for information relating to an individual or entity that, at the time the information is provided, is already the subject of a review or investigation by CMS or its contractors, or the OIG, the Department of Justice, the Federal Bureau of Investigation, or any other Federal, State, or local law enforcement agency. (c) Persons eligible to receive a reward General rule. (2) Excluded individuals. (ii) Any other Federal or State employee or contractor or an HHS grantee is not eligible for a reward under this section if the information submitted came to his or her knowledge in the course of his or her official duties. (iii) An individual who illegally obtained the information he or she submitted is excluded from receiving a reward under this section. (iv) An individual who participated in the sanctionable offense with respect to which payment would be made is excluded from receiving a reward under this section. (d) Notification of eligibility General rule. (2) Special circumstances. (ii) If the individual has become incapacitated or has died, an executor, administrator, or other legal representative may claim the reward on behalf of the individual or the individual's estate. The claimant must submit certified copies of the letters testamentary, letters of administration, or other similar evidence to show his or her authority to claim the reward. The claim must be filed within 1 year from the date on which CMS first gave or attempted to give notice of the reward. (e) Amount and payment of reward. (2) The amount of a reward represents what CMS considers to be adequate compensation in the particular case, not to exceed 10 percent of the overpayments recovered in the case or $1,000, whichever is less. (3) If more than one person is eligible to receive a reward in a particular case, CMS allocates the total reward amount (not to exceed 10 percent of the overpayments recovered in that case or $1,000, whichever is less) among the participants. (4) CMS bases rewards only on recovered Medicare payments and not on amounts collected as penalties or fines. (5) CMS makes payments as promptly as the circumstances of the case permit, but not until it has collected all Medicare overpayments, fines, and penalties. (6) No person may make any offer or promise or otherwise bind CMS or HHS with respect to the payment of any reward under this section or the amount of the reward. (f) Submission of information. (2) A participant interested in receiving a reward must provide his or her name, address, telephone number, and any other requested identifying information so that he or she may be contacted, if necessary, for additional information and, when applicable, for the payment of a reward upon resolution of the case. (g) Confidentiality. (h) Finding of ineligibility after reward is accepted. § 420.410 Establishment of a program to collect suggestions for improving Medicare program efficiency and to reward suggesters for monetary savings. (a) Definitions. Payment Savings Suggester Suggestion Suggestion program (b) General rule. (c) Eligibility. (d) Exclusions. (e) Requirements for submitting suggestions (i) A description of an existing problem or need; (ii) A suggested method for solving the problem or filling the need; and (iii) If known, an estimate of the savings potential that could result from implementing the suggestion. (2) Suggestions must be mailed to: Centers for Medicare & Medicaid Services Suggestion Program, 7500 Security Blvd., Baltimore, Maryland 21244-1850. (3) Any suggesters interested in receiving a reward must provide CMS with the following information: An individual suggester must provide his or her name, a group of suggesters must provide the names of all the group members, and a legal entity must provide its name and the name of its representative. All suggesters must provide an address, telephone number, and any other identifying information that CMS needs to contact the suggester for additional information and, where applicable, to mail the reward. (f) Evaluation process Relevant factors. (i) Originality of suggestion. (ii) An estimate of potential monetary savings to the Medicare program. (iii) The extent to which Medicare program efficiency would be improved if CMS adopts the suggestion. (iv) Accuracy of the information reflected in the suggestion. (v) Feasibility of implementation. (vi) Nature and complexity of the suggestion. (vii) Any other factors that appear to be relevant. (2) Evaluation time limit. (g) Basis for reward payment General rule. (i) The actual first-year net savings to the Medicare program, or (ii) The average annual net savings to the Medicare program expected to be realized over a period of not more than 3 years if— (A) An improvement is expected to yield monetary savings for more than 1 year and implementation involves substantial costs; or (B) Monetary savings are negligible in the first year but are expected to substantially increase in subsequent years. (2) Reward payment amount. (i) Net savings from $1,000 to $10,000—10 percent of the savings, with a minimum award amount of $100; (ii) Net savings of $10,001 to $100,000—$1,000 for the first $10,000 of savings, plus 3 percent of the net savings over $10,000; (iii) Net savings of more than $100,000—$3,700 for the first $100,000 of savings, plus 0.5 percent of savings over $100,000, with a maximum award amount of $25,000. (h) Adoption of suggestion and issuance of reward payment Adoption. (2) Issuance of reward payment. (i) Group suggestions. (j) Change in name or address. (k) Incapacitated or deceased suggester. (l) Maintenance of records (2) CMS does not disclose information submitted under the suggestion program, except as required by law. [64 FR 66401, Nov. 26, 1999]