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march 2017

Common Pitfalls in Medicare Contracting

Participation in Medicare is a vital part of many family physicians’ practices. Unfortunately, well-meaning family physicians can unintentionally run afoul of Medicare’s byzantine rules governing enrollment and reimbursement. A simple mistake, for example, can have drastic effects on a medical practice, including recoupment of past payments and revocation of billing privileges. This article highlights a few common pitfalls family physicians may face in Medicare contracting, and several options available to help protect their practices.  


Changes in Enrollment Information Must Be Reported

To receive payment for providing services to Medicare beneficiaries, physicians need to enroll with the Medicare program. [1] As part of this enrollment, both individual physicians and group practices must provide the Centers for Medicare and Medicaid Services (CMS) with basic information about the provider’s practice. [2] While these initial enrollment requirements may seem obvious, less obvious is the fact that providers have a continuing obligation to notify the Medicare program of any changes in their enrollment information. Innocent failures to report changes in a timely way can have severe consequences on a provider’s practice, including revocation of Medicare billing privileges.[3] 


A provider must report to Medicare within 30 days if: 1. There has been any change in the practice’s ownership; 2. There has been any adverse legal action against the physician or group; and 3. If there has been any change in the practice location.[4] If any other information contained in a provider’s initial enrollment application changes, it must be reported within 90 days.[5] 


Physicians and group practices must scrupulously keep Medicare informed of any changes in their enrollment information.


Initial Payments Can Be Clawed Back (or “Recouped”) by Medicare

Another hazard of Medicare contracting is recoupment for alleged overpayments. Providers are responsible for accurately submitting claims to Medicare. Often, Medicare will initially reimburse a provider only to allege later (sometimes years after the fact) the reimbursement was made in error. At that point, Medicare will demand that the provider repay the alleged overpayment. According to Medicare, the most common reasons for alleged overpayments are insufficient documentation submitted with the initial claim, provision of services deemed not medically necessary and “administrative and processing errors.”


When Medicare determines an overpayment has occurred, it has the legal authority to recoup payments from the provider, i.e., deduct the amount allegedly overpaid from future payments to the provider.[6] In this case, a provider may be liable not only for the amount of the alleged overpayment, but for interest as well.[7] The recoupment process can wreak havoc on a practice, allowing Medicare to retroactively claw back payments from years earlier.


Given the risks of recoupment, practice groups and physicians should consider working with a reputable billing company or individual to ensure accurate billing and collections services. A trustworthy billing company or individual can help eliminate administrative errors and ensure compliance with ever-changing coding standards.


Medicare Appeals Process

Fortunately, a provider has options when accused of failing to update enrollment information or being overpaid. If a provider disagrees with Medicare’s determination, he/she can file an administrative appeal, which is often a provider’s only practical recourse to challenge Medicare’s claim.


The Medicare appeals process has five separate levels of review: 1. Redetermination by the Medicare contractor; 2. Reconsideration by a Qualified Independent Contractor (a private contractor who did not take part in the initial decision); 3. A hearing before an Administrative Law Judge; 4. A review by the Medicare Appeals Council; and 5. Judicial review in the federal court system. Each stage of the appeals process offers physicians an opportunity to argue why the initial determination was incorrectly decided and why it should be overturned.


Unsurprisingly, the appeals process is governed by rules that can seem complex. Failure to adhere assiduously to them can be fatal to an appeal. Because of the complexities in the process and their attendant risks, providers should not enter the thicket of administrative appeals without the assistance of counsel knowledgeable in Medicare appeals. Moreover, to stop automatic recoupment, a provider may have to rebut an initial determination in as little as fifteen days from the date of notice. Upon receiving a notification that Medicare is taking adverse action, we recommend that a provider should contact health care counsel as soon as possible.



Proactively identifying potential pitfalls in Medicare contracting can help providers avoid administrative headaches and financial losses. As always, this article does not reflect a complete list of legal issues that may arise, nor does it constitute legal advice. If you have questions about compliance with the laws, we recommend that you consult an attorney who specializes in healthcare law.


About the Author

Scott Kessenick practices in all areas of Kessenick Gamma & Free, LLP specialization, a San Francisco firm providing legal representation to physicians, physician groups, and other health care professionals. He may be reached at


[1] 42 C.F.R. § 424.505.

[2] See Medicare Enrollment Application, Form CMS-855B; Medicare Enrollment Application, Form CMS-855I .

[3] 42 C.F.R. § 424.535(a)(9) (permitting CMS to revoke Medicare billing privileges and any corresponding provider agreement for failure to comply with reporting requirements in 42 C.F.R. § 424.516(d)(1)(ii) and (iii)).

[4] Id. § 424.516(d)(1).

[5] Id. § 424.516(d)(2).  

[6] Id. § 1395ddd(f)(2).

[7] Id. § 1395ddd(f)(2)(B).




The articles provided in Practice Management News are general. They do not constitute legal, practice management or coding advice in any particular factual situation or create at attorney-client relationship. Consult your attorney or other professional for advice in your particular situation.