Montana Administrative Register Notice 37-561 No. 20   10/27/2011    
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In the matter of the amendment of ARM 37.5.304, 37.85.512, and 37.85.513 pertaining to Medicaid credible allegation of fraud







TO:  All Concerned Persons


            1.  On November 16, 2011, at 10:00 a.m., the Department of Public Health and Human Services will hold a public hearing in Room 207, 111 North Sanders, Helena, Montana, to consider the proposed amendment of the above-stated rules.


2.  The Department of Public Health and Human Services will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice.  If you require an accommodation, contact Department of Public Health and Human Services no later than 5:00 p.m. on November 9, 2011, to advise us of the nature of the accommodation that you need.  Please contact Kenneth Mordan, Department of Public Health and Human Services, Office of Legal Affairs, P.O. Box 4210, Helena, Montana, 59604-4210; telephone (406) 444-4094; fax (406) 444-9744; or e-mail dphhslegal@mt.gov.


3.  The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:


            37.5.304  DEFINITIONS  For purposes of this subchapter, unless the context requires otherwise, the following definitions apply:

            (1) through (1)(p)(ii) remain the same.

            (iii)  order corrective action to be taken at a swimming pool, spa, or other water feature.

            (2) through (5) remain the same.

            (6)  "Credible allegation of fraud" may be an allegation, which has been verified by the State, from any source.  Allegations are considered to be credible when they have indicia of reliability and the state Medicaid agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a case-by-case basis.  Allegations may include, but are not limited to, the following:

            (a)  fraud hotline complaints;

            (b)  claims data mining; or

            (c)  patterns identified through provider audits, civil false claims cases, and law enforcement investigations.

            (6) through (12) remain the same but are renumbered (7) through (13).


AUTH:  2-4-201, 41-3-208, 41-3-1142, 50-53-103, 52-2-111, 52-2-112, 52-2-403, 52-2-622, 52-2-704, 52-3-304, 52-3-804, 53-2-201, 53-2-606, 53-2-803, 53-3-102, 53-3-107, 53-4-111, 53-4-212, 53-4-403, 53-4-503, 53-5-304, 53-5-504, 53-6-111, 53-6-113, 53-7-102, 53-20-305, MCA

IMP:     2-4-201, 41-3-202, 41-3-208, 41-3-1103, 50-53-101, 50-53-102, 50-53-103, 50-53-104, 50-53-106, 50-53-107, 52-2-603, 52-2-704, 52-2-726, 53-2-201, 53-2-306, 53-2-606, 53-2-801, 53-3-107, 53-4-112, 53-4-404, 53-4-503, 53-4-513, 53-5-304, 53-6-101, 53-6-107, 53-6-111, 53-6-113, 53-20-305, MCA


            37.85.512  NOTICE OF ADVERSE ACTION  (1)  As provided in this rule, the department must notify a provider of any adverse action it will take on a determination when the department has determined that the provider has engaged in fraud, improper billing, waste, or abuse, or has received payment to which the provider is not entitled, or where the department has verified a credible allegation of fraud, as that term is defined at ARM 37.5.304.  The notification notice must include  address all of the following:

(a)  a description of the fraud, allegation, improper billing, waste, abuse, or overpayments;

            (b)  the dollar value of any overpayment; and

            (c)  the adverse action to be taken or sanction to be imposed by the department;

            (d)  explanation of any actions required of the provider; and

            (e)  the provider's right to submit written evidence for consideration by the department, an administrative review, and a fair hearing.

            (2)  The department is not required to notify a provider pursuant to (1) until after the department has determined that fraud, a credible allegation of fraud, improper billing, waste, abuse, or an overpayment has occurred, the dollar amount of any overpayment and that a particular adverse action will be taken by the department against the provider, such as recovery of an overpayment or imposition of a sanction.  The department is not required to notify the provider when the department merely suspects or has information which suggests that fraud, abuse, or an overpayment has occurred or when the department has not determined to take a particular adverse action in response to the fraud, abuse, or overpayment.

            (3)  Subject to the provisions of (4), the department must notify the provider as required in this rule within 45 days after the department has determined that fraud, abuse or an overpayment has occurred, the dollar amount of any overpayment and the adverse action that will be taken against the provider.  Subject to the provisions of (4) and (5), and excepting suspensions of payment under ARM 37.85.513(3), the department must notify the provider as required in this rule within 45 days after the department has determined that fraud, improper billing, waste, abuse, or an overpayment has occurred.  The department's failure to notify a provider as required by this rule is not a defense to recovery of the overpayment or imposition of the sanction, but the department may be required to provide a new notice in compliance with this rule.

            (4) and (5) remain the same.


AUTH:  53-2-201, 53-6-111, 53-6-113, MCA

IMP:  53-2-201, 53-6-101, 53-6-111, 53-6-113, MCA


            37.85.513  SUSPENSION OR WITHHOLDING OF PAYMENTS PENDING FINAL DETERMINATION  (1)  Where the department has notified a provider of a violation, sanction, or an overpayment pursuant to ARM 37.85.512, the department may withhold payments on pending and subsequently received claims in an amount reasonably calculated to approximate the amounts in question or may suspend all payments pending a final determination the outcome of a departmental or law enforcement investigation.

            (2)  Where the department intends to withhold or suspend payments not regarding a credible allegation of fraud, as that term is defined at ARM 37.5.304, it shall notify the provider in writing at least ten days prior to commencement of withholding and shall include a statement of the provider's right to request an informal reconsideration of such decision as provided in ARM 37.5.305.  This rule does not require that an informal reconsideration or any hearing be conducted prior to the withholding or suspension of payments.

            (3)  Where the department suspends payments based on a credible allegation of fraud in accordance with 42 CFR 455.23, the department may suspend payments without first notifying the provider.

(a)  The department must send notice of its suspension of payments within the following timeframes:

(i)  five days of taking such action unless requested in writing by a law enforcement agency to temporarily withhold such notice;

(ii)  thirty days if requested by law enforcement in writing to delay sending such notice, which request for delay may be renewed in writing up to twice and in no event exceed 90 days.

            (b)  In addition to the noticing requirements of ARM 37.85.512(1), the notice must state that the suspension is in accordance with 42 CFR 455.23 and is for a temporary period and cite the circumstances under which the withholding will be terminated.  Suspension of payment will not continue after either of the following:

            (i)  the agency or the prosecuting authorities determine that there is insufficient evidence of fraud or willful misrepresentation by the provider; or

            (ii)  legal proceedings related to the provider's alleged fraud are completed.

            (3) remains the same but is renumbered (4).


AUTH:  53-2-201, 52-2-211, 53-2-803, 53-4-111, 53-6-111, 53-6-113, MCA

IMP:    52-2-112, 53-2-201, 53-2-306, 53-2-801, 53-4-112, 53-6-111, MCA




In order to comply and implement portions of the Affordable Care Act, ARM 37.5.304, 37.85.512, and 37.85.513 must be amended to reflect new statutory requirements.  In addition, Montana underwent a Comprehensive Program Integrity (PI) Review in August of 2010.  One of the regulatory compliance issues cited by the Centers for Medicare and Medicaid Services' (CMS) Medicaid Integrity Group (MIG) was the state's notice of payment withholding letter.  The letter did not include all required information as required by 42 CFR 455.23(b).  In order to comply with the federal rule, the department must update rules to reflect the federal language defining credible allegation of fraud, timeframe for notifying providers, and the content of the withholding letter notice.


Section 6402(h)(2) of the Affordable Care Act, Suspension of Medicaid Payments Pending Investigation of Credible Allegations of Fraud amended section 1903(i)(2) of the Social Security Act to provide that federal financial participation (FFP) in the Medicaid program will not be made with respect to any amount expended for items or services (other than an emergency item or service, not including items or services furnished in an emergency room of a hospital) furnished by an individual or entity to whom a state has failed to suspend payments under the plan during any period when there is pending an investigation of a credible allegation of fraud against the individual or entity as determined by the state, unless the state determines that good cause exists not to suspend such payments.  On February 2, 2011, CMS published its final rule implementing this provision found at the following web site:  http://edocket.access.gpo.gov/2011/pdf/2011-1686.pdf.


CMS-6028-FC allows Medicare payments to be suspended from providers or suppliers if there is a credible allegation of fraud pending an investigation or final action.  The law also requires states to suspend payments to Medicaid providers where there is a credible allegation of fraud.  This enhanced authority will help prevent taxpayer dollars from being used to pay fraudulent providers and suppliers.


States must suspend Medicaid payments to providers when an investigation of a "credible allegation of fraud" against an individual or entity is pending, unless the state has determined that there is good cause not to suspend.  If a state fails to suspend, 42 CFR 477.90 provides that the state will not receive FFP payments.


In the final rule, CMS provides certain bounds around the definition of "credible allegation of fraud" at 42 CFR 455.2.  Generally, a "credible allegation of fraud" may be an allegation that has been verified by a state and that has indicia of reliability that comes from any source.  Further, CMS recognizes that different states may have different considerations in determining what may be a "credible allegation of fraud."  Accordingly, CMS believes states should have the flexibility to determine what constitutes a "credible allegation of fraud" consistent with individual state law.  However, a "credible allegation of fraud," for example, could be a complaint made by an employee of a physician alleging that the physician is engaged in fraudulent billing practices, i.e., the physician repeatedly bills for services at a higher level than is actually justified by the services rendered to beneficiaries.  Upon state review of the physician's billings, the state may determine that the allegation has indicia of reliability and is, in fact, credible.


According to 42 CFR 455.23, Medicaid payments may be suspended without prior notice, but providers must receive notice (unless law enforcement requests the state to temporarily withhold the notice) of the suspension within five days after the state initiates it.  However, ARM 37.85.513 currently requires that the provider receive notice of withholding or suspension of payments ten days prior to the withholding of suspension.  This is conflicting with the federal requirement.  In addition, ARM 37.85.513 requires that the provider must have received notice of the adverse action as required by ARM 37.85.512.  Currently ARM 37.85.512 and 37.85.513 do not contain the correct language and must be updated.  The state's notice must include or address all requirements found in 42 CFR 455.23(b).


            5.  Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing.  Written data, views, or arguments may also be submitted to: Kenneth Mordan, Department of Public Health and Human Services, Office of Legal Affairs, P.O. Box 4210, Helena, Montana, 59604-4210; fax (406) 444-9744; or e-mail dphhslegal@mt.gov, and must be received no later than 5:00 p.m., November 25, 2011.


6.  The Office of Legal Affairs, Department of Public Health and Human Services, has been designated to preside over and conduct this hearing.


7.  The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the contact person in 5 above or may be made by completing a request form at any rules hearing held by the department.


8.  An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register.  The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.  In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.


9.  The bill sponsor contact requirements of 2-4-302, MCA, do not apply.




/s/ Kurt R. Moser                                           /s/ Mary E. Dalton acting for                      

Rule Reviewer                                             Anna Whiting Sorrell, Director

                                                                        Public Health and Human Services


Certified to the Secretary of State October 17, 2011.


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