New Rules


Revisiting compliance issues that have severe ramifications.

By Mary R. Daulong, PT, CHC, CHP

Q: Is it true that physicians and other health care providers will be expected to implement a compliance program soon?
A: Yes, in fact, Section 6401 of The Patient Protection and Affordable Care Act (PPACA), “Provider Screening and Other Enrollment Requirements under Medicare, Medicaid, and The Children’s Health Insurance Program (CHIP),” now requires that providers implement compliance programs as a condition of enrollment in Medicare, Medicaid, and CHIP. PPACA has instructed the Secretary of Health & Human Services in consultation with the Office of Inspector General (OIG) to develop “core elements” for the mandatory compliance programs. As of today, those core elements have not been published but a good starting place would be to utilize the OIG’s Compliance Guidances for Individual & Small Physician Practices:1 Your compliance program should include all local, state, and federal regulations that govern you as a health care practitioner and a business owner.

Update with New Information: 12-12-15 (per CMS’s Medicare Managed Care Manuals Chapter 21)
Centers for Medicare & Medicaid Service’s (CMS’s) updated regulations clarify that an effective compliance program must include measures that prevent, detect, and correct program noncompliance and fraud, waste, and abuse.

CMS released its core elements for Compliance Plans for “Sponsors/Organizations” of Medicare Part C (Medicare Advantage Organizations) and Part D (Medicare Prescription Drug Plans), and its first tier, downstream, and related entities (FDRs) (see definitions below).

The compliance program must, at a minimum, include the following core requirements: written policies, procedures, and standards of conduct;

  1. compliance officer, compliance committee, and high-level oversight;
  2. effective training and education;
  3. effective lines of communication;
  4. well-publicized disciplinary standards;
  5. effective system for routine monitoring and identification of compliance risks; and
  6. procedures and system for prompt response to compliance issues.

CMS has updated its guidance language to provide that sponsors must specifically develop procedures to promote and ensure that all FDRs are in compliance with all applicable laws, rules, and regulations. A sponsor must have a risk assessment and management program, effective training and education, and effective internal controls and monitoring in place to exercise oversight of all of its FDRs and their associated personnel.

Effective January 16, 2016, CMS will begin enforcing its mandatory compliance training for Medicare Advantage Organizations, Prescription Drug Plans sponsors, and their FDRs who have involvement in the administration or delivery of Parts C and D benefits. The purpose of this is to ensure that general compliance and fraud, waste, and abuse training and education is communicated to their employees and their FDRs.

CMS defines FDRs as:

  • first tier entity—any party (this could be your business/clinic, etc.) that enters into a written arrangement, acceptable to CMS, with a Part C Medicare Advantage Organization (MAO) sponsor, Part D Prescription Drug Plan sponsor, or applicant to provide administrative services or health care services (this could also be you) to a Medicare-eligible individual under the Medicare Advantage program or Part D program.
  • downstream entity—any party that enters into a written agreement, acceptable to CMS, with persons or entities involved with the Medicare Advantage or Part D benefit, below the level of first tier entity. These arrangements continue down to the level of the ultimate provider (this is, typically, where physical therapy providers are located) of both health and administrative services.
  • related entity—any entity that is related to an MAO or Part D Sponsor by common ownership or control and performs some of the sponsor’s management functions under contract or delegation, furnishes services to Medicare enrollees under an oral or written agreement, or leases real property or sells materials to the MAO or Part D plan sponsor at a cost of more than $2,500 during a contract period.

Sponsors and FDRs must provide general compliance and fraud, waste, and abuse (FWA) training for all employees of their organization and entities they partner/contract with to provide benefits or services. Starting January 1, 2016, to comply with training requirements sponsors and MCOs must ensure that those noted above take the CMS training and accept certificates of completion of the CMS training located on the Medicare Learning Network (MLN).


There is an exception to the FWA training for providers and suppliers who are “deemed” exempt due to being enrolled and certified or accredited with Medicare through Part A or B. Examples of “therapy-related” services eligible for exempt or “deemed certification status” are: comprehensive outpatient rehabilitation facilities; home health agencies; hospices; rehabilitation agencies or public health agencies providing outpatient physical therapy, occupational therapy, or speech pathology services.

Private practice physical therapy practices are not certified or accredited and therefore are not privileged to being exempt from the federal mandate to obtain both FWA Training and General Compliance Training upon hire (within 90 days) and annually, thereafter. Medicare Advantage Organizations (MAOs) may no longer require that its FDRs take the MAOs’ specific training program unless they have incorporated CMS’s standardized training in its entirety. It would be advisable to begin the orientation and/or annual training of your staff, contractors, students, and volunteers now so that you can provide the attestation of completion when requested by your MAO.

The link to the CMS site is: Scroll down to “Downloads” and choose Medicare Parts C and D FWA Training & Medicare Parts C and D General Compliance Training. At the end of each training module you will receive a certificate of training confirmation. Complete the certification form and retain it for a minimum of 10 years. This will suffice for any and all MAO requests for training attestation.

Q: Does Medicare require all outpatient therapists, billing Part B, to be enrolled in Medicare and to have a Medicare Provider Transaction Access Number (PTAN)?
A: Yes, Medicare mandates that a physical therapist be enrolled in the Federal Program when billing Part B Medicare. The support for this answer is based on the following regulations:

CMS Benefits Policy Manual
Chapter 15, Section 230.4
Services Furnished by a Therapist in Private Practice (TPP)
(Rev. 179, Issued: 01-14-14, Effective: 01-07-14, Implementation: 01-07-14)

A general therapist refers only to a qualified physical therapist, occupational therapist, or speech-language pathologist. TPP refers to therapists in private practice (qualified physical therapists, occupational therapists, and speech-language pathologists).

In order to qualify to bill Medicare directly as a therapist, each individual must be enrolled as a private practitioner and employed in one of the following practice types: an unincorporated solo practice, unincorporated partnership, unincorporated group practice, physician/National Purchasing Partners (NPP) group or groups that are not professional corporations, if allowed by state and local law. Physician/NPP group practices may employ therapists in private practice if state and local law permits this employee relationship.

For purposes of this provision, a physician/NPP group practice is defined as one or more physicians/NPPs enrolled with Medicare who may bill as one entity. For further details on issues concerning enrollment, see the provider enrollment website.2

100-08, Medicare Program Integrity Manual
Chapter 15, Section
CMS Program Integrity Manual
Chapter 15, Section 15.1
Introduction to Provider Enrollment
(Rev. 347, Issued: 07-15-10, Effective: 07-30-10, Implementation: 07-30-10)

This chapter specifies the resources and procedures Medicare fee-for-service contractors must use to establish and maintain provider and supplier enrollment in the Medicare program. These procedures apply to carriers, fiscal intermediaries, Medicare administrative contractors, and the National Supplier Clearinghouse (NSC), unless contract specifications state otherwise. No provider or supplier shall receive payment for services furnished to a Medicare beneficiary unless the provider or supplier is enrolled in the Medicare program. Further, it is essential that each provider and supplier enroll with the appropriate Medicare fee-for-service contractor.

Update with Additional Information 12-12-15

Medicare does not provide an exemption from enrollment for independent contractors or agency personnel. CMS is clear that all suppliers in private practice settings must be enrolled with Medicare in order to bill for services delivered. This does not apply to rehab agencies or comprehensive outpatient rehabilitation facilities as they do not require individual therapist enrollment. The use of a cosignature by an enrolled therapist on a clinical record and for subsequent claim filing purposes could be considered a false claim violation. The only situation in which services are provided and billed on behalf of the nonenrolled individual is when those services are provided by a physical therapist assistant under the onsite supervision of an enrolled physical therapist.

Medicare has been quite transparent about the value of the enrollment process as a tool for FWA prevention, investigation, and sanctioning. Therapists engaged in “loaning” their NPI/PTAN for billing purposes not only run the risk of experiencing civil and criminal penalties and sanctions but also run the risk of potential exclusion from the federal program.

The following payers (not all inclusive) have also issued enrollment or provider restriction mandates:

TRICARE-authorized providers must meet state licensing and certification requirements and are certified by TRICARE to provide care to TRICARE beneficiaries. TRICARE-authorized providers include doctors, hospitals, ancillary providers (nurse practitioners, physician assistants, and physical therapists [excludes physical therapist assistants]), laboratory, and radiology providers, and pharmacies. Beneficiaries are responsible for the full cost of care if they see providers who are not TRICARE authorized. Providers must wait to receive final notification of contract execution and credentialing approval from Humana Military before providing care to TRICARE beneficiaries as a network provider.

BCBS prohibits the treatment and/or billing for treatment of BCBS subscribers unless the provider is credentialed and approved as a provider by BCBS.

Unfortunately, it appears that more and more payers are requiring enrollment and/or credentialing verification prior to permitting the billing of services by a provider. This is, no doubt, a taxing administrative and staffing burden but without voicing concerns to payers, employers, legislators, and the public there will be no solution.3


1. asp as well as the Small Entity’s Compliance Guide at this link: SmallEntity/index.html?redirect=/SmallEntity/.

2. and Pub.

3. Blue Cross Blue Shield of Texas.


Mary R. Daulong, PT , CHC, CHP, is a PPS member and the owner of Business & Clinical Management Services, Inc., a consulting firm specializing in outpatient therapy compliance, including documentation, coding and billing, enrollment and credentialing, and Health Insurance Portability and Accountability Act and Occupational Safety and Health Administration regulation education. She is also the author of both The Private Practice Compliance Manual and The Third-Party Biller Compliance Manual. She can be reached at

Copyright © 2018, Private Practice Section of the American Physical Therapy Association. All Rights Reserved.

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