Sign in Subscribe
Fraud

Medicare Payment Suspensions: Understanding the Risks and Consequences

Strategic Insights

— 2 min read

The U.S. Department of Justice (DOJ) has announced the creation of a new "DOJ-HHS False Claims Act Working Group" to combat health care fraud and abuse. As part of its efforts, the working group will focus on identifying credible allegations of fraud, which can lead to the imposition of Medicare payment suspensions. A Medicare payment suspension is the withholding of payment by a Medicare contractor from a provider or supplier of an approved Medicare payment amount before a determination of the amount of the overpayment exists, or until the resolution of an investigation of a credible allegation of fraud. This article provides an overview of Medicare payment suspensions, including the circumstances under which they can be imposed, how long they last, and the consequences for providers and suppliers.

Key Takeaways:

  • A Medicare payment suspension can be imposed for a credible allegation of fraud, which is defined as an allegation of fraud from any source, including but not limited to fraud hotline tips, claims data mining, and patterns identified through provider audits, False Claims Act (FCA) cases, and investigations.
  • The Working Group will consult with the Health and Human Services Office of Inspector General (HHS-OIG) in determining whether there is a credible allegation of fraud against a provider of services or supplier.
  • Payment suspensions may be used for "reasons not typically viewed within the context of false claims," such as suspected violations of the physician self-referral ban and credible allegations of kickbacks.
  • Medicare payment suspensions are expected to last no longer than 18 months, although the period may be extended if the case has been referred to, and is being considered by, HHS-OIG, or if DOJ submits a written request to continue the suspension.
  • CMS must evaluate whether there is good cause to not continue a suspension every 180 days after the initiation of a suspension.
  • There is no administrative process to appeal a suspension, although providers and suppliers can submit a rebuttal and CMS will consider evidence of "good cause" that would justify a discontinuation of the suspension.
  • Providers and suppliers should be prepared to act quickly to respond to a Medicare payment suspension and advice of experienced counsel is recommended.

Statistics:

  • 42 C.F.R. § 405.370 defines a Medicare payment suspension as the withholding of payment by a Medicare contractor from a provider or supplier of an approved Medicare payment amount.
  • 42 C.F.R. § 405.371(a) states that a payment suspension may be applied against part or all of Medicare payments.
  • 42 C.F.R. § 405.372 provides that notice to the provider or supplier may be waived if harm to the trust fund is suspected.
  • 42 C.F.R. § 405.374 states that there is no administrative process to appeal a suspension.
  • The Affordable Care Act added the basis for a Medicare payment suspension based on a "credible allegation of fraud" at 42 U.S.C. § 1395y(o) for Medicare, with a Medicaid corollary at 42 U.S.C. § 1396b(i)(2).

Sources:

  • U.S. Department of Justice, Press Release, DOJ-HHS False Claims Act Working Group, July 2, 2025
  • 42 C.F.R. § 405.370
  • 42 C.F.R. § 405.371
  • 42 C.F.R. § 405.372
  • 42 C.F.R. § 405.374
  • 42 U.S.C. § 1395y(o)
  • CMS Program Integrity Manual, Chap. 8, Sec. 8.3.1.1

Read more