42 C.F.R. § 455.23
Suspension of payments in cases of fraud
(a) Basis for suspension. (1) The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.
(2) The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.
(3) A provider may request, and must be granted, administrative review where State law so requires.
(b) Notice of suspension. (1) The State agency must send notice of its suspension of program 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 may exceed 90 days.
(2) The notice must include or address all of the following:
(i) State that payments are being suspended in accordance with this provision.
(ii) Set forth the general allegations as to the nature of the suspension action, but need not disclose any specific information concerning an ongoing investigation.
(iii) State that the suspension is for a temporary period, as stated in paragraph (c) of this section, and cite the circumstances under which the suspension will be terminated.
(iv) Specify, when applicable, to which type or types of Medicaid claims or business units of a provider suspension is effective.
(v) Inform the provider of the right to submit written evidence for consideration by State Medicaid Agency.
(vi) Set forth the applicable State administrative appeals process and corresponding citations to State law.
(c) Duration of suspension. (1) All suspension of payment actions under this section will be temporary and will not continue after either of the following:
(i) The agency or the prosecuting authorities determine that there is insufficient evidence of fraud by the provider.
(ii) Legal proceedings related to the provider's alleged fraud are completed.
(2) A State must document in writing the termination of a suspension including, where applicable and appropriate, any appeal rights available to a provider.
(d) Referrals to the Medicaid fraud control unit. (1) Whenever a State Medicaid agency investigation leads to the initiation of a payment suspension in whole or part, the State Medicaid Agency must make a fraud referral to either of the following:
(i) To a Medicaid fraud control unit established and certified under part 1007 of this title; or
(ii) In States with no certified Medicaid fraud control unit, to an appropriate law enforcement agency.
(2) The fraud referral made under paragraph (d)(1) of this section must meet all of the following requirements:
(i) Be made in writing and provided to the Medicaid fraud control unit not later than the next business day after the suspension is enacted.
(ii) Conform to fraud referral performance standards issued by the Secretary.
(3)(i) If the Medicaid fraud control unit or other law enforcement agency accepts the fraud referral for investigation, the payment suspension may be continued until such time as the investigation and any associated enforcement proceedings are completed.
(ii) On a quarterly basis, the State must request a certification from the Medicaid fraud control unit or other law enforcement agency that any matter accepted on the basis of a referral continues to be under investigation thus warranting continuation of the suspension.
(4) If the Medicaid fraud control unit or other law enforcement agency declines to accept the fraud referral for investigation the payment suspension must be discontinued unless the State Medicaid agency has alternative Federal or State authority by which it may impose a suspension or makes a fraud referral to another law enforcement agency. In that situation, the provisions of paragraph (d)(3) of this section apply equally to that referral as well.
(5) A State's decision to exercise the good cause exceptions in paragraphs (e) or (f) of this section not to suspend payments or to suspend payments only in part does not relieve the State of the obligation to refer any credible allegation of fraud as provided in paragraph (d)(1) of this section.
(e) Good cause not to suspend payments. A State may find that good cause exists not to suspend payments, or not to continue a payment suspension previously imposed, to an individual or entity against which there is an investigation of a credible allegation of fraud if any of the following are applicable:
(1) Law enforcement officials have specifically requested that a payment suspension not be imposed because such a payment suspension may compromise or jeopardize an investigation.
(2) Other available remedies implemented by the State more effectively or quickly protect Medicaid funds.
(3) The State determines, based upon the submission of written evidence by the individual or entity that is the subject of the payment suspension, that the suspension should be removed.
(4) beneficiary access to items or services would be jeopardized by a payment suspension because of either of the following:
(i) An individual or entity is the sole community physician or the sole source of essential specialized services in a community.
(ii) The individual or entity serves a large number of beneficiaries within a HRSA-designated medically underserved area.
(5) Law enforcement declines to certify that a matter continues to be under investigation per the requirements of paragraph (d)(3) of this section.
(6) The State determines that payment suspension is not in the best interests of the Medicaid program.
(f) Good cause to suspend payment only in part. A State may find that good cause exists to suspend payments in part, or to convert a payment suspension previously imposed in whole to one only in part, to an individual or entity against which there is an investigation of a credible allegation of fraud if any of the following are applicable:
(1) beneficiary access to items or services would be jeopardized by a payment suspension in whole or part because of either of the following:
(i) An individual or entity is the sole community physician or the sole source of essential specialized services in a community.
(ii) The individual or entity serves a large number of beneficiaries within a HRSA-designated medically underserved area.
(2) The State determines, based upon the submission of written evidence by the individual or entity that is the subject of a whole payment suspension, that such suspension should be imposed only in part.
(3)(i) The credible allegation focuses solely and definitively on only a specific type of claim or arises from only a specific business unit of a provider; and
(ii) The State determines and documents in writing that a payment suspension in part would effectively ensure that potentially fraudulent claims were not continuing to be paid.
(4) Law enforcement declines to certify that a matter continues to be under investigation per the requirements of paragraph (d)(3) of this section.
(5) The State determines that payment suspension only in part is in the best interests of the Medicaid program.
(g) Documentation and record retention. State Medicaid agencies must meet the following requirements:
(1) Maintain for a minimum of 5 years from the date of issuance all materials documenting the life cycle of a payment suspension that was imposed in whole or part, including the following:
(i) All notices of suspension of payment in whole or part.
(ii) All fraud referrals to the Medicaid fraud control unit or other law enforcement agency.
(iii) All quarterly certifications of continuing investigation status by law enforcement.
(iv) All notices documenting the termination of a suspension.
(2)(i) Maintain for a minimum of 5 years from the date of issuance all materials documenting each instance where a payment suspension was not imposed, imposed only in part, or discontinued for good cause.
(ii) This type of documentation must include, at a minimum, detailed information on the basis for the existence of the good cause not to suspend payments, to suspend payments only in part, or to discontinue a payment suspension and, where applicable, must specify how long the State anticipates such good cause will exist.
(3) Annually report to the Secretary summary information on each of following:
(i) Suspension of payment, including the nature of the suspected fraud, the basis for suspension, and the outcome of the suspension.
(ii) Situation in which the State determined good cause existed to not suspend payments, to suspend payments only in part, or to discontinue a payment suspension as described in this section, including describing the nature of the suspected fraud and the nature of the good cause.