What is a credible allegation of fraud under Medicare rules?

A credible allegation of fraud is the standard CMS and its Medicare contractors use to suspend payments under 42 CFR 405.371, after consulting the Office of Inspector General and, where appropriate, the Department of Justice. The allegation can come from a fraud hotline tip, claims data analysis, a provider audit, or a law enforcement referral. CMS does not need a finding that fraud occurred, only an allegation with indicia of reliability, before it suspends payment in whole or in part.

How long can CMS suspend a wound care practice's Medicare payments?

A suspension based on reliable information of an overpayment is capped at 180 days, with one 180-day extension, for a maximum of 360 days. That cap does not apply to a suspension based on a credible allegation of fraud. CMS must reevaluate a fraud-based suspension every 180 days, and good cause to continue it is deemed to end after 18 months without resolution, unless the Department of Justice or the Office of Inspector General asks in writing that it continue.

Can a wound care practice appeal a Medicare payment suspension?

No. Under 42 CFR 405.375, a decision to suspend payment is not an initial determination, so the standard Medicare redetermination and reconsideration process does not apply. When the contractor gives prior notice, the provider's remedy is a written rebuttal statement under 42 CFR 405.374, due at least 15 days from that notice unless the contractor shortens or extends that period for cause; when a fraud-based suspension takes effect without prior notice, the contractor must still give the provider an opportunity to submit a rebuttal statement under 42 CFR 405.372 once the suspension is in effect. Once the underlying claims are later denied or an overpayment is assessed, that determination carries its own appeal rights.

Medicare Payment Suspensions for Wound Care Providers

Wound care and skin substitute claims now sit inside CMS's credible allegation of fraud enforcement, and a Medicare payment suspension under 42 CFR 405.371 can freeze every pending claim before any overpayment determination, any hearing, or any finding that a single claim was billed incorrectly. For a practice billing weekly debridement and skin substitute applications, that freeze can take effect before the practice receives notice, and the only early tool to respond is a short written rebuttal, not a Medicare appeal.

The Credible Allegation of Fraud Trigger

Under 42 CFR 405.371, CMS or its Medicare contractor may suspend payments in whole or in part once it has consulted the HHS Office of Inspector General, and the Department of Justice where appropriate, and determined that a credible allegation of fraud exists against a provider or supplier. The regulation sets a deliberately low bar: an allegation, not a proven finding, is enough to support a suspension, unless CMS finds good cause not to suspend. Because the allegation involves fraud rather than a plain overpayment, 42 CFR 405.372 lets CMS decide whether advance notice is even appropriate before the suspension takes effect.

A payment suspension built on a credible allegation of fraud carries no advance-notice guarantee and no appeal right, only a rebuttal statement on a short clock.

The Wound Care Billing Patterns That Draw This Scrutiny

Skin substitute and debridement claims generate the billing pattern CMS can treat as a credible allegation of fraud under 42 CFR 405.370: claims data mining and patterns found through provider audits that turn up high-dollar claims or documentation that does not support the billed service. A missing signature log, an undated progress note, or a debridement code that does not match the wound depth in the chart is the kind of claims-data pattern that generates a referral, independent of the underlying clinical decision. Skin substitute billing is also governed by a local coverage determination that varies by Medicare Administrative Contractor, so a practice following its own contractor's protocol can still produce the data anomaly a program-integrity unit reads as credible. For the records that keep that pattern from forming, see Medicare Wound Care Documentation: The Chart That Survives Audit.

Suspension Duration and the Fraud Exception

A suspension built on reliable information of an overpayment is capped at 180 days, with one 180-day extension under 42 CFR 405.372, for a maximum of 360 days. That cap does not apply to a suspension based on a credible allegation of fraud. CMS must still revisit a fraud-based suspension every 180 days to decide whether good cause exists to continue it, and must ask the Office of Inspector General or another law enforcement agency to certify the matter remains under investigation. Good cause to continue is deemed to end once the suspension has run 18 months without a resolution of the investigation, unless the case has been referred to the Office of Inspector General for administrative action, or the Department of Justice submits a written request, naming the entity and the time needed to conclude the proceeding, to keep it in place.

The Rebuttal Process, Not an Appeal

A decision to suspend payment is not an initial determination under 42 CFR 405.375, so it carries no right to the standard Medicare redetermination and reconsideration process. When the contractor gives prior notice, the provider's remedy is a written rebuttal statement under 42 CFR 405.374, due at least 15 days from that notice unless the contractor shortens or extends the window for cause; when a suspension for a credible allegation of fraud takes effect without prior notice, the contractor must still give the provider an opportunity to submit a rebuttal statement under 42 CFR 405.372 once the suspension is in effect. That is a different proceeding from challenging a specific overpayment finding once one has been issued; Appealing a Medicare Wound Care Overpayment Determination covers that later-stage process. A suspension is also distinct from a Medicare Advantage plan's denial of a submitted claim, covered in Medicare Advantage Plans Denying Wound Care and Skin Substitute Claims, since MA denials run through the plan's own appeal process rather than this fee-for-service suspension rule.

It is critical that wound care providers promptly retain experienced healthcare defense counsel upon receiving a payment suspension notice, a records request, or any other government inquiry tied to skin substitute or debridement billing. Early legal intervention can protect the provider's rights, shape the rebuttal statement before the rebuttal window closes, avoid inadvertent admissions, preserve relevant defenses, and allow counsel to communicate with the Medicare contractor and law enforcement on the provider's behalf. Delaying legal representation can significantly affect the outcome of the suspension and expose the provider to unnecessary risk.

Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience. A wound care practice facing a payment suspension or a credible allegation of fraud letter should contact Health Law Alliance for a free, confidential consultation before the rebuttal window runs.