CAT Act Mandates 30-Day Notice and 180-Day Limit on Medicare Payment Suspensions for Fraud Investigations

The Centers for Medicare Medicaid Services Auditor Transparency Act of 2025, or the CAT Act, aims to balance the fight against healthcare fraud with the due process rights of healthcare providers. It directly addresses the current system where the Centers for Medicare & Medicaid Services (CMS) can halt payments to providers suspected of fraud, a necessary tool that sometimes ends up financially crippling good-faith providers before they even know the specifics of the accusation. This bill sets up clear rules for how and when CMS can stop the flow of cash to hospitals, clinics, and doctor’s offices.

The New Rules of Engagement for Fraud Investigations

If you’re a doctor, a clinic owner, or anyone else who bills Medicare, this bill changes the game when it comes to fraud investigations. Currently, CMS can suspend your payments based on a “credible allegation of fraud,” often without giving you much detail, which can instantly put a small practice out of business. The CAT Act changes this by requiring CMS to give the provider detailed information about the alleged fraud—including the specific nature, date, and basis for the allegation—at least 30 days before the payment suspension begins (Sec. 3). Think of it like getting a detailed, official warning letter instead of having your bank account frozen without notice. The law also clarifies that a simple billing error or human mistake found during an audit does not count as a “credible allegation of fraud,” which is a huge win for providers who are just trying to navigate complex billing codes.

Putting a Clock on the Investigation

One of the biggest complaints from providers is that once payments are suspended, the investigation can drag on indefinitely. This bill tackles that directly by setting a time limit: investigations and the related payment suspensions can only last longer than 180 days if CMS determines there is “good cause” for an extension (Sec. 3). For providers, this means the government can’t just leave them hanging for years. Furthermore, if CMS fails to meet the new transparency requirements—like providing updates every 30 days during the suspension—payments must resume immediately, and the provider must be paid all withheld amounts plus accrued interest. This is a powerful incentive for CMS to move quickly and be transparent.

Due Process and the Appeal Button

For anyone running a business, the ability to appeal a devastating decision is critical. The CAT Act mandates that the Secretary of Health and Human Services (HHS) create an independent appeals process within 180 days of the bill becoming law. This process will allow a provider or supplier to appeal a payment suspension and receive a timely resolution (Sec. 3). This new appeals route, which must be developed in consultation with stakeholders, adds a layer of essential due process that was largely missing before. It’s like adding a neutral referee to review the initial decision, giving providers a fighting chance to prove they were operating in good faith.

Real-World Impact and Administrative Hurdles

For patients, this bill is good news because it protects the financial stability of the doctors and clinics they rely on. If a small rural clinic is unjustly accused of fraud and has its payments suspended for two years, it might have to close, leaving Medicare beneficiaries without local care. This law significantly reduces that risk. However, the new rules create a heavy administrative lift for CMS and its anti-fraud contractors. They will now have to dedicate resources to detailed pre-suspension reporting, mandatory 30-day updates, and the creation and management of the new independent appeals board. While the bill aims for transparency, there is one area of medium vagueness: CMS can still withhold the detailed pre-suspension information if providing it would “compromise the investigation’s integrity.” While this requires consultation with the HHS Inspector General, how often this exception is used—and whether it undermines the spirit of the 30-day notice rule—will be something to watch.