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CMS Finalizes Rule on Reporting and Returning Medicare Overpayments

    Client Alerts
  • May 03, 2016

The Affordable Care Act (sometimes referred to as Obamacare) included a requirement for providers to report and return all Medicare and Medicaid overpayments within 60 days of identification.  Although this requirement has been in effect since 2010, the Centers for Medicare and Medicaid Services (“CMS”) has proposed but failed to promulgate rules serving to further clarify this requirement. On February 12, 2016, CMS published a final rule, which went into effect March 14, 2016.  The final rule applies to Part A and Part B of Medicare.

Section 1128J(d)(4)(B) of the Affordable Care Act and the final rule define the term “overpayment” as any funds that a person receives or retains to which the person, after applicable reconciliation, is not entitled.  As CMS states:  “This rule provides needed clarity and consistency in the reporting and returning of self-identified overpayments.”  The final rule requires Medicare Part A & Part B providers and suppliers to report and return overpayments by the later of either (1) 60 days after the overpayment is identified or (2) the date that the corresponding cost report is due (if applicable). “Identification” of an overpayment occurs when a person should have, through the exercise of reasonable diligence, determined that he or she has received an overpayment and has quantified the amount of the overpayment.

When a provider obtains credible information concerning a potential overpayment, the provider needs to undertake reasonable diligence to determine whether an overpayment has been received and to quantify the amount. The 60-day time period begins when either the reasonable diligence is completed or on the day the person received credible information of a potential overpayment if the person failed to conduct reasonable diligence and the person actually received an overpayment.

The final rule clarifies that a provider can use the existing voluntary refund process referenced in Publication 100-08, Chapter 4, Section 4.16 of the Medicare Program Integrity Manual. Under the existing voluntary refund process, providers and suppliers report overpayments using a form that each Medicare contractor makes available on its website.

The final rule creates a look-back period of six years from receipt of overpayment, meaning provider and suppliers can be liable for overpayments going back six years. The final rule shortens the look-back period from the originally proposed ten-year look-back period.  Providers raised concerns about the burden of such a lengthy look-back period. A failure to report and return overpayments could subject providers to False Claims Act liability, Civil Monetary Penalties, and exclusion from federal health care programs.

If you have any questions about the requirements of the 60-day rule, please contact Matt Wolfe at 919-835-4647 or