The Affordable Care Act (ACA) requires Medicare providers to return overpayments within 60 days of the date they are identified in order to avoid liability under the False Claims Act. Four years ago, CMS issued a proposed rule to implement this statutory requirement that would have placed a substantial burden on providers to identify and return overpayments within the 60-day period. Last week, CMS issued its long-awaited “final rule” on the matter. The final rule is substantially less burdensome than the proposed rule would have been and offers providers a clearer view of their obligations to investigate and report overpayments.
Here are five key aspects of the final 60-Day Overpayment Rule that physicians and medical practices should keep in mind:
- What It Means to Identify an Overpayment
CMS clarifies that identifying an overpayment requires reasonable diligence and quantification of the overpayment. Specifically, a provider has “identified” an overpayment when the provider “has or should have, through the exercise of reasonable diligence, determined that it has received an overpayment and can quantify the amount of the overpayment.” In contrast, the proposed rule would have held providers to a “deliberate ignorance” or knowledge standard regarding the existence of an overpayment and would have included no leeway for quantification of the overpayment.
- The New Timeframe In Which Providers Must Identify Overpayments
One of the biggest questions that arose from the proposed rule was: “When does the 60-day clock to identify overpayments start ticking?” The proposed rule called for providers to act with “all deliberate speed” to identify overpayments once they became aware of a possible billing error. In its final rule, CMS provides a clearer answer to the question. Providers will have up to 6 months to investigate a possible overpayment before the 60-day reporting period begins.
- The “Look-Back Period” Is Shortened
Part of a provider’s obligation with respect to overpayments under the ACA is to search through past records for overpayments after a provider identifies that it has received at least one overpayment. CMS originally proposed a requirement that providers “look back” 10 years in their records for other overpayments in order to comply with this rule. Acknowledging the unreasonable burden such a time period would impose on providers (both in effort and cost), in the final rule CMS has reduced the duration of the look-back period to 6 years.
- Documentation of Reasonable Diligence Is Advisable
In prefatory comments to the rule, CMS stated that it is “certainly advisable” for providers to document their diligence in investigating possible overpayments. While documenting an investigation may not make a provider’s diligence “reasonable” per se, it may provide strong evidence of the provider’s efforts.
- Proactive Compliance
CMS emphasizes in the final rule that “reasonable diligence” requires not only reactive activities, such as a good faith investigation of potential overpayments by qualified individuals, but also “proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments.”
The full text of the final rule may be accessed here: https://www.federalregister.gov/articles/2016/02/12/2016-02789/medicare-program-reporting-and-returning-of-overpayments.
Be sure to consult experienced legal counsel if you would like further guidance on the Medicare 60-Day Overpayment Rule, including what steps your practice should take to proactively and reactively address potential overpayments.