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:

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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:

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.

Earlier this month, the Centers for Medicare and Medicaid Services released a new tool designed to give providers and consumers insight into Medicare drug spending.  The Medicare Drug Spending Dashboard, which at present only includes 2014 data, summarizes information on 80 drugs, 40 of which are covered under Medicare Part B and 40 of which are covered under Medicare Part D.  Data on the dashboard (which is sortable) includes total drug spending, number of beneficiaries utilizing each drug, drug spending per user, beneficiary costs, and the annual change in average drug unit cost.

The Centers for Medicare & Medicaid Services (CMS) has stated its intention to move at least 50% of Medicare payments from fee for service to alternative payment systems based on quality and/or value by 2018.  In furtherance of this goal, the Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act of 2015 (MACRA) passed earlier this year included a requirement that the Department of Health and Human Services publish a draft plan for developing quality measures to support these alternative payment models.  On December 18, 2015, CMS published its draft Quality Measure Development Plan: Supporting the Transition to the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) to create a framework for the development of these quality measures .  Although the plan is only in draft, it sheds important light on what Medicare payment systems are likely to look like commencing in 2019 and beyond.  Physicians and other providers who rely upon Medicare reimbursement for their livelihood should review the draft plan and keep a close eye on future developments in this area as changes will likely be sweeping.



This past month, CMS published several new Frequently Asked Questions  (FAQs) on its website addressing questions about the EHR incentive programs, and in particular how to attest to certain measures for health information exchange, patient electronic access, and other objectives that require patient action.  Those FAQs can be found here on the CMS website.

CMS also published the final regulations with a comment period for participation in Stage 3 of the EHR incentive program.  The public may submit comments on the regulations until December 15, 2015.  The regulations can be viewed here in the Federal Register.

A new study in the BMJ suggests that the more services a physician provides to his or her patients, the less likely the physician is to be sued for malpractice.  The study examined the use of resources by attending physicians in several Florida acute care hospitals during a ten-year period from 2000-2009, in relation to the number of malpractice claims brought against the physicians in the year following care.  Researchers found that physicians who billed higher than average hospital charges were sued less often than lower-billing physicians.

The study builds on evidence that most physicians in the United States report practicing “defensive medicine”, commonly understood to be “medical care provided to patients solely to reduce the threat of malpractice liability rather than to further diagnosis or treatment.”  Prior to this study, no research had been published on whether greater resource use by physicians is associated with reduced claims for malpractice.

The researchers focused on physicians from seven specialties, including obstetrics, which tends to have a higher rate of malpractice claims than other specialties.   The evidence clearly showed that a physician’s risk of being sued for malpractice was reduced among those who performed and billed for more services.  However, the authors noted that the data only show a correlation.  Further research is necessary to understand why higher spending is linked to a lower risk of malpractice claims.

Perhaps the greatest value from this study is that the results corroborate the belief that defensive medicine reduces the likelihood of claims for malpractice.  Interestingly, the authors note that the effectiveness of defensive medicine could be a reason why efforts to reduce physician spending have been difficult.

The full study is available online at:

The long-anticipated implementation of ICD-10 coding finally began this past Thursday, October 1, 2015.  As of that date, government and commercial payors ceased to accept claims under the old coding system (ICD-9).  The transition has been five years in the making due to a government delay in 2012.

The new system has five times the codes of the prior system, including everything from “problems in relationship with in-laws” to “pedestrian injured in collision with roller skater” to “burn due to water-skis on fire”.  The hope is that the breadth and detail of the new codes will provide greater accuracy and increase reimbursement rates.  However, the complexity of ICD-10 could also cause substantial delays in reimbursement from both the provider side and the insurer side.  While CMS and other insurers are committed to ensuring that the implementation of the new system is completed, it is up to each provider to prepare for and manage the transition in their own practice.

Here are a few tips for your practice during the transition:

  • Mitigate the risk of longer-than-expected reimbursement times by setting aside a reserve fund to cover interim operating expenses, such as payroll, in the event of a one to two week delay in reimbursement during the next few months.
  • Whenever your staff has specific claims questions, contact the appropriate payor sooner rather than later.
  • If you haven’t already, consult your practice management and EHR software vendors to find out how they recommend using their technology with the new coding system.
  • In an effort to speed up the learning curve, consider asking your billing and coding staff to dual code a few charts each day.  This will give them additional opportunities to train, while reducing the need for extra training sessions down the line.

These are uncertain times for physicians.  The future of healthcare is uncertain for everyone involved, from payors to providers to consumers.  In fact, there may be only one universal certainty about the future of healthcare: things are changing and are going to continue to change.

The federal Affordable Care Act (ACA) has sent shivers of panic through all levels of the industry.  Payors are scrambling to find ways to control burgeoning premium and provider costs.  Their stated goal is to transition reimbursement from fee-for-service to models based on quality and performance metrics (though no one has really figured out how to accomplish that goal).

Hospitals and other providers are racing to form Accountable Care Organizations (ACOs) and other networks to try to take advantage of these promised “new reimbursement models”.  Unfortunately, developing a network that can effectively control costs and performance across a continuum of care is virtually impossible without knowing what criteria payors will pay for, how those criteria will be measured and how they will be incentivized/rewarded.  As a result, most of the provider networks  I have encountered in the last couple of years are suffering “all hat, no cattle syndrome” — which is to say that they have big plans for managing care but don’t yet have any payor contracts that will pay them for doing so.

For many physicians, particularly those in private practice, the lack of certainty and the resulting panic in the marketplace can be maddening.   Looking for any kind of certainty, many physicians have sold or are considering selling out to a hospital.  Unfortunately, as noted above, hospitals generally have no better idea of what the future of healthcare will look like than anyone else.  Not surprisingly then, most hospital-physician employment agreements have a term of no more than three years, and more and more often, hospitals are building mechanisms into their employment agreements to permit them to reevaluate compensation even before the end of the agreement term.

What will make the most sense for a particular physician or practice will depend on a variety of factors, many of which will be subjective.  While there can likely never be any guaranty that a particular decision in this regard will result in success, the chances of making the right decision will be greatly improved with some careful self-evaluation and planning.

The next several posts on this blog will explore some of the big practice planning decisions physicians are being faced with and the various practical and legal considerations  that physicians should evaluate in making those decisions.  Topics to be covered will include whether to sell, merge or stay the same, identifying the right “partners”, optimizing practice performance to adapt to change and contracting for successful relationships.

Many physicians are aware of the push by the Medicare program to move away from a fee for service physician payment model to one which recognizes higher quality and lower cost care.  However, few physicians have a good understanding of how such payment models would work and how their practices would fair under them.  This week, the Centers for Medicare and Medicaid Services (CMS) released some important  data regarding one of these value-based payment programs: the Value Modifier program.

The Value Modifier program seeks to reward physicians who provide high quality and low cost care by increasing their reimbursement by a “value modifier”.  Physicians who do not score favorably under the program will, in turn, be subject to a downward payment adjustment.  This week, CMS published a summary of the results of the first year of the program which initially applied only to physician groups of 100 or more.

In the initial year of the program, groups subject to the Value Modifier had the option to participate in a tiering program (which will be mandatory starting in 2016).  Under this program, depending on their cost and quality scores, groups would either be subject to an upward payment adjustment, a neutral payment adjustment or a downward adjustment.  Of 691 group practices subject to the Value Modifier, only 127 initially elected to participate in the tiering program.  Of these 127 groups, only 106 submitted sufficient data to receive both cost and quality scores for tiering purposes.  According to the published results, 14 groups will receive an upward adjustment; 11 groups will receive a downward adjustment and 81 groups will have a neutral adjustment (i.e., no adjustment ).  None of the groups earned the highest modifier adjustment available for quality and low cost.

The Value Modifier program will apply to all physician groups and solo practitioners beginning in 2016.  Physicians need to be paying careful attention to this and other value-based payment programs as it is clear that CMS is serious about shifting payment arrangements in this direction.

According to various news outlets, physicians at the University of California student health centers (as many as 150 physicians in all) went on strike this week in protest of what they believe are unfair labor practices by the University.  These physicians are members of the Union of American Physicians and Dentists.  The protest stems from contract negotiations between the Union and the University which have been ongoing for many months.  While this is only the first time in more than 25 years that physicians in the United States have gone on strike, with more and more physicians becoming employees of large health systems and insurance companies, this strike could be a sign of things to come in the not too distant future.