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February 16‚ 2012
CMS Publishes Proposed Rule on Return of Medicare
and Medicaid Overpayments
By Karen S. Lovitch
and Stephanie D. Willis
Health care providers and suppliers concerned about how the Centers for Medicare & Medicaid
Services (CMS) plans to implement the 60-day deadline for
returning Medicare and Medicaid overpayments enacted as part of the Affordable
Care Act (ACA) now have a proposed
rule that provides some insight.
Section 6402(a) of the ACA created a new section 1128J
of the Social
Security Act, and it establishes that the failure to report and
return an overpayment within 60 days of identifying its existence can give
rise to liability under the False
Claims Act (FCA). The proposed rule applies only to
overpayments identified by Medicare Part A and B providers and suppliers,
but CMS made clear that Medicare Advantage Organizations, Medicaid Managed
Care Organizations, and Prescription Drug Plans under Medicare Part D still
have an obligation under various statutes to report and return
overpayments.
Overpayment Identification
Since the enactment of section 1128J, providers and suppliers
have wondered when the 60-day clock begins to tick. CMS attempted to
address this issue but left many questions unanswered. According to
the proposed rule, an overpayment is “identified” if the provider or supplier
has actual knowledge of the existence of the overpayment or acts in
reckless disregard or deliberate ignorance of the overpayment. CMS
believes that this standard, which is consistent with the False Claims Act,
will motivate providers and suppliers to exercise reasonable diligence to
determine whether an overpayment exists.
CMS acknowledged that providers and suppliers may need time
to conduct a “reasonable inquiry” after receiving information regarding a
potential overpayment (e.g., a compliance hotline report) to confirm that
an overpayment was in fact received. In such cases, reporting and
return of the overpayment must occur within 60 days of completing the
inquiry. To illustrate application of the requirement, CMS provided a
number of examples but offered very little concrete guidance on how it will
determine whether an inquiry is “reasonable.” It did note, however, that
failure to act “with all deliberate speed” could result in the provider or
supplier knowingly retaining an overpayment.
Section 1128J allows providers who submit cost reports to
report certain types of overpayments when the cost report is due rather
than within 60 days of identification, but CMS made clear that such
providers cannot delay the return of claims-based overpayments. For
example, a provider may report an overpayment of graduate medical education
funds at the cost report deadline, but overpayments resulting from
inaccurate coding of claims must be returned within 60 days of
identification.
Process for Reporting and Return of Overpayments
Providers and suppliers would report overpayments to the
appropriate Medicare contractors using the existing voluntary refund
process in Chapter 4 of the Medicare
Financial Management Manual, which will be renamed the
“self-reported overpayment refund process.” Because the
self-disclosure mechanisms employed by CMS and the Office of Inspector General (OIG)
may create duplicate reporting obligations, CMS proposed that providers and
suppliers who report overpayments through the OIG Self-Disclosure
Protocol should not also report and return overpayments
through the self-reported overpayment refund process. But providers
and suppliers who report overpayments through CMS’s Self-Referral
Disclosure Protocol still must go through the self-reported
overpayment refund process because the 60-day requirement would only be
suspended with regard to the Stark self-referral statute-related component
of the overpayment. CMS is seeking comment on alternative approaches
that would eliminate the need for multiple reports of identified
overpayments.
The Lookback Period
For now, CMS has determined that all providers should report
overpayments that may have occurred within a ten-year lookback period,
which is consistent with the ten-year statute of limitations under the
False Claims Act. CMS believes that this requirement will offer
providers and suppliers certainty and that it will sufficiently further its
interest in the timely return of overpayments. CMS therefore proposed
an amendment to the reopening
rules to allow for this change. At present, the
reopening rules state that the Medicare contractors can reopen claims
within one year for any reason, within four years for “good cause,” and any
time if evidence of “fraud or similar fault” exists. Absent any
evidence of wrongdoing, providers and suppliers who identify overpayments
typically repay claims received within the last four years. If the
reopening rules are amended to require repayment of claims over a ten-year
period, providers and suppliers will be required to repay at least ten
years’ worth of claims in all cases.
Areas for Comment and Comment Period
CMS is specifically seeking comment on anticipated burdens
and costs associated with the proposed rule’s reporting and repayment
requirements, the appropriateness of the ten-year lookback period, and
other ways to alleviate provider and supplier burdens that may arise from
complying with the increased overpayment reporting and repayment
obligations under the ACA. These comments are due by April 16,
2012. In the meantime, providers and suppliers should act quickly
when investigating potential overpayments and document all steps in the
investigation to ensure the ability to document that the inquiry was “reasonable”
and conducted with “all deliberate speed.”
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