Medicare Overpayments: What Do You Do And When?

Fri, Apr 15, 2016 --


medicare overpayments, long term care facilities, health care consultants, healthcare consulting, medicare 60 day rule


CMS recently published Medicare’s long-awaited “60-day rule” in the Federal Register. How will this newly published rule on returning Medicare overpayments affect your practice?

What’s the 60-Day Rule?

The Affordable Care Act (ACA) of 2010 included language compelling providers to identify, report, and return any overpayments by Medicare. If providers failed to comply with this express duty, the ACA included sanctions such as false claims liability, civil money penalties, and exclusion from Medicare.

The rule, which was published in the Federal Register on February 12, went into effect on March 14. It requires providers and suppliers to report and return overpayments within 60 days that those overpayments are identified. If providers and suppliers keep overpayments beyond the 60-day window, they become subject to the False Claims Act — even if the overpayments were not their fault.

To Comply With the 60-Day Rule, Understand ‘Identify’

While providers were waiting for the final rule’s guidance, many debated when that 60-day clock started running. The ambiguity of this part of the ACA statute left providers wondering whether identification occurred at the moment a billing error was verified, the second the overpayment amount was determined, or when a call to a compliance hotline alleged an overpayment.

The Centers for Medicare & Medicaid Services admitted this problem, adding in the Federal Register final rule that “Some commenters stated that the proposed rule actually provides a disincentive to undertake compliance audits for fear of creating liability for identifying an overpayment.”

Here is CMS’s final word on “identification” of overpayment: “A person has identified an overpayment when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.” CMS added that providers who do not perform regular audits or self checks are not using reasonable diligence. Simply investigating based on hotline complaints or staff reports would not meet CMS’s reasonable diligence standard.

When Does the Clock Start Ticking?

Generally, the 60-day clock starts when the amount of the overpayment is determined. However, that rule of thumb applies only when the provider uses a “timely, good faith investigation of credible information, which is at most 6 months from receipt of the credible information, except in extraordinary circumstances,” according to CMS. If the provider doesn’t follow up on a credible tip and an overpayment did apply, the 60-day clock instead starts running “on the day the person received the credible information,” CMS says.

Good News — A 6-Year Look-Back Period

A look-back period of six years is good news because CMS initially pushed for a 10-year look-back period for overpayments. But most existing record retention rules require keeping records for six years. Plus, conducting accurate audits of material 10 years back would require providers to create huge sample sizes to review. Finally, CMS backed down to a six-year look-back period, which it said is consistent with other federal and state laws.

What About You?

What do you think? Are you ready for the new 60-day rule? Let us know in the comment box below.

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Susan taught health information and healthcare documentation at the community college level for more than 20 years. She has a special love for medical language and terminology. She is passionate about ensuring accurate patient healthcare documentation through education. She has a master's degree in healthcare administration, is a certified healthcare documentation specialist, and serves as immediate past president for the Association for Healthcare Documentation Integrity (AHDI).

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