Health Reform WK-EDGE What providers should know about the 60-day Medicare overpayment rule
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Wednesday, September 7, 2016

What providers should know about the 60-day Medicare overpayment rule

By Harold Bishop, J.D.

Important information regarding the "identification" of overpayments, the length of the "look-back" period, and how to report and refund Medicare Parts A and B overpayments under CMS’ 60-day overpayment rule were discussed by Scott R. Grubman of Chilivis Cochran Larkins & Bever LLP) in a recent Health Care Compliance Association (HCCA) webinar.

The Final rule (February 12, 2016, 81 FR 7653) requires health care providers and suppliers receiving payments under the Parts A and B programs to report and return overpayments by the later of the date that is 60 days after the date an overpayment is "identified," or the due date of any corresponding cost reports (see CMS finally codifies the 60-day Parts A and B overpayment return rule, February 12, 2016). Another Final rule was published on May 23, 2014 (79 FR 29844), which addressed the return of Medicare Parts C and D overpayments (see Medicare Parts C and D 2015 participation requirements and payment accuracy addressed, May 27, 2014). Both Final rules were published to implement section 6402(a) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

According to Grubman, despite the fact that the Final rules only amended the Medicare regulations, CMS makes it clear in its commentary that the 60-day overpayment rule also applies to Medicaid. He further cautioned that the overpayment rule not only applies to funds received or retained due to fraud, but also due to inadvertent reasons. Some examples of overpayments, according to Grubman, include the following:

  • payments received for non-covered services;
  • payments received in excess of the allowable amount for a particular covered service;
  • errors and non-reimbursable expenditures in cost reports;
  • duplicate payments;
  • receipt of Medicare primary payment when another payor had primary responsibility for the payment;
  • insufficient documentation;
  • lack of medical necessity; and
  • claims tainted by Stark (physician self-referral) and Anti-kickback law violations.

Identification. According to Grubman, under 42 C.F.R. sec. 401.305(a)(2), "identification" means "when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amountof the overpayment." Grubman stressed that the provider cannot purposely delay quantification in order to defeat identification.

Grubmann defined "reasonable diligence" in section 401.305(a)(2) as requiring both proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments; and investigationsconducted in good faith and in a timely manner by qualified individuals in response to obtaining credible information of a potential overpayment.

The bottom line, according to Grubman, is that once a provider receives credible information of possible overpayment, it has six months to conduct an investigation and identify the overpayment. In addition, once the overpayment is identified (confirmed and quantified), the provider has 60 days to report the overpayment and make the refund (a total of eight months from the receipt of credible information).

Grubman believes that Medicare contractor overpayment determinations are alwaysa credible source of information for other potential overpayments. However, a provider cannot just pay identified overpayment and move on; it must also determine whether there is additional overpayment within what is known as the look-back period.

Look-back period. The Final rule specifies a six-year look-back period. This, according to Grubman, means that the total overpayment equals the amount of all identified overpayments made within the six-year period. Grubman noted that this six-year look-back period is the same length of time as record retention obligations under the Health Insurance Portability and Accountability Act (HIPAA) (P.L. 104-191).

Reporting and returning overpayments. The Final rule states that: "[I]f a person has received an overpayment, the person shall both report and return the overpayment to the Secretary [of HHS], an intermediary, a carrier, or a contractor, as appropriate, at the correct address; and notify the Secretary, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment."

Grubman recommended a report and return package containing: (1) a cover letter describing reason for overpayment and any extrapolation or sampling used, (2) the overpayment refund form, and (3) a check for amount of overpayment (unless the provider is requesting a payment offset).

With regards to returning overpayments, Grubman cautioned that the Final rule states that the deadline to report and return an overpayment may be extended in two situations. First, if the Office of Inspector General (OIG) acknowledges receipt of submission to the Self-Disclosure Protocol (SDP) or CMS acknowledges receipt of submission to the Self-Referral Disclosure Protocol (SRDP) (as established by section 6409 of the ACA), the deadline is extended until the matter is settled, the provider withdraws, or is removed from the protocol. If withdrawn or terminated from the SDP or SRDP, the provider has 60 days from that date to report and return overpayment, according to Grubman.

Second, if the provider requests a repayment plan, the deadline is extended until the request is rejected or the provider fails to comply with the plan. Grubman cautioned that a repayment plan request merely suspends the return deadline, not the reporting deadline.

Attorneys: Scott R. Grubman (Chilivis Cochran Larkins & Bever LLP).

Companies: Health Care Compliance Association

IndustryNews: NewsStory ProviderPaymentNews MedicaidNews MedicarePartANews MedicarePartBNews MedicarePartCNews MedicarePartDNews

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