CMS Final Rule Clarifies 60-Day Deadline for Returning Overpayments

Labs and other providers are required by a provision enacted in the Affordable Care Act to return overpayments to Medicare within 60 days of identifying the overpayment. Violations of the rule subject the provider to False Claims liability and a fine ranging from $5,500 to $11,000 per claim. What constitutes identification of an overpayment, however, has caused much debate and concern. A 2012 proposed rule didn’t add much clarity and a New York federal court decision last year in U.S. ex rel. Kane v. Continuum Health Partners, Inc., caused much consternation. Now, however, the Centers for Medicare & Medicaid Services (CMS) has issued a final rule interpreting the 60-day repayment requirement.

Health care attorney Robert E. Mazer, of Ober Kaler, explains that the final rule applies to Medicare Part A and B providers and suppliers “reporting and returning overpayments on or after March 14, 2016, irrespective of the date on which the overpayment was received.”

The final rule clarifies “the meaning of overpayment identification; the required lookback period for overpayment identification; and the methods available for reporting and returning overpayments to CMS,” according to CMS press release.

On those three issues, the final rule states:

• An overpayment is identified “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.”
• The lookback period is six years, meaning if an overpayment is identified within six years of the date payment was received, the recipient must comply with the 60-day rule.
• Repayments must be achieved using “an applicable claims adjustment, credit balance, self-reported refund, or other reporting process set forth by the applicable Medicare contractor.” The OIG’s self-disclosure and CMS’ self-referral disclosure protocols also may serve as a method to report overpayments.

CMS clearly emphasizes in the preamble to the rule that an overpayment is any amount which a lab receives to which it isn’t entitled—whether the result of fraud, inadvertent error or mistake. This interpretation of what constitutes an overpayment is in keeping with CMS’ stated objective: “Our general aim of this final rule is to strengthen program integrity and to ensure that the Medicare Trust Funds are protected and made whole and that taxpayer dollars are not wasted. An overpayment must be reported and returned regardless of the reason it happened—be it a human or system error, fraudulent behavior or otherwise.”

Mazer also notes that “in the case of an overpayment resulting from a violation of the Federal Anti-kickback or Stark Statute, or goods or services provided by an excluded individual, the entire amount received is considered to be an overpayment.”

We’ll provide more detailed analysis of this final rule in the April issue of G2 Compliance Advisor. Robert E. Mazer, together with his colleague Kelly J. Davidson, also a health care lawyer with Ober Kaler, will be presenting a webinar addressing this final rule and what it means for labs and pathology groups April 13, 2016. For more information, visit the G2 Intelligence website, www.g2intelligence.com/web/.

Takeaway: Centers for Medicare & Medicaid Services has finally provided labs some clarity about when the 60-day deadline for repaying Medicare overpayments begins to run, how to calculate the overpayment amount and how far back liability for overpayments extends.