BY Phuong D. Nguyen, Esq. and Michael R. Alexander, Esq., Brown & Fortunato, P.C.
Earlier this year, the Centers for Medicare and Medicaid Services (“CMS”) published a Final Rule amending the standards for an “identified overpayment.” As a recap, the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act”) requires that an overpayment be reported and returned by the later of 60 days after the date the overpayment was identified or the date any corresponding cost report is due, if applicable (the “60-Day Rule”). Overpayments must be reported and refunded by health care providers and suppliers, as well as Medicare advantage organizations and Medicaid managed care organizations. Failure to report and refund an overpayment by the applicable deadline can result in liability under the False Claims Act.
The Affordable Care Act defined “overpayment” as any funds that a person receives or retains under Medicare or Medicaid to which the person is not entitled after applicable reconciliation. A key question is when an overpayment is “identified” as that starts the 60-day countdown. The Final Rule states that a person has identified an overpayment when the person knowingly receives or retains an overpayment. The rule further defines the term “knowingly” to have the same meaning as that term is defined under the False Claims Act. In its commentary, CMS noted that the Final Rule is consistent with the knowledge requirement applicable to the False Claims Act so the same knowledge requirement will apply for both the False Claims Act and 60-Day Rule. That is, a person knowingly receives or retains an overpayment when the health care provider or supplier has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.
Some public comments to the Final Rule expressed the need for time to investigate, calculate, and report and return overpayments. To address such concerns, CMS included a suspension of the reporting and refund for up to 180 days to give health care providers time to conduct a good faith investigation of the existence and extent of the initially identified overpayment. CMS explained that in cases where the health care provider is actively investigating a potential overpayment, the 60-day deadline for reporting and refunding the overpayment begins when the provider has actual knowledge of the overpayment, but the suspension of the 60-day period is limited to 180 days. In other words, a provider has up to 180 days to investigate a potential overpayment and, once the overpayment is known, 60 days to report and refund the total overpayment, which includes the aggregate amount of the initially identified overpayment and related overpayments.
Based on CMS’s comments, in practice, this means that when a health care provider becomes aware of a single overpayment, either through internal reviews or from external reports, and suspects that the underlying issue may impact additional claims, then the health care provider must investigate and calculate the aggregate overpayment. The health care provider has up to 180 days to investigate and calculate the overpayment and, once calculated, 60 days to report and refund the aggregate of all overpayments arising from the underlying issue. In cases where a health care provider acts in deliberate ignorance or reckless disregard of the existence of the overpayment, the 60-day period begins on the date the provider acted in deliberate ignorance or reckless disregard of the truth or falsity of information regarding the overpayment. In other words, a health care provider cannot stick its head in the sand when it receives information about a potential overpayment.
In addition to 180 days for good faith investigation of a potential overpayment, the 60-day deadline can also be suspended where the Office of Inspector General (“OIG”) acknowledges receipt of a health care provider or supplier’s submission of a Self-Disclosure Protocol. Similarly, the 60-day deadline can be suspended where CMS acknowledges receipt of the submission of a CMS Voluntary Self-Referral Disclosure Protocol. Under such cases, the 60-day deadline remains suspended until a settlement agreement is entered, or the person withdraws or is removed from the self-disclosure or self-referral disclosure protocol. Lastly, the 60-day deadline can be suspended when a health care provider or supplier requests an extended repayment schedule. In such cases, the deadline remains suspended until CMS or a Medicare contractor rejects the extended repayment schedule request, or the provider fails to comply with the terms of the extended repayment schedule.
The 60-Day Rule has a 6-year “lookback” period, meaning that a health care provider must report and refund any overpayment that is identified within 6 years of the date the overpayment was received. Overpayments may be reported through an applicable claims adjustment, credit balance, self-reported refund, or other reporting process set by the applicable Medicare contractor. Because failure to report and refund an overpayment can result in liability under the False Claims Act, it is important for health care providers and suppliers to heed the timelines and deadlines for the 60-Day Rule.