Under Section 6402(a) of PPACA, providers, suppliers, Medicare Advantage organizations, prescription drug plan sponsors, and Medicaid managed care organizations are required to report and return Medicare overpayments within the later of sixty (60) days after the overpayment is identified or the due date of any corresponding cost report, if applicable. If an overpayment is not reported and returned within this 60-day period, providers may be exposed to harsh penalties and liability under the False Claims Act and the Civil Monetary Penalties Law.
Since the passage of PPACA, there has been some confusion among those in the healthcare industry regarding their obligations under Section 6402(a), especially with regard to when an overpayment exists, when such overpayment should be reported, and how to report the overpayment. The recently proposed regulation is designed to answer some of these questions with respect to Medicare Part A and Part B providers and suppliers. Clarification for Medicare Advantage organizations, prescription drug plan sponsors, and Medicaid managed care organizations, who are all also bound by the provisions of Section 6402(a) of PPACA, will be addressed by CMS at a later date.
Critical to determining a provider's obligations under the reporting requirement is determining what is considered an overpayment and when such overpayment is identified. The proposed regulation defines an overpayment as "any funds that a person has received or retained under title XVIII of the Act to which the person, after applicable reconciliation, is not entitled under such title." In the proposed regulation, CMS offers examples of what would constitute an overpayment under this definition, including payments for non-covered services, payments in excess of allowed amounts, errors and non-reimbursable expenditures in cost reports, and duplicate payments.
The proposed regulation also clarifies when an overpayment has been identified, triggering the running of the 60-day period. An overpayment is identified if "a person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the existence of the overpayment." CMS also offers examples on when an overpayment is identified, such as when a provider discovers billing records in which it incorrectly coded certain services, a provider learns that a patient death occurred prior to the service date on which a claim has been filed, a provider learns that the services were rendered by an unlicensed or excluded individual, or a provider performs an internal audit and discovers that an overpayment has been made. Under this definition, providers must exercise reasonable diligence to determine whether an overpayment exists.
In that regard, the proposed regulation states that a provider will be in violation if the provider fails to affirmatively, and with deliberate speed, seek information about possible overpayments when there is reason to suspect the provider has been overpaid. For example, a provider who receives information that a potential overpayment may exist could be subject to liability if the provider fails to reasonably inquire as to whether or not such an overpayment does in fact exist. This application has broad implications for providers and is likely to receive criticism from members of the healthcare industry.
Under the proposed regulation, providers and suppliers must report and return any overpayments that are identified within ten (10) years of when the overpayment is received. The ten (10) year look-back period, if effective, could be problematic if documents and information regarding the claims are no longer readily available.
Overpayments should be reported and returned within the later of sixty (60) days after the overpayment is identified or the due date of any corresponding cost report, if applicable. Overpayments should be reported and submitted using the existing voluntary refund process for disclosing overpayments. While CMS intends to create a new standard form for reporting such overpayments, the existing voluntary refund process form should be used until the new form is developed.
Finally, the proposed regulation notes that the 60-day period will be suspended if the overpayment is reported through the CMS or the Office of Inspector General ("OIG") self-disclosure protocols. In such situations, the 60-day period with regard to repayment of the overpayment will be suspended as of the date of acknowledgement that a submission has been received by either CMS or the OIG and until the matter is either removed from the disclosure process or settled.
While the proposed rule is just that, a proposed regulation, and will not take effect until the final rule is released, it does provide insight into the aggressive approach that CMS plans to take in implementing the 60-day overpayment provision of PPACA. Further, even though the proposed rule is not yet in effect, CMS makes it clear that providers are currently required to comply with the 60-day statutory requirement implemented by PPACA.
Comments to the proposed rule may be submitted until April 16, 2012. Submitted comments may be viewed at http://www.regulations.gov.
Kelli Fleming is an associate with Burr & Forman LLP and practices exclusively within the firm's Health Care Practice Group.
