Today, the Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule requiring health care providers and suppliers to report and return self-identified overpayments. The proposed rule implements Section 6402(a) of the Patient Protection and Affordable Care Act, which requires that an overpayment be reported and returned by the later of: (1) the date which is 60 days after the date on which the overpayment is identified, and (2) the date any corresponding cost report is due, if applicable. This section provides that any overpayment retained by a person after the deadline for reporting and returning the overpayment is an “obligation” that may cause the provider or supplier to be liable under the False Claims Act.
The proposed rule adopts the Affordable Care Act definition of an “overpayment”- viz., “any funds that a person receives or retains under title XVIII…to which the person, after applicable reconciliation, is not entitled under such title.” CMS provides the following examples of overpayments:
- Medicare payments for noncovered services
- Medicare payments in excess of the allowable amount for an identified covered service
- Errors and nonreimbursable expenditures in cost reports
- Duplicate payments
- Receipt of Medicare payment when another payor had the primary responsibility for payment
Under the proposed rule, a person is deemed to have “identified” an overpayment if the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment. CMS notes that the failure to make a reasonable inquiry into information concerning a potential overpayment could result in the provider knowingly retaining the overpayment. To assist providers with understanding when an overpayment has been identified, CMS provides the following examples:
- A provider or supplier reviews billing or payment records and learns that it incorrectly coded certain services, resulting in increased reimbursement
- A provider or supplier learns that a patient death occurred prior to the service date on a claim that has been submitted for payment
- A provider or supplier learns that services were provided by an unlicensed or excluded individual on its behalf
- A provider or supplier is informed by a government agency of an audit that discovered a potential overpayment, and the provider or supplier fails to make a reasonable inquiry
- A provider or supplier experiences a significant increase in Medicare revenue and there is no apparent reason for the increase, and the provider or supplier fails to make a reasonable inquiry into whether an overpayment exists
CMS fails to explain how the proposed rule applies where a provider or supplier learns that it has received an overpayment but has not yet determined the amount of the overpayment (e.g., a provider discovers a Stark violation with respect to a particular referring physician but has not yet determined what items or services billed by it were the result of improper referrals from that physician). In such a case, the proposed definition of “identified” could indicate that the 60-day period begins to run from the date the Stark violation was discovered, regardless of the need for the provider to determine the actual amount of the overpayment through an analysis of referrals from the physician and billings by the provider for such referred items and/or services.
CMS notes that although a report under the Medicare Self-Referral Disclosure Protocol (“SRDP”) suspends the running of the 60-day deadline under Section 6402(a) of the Affordable Care Act to return an overpayment, providers and suppliers making such a report under the SRDP would nevertheless also have to report under the self-reported overpayment refund process. However, providers or suppliers reporting under the OIG Self-Disclosure Protocol would not also have to report under the self-reported overpayment refund process. Specifically with regard to the SRDP, CMS notes that it is soliciting comments on alternative approaches that would allow providers and suppliers to avoid making multiple reports of identified overpayments.
The proposed rule implements the requirements of Section 1128J(d) by using the existing voluntary refund process, renamed the “self-reported overpayment refund process.” Under the existing voluntary refund process, providers and suppliers report overpayments using a form that each Medicare contractor makes available on its website.
The proposed rule establishes a 10-year look-back period that parallels the False Claims Act statute of limitations. Overpayments identified after 10 years from the date the overpayment was received are not subject to the self-reported overpayment refund process.
Comments on the proposed rule must be submitted by April 16, 2012.