In February 2015, I wrote a blog addressing CMS' delay in clarifying a proposed rule that had come out on Feb. 16, 2012. The rule required providers who discover an overpayment to refund it within 60 days, or else be considered to have made a "false claim." For purposes of the proposed rule, an "overpayment" includes any funds that a person receives or retains under the Medicare or Medicaid programs to which that person is not entitled. The issue with the proposed rule was that it was unclear exactly when an overpayment had occurred, when the 60-day rule period started to run, or even how far back the reach of the 60-day rule applied.
Providers and counsel can now be somewhat relieved that CMS has finally published the much-awaited Final Rule regarding reporting and returning of Medicare Part A and B overpayments (the "Final Rule"), which will take effect March 14, 2016. The Final Rule requires providers to exercise "reasonable diligence" through "timely, good faith investigation of credible information." To do this will require proactive and reactive reviews of Medicare billing (and not just responding to an audit or complaint). The Final Rule also clarifies the 60-day clock will start after the reasonable diligence period has concluded, which may take "at most [six] months from receipt of credible information, absent extraordinary circumstances." Extraordinary circumstances are, according to CMS, complex investigations such as a Stark Law violation. Most importantly, an overpayment is not "identified" until the amount of the refund has been "quantified." Based on the Final Rule, if you do the math, a provider will have six months at most to quantify a claim and then 60 days to report and refund any overpayments.
Failure to comply with the requirements of the Final Rule can lead to federal False Claims Act liability as a "reverse" false claim. Therefore, it is strongly advised that all providers and suppliers comply with the new regulatory requirements. One other important point in this Final Rule is that while the proposed rule suggested a 10-year look-back period, based on the outer limit of the False Claims Act's statute of limitations, the Final Rule set the limit at a six-year look-back period. This certainly helps create certainty for providers in terms of calculating potential overpayments and could reduce amounts that may need to be repaid. You can find out more about this Final Rule at 81 Fed. Reg. 7654-7684 (Feb. 12, 2016).
If you are not already regularly auditing your practice's billing records, now is the time to create a formal process to get started. The burden is on the practice to find and refund overpayments. Consider a review of random charts from each provider that reflect the variety of services your practice offers, at least annually. I usually recommend an outside auditor to get a perspective that your current billing staff or outside billing company may not have. Make sure the audit is done through legal counsel to assure attorney-client privilege, and don't forget to get appropriate business associate agreements signed in advance and comply with HIPAA in sharing any information. For practices that think they cannot afford to engage in the auditing process, my response is simple: You can't afford not to!