CMS clarifies 60-day overpayment rule


A blue door with two small holes in it.The Centers for Medicare & Medicaid Services (CMS) has published its long-awaited final rule that details the reporting and returning of Medicare Part A and B overpayments.

The proposed rule left providers asking many questions. The final rule provides needed clarity and consistency in the reporting and returning of self-identified overpayments. It is designed to answer critical questions including when an overpayment is “identified.†The new rule also adopts a six-year lookback period instead of the originally proposed ten-year period.

Specifically, the final rule requires providers and suppliers receiving funds under the Medicare program to report and return overpayments by the later of the date that is 60 days after the date on which the overpayment was identified; or the date any corresponding cost report is due, if applicable. Failure to do so could expose a provider to False Claims Act liability, civil monetary penalties, or exclusion from federal healthcare programs.

Healthcare providers and suppliers also must continue to comply with current CMS procedures when CMS, or its contractors, determine an overpayment exists and issue a demand letter.

The 60-Day Overpayment Rule grew out of the Affordable Care Act which created a new section of the Social Security Act, Section 1128j(d)(1), which requires the recipient of an overpayment to report and return it within 60 days after the date on which the overpayment was identified.

The proposed rule used an “actual knowledge†standard to define the term “identified.†The final rule, however, creates a “reasonable diligence†standard.  Under this standard, “a person has identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined both that the person has received an overpayment and quantified the amount of the overpayment.â€

The statute also left unclear the so-called “look-back†period. It offered a 10-year look-back period, based on the outer limit of the False Claims Act’s statute of limitations. The final rule states that overpayments must be reported and returned only if a person identifies the overpayment within six years of the date the overpayment was received.

“Creating this limitation for how far back a provider or supplier must look when identifying an overpayment is necessary in order to avoid imposing unreasonable additional burden or cost on providers and suppliers,†states CMS.

To satisfy the obligation to report and return overpayments, providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or another appropriate process. However, CMS also has reserved the right to modify or create new processes in the future.

The final rule takes effect March 14. If you have any questions or concerns, contact us at 305 358-4500 or email us at info@vitalehealthlaw.com.

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