CMS Releases Proposed Rules for Reporting and Returning Medicare Overpayments for Parts A and B

The Centers for Medicare & Medicaid Services (CMS) released proposed rules (42 C.F.R. Part 401, Subpart D) for Medicare overpayments to implement section 6402(a) of the Affordable Care Act enacted in 2010.  The Act requires that overpayments be reported and returned to the appropriate Medicare or Medicaid contractor within (60) days from the date the overpayment was identified or by the date a corresponding cost report was due, whichever is later.  The proposed rules set forth the policies and procedures for reporting and returning overpayments to the Medicare program only for providers and suppliers of services under Parts A and B.

The highlights of the Federal Register:

  • Identification – The term “identified” has remained a gray area requiring clarification as to whether the person is required to report an overpayment prior to conducting an investigation or ascertaining the amount of the overpayment.  CMS proposes that a person has 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 (§401.305(a)(2)). CMS provides multiple examples of when an overpayment is deemed to have been identified and proposes that a provider or supplier will have an opportunity to conduct a diligent investigation after receiving any information or complaint to determine whether an overpayment exists.
  • Internal Audit – CMS does not mandate a provider or supplier conduct a scheduled internal audit, but suggests the definition of “identified” gives an incentive to exercise reasonable diligence to conduct self-audits, compliance checks, and other additional research.  However, CMS states that if the provider fails to conduct an investigation after receiving any information or complaint of a potential overpayment it may have acted in reckless disregard or deliberate ignorance of an overpayment.
  • Refund Process – CMS proposes to utilize the existing voluntary refund process described in Publication 100-06, Chapter 4 of the Medicare Financial Management Manual, which will be renamed the “self-reported overpayment refund process.”  The form will require (9) specific categories of information, including the amount of the overpayment.  In instances where there is an intersection between reporting an overpayment and reporting potential fraud to the OIG (i.e. Anti-kickback), CMS proposes to suspend the obligation to report the overpayment upon acknowledgement of receipt from the OIG.

The Federal Register includes examples of what a person may report as the reason for the overpayment, including the following: (1) incorrect service date; (2) duplicate payment; (3) incorrect CPT code; (4) insufficient documentation; and (5) lack of medical necessity.

The Federal Register states that CMS intends to address policies and procedures for MAOs, PDPs, and Medicaid MCOs at a later date.

This post was contributed by Charles Dunham.