May 27, 2012

HHS OIG Identifies $332 Million in Uncollected Medicare Overpayments

On Friday the Office of Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”) made public a report which revealed that the Centers for Medicare and Medicaid Services (“CMS”) had failed to collect over $332 million in Medicare overpayments, for the 30-month period ending March 31, 2009.

During that time, OIG had issued reports recommending that CMS collect approximately $418 million in Medicare overpayments.  CMS delegates this responsibility to Medicare contractors.  However, OIG found that CMS efforts at recapturing these overpayments were hindered by two factors in particular.  First, OIG found that the statute of limitations in the Federal Claims Collection Act of 1966, which bars recovery from providers that are “without fault” at any time and deems providers to be “without fault” 3 years after the year payment is made unless there is “evidence to the contrary,” had precluded recovery of a large amount of the overpayments, which OIG now deems unrecoverable.

Second, the OIG found that CMS did not provide adequate guidance to the recovery contractors regarding documentation of recoveries or reporting collections to CMS.  The OIG also concluded that CMS did not adequately monitor the recovery contractors’ efforts to ensure diligence and did not require supporting documentation to verify collections.

OIG made five specific recommendations to CMS, including pursuing legislation to extend the statute of limitations, as well as several recommendations to improve oversight of Medicare recovery contractors and tracking of collections.

The report also noted the Patient Protection and Affordable Care Act’s (“PPACA”) provisions requiring a person who has received an overpayment to report and return the overpayment within 60 days after the date the overpayment was identified or, if applicable, 60 days after the corresponding cost report is due.  OIG observed that the 60-day requirement “may affect overpayment recoveries related to OIG audit findings, and we plan to work with CMS as it implements this requirement.”  Given this large percentage of unrecoverable overpayments, providers should closely monitor further developments regarding the 60-day requirement.