Home Health & Hospice Week

What to understand about Medicare’s latest move and what you should do now to be ready.

You’re going to have a lot less time to clean up overpayment obligations, or face Medicare recoupment action much sooner — including interest or even referral to the U.S. Treasury for collection.

After the surprise announcement that Medicare was intending to change the 60-day Overpayment Rule, the Center for Medicare & Medicaid Services final rule on the topic has left providers hanging and wondering what they will do next.

Background: In the 2024 Medicare Advantage Program Proposed Rule issued in December 2022, CMS included its intent to amend existing regulations for Medicare overpayments (Parts A, B, C, and D) and the requirements to report and return them.

Shocker (or Maybe Not): CMS issued the MA Final Rule April 5, 2023 codifying many proposed changes but completely ignoring the overpayment revisions. It did state that the agency was not addressing comments received on provisions not finalized (e.g., overpayments) but warned it will address them at a later time, such as in possible future rulemaking, as appropriate.

Remember, if the proposed changes become final, you’ll need to move f-a-s-t to identify overpayments as the 60-day clock will start ticking sooner than you know. What’s more, it appears that CMS won’t care if you can determine that it is a true overpayment in that timeframe and what the exact amount is that you overpaid.

Here's The 60-Day Rule Now

The current refund rule (42 C.F.R. § 401.305) allows you time to perform reasonable diligence to make the decision that a true overpayment has occurred and to quantify the amount of the overpayment.

Definition: In the 2016 final rule, CMS described reasonable diligence to include both “proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments” and “investigations conducted in good faith and in a timely manner by qualified individuals in response to the receipt of credible information of a potential overpayment.”

Once you become aware of a potential overpayment CMS expects you to:

• investigate and confirm you have been overpaid,
• determine the amount of the overpayment,
• notify the government and return the entire overpaid amount, and
• include a written statement as to the reason for the overpayment.

The 60-day clock to return the overpayment to the government does not start until after you quantify the overpayment amount. The clock will start ticking much sooner if CMS’s proposed changes become final.

Problem: The latest proposed revisions do not appear to take into consideration that all situations are not straight­forward and it can sometimes take time to investigate and assess matters to determine if there is an actual overpayment and to quantify the amount overpaid.

This thinking was included in the illustrative remarks in the February 2016 Overpayments Final Rule but was missing in the rule’s proposed changes.

In 2016, CMS allowed for reasonable diligence to demonstrate a timely, good faith investigation of credible information; at most six months from receipt of the credible information.

CMS explained that it chose six months as the benchmark because it believes you should prioritize these investigations. However, it also did so to recognize that completing these investigations may require the devotion of resources and time.

In fact, a total of eight months was specified — six months for timely investigation and two months for reporting and returning funds — as a reasonable amount of time, absent any extraordinary circumstances.

Exception to the Rule: Per CMS, extraordinary circum­stances include unusually complex investigations that you reasonably anticipate will require more than six months, such as physician self-referral law (Stark Law) violations. Other types of extraordinary circumstances mentioned included natural disasters or a state of emergency.

Check Out Proposed Changes

If adopted, CMS proposed regulatory changes will remove the existing reasonable diligence benchmark and adopt the False Claims Act (FCA) knowing standard.

The intent is to remove existing § 401.305(a)(2) language which states: “A person has identified an overpayment when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment. A person should have determined that the person received an overpayment and quantified the amount of the overpayment if the person fails to exercise reasonable diligence and the person in fact received an overpayment” (emphasis added).

The update would replace it with wording that reads: “A person has identified an overpayment when the person knowingly receives or retains an overpayment. The term ‘knowingly’ has the meaning set forth in 31 U.S.C. 3729(b)(1)(A).”

“Knowingly” is defined in the FCA section: “that a person, with respect to information — (i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information.”