Home Health & Hospice Week

Case hinges on when provider ‘identified’ overpayment.

When an employee or consultant tells you that you owe Medicare money, you’d better start the 60-day repayment clock. So indicates a game-changing court case that should change the way you track overpayments from Medicare and Medicaid.

Background: In the case, Kane v. Healthfirst, Inc. et al. (and U.S. v. Continuum Health Partners Inc. et al.), the defendants included Continuum Health Partners Inc., Beth Israel Medical Center and St. Luke’s-Roosevelt Hospital Center (see Eli’s HCW, Vol. XXIV, No. 18). The case came about from a whistleblower claim by a former employee, who had been tasked with examining an overpayment issue, according to an analysis by attorney Greg Montgomery of Ogden Murphy Wallace Attorneys in Seattle. After providing his employer with a spreadsheet detailing the overpayments, his employer fired him and “filed” the spreadsheet, the suit claimed.

The U.S. District Court for the Southern District of New York is hearing the case. On Aug. 3 the judge denied the defendants’ motion to dismiss.

Why This Case Is So Important

A key provision in the Affordable Care Act is the 60-day repayment rule, which requires providers to refund overpayments to Medicare and Medicaid within the strict timeframe. In this case, the defendants argued that simply knowing about a potential overpayment was not enough to trigger the 60-day repayment provision.

Significance: “This case … is important because it is the first time there has been a court opinion addressing the meaning of the term ‘identified’ as used in the law,” explains Susan Kayser, a New York City-based attorney with Duane Morris. “Draft regulations published in 2012 have not been finalized.”

The court found that the word “identified” means the date on which a provider is “put on notice” that Medicare or Medicaid may have overpaid a claim, Kayser says. “The court said that providers cannot delay commencement of the 60-

day period until the overpayment amount has been definitively determined.”

The government argued that the former employee’s email and spreadsheet properly “identified” the overpayments within the ACA’s meaning, according to an analysis by attorneys Thomas Ferrante Jr. and Rhada Bachman of Carlton Fields Jorden Burt. But the providers argued that the email “only provided notice of ‘potential’ overpayments and did not identify actual overpayments so as to trigger the ACA’s 60-day report and return clock.”

‘Prosecutorial Discretion’May Save You — If You’re Diligent

Caveat? The court acknowledged the “demanding standard of compliance” and the burden the law places on providers to investigate and refund potential overpayments within 60 days, Kayser notes. “However, there was a suggestion that prosecutorial discretion could act to assist a provider that did not comply with the letter of the law but acted diligently to attempt to determine an overpayment amount within the required timeframe.”

This could mean that whether you’re subject to enforcement action for failing to report and return an overpayment within the 60-day window may depend on how you behave after learning of the potential overpayment, Montgomery said. The court characterized the False Claims Act’s legislative history as “unforgiving” in that it provides no leeway for providers who are struggling to isolate and return all overpayments within 60 days.

The FCA “nowhere requires the government to grant more leeway or more time to a provider who fails to timely return an overpayment but acts with reasonable diligence in an attempt to do so,” the court wrote. However, the court stated that it “would counsel against the institution of enforcement actions aimed at well-intentioned healthcare providers working with reasonable haste to address erroneous overpayments.”

Luckily, the government vocally agreed with the court’s sentiments, stating that it would not bring a case involving a provider that was working diligently on the claims but did not manage to meet the 60-day deadline despite faithful efforts.

Lesson learned: “So the moral of the story is if a messenger notifies you of a potential overpayment, be nice, act with diligence to investigate and quantify any overpayment, and for goodness sake don’t shoot the messenger,” Montgomery stressed.

Note: To read about CMS’ overpayment rule, go to www.federalregister.gov/articles/2015/02/17/2015-03072/medicare-program-reporting-andreturning-of-overpayments-extension-of-timelinefor-publication-of.