Medicare Compliance & Reimbursement

If Medicare overpaid you, send the extra cash back — ASAP.

Consider this nightmare scenario: Your office performs its annual internal audit, which reveals that Medicare overpaid you thousands of dollars for services you incorrectly billed. This is one of those situation that no Medicare provider wants to uncover. What do you do to fix the issue, when the unthinkable happens to you?

Read on to discover what our experts advise on how to overcome overpayment obstacles.

Background: In 2016, CMS mandated the timeline associated with Medicare overpayments, using language and guidance from both the Fraud Enforcement Recovery Act of 2009 and the Affordable Care Act (ACA) of 2010. The payback rules outlined by the agency indicate that the liability falls on the provider, whether the overpayments resulted from intentional fraud or an honest mistake.

“This is true even if there is only suspicion of the error,” said Michael D. Miscoe, JD, CPC, CPCO, CPMA, CASCC, CCPC, CUC, president of Practice Masters Inc. and founding partner of Miscoe Health Law in Central City, Pennsylvania, during his presentation at AAPC’s HealthCon in April. Even a general letter from the government about problem codes being used incorrectly across specialties, which might not mention any specific practice by name, is suspicion enough, Miscoe notes, and should prompt practices to audit their records and repay any obligations.

Follow These 3 Guidelines for Overpayment Issues

Miscoe outlines three steps that every practice needs to go through in order to become compliant when it is overpaid for services:

1. Return the money. CMS rules stipulate a 60-day limit on returning overpayments to federal agencies. And while the rule might seem simple, you’ll want to ensure you comply since compliance failure could lead to huge penalties.

As Miscoe puts it, regardless of fault, and regardless of whether the overpayment was full (in the case of claims that were not medically necessary or covered) or partial (in the case of upcoding or an incident-to reporting error), the practice must return the money immediately. “Medicare’s default position,” in Miscoe’s estimation, “is, ‘we want our money back.’”

The reasoning: Every practice occasionally handles overpayments, but the 60-day rule is designed to help practices identify systemic overpayment problems. Federal officials expect providers to keep close enough tabs on payments to find any coding or billing issues early so they can be dealt with in a timely fashion.

2. Conduct an internal audit to determine the cause of the problem. Once the practice has returned the initial overpayment, it has a six-month window to conduct “reasonable diligence to determine whether there are more overpayments on the same issue,” according to Miscoe. This will involve going back six years in the case of an internal audit, though contractors are only obliged to go back five years.

3. Report and return any other monies found in the audit. After you perform a comprehensive audit of your billing practices, any overpayments you discover should then be refunded to CMS within the 60-day window. In addition, CMS goes with the assumption that you will fix any and all underlying problems to avoid future overpayments.

Reminder: The clock starts ticking on the date the issue is discovered, not the date of service or payment.

Additionally, Miscoe recommends that practices report “how the overpayments were identified and quantified, and what corrective measures they have implemented” to correct the issue.

In Miscoe’s estimation, it is this last step that will show that your practice is acting in good faith. “If you have a culture of compliance and errors are found,” Miscoe explains, “evidence of the culture — the continuous process of risk analysis, evaluation, and re-evaluation through internal audits — will be in your favor.”

It’s a position that Kent Moore, senior strategist for physician payment at the American Academy of Family Physicians, wholeheartedly endorses. “Ideally,” Moore argues, “periodic internal self-audits involving a sample of claims should be standard operating procedure within the practice, not just a result or consequence after a problem is identified.”

Tip: If your practice does find evidence of overpayments, Moore advises that you have “some explanation of how the practice identified the overpayment and, if applicable, what steps the practice is taking to avoid such overpayments in the future. This can help demonstrate the positive intent of the practice and show that the practice is a responsible part of the health plan’s network.”

Dealing with any overpayments quickly is important because if federal agencies discover that you knew about overpayments and failed to repay them promptly, you could be looking at penalties related to the False Claims Act (FCA) or the Civil Monetary Penalties Law (CMPL).

Bad news: Worst case scenario — your practice could be excluded from all federal healthcare programs if the evidence shows you didn’t follow through and repay the extra cash.

It’s no fun to identify an overpayment, especially if it turns out to be part of a larger issue that requires work to correct. But once you do pinpoint the problem, it’s in your best interest to fix it, both to avoid penalties and because it’s the right thing to do.

Check out the MLN booklet on Medicare overpayments at www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/OverpaymentBrochure508-09.pdf.