Medicare Compliance & Reimbursement

Don’t forget about the six-year lookback period, too.

Accidents happen. And, when your books show you’re on the wrong side of an overpayment, it’s only natural that you feel obliged to send those funds back to the government. Since the Feds require you to identify them of the overpayment ASAP, it’s a good idea to review the 60-day rule to ensure your practice is on theup-and-up.

Background: CMS issued a rule last year setting a 60-day limit on returning overpayments to federal agencies. The important thing to remember is that while the rule might seem simple, it actually represents some big changes related to compliance — and a practice that fails to comply might face huge penalties. Here’s what you need to know to stay out of hot water with CMS.

Final rule: On Feb. 12, 2016, CMS published in the Federal Register the much-debated final rule on Medicare overpayments — the so-called “60-day rule” — that requires providers to report and return overpayments within 60 days of their identification. The final rule would subject providers and suppliers that retain overpayments beyond the 60-day time period to the reverse false claims provision under the False Claims Act, says a summary by Ropes & Gray.

Refresher: The 60-day rule arose from language in the 2010 Affordable Care Act (ACA) requiring providers to identify, report, and return Medicare overpayments or else face false claims liability, Civil Monetary Penalties, or even exclusion from Medicare.

Beware: “This rule makes the retention of an innocent overpayment a potential basis for a False Claims Act or exclusion or other horrible outcome for an organization,” warns attorney Lawrence Vernaglia with Foley & Lardner. “Determining whether in fact you were overpaid through a highly complex Medicare regulatory scheme — and even if you were, how much you need to give back — is just not that easy.”

The final rule applies to Medicare Parts A and B, and a separate May 2014 rule applies to overpayments under Parts C and D. Although CMS has not published a final rule addressing Medicaid, some states have developed their own related guidance and requirements, Ropes & Gray explains.

Lookback Time Frame Shortened

Under the final rule, you must report and return overpayments only if you identify the overpayment within six years of the date you received the overpayment.

“This six-year lookback period is down from the 10-year period reflected in the proposed rule,” note attorneys Stephanie Sprague Sobkowiak and Daniel Kagan with Murtha Cullina in a recent analysis. “This change aligns the final rule with similar state and federal record-retention requirements and helps to address providers’ concerns regarding the burden and cost of a 10-year lookback period.”

The six-year lookback is not retroactive and was effective as of March 14, 2016. But CMS advises providers and suppliers that the ACA statutory requirements have been in effect since 2010.

Translation: “This means that all providers and suppliers reporting and returning overpayments on or after March 14, 2016 — even overpayments received prior to March 14, 2016 — must comply with the new regulatory requirements,” states an analysis by Foley & Lardner.

Follow this process: Although the proposed rule suggested that providers and suppliers use the voluntary refund process when reporting and returning overpayments, the final rule provides further explanation, according to Ropes & Gray. “CMS has now clarified that providers and suppliers may use the claims adjustment, credit balance, self-reported refund process, or other appropriate process to report and return overpayments.”

CMS hopes this approach will provide an array of familiar options from which providers and suppliers can choose for returning overpayments. And the final rule grants CMS the right to change this process or create new processes in the future as it sees fit.

Also, the final rule does not limit you to reporting a self-identified overpayment using either the CMS-managed or the HHS Office of Inspector General-managed Self-Referral Disclosure Protocol. Instead, CMS will consider you to be in compliance with the 60-day rule’s provisions as long as you’re actively engaged in either protocol.

Important: “Regardless of the process used, the refund should include an explanation of the statistical sampling methodology used if an overpayment was calculated by extrapolation,” Ropes & Gray notes.

Remember: 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.

Note: See the rule online at https://federalregister.gov/a/2016-02789.