CMS Issues Proposed Rule on Reporting and Returning Overpayments
On February 14, 2012, the Centers for Medicare and Medicaid Services (CMS) issued its long-awaited proposed rule on reporting and returning overpayments to the Medicare program. The proposed rule implements section 6402(a) of the Affordable Care Act, which established a new section 1128J(d) of title XVIII of the Social Security Act (the Act), and would require providers and suppliers that receive Medicare funds to report and return any overpayments within 60 days of identifying the overpayment, or, if applicable, the date that any corresponding cost report is due, whichever is later. The proposed rule will be published in the Federal Register on February 16, 2012. Comments to the proposed rule are due no later than 5:00 pm, April 16, 2012.
Although the Act defines an “overpayment” as funds received under Medicare or Medicaid to which the person is not entitled, and “person” as a provider, supplier, Medicaid managed care organization (MCO), Medicare Advantage Organization (MAO), or PDP sponsor, at this time CMS is proposing to implement the requirement to report and return overpayments only as they relate to Medicare Part A and Part B providers and suppliers. CMS intends to address other stakeholders, including MCOs, PDP sponsors and MAOs at a later time.
Definitions:
CMS is proposing the following definitions:
- Overpayment: CMS proposes to adopt the statutory definition of overpayment, which is “. . . any funds that a person receives or retains under title XVIII . . . to which the person, after applicable reconciliation, is not entitled under such title.” Section 1128J(d). This would include, for example, payments for services not covered or in excess of the allowable amount of a covered service, duplicate payments, and Medicare payments when another payor is primary.
- Medicare Contractor: Under the proposed regulations, a “Medicare contractor” would mean a fiscal intermediary, carrier, durable medical equipment Medicare administrative contractor, or Part A/Part B administrative contractor.
- Person: CMS proposes to define a “person” as a provider or supplier.
In addition, there has been much confusion over what it means to have “identified” an overpayment, and exactly when such identification occurs for purposes of running the 60-day timeframe within which overpayments must be reported and returned. CMS is proposing that a person has identified an overpayment when “the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.” The rationale behind this interpretation is to incentivize providers and suppliers to exercise reasonable diligence in determining whether overpayments exist. Failure to make a reasonable inquiry into information concerning a potential overpayment could result in the provider or supplier knowingly retaining an overpayment, on the theory that it acted in reckless disregard or deliberate ignorance of whether an overpayment existed.
CMS’ proposal, while clarifying the statutory requirement somewhat, fails to do so with sufficient specificity. For example, a provider may be aware that an overpayment exists, but does not know the exact amount of the overpayment. It is unclear from the proposed regulations whether knowledge of an unidentified amount of overpayment would start the 60-day clock running, or whether such time does not start to run until the exact amount of the overpayment has been determined.
Requirements for Reporting and Returning Overpayments:
CMS proposes to implement the reporting and returning of overpayments requirements by using the existing voluntary refund process, as described in the Medicare Financial Management Manual, which it will rename the “self-reported overpayment refund process.” The proposed regulation would require the following information to be reported:
- Person’s name;
- Person’s tax identification number;
- How the error was discovered;
- The reason for the overpayment;
- The health insurance claim number, as appropriate;
- Date of service;
- Medicare claim control number, as appropriate;
- Medicare National Provider Identification number;
- Description of the corrective action plan to ensure that the error does not occur again;
- Whether the person has a corporate integrity agreement with the Office of the Inspector General (OIG) or is under the OIG Self-Disclosure Protocol;
- The timeframe and the total amount of refund for the period during which the problem existed that caused the refund;
- If a statistical sample was used to determine the overpayment amount, a description of the statistically valid methodology used to determine the overpayment; and
- A refund in the amount of the overpayment.
Section 1128J of the Act requires overpayments to be reported and returned by the later of (1) 60 days after the date on which the overpayment was identified; or (2) the date on which an applicable cost report is due, if applicable. CMS is proposing to adopt the statutory requirement in the regulations. For claims-related overpayments, the 60-day requirement would apply; however, for providers that submit cost reports, if the overpayment is one that would be reconciled on the cost report (e.g. graduate medical education payments), the provider must report and refund the overpayment on the later of 60 days from identification or on the date that the cost report is due.
Exceptions:
CMS is proposing to suspend the obligation to refund overpayments in two scenarios: (1) when knowledge of the receipt of an overpayment is disclosed to CMS through the Medicare Self-Referral Disclosure Protocol (SRDP); and (2) when disclosures are resolved through the OIG Self-Disclosure Protocol (SDP). Such suspensions, however, would not relieve the provider or supplier from reporting any related overpayment.
With regard to the SRDP, CMS is seeking comments on how to avoid requiring providers and suppliers to make multiple reports of identified overpayments. The obligation to return an overpayment acknowledged through submission to the OIG SDP would only be suspended until the parties enter into a settlement agreement, or the provider or supplier withdraws or is removed from the OIG SDP. In addition, notification to the OIG through the OIG SDP would constitute a report for purposes of the proposed reporting requirements, provided such notice is made within the proposed timeframes.
Applicable Reconciliation:
CMS proposes that “applicable reconciliation” would occur when a provider submits its cost report, whether it is an initial or an amended cost report. CMS, however, also proposes two exceptions to the rule that applicable reconciliation occurs at the time the cost report is submitted: (1) receipt of updated Supplemental Security Income (SSI) ratio used to calculate the disproportionate share hospital (DSH) payment adjustment; and (2) calculating outlier reconciliation.
With regard to the SSI ratio, when a provider later receives updated SSI ratio data, “the provider would not be required to amend the cost report or calculate the change in reimbursement and return the potential overpayment until the final reconciliation of the provider’s cost report occurs.” In instances involving outlier reconciliation, which is not performed until the cost report is settled, a “provider would not be required to estimate the change in reimbursement and return the estimated overpayment until the final settlement of that cost report.”
Enforcement:
Under section 1128J(d) of the Act, an overpayment retained after the applicable deadline is an obligation for purposes of the False Claims Act, and liability under such act could be found, including Civil Monetary Penalties Law liability and exclusion from participation in Federal health care programs.
Look-back Period:
CMS is proposing a 10 year look-back period for reporting and returning overpayments. Overpayments, therefore, must be reported and returned if identified within 10 years of the date on which the overpayment was received. CMS states that it is using 10 years because that is the outer limit of the False Claims Act statute of limitations. This would appear too long of a look-back period, especially considering that, as acknowledged by CMS, overpayments are not always the result of false or fraudulent claims. Accordingly, a fraud-based look-back period would appear to be inappropriate here.
In addition, CMS is proposing to amend the reopening regulations to coincide with the 10-year look-back period. Specifically, cost reports could be reopened for a period of 10 years if an overpayment is reported in accordance with these proposed regulations.
CMS is seeking comments on both the 10-year look-back period and the proposal to amend the reopening rules.
