The Sixty Day Rule
The Centers for Medicare and Medicaid Services (CMS) has finally issued its final rule related to the reporting and refunding of Medicare Part A and Part B overpayments, also known as the “60 Day Rule.” The Final Rule requires healthcare providers to repay an overpayment and to notify the federal government, the state, and any “intermediary, carrier or contractor to whom the overpayment was returned in writing of the reason for the overpayment,” within sixty days of first identifying the overpayment. Providers who fail to heed the sixty day reporting and return window can face potential civil monetary penalties and incur False Claims Act liability.
The 60 Day Rule will go into effect 30 days after its publication in the Federal Register, which is likely to be February 12, 2016. As a reminder, Medicare providers and suppliers have had an obligation to report and refund identified Medicare overpayments since the Affordable Care Act’s enactment in 2010.
Identification
This new rule simply clarifies that an overpayment is considered “identified” when a provider or supplier “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.” CMS believes that this clarification of the standard should allow for consistency in the application of the 60 Day Rule.
Standard for Knowledge
The standard that CMS is using for knowledge is not “actual knowledge,” but instead is when the provider would have identified the overpayment, had it exercised a reasonable level of diligence. This standard is known as the “reasonable diligence” standard, and comes into play, as noted above, once a person has “identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined both that the person has received an overpayment and quantified the amount of the overpayment.”
Some physicians are concerned that when they get a hotline complaint about billing Medicare incorrectly, that hotline complaint is what triggers the countdown, and from that time forward, they only have sixty days to find it and return the money. Tony Maida, JD, Partner in the Health Industry Advisory Group at McDermott Will & Emery, advised CMS on drafting the proposed 60 Day Rule while he was at the Department of Health and Human Services Office of Inspector General, says that is not true. “The clock doesn’t start to tick as soon as the call comes in, as long as the physician exercises reasonable diligence in looking into it.” Maida continues, stating, “there’s an obligation to decide if that call gives you what CMS calls ‘credible information’ of a potential overpayment and if it does…then the provider should exercise reasonable diligence to look into it and determine whether in fact they have received an overpayment and how much that overpayment is.” It isn’t until that process is completed that the sixty days to report and return starts to run. However, if you receive a hotline call and fail to investigate it, then CMS may find that you “failed to exercise reasonable diligence and you may be violating” the 60 Day Rule.
How Must Refund Be Made
The Final Rule specifies, “providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or another appropriate process to satisfy the obligation to report and return overpayments.” The reason for the government specifying the payment and delivery of the overpayment could possibly be to prevent providers from mailing in the repayment in the hopes that the agency does not notice a potentially more serious bill overpayment.
Look-Back Provision
The 60 Day Rule also provides for a look-back period of six years, instead of the ten years CMS had originally put in its 2012 proposed rulemaking. This means that CMS can review six years of claims for any additional overpayments on top of the original overpayment identified by the provider or supplier.
Tony Maida believes that “reducing the lookback period is a positive move.” While a six year period is almost unanimously preferred, some groups are displeased that CMS didn’t shorten the lookback period even further. Wanda Filer, MD, MBA, President of the American Academy of Family Physicians (AAFP), for example, expressed her dissatisfaction by saying, “Six years is better than 10 years, but not as good as 3 years which is what we would prefer. We will continue to encourage CMS – maybe once they’ve got the learning curve established on 6 years, maybe 3 years may become more palatable.”
If you are interested, Mintz Levin has provided a “Comparison of the Proposed Rule to the Final Rule Medicare Program; Reporting and Returning of Overpayments,” to aid in your review of the changes between the Final Rule and the Proposed Rule.