CMS Recently Proposed Important Change to 60-Day Overpayment Refund Rule

Posted on Fraud Investigation, Health Care Law News, Medicare Reimbursement February 27, 2023 by Erin Ferber

CMS recently proposed a revision to the 60-day overpayment rule that would impact Medicare participating providers and entities.

Generally speaking, a provider must return an overpayment within 60-days after the date on which the overpayment was identified.  A person has identified an overpayment when the person 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.  A person should have determined that the person received an overpayment and quantified the amount of the overpayment if the person fails to exercise reasonable diligence and the person in fact received an overpayment. 42 CFR §401.305(a)(2).

Because the process of identifying and quantifying an overpayment can be complex and therefore take some time, CMS has taken the position that “reasonable diligence” is demonstrated by timely, good faith investigation of credible information of an overpayment.  Typically this should take no more than 6 months, except under “extraordinary circumstances.”  That being said, the 60-day clock to report and refund an overpayment does not generally start running until after the overpayment has been identified and quantified, which CMS contemplates may take up to 6 months.

In December 2022, CMS proposed a change to this rule that would replace the “reasonable diligence” standard with the False Claims Act knowledge standard.  More specifically, in the proposed change, a provider has “identified” an overpayment when the person knowingly received an overpayment, either through actual knowledge of the existence of an overpayment or through acting in reckless disregard or with deliberate ignorance of the overpayment. See 87 Fed. Reg. 79452, 79559 (Dec. 7, 2022).  While it remains to be seen how this proposed change would be enforced, this proposed change could significantly broaden potential liability.

The attorneys at Nicholson & Eastin, LLP, routinely assist providers in determining whether a Medicare overpayment has been received and, more importantly, identified for purposes of this rule.  If you believe you may have received an overpayment from Medicare, please do not hesitate to contact the attorneys at Nicholson & Eastin, LLP.  We will be monitoring the proposed rule change and would be happy to discuss how it may affect you and your practice.