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

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

Recently, the Centers for Medicare & Medicaid Services (CMS) proposed a crucial revision to the 60-day overpayment rule, which could have a profound impact on Medicare participating providers and entities. Understanding these proposed changes is essential for healthcare providers to ensure compliance and avoid potential liability

Current Overpayment Refund Rule

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).

Proposed Change: Replacing the “Reasonable Diligence” Standard

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).

Potential Implications and Broader Liability

If the proposed change is implemented, providers would need to be even more vigilant in identifying and quantifying overpayments promptly. This shift in standards could increase the risk of liability for non-compliance, making it crucial for healthcare entities to stay informed about the latest regulatory developments.

How Nicholson & Eastin, LLP Can Assist You

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.