Congress enacted the Patient Protection and Affordable Care Act ("PPACA") on March 23, 2010. Included among the provisions of the PPACA was Section 6402(a), entitled "Reporting and Repayment of Overpayments" (the "Overpayment Statute"). This Overpayment Statute provides that a healthcare provider that has received an "overpayment" must return the overpayment within the later of: (i) sixty (60) days of the date on which the overpayment was "identified", or (ii) the date that the applicable cost report is due.
The Overpayment Statute defines an "overpayment" as any amount received or retained by a provider from Medicare or a state Medicaid program, which the provider was not entitled to be paid or otherwise receive or retain. The Overpayment Statute further provides that failure to repay the overpayment by the deadline established in the law creates an "obligation" which could trigger liability under the federal False Claims Act and the Civil Monetary Penalties Law, which could in turn trigger exclusion from the Medicare program.
The Centers for Medicare and Medicaid Services ("CMS") published proposed rule implementing the Overpayment Statute on February 16, 2012 (the "Proposed Rule"). The Proposed Rule establishes policies and procedures for reporting and returning overpayments for providers and suppliers who are reimbursed under Part A or Part B of the Medicare program.
CMS incorporated the statutory definition of "overpayment" into the Proposed Rule. It then gave several examples of overpayments, including the following: (i) payments for non-covered services, (ii) payments in excess of the "allowable amount", (iii) errors and non-reimbursable expenditures on cost reports, and (iv) duplicate payments.
The Overpayment Statute requires that a provider who has received an "overpayment" must report and return the overpayment to CMS, the intermediary, carrier or a contractor, "as appropriate", and to provide a written explanation for the overpayment. CMS proposed to implement these requirements using the existing voluntary refund process, described in Publication 100-06, Chapter 4 of the Medicare Financial Management Manuel. This process involves using the form of the applicable Medicare contractor to specifically identify affected claims; and, to provide information required by the form relating to the overpayment, including the reason for the overpayment, how it was identified, and other required information. CMS acknowledged that the forms vary from contractor to contractor, and stated that it intended to develop a uniform reporting form. Until then, however, providers are directed to use the applicable contractor's form.
Under the Proposed Rule, a provider has "identified" an overpayment when the provider has actual knowledge of the existence of the overpayment, or when it acts in "reckless disregard or deliberate ignorance" of the overpayment. CMS stated that the "reckless disregard or deliberate ignorance" standard ensures that providers will not avoid taking actions that are designed to identify overpayments. CMS stated that the 60-day deadline under the "reckless disregard or deliberate ignorance" standard begins to run on the date the provider obtains information regarding a possible overpayment. CMS then gives several examples of situations in which a provider may "obtain information" about a potential overpayment which would trigger a duty to investigate, including the following: (i) the provider receives a tip on a compliance "hotline", (ii) the provider conducts a billing audit and "learns" it incorrectly coded certain services, (iii) the provider "learns" that a patient death occurred prior to the service dates on a claim, and (iv) the provider "learns" that services were provided by an unlicensed professional. Other than the example set forth in subsection (i), however, the remaining examples are arguably examples of situations where a provider has actual knowledge of an overpayment.
CMS acknowledged that there are "intersections" between a provider's obligation to report obligations under the PPACA and the Stark Law Self-Referral Disclosure Protocol. CMS stated that the 60-day repayment period would be suspended in connection with claims that are subject of a self-disclosure repayment filing. The notice filed by the provider under the Self-Disclosure protocol will not serve as the written report of the overpayment that is required under the Overpayment Statute, however. The provider must file a separate written report to meet the requirement of the Overpayment Statute. CMS specifically sought comments on alternative approaches to allow providers to avoid making multiple reports in this case.
CMS also recognized intersections between the obligation to report overpayments under the PPACA, and procedures for self-disclosing possible fraud to The Office of Inspector General under the OIG Self-Disclosure Protocol. Again, CMS stated that the report to the OIG Protocol will suspend the 60-day repayment timeline. CMS further stated, however, that notice to the OIG would serve as the "report" for the purpose of meeting the reporting requirements under the Overpayment Statute. Thus, providers who are undergoing the OIG Self-Disclosure Protocol are not required to file multiple reports.
CMS has proposed a 10 year "look back period" with respect to overpayments. Therefore, CMS proposes that providers must report any overpayment identified by the provider within 10 years of the date the overpayment was received. CMS also proposed amending the cost report reopening rules to provide that cost reports that reflected the receipt of an overpayment may be reopened for a period of 10 years. CMS stated it selected this 10 year period because 10 years is the "outer limit" of the Statute of Limitations under the False Claims Act. CMS stated that it "seeks comment"' on the proposed 10 year look back period, and on the 10 year reopening period.
The comment period for the Proposed Rule closes April 16, 2012. CMS is likely to receive a significant number of comments to the Proposed Rule. The Proposed Rule creates considerable uncertainty surrounding the definition and standards for "identifying" overpayments, and the process for reporting and repaying overpayments identified by the provider. In addition, the 10 year "look back" rule is exceeding long and is likely to create considerable unanticipated burdens and costs on providers.
This article was originally published in the March 2012 issue of Atlanta Hospital News.