Reporting and Returning Overpayments
By Duane Abbey, PhD, CFP
On Feb. 16, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule in the Federal Register (see 77 FR 9179-9187). The comment period for this proposed rule closes on April 16. This entry is in response to Section 6402 of the Patient Protection and Affordable Care Act (PPACA). Please consider commenting on whether you agree or disagree with the proposed rule, as several suggested areas for comment are included in this article.
All coding, billing and compliance personnel for all providers and suppliers should read this entry. While the proposed rule does provide some clarity about certain situations, to some extent CMS is proposing to raise the bar of oversight relative to a number of issues.
Here are some of the key issues covered by the entry:
- Identification of overpayments - 60-day period
- Reporting and repayment process
- Definition of overpayment
- The 10-year lookback period
- Extended repayment
- Anti-kickback complications
- Everything in this proposed rule pertains to overpayments. A reasonable suggestion would be to ensure that all the same rules (among whichever rules are implemented) apply to any identified underpayments as well.
- This proposed rule addresses only providers and suppliers covered under Part A and Part B. Other payment processes will be discussed later, but CMS certainly hints at the fact that all healthcare providers under Medicaid should address the concepts of this proposed rule.
- See also the self-reported overpayment process as found in CMS Publication 100-06, Chapter 4.
Once an overpayment is identified, the 60-day reporting and repayment period starts. What does it mean to identify an overpayment? Per CMS, "... we propose that a person has identified an overpayment if the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment." (77 FR 9182)
Well, what if a case arises requiring significant investigation as to whether an overpayment situation exists? In this case CMS provides some latitude for investigation, but such investigations must proceed with all deliberate speed. As usual, be certain to document everything done to address a possible issue generating overpayments. Obviously, this particular phrase will end up in court in litigation.
Also, what is an overpayment? Overpayments involve Medicare payments received or retained by a person or entity not entitled to them. CMS gives some examples:
- Payments for non-covered services
- Payments in excess of an allowable amount
- Erroneous and non-reimbursable expenditures in cost reports
- Duplicate payments
- Improper payments when Medicare is secondary
CMS also gives some further examples in the form of scenarios (see 77 FR 9182):
- A provider of services or supplier reviews billing or payment records and learns that it incorrectly coded certain services, resulting in increased reimbursement.
- A provider of services or supplier learns that a patient death occurred prior to the service date on a claim that has been submitted for payment.
- A provider of services or supplier learns that services were provided by an unlicensed or excluded individual on its behalf.
- A provider of services or supplier performs an internal audit and discovers that overpayments exist.
- A provider of services or supplier is informed by a government agency of an audit that discovered a potential overpayment, and the provider or supplier fails to make a reasonable inquiry.
- A provider of services or supplier experiences a significant increase in Medicare revenue and there is no apparent reason - such as a new partner added to a group practice or a new focus on a particular area of medicine - for the increase. Nevertheless, the provider or supplier fails to make a reasonable inquiry into whether an overpayment exists.
Clearly, CMS is interpreting the definition of "overpayments" broadly.
Note that certain providers and suppliers are reimbursed based on cost, specifically Critical Access Hospitals (CAHs), Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs). For some such providers, the interim payment rate may be too high, meaning that overpayment occurs during a given cost-reporting year. In these cases, the 60-day period has little meaning, and such overpayments (as well as underpayments) are reconciled at the cost report settlement.
 Presumably, "non-covered" would include provided services that were not medically necessary.
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