March 5, 2012
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Health Law Alert: Keeping Ten Years’ Worth of Records on Hand: CMS Proposes 60 Days to Repay Overpayments
The Centers for Medicare and Medicaid (CMS) has released proposed regulations to implement a key Affordable Care Act (ACA) initiative requiring reporting and returning “overpayments.” Once finalized, the regulations will fill in much of the detail about how providers must disclose and return overpayments within 60 days of the date an overpayment is identified. The proposed rule takes an aggressive interpretation of the ACA mandate, while only touching on the complexities of coding, billing, and other reimbursement requirements. It also creates a 10-year look back period for identifying and repaying overpayments. Without substantial changes, the regulations will impose heavy burdens on providers. Overpayments retained beyond the 60-day period are actionable under the False Claims Act (FCA), and thus may expose providers to significant financial liability as well as exclusion from participating in federal health care programs. Providers are encouraged to review and comment on the proposed rule by April 16, 2012.
The Proposed Rule
Who is affected?
What is an “overpayment”?
When is an overpayment “identified”?
CMS offers several examples of when an overpayment has been “identified.” For instance, an overpayment has been identified when a review of billing or payment records discloses incorrect coding. CMS also notes that an overpayment is identified where a provider “experiences a significant increase in Medicare revenue and there is no apparent reason for the increase,” but nonetheless fails to make a reasonable inquiry. This is because a provider who experiences a large revenue increase, but fails to explore why, may be found to have acted in reckless disregard or with deliberate ignorance. Likewise, a provider who receives an anonymous tip on a compliance hotline about a potential overpayment, but fails to timely investigate the matter, could be found to have acted with reckless disregard or deliberate ignorance.
When does the 60-day clock start?
Anti-Kickback Statute and Stark Law Self-Disclosures
CMS recognizes that overpayments may arise from violations of the Anti-Kickback Statute that are not apparent to the provider submitting the claim. CMS gives the example of a hospital that bills for services, unaware that a device manufacturer has paid kickbacks to a physician on the medical staff to induce that physician to implant the manufacturer’s device at the hospital. CMS states that in instances where providers are not a party to an illegal kickback arrangement, they are unlikely to have “identified” an overpayment and no resulting obligations will follow. However, the duty does arise if the provider possesses sufficient knowledge of the Anti-Kickback arrangement that would trigger one of the “knowledge” standards noted above.
For overpayments that are the subject of a disclosure through the CMS Self-Referral Disclosure Protocol, the 60-day deadline for returning overpayments related to physician self-referrals would be suspended. The proposed rule clarifies that a self-disclosure under the SRDP only suspends the 60-day deadline for repayment and does not affect the provider’s obligation to report the overpayment through the self-reported overpayment refund process.
Prepare for the Final Rule
The proposed rule is yet another powerful weapon in CMS’ arsenal of fraud fighting tools. Given the scope of penalties available for not reporting overpayments within the short time frame allowed, providers should evaluate their ability to identify, understand, report, and return overpayments within the 60-day period. Providers are strongly encouraged to submit comments to CMS so that the agency understands the impact the proposed rule may have on provider operations.
If you have questions about the proposed regulations, please contact Jesse Berg at firstname.lastname@example.org or 612.632.3374.
Don’t forget to register for Gray Plant Mooty’s upcoming Health Law Roundtable, "Crisis Management for the Health Care Provider: Successfully Navigating the Law and Public Relations," to be held this Thursday, March 8, at 7:30 a.m. RSVP by email to email@example.com or by phone to 612.632.3170.
This article is provided for general informational purposes only and should not be construed as legal advice or legal opinion on any specific facts or circumstances. You are urged to consult a lawyer concerning any specific legal questions you may have.
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