February 17, 2016
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After Nearly Six Years of Uncertainty, CMS Establishes Final Standards for Reporting and Returning Medicare Overpayments
Six-Month Investigation Benchmark
According to CMS, “reasonable diligence” includes both proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments and investigations conducted in good faith, and in a timely manner by qualified individuals in response to obtaining credible information of a potential overpayment.
Significantly, CMS establishes a six-month period as the “benchmark” for what it considers to be a timely investigation, absent extraordinary circumstances. According to CMS, a total of eight months (six months for timely investigation and two months for reporting and returning) is a reasonable amount of time, absent extraordinary circumstances. CMS states that “extraordinary circumstances” may include unusually complex investigations that the provider reasonably anticipates will require more than six months to investigate, such as Physician Self-Referral Law (also known as the “Stark Law”) violations that are referred to the CMS Voluntary Self-Referral Disclosure Protocol (“SRDP”). Specific examples of other types of extraordinary circumstances cited by CMS include natural disasters or a state of emergency.
Six-Year Look Back Period
Although CMS had originally proposed a 10-year “look-back” period to be consistent with the outer limit of the False Claims Act statute of limitations, CMS recognized that a 10-year period would be overly burdensome for providers in terms of retaining records and retrieving information from electronic legacy systems.
Reporting and Return Process
Notably, in finalizing this section of the rule, CMS removed a requirement under the Proposed Rule which would have required providers to include 13 specific data elements when reporting overpayments to a MAC. CMS acknowledged that allowing providers to follow the processes established by each MAC would avoid the administrative burden of reporting information that the MAC considers unnecessary.
CMS also allows the deadline for returning an overpayment to be suspended with a provider’s submission of a request for an extended repayment schedule to the MAC. The deadline will remain suspended until such time as CMS or the MAC rejects the suspended repayment schedule request or the provider fails to comply with the terms of the extended repayment schedule.
Relationship to Self-Disclosure Protocols
Specifically, a person satisfies the reporting obligations of the Final Rule by making a disclosure under the OIG Self-Disclosure Protocol or the CMS Voluntary Self-Referral Disclosure Protocol (“SRDP”) resulting in a settlement agreement using the process described in the respective protocol.
With respect to the OIG, the deadline for returning an overpayment is suspended when the OIG acknowledges receipt of a submission to the OIG Self-Disclosure Protocol. The repayment deadline remains suspended until such time as a settlement agreement is entered, the person withdraws from the OIG Self-Disclosure Protocol, or the person is removed from the OIG Self-Disclosure Protocol.
Similarly, with respect to the CMS Voluntary SRDP, the deadline for returning an overpayment is suspended when CMS acknowledges receipt of the self-disclosure. The repayment deadline remains suspended until such time as a settlement agreement is entered, the person withdraws from the SRDP or the person is removed from the SRDP.
CMS states that provisions of the Final Rule are not retroactive. Therefore, providers that reported and/or returned overpayments prior to March 14, 2016, and made a good faith effort to comply with the Affordable Care Act’s “report and return” requirements, are not expected by CMS to have complied with each provision of the Final Rule. However, all providers reporting and returning overpayments on or after March 14, 2016 – even overpayments received prior to this date – must comply with the requirements of the Final Rule.
1. For purposes of the article, “provider” or “person” refers to both a “provider,” as defined in 42 CFR 400.202 (e.g. a hospital), and a “supplier,” as defined in 42 CFR 400.202 (e.g. a physician).
2. CMS published rules for reporting and returning of overpayments in Medicare Parts C and D in a separate rulemaking (79 Fed. Reg. 29843 May 23, 2014).
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