February 16, 2016
On February 12, 2016, CMS published the Reporting and Returning of Overpayments Final Rule (Final Rule). The Final Rule takes effect on March 14, 2016. Overall, CMS appears to have listened to stakeholders and acknowledged their comments to the proposed rule. As a result, the Final Rule offers more clarity and reasoned positions than was anticipated. The Final Rule nonetheless will require providers and suppliers to implement various operational changes, some at considerable expense, to satisfy the regulations.

Six Key Themes

1. An overpayment is not identified until it is quantified
2. The lookback period is six years
3. Reasonable diligence to identify overpayments starts with “credible information” that an overpayment may exist and should take no more than six months
4. Providers must report and return overpayments within 60 days of the date of identification
5. The Final Rule only applies to Medicare Parts A and B
6. The methods to report and return overpayments are considerably more flexible

As providers and suppliers digest the Final Rule, it may be helpful to do so with some contextual framework in mind. First, the Final Rule requires an actual overpayment to exist. Claim or cost report errors that do not result in overpayments are not subject to the Act or the Final Rule.

Second, the Final Rule only focuses on those overpayments that are initiated or discovered by a provider or supplier. That is, the Final Rule governs overpayments that are identified by a provider or supplier in the normal course of business (e.g., routine or specific audits, review of internal processes, etc.), even if first alerted to the possible overpayment by an outside source.

Third, overpayment determinations, demands or other final actions asserted by a MAC, a RAC, CMS, OIG or other federal agency must follow the existing processes for responding to those determinations. The Final Rule does not change those existing processes.

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