August 2, 2016

Physician responsibilities for suspected Medicare overpayments

From international law firm Arnold & Porter LLP comes a timely column that provides views on current regulatory and legislative topics that weigh on the minds of today’s physicians and health care executives.

Have you ever heard someone in your office say, “I think Medicare may not have paid these claims correctly?” After that statement, did the relevant documents get buried in a pile on a desk — never to be reviewed again? Be careful. Earlier this year, CMS issued a final rule governing the responsibility of providers to report and return Medicare overpayments. The rule makes clear that providers are responsible for identifying and repaying overpayments that may have occurred within a 6-year lookback period, and repayment must be made to Medicare within 60 days of identifying the overpayment. Failure to take action could trigger liability under the “reverse” false claims provisions of the federal False Claims Act, which punish the retention of federal dollars paid in excess of the actual amount to which the provider was entitled.

The rule applies to overpayments arising within Medicare Parts A and B, and it requires any Medicare provider or supplier that has identified an overpayment to report and return the overpayment within 60 days after the date on which the overpayment was identified. Somewhat helpfully, the final rule recognizes that providers cannot meaningfully “identify” an overpayment without also confirming and quantifying the overpayment; consequently, under the rule, “a person has identified an overpayment when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.”

What is reasonable diligence in performing an investigation? In the view of CMS, reasonable diligence includes “both proactive compliance activities” and “investigations conducted in good faith and in a timely manner” where there is credible information of a potential overpayment. In a nutshell, the government’s view is that providers must apply both prophylactic measures — for example, by training staff and implementing a compliance program — and also must take meaningful action when there is credible evidence of an actual overpayment.

Importantly, the final rule cautions against providers dragging their feet in identifying and quantifying overpayments. An investigation into overpayments covering a small number of claims, for example, should not take 8 months to complete. Physicians and their practices should therefore act promptly and in a time period commensurate with the magnitude of any possible overpayments. As noted above, once an overpayment has been confirmed following a reasonably diligent investigation, and when the amount of the total overpayment is quantified, a provider has 60 days to make repayment to Medicare.

Matthew T. Fornataro, JD, an associate at Arnold & Porter LLP, can be reached at

Alan E. Reider, JD, MPH, a partner at Arnold & Porter LLP, can be reached at

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