CMS’s Long-Awaited Final 60-Day Repayment Rule Provides Guidance and Eases Some Requirements for Health Care Providers and Suppliers
On Friday, February 12, 2016, the Centers for Medicare and Medicaid Services (CMS) released the long-awaited Final Rule and regulations, providing much needed guidance to providers and suppliers on how to meet the Affordable Care Act’s (ACA’s) 60-day overpayment mandate. Specifically, a provision enacted as part of the ACA in 2010 requires that all Medicare and Medicaid overpayments be reported and returned by the later of (i) 60 days after the date on which the overpayment was identified; or (ii) the date any corresponding cost report is due (if applicable). However, since its enactment, there has been a great deal of confusion about various aspects of the law; most notably, about what it means to “identify” an overpayment and the length of the required lookback period (i.e., how far back in time providers and suppliers must investigate the receipt of potential overpayments). The proposed regulations issued in 2012 did not clearly resolve the first issue and would have imposed a burdensome and controversial 10 year lookback period. The Final Rule, which applies only to Medicare Parts A and B, clarifies that the identification of an overpayment occurs when the provider or supplier has or should have, through the exercise of reasonable diligence, determined that it has received an overpayment and quantified the amount of the overpayment due to be returned. The Final Rule also establishes that Medicare providers and suppliers are subject to a six year lookback period. Finally, the regulations set forth the process for reporting and returning the identified overpayments. Many of the key provisions of the Final Rule are described in greater detail below.
Providers and suppliers will welcome several provisions of the Final Rule that provide greater clarity and/or are less stringent than the proposed rule. Moreover, the Final Rule appears to reject the 2015 ruling by a New York federal district court judge in the Continuum case, which placed many health care providers and suppliers on “high alert” after the court held that a provider “identifies” an overpayment when it is “put on notice of a potential overpayment, rather than the moment when an overpayment is conclusively ascertained … .” In simple terms, the court’s holding stood for the proposition that providers had no more than 60 days to investigate, quantify, report and return all overpayments; an unrealistic mandate, particularly for providers and suppliers investigating complicated compliance issues. With this Final Rule, CMS seemingly has both rejected the Continuum court’s inflexible approach and responded to many of the concerns expressed by the health care industry in reaction to the proposed rule.
CMS also repeatedly emphasizes that all providers and suppliers must take reasonable proactive, as well as reactive, steps to identify overpayments in order to satisfy the law’s requirement to report and return overpayments. As a result, providers and suppliers should closely review the new regulations, update their compliance programs to ensure they are well-positioned to identify and return overpayments, and be on the lookout for increased enforcement of the 60-day rule.
*This alert was originally posted on Arent Fox's Health Care Counsel blog. To read this alert in its entirety, please click here.