CMS Final Rule States Providers Liable to Repay Six Years of Medicare Overpayments

The Centers for Medicare and Medicaid Services (CMS) have issued the Final Rule regarding Overpayments. Here are some of the main points of the final rule from CMS.

What is the CMS Final Rule?

According to the final rule, healthcare providers are required to repay overpayments within six years of the initial Medicare reimbursement. The original proposed version of the rule expected physicians to go through 10 years of claims to make sure they had no overpayments from Medicare, but after protests was changed to the present six years. Since federal and state requirements require healthcare providers to retain records and claims data for between six or seven years, the limit on 6 years will not create additional burden for healthcare providers.

Under the Affordable Care Act, providers must return overpayments within 60 days of identifying them. According to the rule, an overpayment is ‘identified’ if the provider has actual knowledge of the existence of the overpayment or acts in reckless disregard of deliberate ignorance of overpayment after exercising reasonable diligence.

When does the 60 day period start?

The final rule from CMS provided clarification on the 60 day rule for overpayments. The 60 day period doesn’t start from the moment the physician/ provider hears about overpayment under Medicare, as long as reasonable diligence is exercised. Instead, the physician or provider has an obligation to decide whether that information of potential overpayment is ‘credible’ and then decide to conduct reasonable diligence to look into it. Once the provider goes through the reasonable diligence process, the 60 day period to report and return the overpayment starts. However, after receiving information about a potential overpayment, if the provider fails to exercise reasonable diligence to look into the matter, it could be a violation of the CMS rule.

What happens if you don’t repay?

Failing to report overpayments can result in liability under the False Claims Act, which could translate into financial penalties, civil fines or exclusion from participation in federal reimbursement programs and CMS programs.

Why is it important?

According to estimates by CMS, the annual administrative cost for industry reporting and returns for overpayments will fall between $120 million and $200 million.

Who does it apply to?

The rule applies to healthcare providers receiving payment from Medicare Parts A and B. It also applies to medical suppliers who receive payments from Medicare.

Bright Spots

The CMS final rule on overpayments offers a more flexible and streamlined approach. Also, in the new rule, the CMS has defined the “reasonable diligence” requirements for compliance.

Hopefully this post has clarified pertinent aspects of the CMS Final Rule for Overpayments. For more latest information, details and expert guidance, check out our healthcare compliance training section.


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