CMS Clarifies How to Report Medicare Overpayments

Abstract

There is finally some clarity about how to report and return Medicare overpayments, under a final rule released by the Centers for Medicare & Medicaid Services. The final regulation clarifies that health providers have identified an overpayment when they “have or should have, through the exercise of reasonable diligence, determined [they have] received an overpayment and quantified the amount of the overpayment.” Overpayments must be reported and returned only if identified within 6 years of the date the payment was received — down from the 10 years included in the proposed rule released in 2012. Physician organizations and other health care stakeholders had criticized the proposal, calling the 10-year time frame unreasonable and burdensome. The 6-year time frame is also more reasonable and will save practices money by limiting their audit obligations, said Scot T. Hasselman, JD, a Washington health law attorney. The revised definition of identification makes more sense for physicians, particularly that identification exists when providers have quantified the amount of the overpayment, Mr. Hasselman noted. In many cases, it takes time to decipher how much money is owed after discovering a potential overpayment, he said in an interview. “This all goes to: When does the clock begin ticking for the 60 days?” he said. “The language in the final rule provides for a standard that is easier to apply. The final rule also allows the 60-day deadline for returning overpayments to be suspended if a provider requests an extended repayment schedule. In the past, “people could be in a real pickle if they didn’t have the money to return,” Mr. Hasselman said. “This [provision] is important, especially for smaller [practices] and physicians who may not have big credit lines or the cash flow of an institutional provider.” The final rule also clarifies how to report overpayments. Providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or another appropriate process to satisfy the obligation to report and return overpayments, the rule states. If a provider has reported a self-identified overpayment using the self-referral disclosure protocol managed by CMS or the self-disclosure protocol managed by the Health and Human Services Office of Inspector General, the provider is considered to be in compliance with the rule. But the final rule is not entirely positive, according to Houston-based health law attorney Michael E. Clark, JD. Many health providers had requested clarification about the level of resources small providers are expected to devote to investigating potential overpayments. Commenters suggested CMS allow for more defined overpayment responses based on provider size and resources. The agency did not do so, saying that providers, “large and small have a duty to ensure claims are accurate and appropriate and to report and return overpayments they have received.” Refusing to allow scalable responses is unfortunate for practices that do not have the ability to react to overpayments as robustly as larger chains, Mr. Clark said. “The agency was unwilling to go that far,” Mr. Clark said. “They’re not going to give a lesser standard for smaller providers. They’re going to look at the facts and circumstances. It gives [CMS] subjectivity, whereas doctors would rather have more clarification and objectivity.” Alicia Gallegos is a Frontline Medical News freelance writer based in Chicago.