United States: The Final 60-Day Rule: The Good, The Bad, And The Ugly

As we announced yesterday, the Centers for Medicare & Medicaid Services (CMS) has finally published the long-awaited Final Rule governing the return of Medicare Part A and Part B overpayments within 60 days (the "Final Rule"). The proposed rule, which was published nearly four years ago, led to a great deal of consternation among providers and suppliers, and thus it is no surprise that CMS received over 200 comments. The Final Rule thankfully provides a more workable approach than the proposed rule, but it demands that a provider have a proactive compliance program designed to monitor for potential overpayments and to lead to a timely investigation of credible information of receipt of an overpayment.

Compliance with the Final Rule is crucial because the potential penalties for non-compliance could be ruinous. Providers and suppliers who fail to timely identify and return overpayments face potential liability under the Civil Monetary Penalties Law as well as exclusion from the federal health care programs. In addition, under the False Claims Act (FCA), retaining an overpayment is defined as an "obligation," and "knowingly conceal[ing] or knowingly and improperly avoid[ing] or decreas[ing] an obligation" can be the basis for treble damages and penalties under the FCA.

Key Provisions of the Final Rule

Several provisions of the Final Rule will drive providers and suppliers' efforts to comply with its requirements.

1. The term "identified" requires a determination of the overpayment and—a crucial addition—"quantification" of the amount of the overpayment.

The meaning of the phrase "identified an overpayment" determines when the 60-day clock starts to run. CMS stated in the Final Rule that a provider or supplier has identified an overpayment if it: (1) "has, or should have through the exercise of reasonable diligence," determined that it has received an overpayment; and (2) has quantified the amount of the overpayment. To prevent the so-called ostrich defense, CMS said in the Final Rule that providers and suppliers "should have" identified and quantified an overpayment "if the person fails to exercisereasonable diligence and the person in fact received an overpayment."

Several aspects of CMS's definition of the term "identified" will impact how providers and suppliers must monitor, investigate, quantify, and report overpayments. For example:

  • Reasonable diligence – According to CMS, reasonable diligence requires both proactive compliance measures (conducted in good faith by qualified individuals) to monitor for potential overpayments and timely, good-faith investigation into "credible information" of a potential overpayment.

    • CMS declined to provide specific guidance on the compliance processes required to comply with the Final Rule; instead, CMS pointed to the resources available through the Medicare Learning Network and the compliance educational material on OIG's website
    • CMS discussed that providers and suppliers can demonstrate reasonable diligence by conducting a timely, good-faith investigation into "credible information" of a possible overpayment. However, absent "extraordinary circumstances," the investigation cannot exceed 6 months. The six-month timeframe may be difficult to meet, especially given that the Final Rule requires analysis of six years of data through the six-year look-back period (discussed below).
  • Quantification and use of sampling – The Final Rule includes quantifying the overpayment amount as a necessary part of identifying an overpayment, accounting for the difference between determining that an overpayment had been received and the auditing work necessary to quantify the overpayment amount. Moreover, the Final Rule makes clear that the overpayment amount may be determined by employing frequently used methods such as statistical sampling and extrapolation. The methodology used to quantify and overpayment must be disclosed.

2. CMS reduced the "look back" period.

CMS reduced the look-back period to six years. According to CMS, this timeframe is practical because it aligns with the FCA statute of limitations, and providers and suppliers commonly retain records for six to seven years based on state and federal requirements.

Providers and suppliers may be disappointed that CMS changed the look-back time period from 4 years to 6 years for overpayments based on Stark Law violations submitted through the CMS Self-Referral Disclosure Protocol (SRDP) after the Final Rule's effective date.

3. Re-opening deadlines are a one-way street.

The Final Rule amends the rules allowing for a request to a Medicare contractor to reopen initial determinations to permit reporting and returning overpayments (42 C.F.R. § 405.980(c)(4)). However, the Final Rule does not permit identification and claiming of underpayments for the same six-year period. In fact, CMS declined to allow providers and suppliers more than the current one-year period to rebill a claim to correct an identified underpayment. Moreover, the Final Rule does not allow netting of underpayments against overpayments. CMS declared that underpayment issues are outside the scope of this rulemaking.

4. Existing processes should be used to report and return overpayments.

In response to comments advocating reliance on existing processes to return overpayments, CMS allowed for the use of applicable claims adjustment, credit balance, self-reported refund, or other reporting processes established by the applicable Medicare contractor to report an overpayment. In addition, providers and suppliers, where appropriate, satisfy their 60-day reporting obligations by utilizing the disclosure processes in the OIG Self-Disclosure Protocol or the CMS SRDP, as applicable. The Final Rule includes several nuances around use of these processes, and it discusses the implications of failure to reach a settlement through either process. A provider or supplier utilizing either protocol should review carefully.

The Final Rule also removed the 13 elements of a report that CMS included in the proposed rule. For example, under the proposed rule, a report had to provide a description of how the error was identified and the reason for the overpayment. That information is no longer required by the Final Rule (but may be required by the Medicare contractor's existing processes).

5. The Final Rule includes a notable FCA discussion.

The preamble to the Final Rule also includes a notable discussion regarding the FCA. Although commenters requested confirmation that a report of an overpayment is a "public disclosure" under the FCA and therefore bars liability under the FCA's qui tam provisions, CMS (not surprisingly) did not respond substantively, explaining that it is interpreting Section 1128J, not the FCA.

For more details, refer to this comparison of the proposed and final rules.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Brian P. Dunphy
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.