United States: CMS Publishes Long-Awaited 60-Day Repayment Final Rule For Identified Overpayments

Last Updated: February 17 2016
Article by Laura F. Laemmle-Weidenfeld, Claire E. Castles and Megan Webb

Four years after the initial publication of the proposed rule, the Centers for Medicare and Medicaid Services ("CMS") released the long-awaited Final Rule regarding the identification, reporting, and repayment of Medicare overpayments as required under the Affordable Care Act ("ACA"), on Friday, February 12, 2016. As the health care industry is aware, one of the program integrity measures included in that statute (and codified at 42 U.S.C. §1395k(d)) is the requirement that all Medicare overpayments be reported and returned. Once overpayments have been identified, the statute also requires that such reporting and repayment be made by the later of (i) the date that is 60 days after the date on which the overpayment was identified, or (ii) the date any corresponding cost report is due, if applicable. CMS acknowledges in the preamble that its Proposed Rule had conflated the statutory provision imposing the obligation to repay all overpayments with the provision imposing the deadline by which to repay identified overpayments, and the agency indicates that its revised language in the Final Rule is intended to decouple the two provisions.

In its February 2012 Proposed Rule, CMS addressed a number of issues relating to the identification and repayment of Medicare overpayments received by providers and suppliers. Two elements of the Proposed Rule drew the most criticism and official comment: (i) defining the term "identified" as it relates to a defined "overpayment," and (ii) proposing a 10-year look-back period and, related to that, a proposed expansion of the reopening period to 10 years. As part of this Final Rule, CMS has revised what it means to "identify" an overpayment and has scaled back the look-back period.

The first element, the definition of "identification" of an overpayment, is critical because "identification" starts the clock for the repayment deadline of 60 days or the next cost report filing and yet is not defined in the statute. CMS in the Final Rule defines "identification" to have occurred when a 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." This new language both imposes new obligations and provides relief to providers and suppliers, by expanding the provider's or supplier's obligation to determine when it has received an overpayment but also permitting the provider or supplier some additional time to investigate and quantify any potential overpayments before reporting and repaying.

The Final Rule expands the provider's or supplier's obligations by refusing to restrict "identification" to situations where the provider or supplier has actual knowledge of an overpayment. Limiting the definition of "identification" to "actual knowledge" would, CMS states, incentivize providers and suppliers to avoid acquiring actual knowledge of an overpayment in order to avoid its repayment obligation, which CMS believes is contrary to Congress's intent.

In addition, CMS uses its "reasonable diligence" standard to expand the provider's and supplier's obligations beyond merely investigating allegations of overpayments. Consistent with its position that the statute's requirement of repaying overpayments stands independently, CMS emphasizes in the preamble that "reasonable diligence" requires "proactive compliance activities" to identify overpayments, as well as reactive investigations into "credible information of a potential overpayment."

At the same time, however, expressly permitting the provider or supplier to conclude its "reasonable diligence" before an overpayment is deemed "identified" permits providers and suppliers additional time to conduct a factual investigation and then quantify any overpayment received, before the 60-day clock begins to run. For providers that do not exercise "reasonable diligence" when confronted with credible information of a potential overpayment, however, and that did receive overpayments, the repayment clock begins to run when they first receive that "credible information."

The second and equally significant revision to the Proposed Rule is the look-back period for identifying an overpayment. Under the Final Rule, providers and suppliers are required to report and return overpayments that were made within six years of the date the overpayment was identified, whereas the Proposed Rule would have required a 10-year look-back. Consistent with this six-year look-back period, CMS also amends the reopening regulation to limit any application of the reopening rules so that such timing does not "present an obstacle or unintended loophole to compliance and enforcement."

In addition to these two significant issues, note that the Final Rule also:

  • Applies only to providers and suppliers of items and services that are reimbursable under Medicare Parts A and B. Like the statute, the regulation does not apply to Medicare beneficiaries.
  • Defines "overpayment" to mean any funds that a person has received or retained under Medicare Part A or B to which the person, after applicable reconciliation, is not entitled. CMS did not expand "applicable reconciliation" beyond cost reporting practices and activities.
  • Clarifies that "applicable reconciliation" is the concluding event of the process through which a person identifies funds to which the person is not entitled. In the context of cost reporting, CMS confirms that the applicable reconciliation occurs when the cost report is filed. The cost report contains the provider's attestation, as of the time of filing, that all interim payments and costs have been reconciled, and any overpaid funds have been identified and returned. CMS concedes that certain events beyond the person's control may delay this reconciliation. In addition, when a provider receives updated information from CMS on the supplemental security income ratio, or knows that an outlier reconciliation will be performed, it need not identify any related overpayments until final reconciliation of the cost report. CMS also states that if post-filing overpayments are self-identified, these should be repaid within 60 days of identification.
  • Upholds clarifications from the Proposed Rule that "claims related" overpayments (e.g., upcoding, medically unnecessary claims, double-billing), as opposed to those that are generally reconciled in a cost report, must still be reported and returned within 60 days of identification.
  • Confirms that a provider or supplier satisfies the reporting obligations of the Final Rule by making a disclosure through the OIG's Self-Disclosure Protocol ("SDP") or the CMS Voluntary Self-Referral Disclosure Protocol ("SRDP"), and the disclosure results in a settlement using the process described in the respective protocol. The Final Rule further finalizes the SRDP and SDP as tolling the provider's or supplier's obligation to return an overpayment. In the case of the SRDP, the repayment obligation remains tolled as long as the provider or supplier is negotiating a potential settlement with CMS in accordance with the requirements of the SRDP. If negotiations end, or if the provider is otherwise no longer engaged in the SRDP process, tolling will cease.
  • Confirms the agency's position that compliance with the Anti-Kickback Statute is a condition of payment, and that CMS expects repayment of the full claim amount for any claim where payment was secured through fraud. The Final Rule also provides that when a provider or supplier has "sufficient knowledge of a kickback arrangement" to identify a resulting overpayment, the provider or supplier must report the overpayment within 60 days. CMS states that it will refer the reported overpayment and potential kickback arrangement to OIG and suspend any repayment obligation until the referred kickback matter is resolved. The agency expects that only actual parties to the kickback scheme would be required to repay the overpayment that was received by an innocent provider or supplier.
  • Affirms that providers and suppliers may not delay the identification date due to financial hardship, instead requiring that requests for additional time to return overpayments be submitted through the existing Extended Repayment Schedule ("ERS") program. Requests for an ERS must be supported by "significant documentation" of "true financial hardship," and not all requests submitted to the ERS will be granted. The Final Rule amends the definition of "hardship" in § 401.607(c)(2)(i) to include specific reference to "overpayments reported in accordance with §§ 401.301 through 401.305." Explanation of the ERS and its documentation requirements are contained in Publication 100-06, Chapter 4 of the Financial Management Manual. The Final Rule also adds § 401.305(b)(2)(iii) to specify that the deadline for returning overpayments will be suspended once a person requests an ERS "until such time as CMS or one of its contractors rejects the [ERS] request or the provider or supplier fails to comply with the terms of the [ERS]."
  • In a revision to the Proposed Rule, allows providers and suppliers to use a broad range of processes, including "applicable claims adjustment, credit balance, self-reported refund, or other reporting process set forth by the applicable Medicare contractor," to report and refund overpayments.
  • Emphasizes that all providers and suppliers are subject to the statutory requirements of the ACA and could face potential False Claims Act or Civil Monetary Penalties Law liability and exclusion from federal health care programs for failure to report and return an overpayment, even if the conduct falls outside the scope of this Final Rule.

Potential Impact of and Considerations Related to Final Rule

CMS's commentary indicates that this Final Rule reflects its attempt to better balance the government's interest in promptly recovering Medicare overpayments against providers' and suppliers' need to be able to thoroughly investigate and quantify potential overpayments before reporting and repaying them. Nevertheless, the Final Rule leaves some loose ends. For example, with respect to overpayments that under the "reasonable diligence" requirement should have been identified by proactive compliance monitoring but were not, at what point in time would they be deemed "identified," if at all? What is "sufficient knowledge" of a kickback arrangement that would allow a provider or supplier to identify an overpayment? Does self-disclosure of an overpayment to the Department of Justice or local U.S. Attorney's Office toll the repayment deadline?

Also, as this rule applies only to providers receiving Part A and B overpayments, do the statutory repayment obligations also extend to suppliers and providers who receive oveerpayments from Part C and D contractors? In May 2014, CMS issued a separate final rulemaking that applies to overpayments received by Part C and D contractors, but that rule is silent with respect to the repayment responsibilities of providers and suppliers who received overpayments from those contractors. In connection with the may 2014 rulemaking, a number of health plans filed a suit in D.C. federal court against CMS earlier this month seeking to block its policies relating to the return of Medicare Advantage overpayments (see UnitedHealthcare Insurance Company et al. v. Burwell et al., Case Number 1:16-cv-00157 (District of Columbia)). The complaint includes allegations that the "reasonable diligence" standard establishes an obligation that is inconsistent with the enabling statute and may inappropriately result in false claims liability based on a negligence standard (id.). It is unclear the extent to which the outcome of that case may affect this Final Rule's application of the "reasonable diligence" standard.

The ultimate significance of this Final Rule may be the signaling of a heightened expectation that providers and suppliers employ robust compliance tools and resources to identify potential overpayments both proactively and reactively, and to facilitate timely repayment. As such, stakeholders are advised to carefully review the Final Rule and examine their internal processes to ensure they have implemented ongoing compliance procedures that effectively mitigate overpayment-related risks.

At the most practical level, however, CMS offers a general roadmap to providers and suppliers who discover a potential overpayment. According to CMS, if a provider or supplier learns credible information regarding a potential Medicare overpayment, the provider or supplier should promptly and in good faith investigate whether an overpayment did occur and, if so, quantify it. The investigation should look as far back in time as the facts would indicate the problem is likely to have occurred, but arguably no further back than six years. If the investigation reveals an overpayment, the provider or supplier should quantify it (if necessary, using sampling and extrapolation) and then determine the most appropriate means of reporting and repaying it. Despite statements that CMS will not provide factual scenarios relating to "reasonable diligence" as part of its rulemaking process, CMS later suggests in its commentary that the "reasonable amount of time" for this entire process in not longer than eight months in total, barring exceptional circumstances. The failure to follow this roadmap promptly and in good faith may expose a provider or supplier to allegations of liability under the False Claims Act and Civil Monetary Penalties Statute. Depending on the complexity of the issue, enlisting outside counsel to conduct the investigation under privilege and to advise regarding self-disclosure and repayment options may be particularly valuable.

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.

Laura F. Laemmle-Weidenfeld
In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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.


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.


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.


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.


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.


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.


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.