Among the many provisions buried in this week's 150+ page American Taxpayer Relief Act ("ATRA"), one — Section 638 — amends Section 1870 of the Social Security Act ("SSA"). Prior to ATRA, Section 1870 provided (among other things) that where an "incorrect payment" was made to a provider who was "without fault," the government could not recover this payment "subsequent to the third year following the year" in which the payment was made. In practical terms, then, SSA § 1870 provided that after (at most) four years — depending on the precise date that the provider received payment — the government could not recoup incorrect payments from providers and suppliers who were "without fault." In effect, Section 1870 acts as a statute of limitations ("SOL") on the government's ability to recover mistaken payments.
Section 638 of ATRA amends this provision, effective January 2, 2013, replacing "third year" with "fifth year" (thereby extending the SOL to up to six years, again, depending on the date the provider received payment). This amendment raises a number of important questions. For example:
- What will be the interplay between Section 1870, as amended, and CMS' regulations implementing SSA Section 1869, which regulations generally prohibit the reopening of claims after four years (absent "fraud or similar fault")? 42 C.F.R. § 405.980(b)(2).
- Relatedly, even assuming CMS' interpretation of Section 1869 and Section 1870, as amended, could be reconciled, to what extent will the government attempt to apply ATRA's new SOL retroactively? For example, if as of January 1, 2013, CMS was not permitted to recover a mistaken overpayment that occurred four and a-half years ago — due to the application of Sections 1869 and 1870 — will CMS nevertheless be able to "revive" that "expired" claim now, or will that claim (as well as any other claims that, as of January 1, 2013, ceased to constitute "overpayments") remain beyond the reach of CMS?
Whatever the answers to these questions — which we will be addressing in a forthcoming client alert, and which surely will be tested in the courts in the coming months and years — it is clear that like the overpayment provisions in the 2010 Accountable Care Act, and CMS' February 2012 proposed overpayment regulations, Section 638 of ATRA reflects a trend: in the wake of continuing budget deficits and accumulating federal debt, the government will continue to look for additional, and increasingly aggressive, methods of wringing additional dollars out of the health care system, both at the front end (in the form of lower reimbursement) and on the back end (in the form of overpayment recoupment).
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