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CMS Proposes to Drastically Change Overpayment Refund Rule

Posted on January 12, 2023 in Health Law News

Published by: Hall Render

On December 27, 2022, the Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule that could potentially have a significant impact on enrollees’ obligations under the “60-day” overpayment rule. The original overpayment rule, which was signed into law in 2014 with the Affordable Care Act and expanded to Medicare Parts A and B in 2016, requires a provider who has received an overpayment to report and return it within 60 days of the date that overpayment was identified (in most cases).

The current overpayment rule utilizes the 2016 “reasonable diligence” standard, which allowed a Medicare enrollee up to six months from the time they received credible information of a potential overpayment to investigate that potential overpayment. It is not until after this six-month investigation period that the 60 days to report starts to run. In practice, this allowed enrollees a total of eight months to report and refund any overpayment and still be considered to have acted with “reasonable diligence” consistent with CMS overpayment rule. However, the December 2022 proposed rule would eliminate the “reasonable diligence” standard, which significantly affects how an enrollee must respond to alleged overpayments.

Under the proposed rule, which would be applicable to Medicare Parts A, B, C and D, the “reasonable diligence” standard would be removed, and the False Claims Act (“FCA”) definition of “knowingly” would be adopted into the overpayment rule. This means that a Medicare enrollee would be deemed to have identified an overpayment if they had actual knowledge or acted in reckless disregard or deliberate ignorance of such overpayment. By removing the “reasonable diligence” language, and replacing it with the more stringent “knowledge” standard, this proposed rule would eliminate the six-month investigation period which has proven to be of benefit to providers in the past in identifying potential federal health care program overpayments. In fact, claims reviews to quantify an overpayment is a time-consuming effort and the six-month period is necessary. Instead, enrollees would be limited to only 60 days from the time they became aware, or from the time it is determined that they should have become aware under FCA standards according to the facts and circumstances, in order to report and refund an overpayment to CMS. This could mean that enrollees have much less time to appropriately investigate potential overpayment situations and present a heavy administrative burden on them. Moreover, failing to comply with this reduced timeline could result in a violation of not only the 60-day overpayment rule, but the FCA as well.

Public Comment is open until February 13, 2023, and public comments to clarify the CMS position on the timeline could become very important. Please advise if you are interested in submitting comments on your own or as part of a group of affected providers. If you have any questions, would like assistance preparing public comments or are interested in any additional information about this important proposal, please contact:

Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.