Our Health Care Group attorneys have authored a new alert explaining the implications of the final rule on the reporting and return of overpayments (the “Overpayment Rule”) the Centers for Medicare & Medicaid Services (CMS) issued earlier this month.  CMS promulgated the Overpayment Rule nearly two years after the agency issued its final rules governing overpayments in the Medicare Part C (Medicare Advantage) and Part D programs and six years after the statutory enactment of the so-called “60-Day Rule” under Section 1128J(d) of the Social Security Act (as enacted by Section 6402 of the Affordable Care Act (ACA)).  The Overpayment Rule’s effective date is March 14, 2016.

Providers should be especially attentive to how the Overpayment Rule clarifies when an overpayment has been “identified” and how efforts precedent to identifying such overpayments will be important to future enforcement efforts under the False Claims Act (FCA). Of note, the Overpayment Rule did not adopt the proposed rule’s plan to adopt the FCA knowledge standard itself.  Rather, the Overpayment Rule sets a six-month timeframe starting from the receipt of credible information about a possible overpayment for providers to exercise “reasonable diligence” in an internal investigation.  The six-month timeframe is not absolute and CMS understands that extraordinary circumstances, such as complex investigations of potential violations under the Physician Self-Referral Law might take longer.  The Overpayment Rule also explicitly allows for providers to “toll” the overpayment reporting obligation by submitting the relevant information through the Office of Inspector General’s Self-Disclosure Protocol (SDP), or the CMS Voluntary Self-Referral Disclosure Protocol (SRDP).

The alert also discusses the implications of the six-year lookback period covered by the Overpayment Rule, particularly in relation to information uncovered during contractor reconciliation processes, as well as through audits performed by Medicare Administrative Contractors, Recovery Audit Contractors, and the HHS Office of the Inspector General.

The Overpayment Rule, along with the other guidance on overpayments issued by CMS for Medicare Parts C & D attempts to resolve issues that have arisen in the courts, particularly in the Kane ex rel. U.S. v. Healthfirst, Inc. case that we discussed in a previous post. Providers should ensure that they update their internal investigation policies and procedures to ensure that timelines, information sources, and final reporting mechanisms align with the Overpayment Rule.