by Johanna Michaels Kreisel
Anatomy of an overpayment:
What providers need to
» Engage in a reasonable inquiry into possible overpayment situations.
» Actual knowledge is required to identify an overpayment.
» Establish a proactive, instead of reactive, overpayment policy.
» Dedicate personnel to reviewing and identifying possible overpayments.
» Despite the lack of a final rule, you have a current legal obligation to identify and repay overpayments.
Johanna Michaels Kreisel ( firstname.lastname@example.org) is an Associate of
the Powers Pyles Sutter & Verville PC law firm in Washington DC.
The Affordable Care Act (ACA) man- dates that providers and suppliers who are aware that they have retained
Medicare or Medicaid funds in error must
report and return those funds within 60 days.
The Centers for Medicare & Medicaid Services
(CMS) issued a proposed rule on
February 13, 2012 detailing the
implementation requirements.1 The
proposed rule defined key terms
such as “identified” and “reporting
and returning deadlines” to clarify
the statutory requirement. Although
this rule has not been finalized, the
statutory obligation is in effect, and
it is unlikely that the final rule will depart
significantly from its proposed form. As such,
Medicare providers and suppliers cannot wait
until publication of the final rule; instead they
must have in place the tools to comply with
the 60-day repayment obligation to avoid False
Claims Act liability. This article outlines the
steps that providers and suppliers need to take
in order to comply with the new requirement.
Identification: What is required and when?
According to the proposed rule, an “identified”
overpayment occurs when “a person has actual
knowledge of the existence of the overpayment or acts in reckless disregard or deliberate
ignorance of the overpayment.” Once the payment is “identified,” the 60-day timeframe
for reporting and returning the overpayment
commences. The issues are what measures
providers and suppliers have to take to detect
potential overpayments in order to avoid an
allegation of reckless disregard, and when
these potential overpayments are “identified”
for purposes of the 60-day reporting obligation.
For simplicity, we’ll use the term “providers” to
encompass Medicare suppliers as well.
First, providers need to adopt an overpayment reporting and repayment policy that
incorporates regular processes of claims review
to detect potential overpayments. A proactive,
reasonable approach can mitigate claims of
reckless disregard. A recent 6th Circuit decision validated this approach by limiting the
reckless disregard standard to an inquiry that
is “‘reasonable and prudent under the circumstances’, which clearly recognizes a limited
duty to inquire as opposed to a burdensome