On February 12, 2016, the Centers for Medicare and Medicaid Services (CMS) published a Final Rule that provides guidelines to Medicare providers about their duty to report and return overpayments.  These new regulations define what it means to “identify” an overpayment and provide detailed guidance regarding Medicare providers’ overpayment obligations. 
 

Effective Date of the New Regulations: March 14, 2016
 

Quick Background of the New Rules:
Since the Affordable Care Act (ACA) went into effect on March 23, 2010, all Medicare suppliers/providers have had a duty to report and return any identified overpayments within 60 days.  An “overpayment” was defined under the ACA as any funds that a person receives or retains from Medicare to which they are not entitled.  And, the ACA provided that any overpayment retained after the 60-day deadline is a potential violation of the Federal False Claims Act. 

Congress tasked CMS with issuing regulations to clarify the vague overpayment law.  This Final Rule provides new regulations that detail what Medicare overpayments are and how and when providers should identify and return them.
 

So, What’s is an Overpayment Under the New Regulations?
The definition of an overpayment remains very broad under the new rules.  Overpayments are any funds you receive from Medicare that you shouldn’t have. 

What if a genuine mistake was involved?  It doesn’t matter. 
What if Medicare made a mistake? Still an overpayment.

Overpayments can be:

• MAC payment errors
• Upcoding (intentional or unintentional)
• Payments for noncovered services
• Medicare payments in excess of the allowable amount
• Receipt of Medicare payment when another payer was primary
• Payments for claims where medical necessity was not met

What Does it Mean to “Identify” an Overpayment?
The Final Rule did away with the proposed definition, stating that a supplier/provider has to have “actual knowledge” of an overpayment, or act in “reckless disregard” or “deliberate ignorance”  of the existence of an overpayment.  Now, the regulations state that a supplier/provider has identified an overpayment when it has, or should have through the exercise of “reasonable diligence,” determined that the supplier/provider received an overpayment and the person “quantified the amount of the overpayment.”  The regulations go on to state that someone should have determined there was an overpayment “if the [supplier/provider] fails to exercise reasonable diligence and the person in fact received an overpayment.”  No using the “ostrich defense,” says Medicare.

What Did CMS Say About the 60-Day Time Period?
CMS said that when a person obtains “credible information” concerning a potential overpayment, the person needs to undertake “reasonable diligence” to determine whether an overpayment has been received and to quantify the amount. Then, the 60-day time period begins when either:

• The reasonable diligence is completed (and the overpayment is identified and quantified)
• Or on the day the person received credible information of a potential overpayment if the person failed to conduct reasonable diligence and the person in fact received an overpayment.

CMS gave examples of how long “reasonable diligence” might take to complete.  CMS also said an overpayment may be determined using statistical sampling, extrapolation methodologies or other methodologies.  Finally,the OIG’s Self Disclosure Protocol tolls the 60 day reporting requirement.

What Do We Have to Do in order to Comply? 
CMS says that:

“Providers and suppliers are responsible for ensuring their Medicare claims are accurate and proper, and are encouraged to have effective compliance programs as a way to avoid receiving or retaining overpayments.  We believe that undertaking no or minimal compliance activities to monitor the accuracy and appropriateness of a provider or supplier's Medicare claims would expose a provider or supplier to liability under the identified standard articulated in this rule based on the failure to exercise reasonable diligence if the provider or supplier received an overpayment.”

Bottom line, you should have a compliance program in place.  Check out PWW Media’s Ambulance Compliance Program Toolkit.