Health care reform and the 60 day repayment rule

John Olson//March 10, 2014

Health care reform and the 60 day repayment rule

John Olson//March 10, 2014

John OlsonAs most are aware, the federal government, primarily through its Medicare program that pays healthcare costs of America’s seniors, is the preeminent payer of healthcare in the United States. In addition, Medicaid, as administered by the Idaho Department of Health and Welfare, provides a limited safety net for Idaho’s poor. As such, Medicaid is also a major payer in the healthcare market.

For a healthcare provider to be reimbursed for providing Medicare or Medicaid services, the provider must make sure that it satisfies certain requirements. If the provider fails to meet these conditions of payment—even by mistake—the provider is not entitled to receive the reimbursement.

Occasionally, after receiving a Medicare or Medicaid payment, a provider may discover that the claim or a series of claims that it submitted did not meet the applicable conditions of payment. Perhaps a required medical record or hospital admission order is missing. Or maybe a required signature was not on the record. When this happens, the provider is required to proactively return the payment, known as an overpayment. This repayment obligation applies even when the provider simply made a mistake. Now more than ever, Idaho’s healthcare providers are making repayments to Medicare and Medicaid.

As part of the healthcare reform in recent years, this repayment obligation has become more serious. The Affordable Care Act (ACA), passed in 2010, added a provision requiring Medicare and Medicaid providers to report and return an overpayment within 60 days after the overpayment had been “identified.” The most sobering part of this 60-day requirement is that if the provider does not make the repayment by the 60-day deadline, the provider may become liable for significant penalties and damages under the False Claims Act and potentially risk exclusion from further participation in the Medicare and Medicaid programs. Under the False Claims Act (FCA), a provider could be liable for a civil penalty of between $5,500 and $11,000 for each false claim, in addition to three times the amount of the damages sustained by the government as a result of the false claim. While we are not aware of any FCA cases in Idaho relating to the 60-day rule, the U.S. Attorney’s Office for Idaho prosecutes FCA cases against Medicare and Medicaid providers.

Since this 60-day rule was passed in 2010, providers have struggled to determine when an overpayment has been “identified.” In other words, when does the 60-day clock start ticking? While it is clear that the clock starts once the overpayment has been “identified,” the ACA unfortunately did not define or explain when the overpayment has been “identified.” Does the 60 days start from the moment the provider first learned of a potential overpayment by an anonymous tip, for example? Or does it start once the provider has conducted a thorough investigation to determine whether the potential overpayment is actually an overpayment? The statute does not answer these questions.

In February 2012, nearly two years after the 60-day rule was passed, the government finally provided some guidance about the rule. At that time, the Centers for Medicare and Medicaid Services (CMS), the agency within the U.S. Department of Health & Human Services responsible for the administration of Medicare and Medicaid, issued proposed regulations interpreting the rule.

While CMS’s proposed regulations provided some direction to providers about when the 60-day clock started, they did not answer all of the questions. An additional problem is that these proposed regulations have yet to be finalized, more than two years after their publication. CMS’s delay in finalizing the regulations is likely due, at least in part, to the negative reaction they have received. For instance, one of the proposals that has been largely rejected by the healthcare industry is CMS’s plan to increase the look-back period (the period during which Medicare claims remain subject to reopening and adjustment) to ten years—a significant expansion over the reopening periods allowed by CMS’s current regulations. With this enlarged lookback period, a provider would be responsible for investigating and determining if a potential overpayment—even one that was the result of a simple mistake up to a decade ago—was an overpayment. Not surprisingly, this ten-year lookback period proposal received a disapproving response from the healthcare industry.

At this time, what is the status of the 60-day repayment rule? Even though CMS has yet to finalize any regulations regarding the rule, and even though it may not be clear in many cases when an overpayment has been “identified”—and when the 60-day clock starts ticking—providers still need to repay overpayments within the 60 days of when they are “identified” to avoid liability under the False Claims Act. Needless to say, with only 60 days to make the repayment once the clock starts, when providers become aware that they have, or may have, received an overpayment, they should move quickly and cautiously.

Mr. Olson is a partner at Hawley Troxell and a member of the firm’s health law group. He can be reached at [email protected].