CMS Extends Deadline for Publishing Final Rule on Reporting/Returning Overpayments
The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule on February 12, 2012 implementing the provisions of Section 6402(a) of the Affordable Care Act (ACA), which outlined the requirements for reporting and returning overpayments received from federal healthcare program payers such as Medicare, Medicaid, Tricare etc. While agency guidelines require publication of a final rule within three years of publication of a proposed rule, this time can be extended in exceptional circumstances. With respect to the rule requiring the reporting and return of overpayments, CMS has decided to take an additional year to finalize the rule and indicates that a final rule will be published on or before February 16, 2016.
As justification for the delay, CMS cited both the “complexity of the rule and the scope of the comments” received, as well as “internal stakeholder feedback” regarding the proposed regulations. CMS “determined that there are significant policy and operational issues that need to be resolved in order to address all of the issues raised by comments to the proposed rule and to ensure appropriate coordination with other government agencies. Specifically, the development of the final rule requires collaboration among both the Department of Health and Human Services’ (HHS’) Office of the Inspector General and the Department of Justice.” For this reason, CMS is opting to take additional time to ensure that the final rule, when published, “provides clear requirements for persons to report and return overpayments.”
The proposed regulation (42 C.F.R. § 401.305) would set forth requirements for reporting and returning of overpayments, addressing specifics such as the contents of required reports of overpayments (made to whom such overpayments are returned), and where appropriate, reporting overpayments with obligations per OIG’s Self-Disclosure Protocol, and the look-back period, which is currently defined in the proposed rule as ten years from the date the overpayment was received.
CMS sought comments regarding various elements of the proposed rule, such as approaches that would allow providers to avoid making multiple reports of identified overpayments, the proposed 10-year look-back period, and a proposal to amend the reopening rules to provide for a 10-year reopening period. CMS received nearly 400 comments regarding the February 2012 proposed rule.
Significant concern was expressed regarding the proposed 10-year timeframe for reporting, as well as the provision extending the re-opening period for post-payment analysis, which is effectively four years presently, to 10 years, as well. Should these changes go into effect, providers will have to retain records longer than what is usually mandated by their respective state licensure laws.
In addition, the 10 year look back and re-opening period is cause for significant concern. Consider that standards often change over such a long time; thereby, making analysis of compliance with Medicare Pub or contractor LCD requirements problematic, at best. Consider also that with provider staff turnover, the performing provider may no longer be available to provide evidence in defense of the compensability of the claim.
Of more concern to providers and provider entities is the uncertainty associated with having potential liability for 10 years worth of services. Given the potential value of the services at issue, innocent errors could lead to practice-ending events. Some stakeholders believe that where the value of an error or errors (based on a 10 year period of review) becomes so substantial, that this may disincentivize voluntarily reporting. Because of these concerns, CMS received substantial feedback from providers and provider groups as to these aspects of the proposed rule, in the hopes that CMS would reform the proposed rule (maintaining the present re-opening period and providing for a similar look back period for reporting and returning overpayments).
Pending publication of a final rule, providers remain obligated to comply with the statutory provisions in effect. Specifically, that overpayments must be returned within 60 days from the date the overpayment was identified by anyone in the entity, or from the date when the existence of an overpayment should have been identified. As such, providers should be on alert relative to adverse probe audit results. Even where the refund demand is small and there is disagreement with the result, the failure to challenge the result is an indicator of agreement. Where remaining claims would be in error for a similar reason, even though the provider disagrees with that reason, failure to challenge the audit result or disclose the “error,” and refund could lead to unwanted liability.
CMS noted that anyone who does not comply can still face potential liability under the False Claims Act and the Civil Monetary Penalties laws, and exclusion from federal health care programs, for failing to report and return overpayments.