CMS Finalizes the 60-day Rule
On Thursday, February 11, 2016, the Centers for Medicare and Medicaid Services (CMS) released the final rule
on reporting and returning overpayments. The rule implements a requirement in the Affordable Care Act that health care providers report and return overpayments within 60 days. As a result, the rule is commonly referred to as the 60-day rule. The final rule was published in the Federal Register on February 12, 2016. The effective date of the rule is March 14, 2016.
Here is a summary of the major provisions of the final 60-day rule:
The final rule states that providers and suppliers must report and return an overpayment by the later of 60 days after the overpayment is identified or the date a corresponding cost report is due.
The rule defines overpayment as any funds that a person has received or retained under title XVIII of the Social Security Act to which the person, after applicable reconciliation, is not entitled to under such title.
Meaning of Identification.
The rule states that a person has “identified” an overpayment when the person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and
quantified the amount of the overpayment. Thus, identification includes quantifying the overpayment.
In commentary to the rule, CMS states "reasonable diligence" includes both proactive compliance activities to monitor claims and reactive investigative activities undertaken in response to receiving credible information about a potential overpayment. CMS believes that undertaking no or minimal compliance activities to monitor the accuracy and appropriateness of claims would expose a provider or supplier to liability under the rule if the provider or supplier received an overpayment. Reasonable diligence is demonstrated through the timely, good faith investigation of credible information, which is at most 6 months from receipt of the credible information, except in extraordinary circumstances.
Deadline for Reporting and Returning Overpayment.
The rule establishes the following deadlines for reporting and returning overpayments: (1) The date which is 60 days after the date on which the overpayment was identified; or (2) the date any corresponding cost report is due, if applicable.
According to CMS, the 60-day time period begins to run when the reasonable diligence is completed and the overpayment is identified, 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.
The final rule states that overpayments must be reported and returned only if a person identifies the overpayment within 6 years of the date the overpayment was received. Thus, the final rule relaxes the 10 year lookback period in the proposed rule.
How to Report and Return Overpayments.
The final rule states that providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or another appropriate process to satisfy the obligation to report and return overpayments. If the person calculates the overpayment amount using a statistical sampling methodology, the person must describe the statistically valid sampling and extrapolation methodology in the report.
Any overpayment retained by a person after the deadline for reporting and returning the overpayment is an obligation for purposes of the False Claims Act (FCA). As a result, health care providers that fail to report and return overpayments in accordance with the rule could face potential FCA liability, Civil Monetary Penalty (CMP) liability, and exclusion from federal health care programs.
The final rule relates to Medicare Part A and Part B providers and suppliers. Other stakeholders such as Medicaid managed care organizations and Medicare advantage organizations will be addressed in future rulemaking. Nonetheless, other stakeholders are subject to the 60-day rule in the ACA and could face potential FCA liability, CMP liability, and exclusion from federal health care programs for failure to report and return an overpayment.
is a partner with Ice Miller LLP. The focus of his practice is health care litigation and white collar criminal defense. He can be reached at firstname.lastname@example.org
. For more information about reporting and returning overpayments, please contact Mr. Cochran or the Ice Miller attorney with whom you work.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.