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Fiscal-Cliff Agreement Gives Medicare Officials Five Years to Collect Overpayments

The American Taxpayer Relief Act of 2012, which became law on January 3, 2013, and is more widely known for addressing the fiscal cliff, also included a less publicized provision which changes the lookback period in the “Provider Without Fault” provisions of the Social Security Act from three years to five years. This provision is important for providers who are defending a Medicare audit. This provision previously provided that, absent evidence to the contrary, providers would be deemed to be “without fault” if an overpayment is discovered more than three years after it was paid. Thus, this provision could often be used as a defense in Medicare audits where the claims at issue were discovered more than three years prior to the audit results letter (although the “absent evidence to the contrary” language was sometimes difficult to overcome). The American Taxpayer Relief Act of 2012 in Section 638 amends section 1870 of the Social Security to allow CMS a five year reopening period.

This provision appears to have been included in the Act in response to the Office of Inspector General’s (OIG) assertions that the three year lookback period was an obstacle to overpayment recovery.

Providers should note that other provisions of the “Provider Without Fault” language in section 1870 of the Social Security Act may still present a viable defense to the extent that the provider complied with all pertinent regulations, made full disclosure of all material facts, and on the basis of the information available, had a reasonable basis for assuming that the payment was correct.

If you need assistance in preparing for, or defending against RAC audits, or implementing a compliance program geared toward identifying and correcting potential risk areas related to RAC audits, please contact an experienced health care attorney at Wachler & Associates attorney at 248-544-0888.