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CMS Releases Final Rule on Reporting and Returning Medicare Overpayments

On February 12, 2016, the Centers for Medicare and Medicaid Services (CMS) released its long-awaited Final Rule regarding the reporting and returning of Medicare overpayments. The Final Rule requires providers and suppliers receiving funds under the Medicare program to report and return overpayments by the later of (1) 60 days after the date on which the overpayment was “identified” or (2) the date any corresponding cost report is due, if applicable.

The first major provision contained in the Final Rule concerns the definition of “identified” for purposes of starting the 60-day clock for reporting and returning the overpayment. As set forth in the Final Rule, a person has identified an overpayment when the person has or should have, through reasonable diligence, determined that the person has received an overpayment and quantified overpayment amount. According to CMS, the 60-day time period to report and return begins whether either the reasonable diligence is completed, or on the day the person received creditable information of a potential overpayment if the person failed to conduct reasonable diligence and the person in fact received an overpayment. Furthermore, absent extraordinary circumstances, CMS chose a six-month period as the benchmark for completing timely investigations, which would give providers a total of eight month to resolve its overpayment issues (six months for timely investigation and two months for reporting and returning).

The second major provision contained in the Final Rule is in regards to the applicable lookback period for reporting and returning identified overpayments. In its 2012 proposed rule, CMS proposed a 10-year lookback period, which many in the provider community found to be overly burdensome. However, CMS reduced its proposed 10-year look back period in the Final Rule to a 6-year lookback period. The 6-year lookback is measured from the date the person identifies the overpayment.

Additional requirements and comments provided by CMS in its final rule include:

  • The Final Rule applies only to overpayments under Medicare Parts A and B. However, CMS notes that section 1128J(d) of the Social Security Act requires providers that identify overpayments received from Medicare or Medicaid to report and return those overpayments to the appropriate payor.
  • CMS will allow providers to utilize additional methods for reporting and returning overpayments beyond the voluntary refund process, which may include the use of claims adjustments, credit balances, requesting a voluntary offset, or another appropriate process.
  • CMS declined to adopt a minimum monetary threshold in its Final Rule.
  • CMS declined commenters’ proposal that providers should be allowed to offset identified overpayments with any identified underpayments when determining the repayment amount. CMS stated underpayments are outside the scope of the Final Rule and that providers can seek to address underpayments under existing reopening policies.

It is important for providers to understand the requirements set forth in the Final Rule and incorporate the necessary policies into their compliance plans regarding the reporting and returning of identified overpayments. Failure to report and return any identified overpayment within 60 days could expose providers to liability under the federal False Claims Act. If you or your entity have any questions regarding the Final Rule, or have any other questions related to Medicare overpayments, please contact an experienced healthcare attorney at (248) 544-0888, or via email at You may also subscribe to our health law blog by adding your email at the top right of this page.

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