ATTENTION MEDICARE PROVIDERS: Important Revisions to the 60 Day Overpayment Repayment and Report Rule

What is the so-called 60 day Overpayment and Report Rule (“the 60-day rule”) and where does it come from?

Section 6402(a) of the Patient Protection and Affordable Care Act (Pub. L. 111-148),  also known as Obamacare, as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) (collectively known as the Affordable Care Act), established section 1128J(d) of the Act. Section 1128J(d)(1) of the Act requires a person who has received an overpayment to report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, and to notify the Secretary, State, intermediary, carrier or contractor to which the overpayment was returned, in writing of the reason for the overpayment. This law dates back to 2010.

Section 1128J(d)(4)(B) of the Act defines the term “overpayment” as any funds that a person receives or retains under title XVIII or XIX to which the person, after applicable reconciliation, is not entitled under such title. There can be any number of reasons why a payment received from the Medicare program is an overpayment, including but not limited to regulatory noncompliance, errors/mistakes and/or omissions, and intentional misconduct (fraud).

For purposes of Medicare Parts A and B, section 1128J(d)(4)(C) of the Act defines the term “person” to include providers and suppliers as those terms are defined in the Act.

The 60 day rule is as follows. Section 1128J(d)(2) of the Act requires that an overpayment be reported and returned by the later of: (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. Section 1128J(d)(3) of the Act specifies that any overpayment retained by a person after the deadline for reporting and returning an overpayment is an obligation (as defined in 31 U.S.C. § 3729(b)(3)) for purposes of the False Claims Act, 31 U.S.C. § 3729, which imposes treble damages and significant per claim penalties of up to approximately $28,000, depending on when the payment was made.

Section 1128J(d)(4)(A) of the Act provides that the terms “knowing” and “knowingly” have the meaning given those terms in the False Claims Act which defines the terms “knowing” and “knowingly” to include information about which a person “has actual knowledge,” “acts in deliberate ignorance of the truth or falsity of the information,” or “acts in reckless disregard of the truth or falsity of the information.”

On February 12, 2016, the federal government published a regulation titled “Medicare Program; Reporting and Returning of Overpayments” which provided, among other things, that a provider or supplier has identified an overpayment when the provider or supplier has determined, or should have determined through the exercise of reasonable diligence, that the provider or supplier has received an overpayment and quantified the amount of the overpayment.

Specifically, in the CY 2025 Physician Fee Schedule, the federal government proposed new Medicare regulations that specify circumstances under which the deadline for reporting and returning overpayments in Parts A and B would be suspended to allow time for providers and suppliers to investigate and calculate overpayments. The proposed regulation has been finalized.

The finalized regulation states that a provider or supplier has identified an overpayment if it has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.

The Medicare program understands that providers and suppliers need time to investigate, calculate, and report and return certain overpayments. To address this concern, Medicare has provided a regulatory suspension of the applicable requirements for 180 days, to conduct a timely, good faith investigation to determine the existence of related overpayments that may arise from the same or similar cause or reason as the initially identified overpayment.

When has a person identified an overpayment?

Medicare has clarified that a person has identified an overpayment when the person:

(1) has actual knowledge of an overpayment;

(2) acts in deliberate ignorance of the truth or falsity of information regarding the overpayment; or

(3) acts in reckless disregard of the truth or falsity of information regarding the overpayment.

In cases where a provider or supplier is actively investigating a potential overpayment, the 60-day period for reporting and returning the overpayment begins when the provider or supplier has actual knowledge of the overpayment. As stated above and discussed below, the 60-day deadline may be suspended for up to 180 days.

However, in cases where a provider or supplier acts in deliberate ignorance or reckless disregard of the existence of the overpayment, the 60-day period begins on the date that the provider or supplier acted in deliberate ignorance or reckless disregard of the truth or falsity of information regarding the overpayment and no 180 day suspension of the deadline would exist.

With respect to quantification of the overpayment, once a person has identified an overpayment, the person has 60 days to report and return the overpayment even if the person has not yet calculated the precise amount of the overpayment at the time of identification. Because a person cannot return an indefinite amount of money, the overpayment amount must be calculated within 60 days of identification to meet the 60-day deadline.

Under what circumstances may the 60 day rule be extended?

The final regulation provides the circumstances under which the 60 day deadline for reporting and returning overpayments may be suspended for 180 days to allow time for providers and suppliers to investigate and calculate overpayments.

The deadline to report and return an overpayment is suspended if:

(1) a person has identified an overpayment but has not yet completed a good-faith investigation to determine the existence of related overpayments that may arise from the same or similar cause or reason as the initially identified overpayment; and

(2) the person conducts a timely, good-faith investigation to determine whether related overpayments exist.

If the person believes that there may be other related overpayments, the 60-day deadline for reporting and returning the initially identified overpayment may be suspended for up to 180 days, to allow a person to conduct a timely, good faith investigation to determine the existence of related overpayments, if any, that may arise from the same or similar cause or reason as the initially identified overpayment.

The investigatory timeframe includes time to calculate the aggregate amount of both the initially identified overpayment and related overpayments, if any, uncovered by the investigation.

Where a single overpayment is found and other related overpayments are suspected, the provider or supplier should investigate and calculate the aggregate overpayment prior to its return.

When does the Medicare 60-day report and return obligation begin?

The Medicare program has provided a useful example of how the new rule will work in a hypothetical situation as follows.

Assume that, on day 1, a person identifies an overpayment arising from a physician’s failure to properly document the medical record to support the coding of a specific claim, and the person has reason to believe that this may be a common practice of the physician, so there could be more affected claims. Once the overpayment has been identified on day 1, the report and return obligation applies, and the person has 60 days to report and return the overpayment.

However, the 60-day deadline may be suspended for up to 180 days to conduct and conclude a good faith investigation to determine whether related overpayments that arise from the same or similar cause or reason as the initially identified overpayment exist.

If the person does NOT conduct an investigation, or the investigation is not timely or not conducted in good faith, the identified overpayment must be reported and returned by day 60.

If the person does conduct a timely, good faith investigation, suspension of the report and return obligation begins when the person begins the investigation. The suspension of the 60-day deadline ends when the investigation is concluded and the initially identified overpayment and related overpayments, if any, are calculated, or by day 180, whichever is earlier.

Once the suspension of the 60-day deadline ends, the person has the remainder of the 60-day period to report and return the overpayment. For example, assuming the investigation to determine the existence of related overpayments was begun on day 10 (that is, the tenth day after the initial overpayment was identified), the overpayment must be reported and returned within 50 days after either (1) completion of the investigation or (2) day 180, whichever is earlier. However, a different suspension may also be applicable. For example, if the person is reporting the overpayment to the OIG Self-Disclosure Protocol, the overpayment return requirement may be further suspended.

If a person does not conduct such an investigation, or the investigation is not timely or not conducted in good faith, the 60-day deadline is not suspended, and the initially identified overpayment must be reported and returned within 60 days of its identification.

If a person does conduct a timely, good faith investigation, the 60-day deadline is suspended until the investigation is concluded and the initially identified overpayment and related overpayments, if any, are calculated, or by day 180, whichever is earlier.

Once the suspension of the 60-day deadline ends, the person has the remainder of the 60-day period to report and return the overpayment. For example, if a person began a timely, good faith investigation of related overpayments 20 days after identifying the initial overpayment, the suspension of the deadline would apply on day 20, and there would be 40 days remaining in the 60-day period to report and return the overpayment after the suspension ends.

Conclusion

The question of whether any particular payment(s) a provider has received from the Medicare program as reimbursement is an overpayment is a critical threshold question. It is advised that providers consult with legal counsel who practices in this area of law.

If a mistake is made, and a provider or supplier makes the wrong determination and fails to self-disclose and report the overpayment(s) to Medicare in a timely manner, such a decision will have serious liability attached to it. The provider is now subject to a False Claims Act lawsuit by the government and/or a whistleblower seeking treble damages; per-claim penalties of approximately $14,000 to $28,000, depending on when the payment was made; and attorneys’ fees.

In addition, such providers or suppliers are subject to exclusion from Medicare, Medicaid, and other federal health care programs, a revocation of Medicare billing privileges, and the collateral consequences that can follow. In some cases, criminal prosecution can result from the unlawful retention of Medicare overpayments.

Of course, if a provider or supplier decides incorrectly that it has received a Medicare overpayment(s) then it will return money to the Medicare program that it does not need to return.

Medicare providers and suppliers should retain counsel to review and advise them on these matters.

NOTE: at the present time, there is no applicability of the 180 day rule to Medicaid overpayment; this law applies only to Medicare overpayments.

For additional information, or to discuss federal health care program overpayments and other compliance issues, please contact David R. Ross, Esq., Shareholder, at dross@oalaw.com or (518) 312-0167. Mr. Ross has been practicing health law for almost 30 years, and his practice areas consist of virtually all aspects of Medicare, Medicaid, and private insurance compliance, as well as regulatory interpretation, civil and criminal investigations of all kinds, audits and audit appeals, and exclusions/revocations/suspensions. Mr. Ross has handled many self-disclosures to Medicare and Medicaid over the years.