Idea of proactive compliance plagues 60-day report and refund rule

The final rule implementing the 60-day report and refund statute was a “mixed bag” for providers because it provided guidance to mitigate risk but perpetuated uncertainty by relying on vague terms, said Robert L. Roth, managing partner at Hooper Lundy & Bookman, PC, and James S. Hinkle, vice-president and chief compliance officer at Ardent Health Services, at the American Health Lawyers Association’s Institute on Medicare and Medicaid Payment Issues. Roth and Hinkle emphasized that the buck stops with providers, even if they did not cause the overpayment.

Overpayments

Section 6402(a) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) added Soc. Sec. Act Sec. 1128J(d) to provide that a person that receives an overpayment must report and return the overpayment within 60 days of when the overpayment was identified or when the corresponding cost report was due. CMS issued a final rule (81 FR 7564) February 12, 2016, effective March 4, 2016, implementing section 6402(a). Examples of overpayments include: (1) Medicare payments for noncovered services; (2) Medicare payments in excess of the allowable amount for an identified covered service; (3) errors and nonreimbursable expenditures in cost reports; (4) duplicate payments; (5) lack of medical necessity; and (6) insufficient documentation.

Proactive compliance

The final rule provides that an overpayment is “identified” if the person fails to act with reasonable diligence and the person in fact received an overpayment. CMS stated that “reasonable diligence” includes both proactive and reactive compliance. Roth and Hinkle concluded that the proactive compliance standard “raises the stakes”–the preamble does not explain the legal basis for proactive compliance, and the standard is “unreasonably vague” in light of possible civil money penalties, exclusion, and False Claims Act liability. They asked if a provider did not but arguably could have identified an overpayment by being proactive, has the provider identified an overpayment and, if so, when does the 60-day deadline start?

Quantification

An overpayment has not been “identified” until it is quantified or should have been quantified with reasonable diligence. However, CMS declined to adopt a minimum materiality threshold.