What are the next steps to compliance?
The Centers for Medicare and Medicaid Services (CMS) issued a final interpretation of the 60-day refund rule, effective Jan. 1, 2025, that clarifies responsibilities for identifying, reporting and refunding overpayments. CMS finalized the overpayment rule as part of the CY 2025 Medicare Physician Fee Schedule, which was published in the Federal Register on Dec. 9, 2024 (2024-25382.pdf, pages 630-631).
What is the 60-day Overpayment Refund Rule?
An overpayment might happen, for example, due to lack of medical necessity for services provided, inappropriate patient status assignment, miscoding a service, inaccurate patient demographics, insurance errors, duplicate billing, or deductible and copayment miscalculations. An overpayment obligation can be created in all healthcare related service industries that submit claims for remittance to governmental entities for payment.
The federal rule has required any person (i.e., providers or suppliers) who receives an overpayment of Medicare or Medicaid funds to return the overpayment to the appropriate government official or contractor.
Previously, if through reasonable diligence the person identifies and determines that an overpayment has occurred as well as a quantified amount of the overpayment dollar amount, then a 60-day period would begin to report and return the overpayment.
Failing to report and return the overpayment timely can become and be considered a potential false claim and be subject to enforcement under the federal False Claims Act (FCA). Additionally, failing to report can lead to additional monetary penalties and further financial obligations.
What are the changes on the 60-day rule effective Jan. 1, 2025?
The following are two key revisions to the CMS regulations:
- How CMS defines “identified” overpayments
The new rule redefines the “identified” term to align with the FCA’s standard of “knowingly,” which includes actual knowledge, reckless disregard or deliberate ignorance of an overpayment.
Therefore, providers must now report and return an overpayment when identified within 60 days of knowing it, even if the exact amount has not been completely determined and an investigation has not been completed to quantify other related claims and the total estimated amount of the overpayment.
- 180-day period to investigate overpayments
A new “up to 180-day period” has now been established to allow for the investigation of the matter, systemic process trending errors, identification of related claims and estimated overpayment obligations. This period starts from when the first overpayment is identified. During this period, the provider is required to conduct a good faith investigation to determine whether related claims exist and to calculate the overpayments.
The 180-day period ends from the date of the identification and reporting of the first overpayment , and/or when the provider’s full investigation is concluded, and the total overpayment amount is determined.
Staying Compliant – Next Steps
- Update internal compliance policies and procedures so that they are aligned with the new 60-day rule definitions and timelines.
- Assign compliance resources, along with a dedicated but limited team that includes legal counsel, to manage investigations accurately and effectively.
- Provide compliance training for employees and providers on the 60-day rule changes.
- Encourage staff to timely report possible overpayments without fear of retaliation.
- Implement ongoing internal audits for discovering overpayments triggered, for example, by documentation issues, miscoding services with a higher level than was actually performed, service fees and charge capture miscalculations, lack of medical necessity and incorrect patient status assignment.
If you have any questions about these changes and how to avoid a potential False Claim Act liability, Denise Gaulin.
Disclaimer: This article is meant to be for general information and not be interpreted as a legal advice.
