As we discussed in March—“Identifying” an Overpayment: The Long and (Still) Winding Road—since 2018, when a US district court rejected CMS’s definition of “identified” for purpose of Medicare’s overpayment regulations, the agency has hesitated to finalize a new definition of that term. In December 2022 (i.e., four years after the court’s ruling), CMS proposed removing the reference to “reasonable diligence” in the definition of “identified” and replacing it with language “that gives the terms ‘knowing’ and ‘knowingly’ the same meaning given those terms in the False Claims Act.” In other words, a provider would be deemed to have “identified” an overpayment only if the provider
(i) had “actual knowledge of the existence of the overpayment” or (ii) acted “in reckless disregard or deliberate ignorance of the overpayment.”
Unfortunately, CMS never finalized this proposed amendment. Fourteen months later, however, in February 2024, CMS reported that it continued to receive inquiries regarding this issue and stated it intended “to issue a final rule to revise the definition of ‘identified’ in the overpayment rules as soon as is reasonably possible.”
As part of its annual Medicare Physician Fee Schedule proposed rulemaking (MPFS Proposed Rule), expected to be published in the Federal Register on July 31, 2024, CMS has proposed modifying the current Medicare Part A and B overpayment regulations in two significant respects.
First, CMS would “retain” its December 2022 proposal; that is, a provider would be deemed to have “identified” an overpayment only if the provider had “actual knowledge of the existence of the overpayment” or acted “in reckless disregard or deliberate ignorance of the overpayment.”
Second, the overpayment regulations currently provide that “[a] person who has received an overpayment must report and return the overpayment by the later of either of the following”: (i) the “date which is 60 days after the date on which the overpayment was identified,” or (ii) the “date any corresponding cost report is due, if applicable.” Recognizing “the importance of allowing time to investigate and calculate overpayments,” a new provision would “specify the circumstances under which the deadline for reporting and returning overpayments would be suspended to allow time for providers to investigate and calculate overpayments.”
Specifically, the proposed regulation provides that “[t]he deadline for returning overpayments will be suspended” if the person both:
- “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
- “conducts a timely, good-faith investigation to determine whether related overpayments exist.”
If these conditions are satisfied, “the deadline for reporting and returning the initially identified overpayment and related overpayments that arise from the same or similar cause or reason as the initially identified overpayment will remain suspended until” the earlier of:
- the “date that the investigation of related overpayments has concluded and the aggregate amount of the initially identified overpayments and related overpayments is calculated,” or
- the “date that is 180 days after the date on which the initial identified overpayment was identified.”
CMS provides the following example of its new proposed rule in operation:
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. At this point, the person has 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 on day 1. The suspension 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.
Comments on the MPFS Proposed Rule are due on or before September 9, 2024.
