Returning Medicare and Medicaid Overpayments – Better Act Fast!

Weatherbee Resources, Inc.




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Don’t shoot the messenger but compliance with Medicare and Medicaid rules just got tougher for hospice organizations.  In the first judicial opinion on when a Medicare or Medicaid “Overpayment” is “identified” for purposes of the Affordable Care Act’s (ACA) 60-Day Repayment Law, a New York federal court’s interpretation complicates the already difficult task providers face in having sufficient time to assess and quantify potential overpayments. An August 3, 2015 decision in United States v. Continuum Health Partners Inc. marks the first time a court has interpreted the provision of the ACA that requires providers to return Medicare and Medicaid overpayments to government agencies within 60 days of the overpayment being “identified” (“60-Day Rule”). Rejecting the argument by defendants Continuum Health Partners and three member hospitals that a claim is “identified” when specific overpayments are conclusively pinpointed, the court wrote that such an interpretation would create “a perverse incentive to delay learning the amount due” and instead found that the 60-day clock begins running when the provider is on notice of potential overpayments—even where the exact claims or amounts are not yet known.

As part of the “Medicare and Medicaid program integrity provisions,” the ACA requires that any person who receives an overpayment shall report and return the payment to the appropriate agency or carrier and notify the agency or carrier in writing about the reason for the overpayment. The recipient of the overpayment must do so by the later of (1) “60 days after the date on which the overpayment was identified” or (2) the due date of “any corresponding cost report, if applicable.”  Since its implementation, the 60-Day Rule left open many questions as to how to determine when the “clock” begins to “tick”. The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule on the topic in February 2012 stating that a provider has “identified” an overpayment for purposes of the 60-day clock when it has “actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.” A final rule for Medicare Part A providers, including hospices, still has not been issued, and questions continue to abound.  The Continuum decision marks the first judicial interpretation of the 60-Day Rule provisions.

The government’s False Claims Act complaint, initiated by a whistleblower who had been terminated by the health system, essentially alleged that the defendants, as a result of a computer error, double billed for certain services rendered to Medicaid beneficiaries, resulting in the defendants receiving payments from both a managed care plan and Medicaid. The whistleblower had sent a detailed list of potential overpayments (about half of the claims on the list had resulted in an overpayment), but despite the government’s contention that it had at that point “identified” the overpayment, the hospitals over a two year period failed to refund the bulk of the “identified” overpayments. Defendants argued that the government’s interpretation that an overpayment is identified when it is put on reasonable notice of potential overpayments, even if not yet quantified, would “impose an unworkable burden” on providers to report and return potential overpayments within 60 days. This argument was not persuasive to the judge, who commented that “[i]t would be an absurd result to construe this robust anti-fraud scheme as permitting willful ignorance to delay the formation of an obligation to repay the government money that is due.”

However, the court noted that the 60-day window for returning an overpayment is an “obligation” under the ACA that does not, unto itself, establish liability under the False Claims Act (FCA). “Rather, in the reverse false claims context, it is only when an obligation is knowingly concealed or knowingly and improperly avoided or decreased that a provider has violated the FCA.” Thus, the court concluded, “well-intentioned” providers “working with reasonable haste” to address the overpayments identified should be safeguarded by prosecutorial discretion because “[s]uch actions would be inconsistent with the spirit of the law and would be unlikely to succeed.”

Main Takeaways

Although this district court decision is binding only in one judicial district, it carries great weight given that it is the first and only judicial interpretation of a vague term in the ACA (what it means to “identify” an overpayment for purposes of the 60 Day Rule).  Even in the absence of a final regulation by CMS on the 60 Day Rule, Medicare, state Medicaid agencies, the Department of Justice, the OIG and whistleblower attorneys are all likely to argue (now with some support) that the 60 day clock begins to tick when a provider is put on reasonable notice of an overpayment and has only 60 days from that time to report and refund the overpayments.  Failure to do so may put the organization at some risk of a “reverse” false claim under the False Claims Act, with its attendant punitive penalties, especially if the hospice does not act with reasonable diligence to determine the amount of the overpayment.  Practically speaking, this means hospices must devote substantial compliance and billing resources when it has reasonable notice of a potential Medicare or Medicaid overpayment to tackle the issue within 60 days.  There is no legal exception for “thinly staffed compliance programs” and hospices should create workable strategies to address potential refunds.

Read more here

Posted by Howard Young, Esq. – Morgan Lewis
Howard Young is also a regular faculty member at Weatherbee’s Hospice Regulatory Boot Camp.


By | 2017-05-17T09:21:39+00:00 August 24th, 2015|Comments Off on Returning Medicare and Medicaid Overpayments – Better Act Fast!

About the Author:

Heather Wilson, PhD, CHC, is the Founder of Weatherbee Resources, Inc. You can reach Heather at or 508.778.0008