CMS Finally Publishes the Final Rule on Returning Medicare Overpayments


On February 12, 2016, six years after the passage of the Affordable Care Act (ACA), CMS published the final rule with respect to returning self-identified overpayments.

The ACA established a requirement that any person who receives an overpayment from Medicare must report and return the overpayment by the later of: (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.

Major Provisions

The major provisions of the final rule clarify:

  • the meaning of overpayment identification;
  • the required lookback period for overpayment identification; and 
  • the methods available for reporting and returning identified overpayments to CMS.

The Meaning of "Identification"

The final rule states that a person has identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment. For example, if you discover that you have upcoded, you need to identify the extent of the upcoding and quantify the amount of the overpayment. The new standard for identification provides some clarity and consistency for health care providers regarding the actions they need to take to self-identify overpayments.

Lookback Period - 6 years from Identification

Under the final rule, providers must report and return overpayments which are identified within six years of the date the overpayment was received. Specifying the length of the look back period provides additional clarity for providers and suppliers who have identified an overpayment.

How to Report and Return Overpayments

The final rule provides that providers must use an applicable claims adjustment, credit balance, self-reported refund, or another appropriate process to satisfy the obligation to report and return overpayments. As a result, the methods for returning overpayments includes various options from which providers may select based on individuals circumstances.

Penalties for Reverse False Claims

If you receive a Medicare overpayment, and do not return it within 60 days of identifying that overpayment, you may be liable for False Claims Act penalties. The Fraud Enforcement and Recovery Act of 2009 (FERA) amended the False Claims Act to formally adopt the concept of “reverse false claims,” which includes knowingly retaining an overpayment.

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