The long awaited ruling on reporting and returning overpayments is now in the Federal Register and will become effective on March 14, 2016. As stated in §401.303, an overpayment is any fund that a person has received or retained under Title XVIII of the Social Security Act to which the person, after applicable reconciliation, is not entitled under such title. There is no minimum monetary threshold for an overpayment. The CMS’ Final Rule includes the definition of “identification” of an overpayment, what constitutes the look-back period, and the mechanism to report and return overpayments.

Meaning of Identification

 Providers must report and return overpayments for Medicare Part A and B by 60 days after date of identification of the overpayment or the due date of corresponding cost report, if applicable.   Identification of the overpayment occurs when the “person has or should have known through the exercise of reasonable diligence that the provider has received an overpayment and quantified the amount of the overpayment.” Simply, identification is knowledge of when the overpayment occurred and the amount quantified, not when the overpayment was received. If a contractor identifies the overpayment and notifies the provider that the contractor will correct the error, the provider does not need to separately report and return the overpayment. Examples of overpayments described in §401.303 include:

  • Medicare payments for non-covered services.
  • Medicare payments in excess of the allowable amount for an identified covered service.
  • Errors and non-reimbursable expenditures in cost reports.
  • Duplicate payments.
  • Receipt of Medicare payment when another payor had the primary responsibility for payment.

Look-back Period

Fortunately, the look-back period is shortened to 6 years for any identified overpayments. If the overpayment is identified within 6 years of receipt, the overpayment must be reported and returned. Originally the look-back period was proposed as 10 years for consistency with False Claims liability. However, many of these overpayments have been determined to be simple errors and not considered fraudulent.

How to Report and Return Overpayments

 Providers must use claims adjustment, credit balance, self-reported refund or other process to report and return overpayments. If the OIG receives a submission by the provider using the OIG Self-Disclosure protocol for violations related to Stark, Anti-Kickback or the Exclusion’s Statute or CMS receives a submission of the CMS Voluntary Self-Referral Disclosure Protocol by the provider, the deadline will be delayed. The 60-day time period would not be in effect until a settlement agreement is entered. If the provider has requested an extended repayment schedule, the deadline to return overpayments would also be suspended.

Now that CMS has finalized the 60- day deadline, providers should be sure to have their processes in place prior to March 14 for identifying, reporting and returning any overpayments.