The long awaited final rule on reporting and returning Medicare Part A and Part B overpayments was published on February 12, 2016. The regulations became effective on March 14, 2016.
The Basic Requirements of Final Rule
The final rule requires health care providers and suppliers to report and return a Medicare overpayment by the later of the date that is 60 days after the date an overpayment is identified, or the due date of any corresponding cost report if applicable. An “overpayment” is broadly defined as “any funds that a person has received or retained under title XVIII of the Act to which the person, after applicable reconciliation, is not entitled under such title.” 42 C.F.R. § 401.303. There is a 6 year look-back period which is based on the date the overpayment was received.
This health care alert focuses on the practical steps that health care providers and suppliers need to take to ensure compliance with the final rule. It also highlights areas that may be of concern for particular provider/supplier types.
Practical Steps to Comply with the Final Rule
The following “checklist” is not exhaustive but rather illustrative of the practical steps to take to ensure compliance with the final rule:
- Establish and implement policies and procedures for reporting and returning Medicare overpayments.
- Conduct ongoing, proactive compliance activities to monitor claims.
- Investigate any credible information of a potential overpayment.
- Follow approved procedures for reporting and returning overpayments.
- Provide education and training on reporting and returning Medicare overpayments to staff based on their responsibilities within the health care provider/supplier organization.
- Review and update contracts with third-party billing services and contracts for ancillary services, physician services, and services provided under arrangement.
Overpayments Resulting from the Failure to Comply with Specific Regulations
Potential Medicare overpayments may result from a health care provider’s or supplier’s failure to comply with specific regulations affecting Medicare payments. Examples of areas that may be of concern for particular provider/supplier types are listed below:
- Billing for provider-based services that do not meet the regulatory requirements in 42 C.F.R. § 413.65.
- Inaccurate MS-DRG assignments for inpatient claims for mechanical ventilation.
- Inaccurate coding of transfers as discharges under the Medicare transfer policy.
- Using “new patient” codes when billing for outpatient evaluation and management services provided to established patients.
Skilled Nursing Facilities
- Billing for therapy services at highest level of therapy without meeting the documentation requirements in 42 C.F.R. § 480.20.
- Billing for inpatient care claims without meeting the medical necessity requirements for inpatient care.
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Suppliers
- Billing for orthotic braces that are not medically necessary or without having the appropriate documentation to support the claims.
Freestanding Long Term Care Hospitals
- Exceeding the applicable threshold under the so-called “freestanding 25 percent rule” at 42 C.F.R. § 412.536.
Co-Located Long Term Care Hospitals
- Receipt of payments that are inconsistent with the interrupted stay policy at 42 C.F.R. § 412.531.
- Receipt of payments that are inconsistent with the 5 percent readmission rule during the time period the rule was in effect.
- Exceeding the applicable thresholds under the so-called “co-located 25 percent rule” at 42 C.F.R. § 412.534 and the so-called “freestanding 25 percent rule.”
Potential Liability for Failure to Comply with the Final Rule
The failure to report an overpayment could result in potential liability under the False Claims Act and the Civil Monetary Penalties Law with significant civil penalties as well as potential exclusion from participation in federal health care programs. A violation of the False Claims Act also could result in qui tam actions by whistleblowers.
If you have any questions regarding the final rule on reporting and returning Medicare overpayments, please contact Rochelle H. Zapol, chair of the firm’s Health Care Practice Group and the author of this alert. You can reach Rochelle at 617 456 8036 or firstname.lastname@example.org.