The Affordable Care Act (ACA) published back in 2010, required providers and suppliers to repay overpayments from the Medicare program within 60 days. Many facets of the requirement were unclear, until now. On February 12, 2016, the Centers for Medicare and Medicaid Services (CMS) published in the Federal Register the "Reporting and Returning of Overpayments, final rule" providing guidance to Medicare providers. The effective date of this rule was March 14, 2016.
Of particular interest is the clarification of when an overpayment is identified, which sets the 60-day clock ticking. The original legislation did not provide clear guidance. The final rule states that an overpayment is identified when the provider has, or should have through the exercise of reasonable diligence, determined that they have received an overpayment and quantified the amount of the overpayment. This includes both results from a self-audit or a contractor initiated review or audit. "Quantification" can include the use of statistical sampling or extrapolation methodologies to determine the overpayment.
The final rule clarifies that it only applies to Medicare Part A and B fee-for-service overpayments. Medicare Part C (Medicare Advantage), Part D, and Medicaid are not addressed in the rule. It also applies to all provider types, regardless of payment methodology used. If you have concerns regarding how to determine overpayments based on your particular payment methodology, please consult with your Marcum advisor.
The lookback period was reduced from the 10 year period in the proposed rule to 6 years in the final rule. This eases the burden for providers who do not necessarily retain records for more than the 6 or 7 year period required by many other Federal or State statutes. However, providers may need to review 6 years of data in cases where there are suspected overpayments, please consult with your healthcare attorney when determining the exact lookback period and self-reporting to the Office of Inspector General (OIG) or other agency.
There are many acceptable methods for repayment of the overpayments, including claims adjustment, credit balance reports, self-reported refund processes, or other means which are appropriate in the circumstances. Your Marcum advisor can help you determine the most appropriate method of returning overpayments under individual circumstances.
Certain circumstances are specifically excluded from the overpayment rule since they are not determinable until a later date. These include:
- Home health outlier and hospice cap determinations are made at the end of the cap year and cannot be determined prior to the final cap calculation through review of the self-determination by the Medicare Administrative Contractor (MAC). Overpayments cannot be expected to be returned during the year until the cap determination has been received.
- Overpayments from periodic interim payments (PIP) would be reported and returned at the time the initial cost report is due. If providers become aware that their PIP payment is not accurate, they should inform the MAC of this situation.
Providers are expected to perform self-audits of their claims as part of their compliance programs, this obligation was reiterated in the final rule. At a minimum providers should perform triple checks or other due diligence reviews including an examination of claims submitted and medical documentation review. The final rule addresses documentation reviews and states, "sufficient documentation and medical necessity are longstanding and fundamental prerequisites to Medicare coverage and payment." The final rule also states that overpayments due to upcoding must be returned whether or not the inappropriate coding was intentional or not. It is the duty of the provider to ensure that Medicare claims are submitted correctly and that any errors be identified and corrected.
WHAT YOU SHOULD DO
If you do not already have a self-audit or triple check process in place, steps to begin one should be commenced immediately. The final rule expects that providers are doing their own self-investigation activities to find and address overpayments. Items to review include, but are not limited to:
- Medicare claims as submitted (UB-04, 1500, or their electronic equivalent).
- Medical documentation and charts, looking for accuracy, completeness and documentation showing medical necessity and appropriate care.
- Evidence of appropriate physician and other practitioner signatures. The lack of a physician signature and date is a technical denial and no Medicare payment can be made without a signed and dated physician order for the service or item.