The 60-Day Rule Is Final: Assessing Your Organization’s Safeguards

February 17, 2016

Follow these tips to ensure compliance in the wake of the new 60-Day Rule.

On February 12, the CMS finalized the 60-Day Overpayment Report and Refund rule (60-Day Rule) for Medicare Parts A and B. This long-awaited rule clarifies the requirements of section 1128J(d) of the Social Security Act (SSA) and requires providers to report and refund overpayments within 60 days of “identification.” View the full text of the final rule.

In the wake of the final rule, many Medicare stakeholders are assessing their compliance and monitoring activities and implementing enhanced processes. Consider the following five tips as your organization seeks to reduce its exposure:

  • Implement a “proactive” approach to auditing and overpayment detection. Among the most far-reaching aspects of the 60-Day Rule is that providers could be liable for failing to exercise “reasonable diligence,” which includes proactive compliance activities. Providers must examine their current processes for overpayment detection (if they exist) and assess whether the government would consider them “reasonable.” Is quarterly auditing of 30 claims for a 500-bed hospital sufficient? What about 100 claims or 500 claims? The 60-Day Rule, despite claims of a bright-line test, is anything but; much of the analysis relies on fact-specific determinations. To that end, choosing self-audit priorities based on risk stratification and other advanced auditing techniques will put your organization in a better position to detect and address overpayments to meet this “reasonable diligence” standard.
  • Develop an organizationwide summary of disputes with various authorities. Most providers regularly interact with various Medicare contractors, whether through cost reconciliation, CERT audits, RAC claims reviews, or questions addressed to the MAC. CMS is clear that these interactions can (and often do) result in “credible information,” which may require your organization to delve further into a particular issue. This includes determining not just if the contractor is correct but also whether the issue affects other claims and time periods. Thus, developing an organizational summary of the various disputes that an organization has had with Medicare contractors will help ensure that the potential areas the organization is on notice of are properly addressed.
  • Train all employees on prompt reporting of potential overpayments. The 60-Day Rule attributes knowledge of overpayments to any person in an organization, regardless of his or her job responsibilities or seniority level. Consequently, CMS perceives the organization to receive “credible information” of an overpayment on the day that any employee or agent receives such information. Training staff, particularly those responsible for billing and revenue management, on reporting mechanisms and monitoring processes will be increasingly important going forward. Providers should also assess whether their current grounds for disciplinary action include failure to promptly report known or potential overpayments to management and whether providers in fact discipline employees on these grounds.
  • Assess what the provider reasonably believes to be “reconciled” on the cost report. SSA 1128J(d) requires reporting and repayment of overpayments within the later of 60 days or the date that the corresponding cost report is due. Thus, it is important from a timing perspective for providers to make a well-reasoned and consistent judgment about which claims are subject to “applicable reconciliation” on the cost report and which are not.
  • Document, document, document. Nearly every feature of healthcare operations now requires diligent and clear supporting documentation. The 60-Day Rule’s requirements are no different. At the broadest level, providers should develop standard operating procedures to guide overpayment monitoring activities and the process for investigation once a potential overpayment has been uncovered. From there, providers should develop and follow audit and investigation protocols. Finally, documenting the steps that a provider has taken, is currently taking, and plans to take to identify and quantify an overpayment will be important to demonstrate “reasonable diligence” for purposes of the 60-Day Rule.

The 60-Day Rule has many facets that providers should quickly get a handle on. To assist in those efforts, we are hosting a webinar on practical implications of the 60-Day Rule on February 23, 2016 from 1:00 to 2:00 p.m. eastern time. Learn more about the webinar and register.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Washington, DC
Howard J. Young
Albert W. Shay
Andrew Ruskin
Jacob J. Harper