Sixty Days of Gray: Medicare and Medicaid Refund Requirements

Although CMS has not yet issued a final rule on the ACA’s 60-day repayment provisions, hospitals and other providers can still create policies and train staff in a manner that gives them some measure of protection. Even with no final rule, the law is now in effect and needs to be considered whenever a potential Medicare or Medicaid overpayment issue is detected.

Your compliance officer pulls the hospital’s CFO aside in the hallway and whispers, “We may have a problem in urology with how we are documenting certain procedures. I’m looking into it, but we may have a refund issue here.” The CFO responds, “OK, when can I get a report?” The compliance officer says, “Not sure. This could take a while because we have to do some interviews and possibly engage a consultant. I also should probably get Legal involved.”

For purposes of compliance with the ACA’s requirement that all identified Medicare and Medicaid overpayments be reported and refunded within 60 days, with potential False Claims Act penalties for knowingly retaining improper overpayments past the 60-day mark, this scenario presents many challenges. When does the 60-day clock start ticking? What if the review is limited to just last month's claims and identifies overpayments—does a hospital have to then review earlier claims and, if so, how far back? What if some nurses say one thing central to the overpayment determination, but a physician directly contradicts those statements—how do such inconsistencies factor into the analysis? What if some of the patients were enrolled with Medicare Advantage or Medicaid managed care plans—do the same 60-day refund rules even apply to them? If state Medicaid programs have their own or different reporting obligations, which control?

Unfortunately, CMS has yet to answer these and many other important questions regarding the 60-day rule through rulemaking. Despite publishing a proposed rule in February 2012, CMS has not finalized that rule as it applies to Medicare Part A and B providers, although it is likely that the rule will be finalized within the next nine months. Among other things, industry did not respond favorably to the CMS proposal that the “look-back period” for Medicare refunds be 10 years. To make matters more interesting, whistleblowers and the Department of Justice are not waiting for CMS to finalize the rules, and there is at least one False Claims Act action against a hospital for allegedly failing to refund identified Medicare overpayments within 60 days.

So, where does that leave Medicare and Medicaid providers that struggle to comply with the statutory requirement to report and refund identified overpayments within 60 days? Here are several practical recommendations to consider:

• Ensure that policies are established to encourage employees to raise concerns through appropriate channels (reimbursement, compliance, and legal) if they have a question regarding a practice that may lead to potential overpayments and avoid any hint of retaliation for those who report in good faith.

• Ensure appropriate and timely review of credible reports of potential overpayments. Heel dragging is inconsistent with the statute and the proposed CMS rule. Remind those involved to refrain from reaching any premature conclusions about whether an overpayment actually exists, as such conclusions could be viewed as starting the 60-day clock.

• When appropriate, involve experts (billing, coding, compliance, and legal) with some level of independence to avoid the “fox watching the henhouse” scenario, or at least its appearance. Develop a tight review plan that addresses scope of review, timeframe, contingencies, and the like. Ask the experts to report their findings orally before they prepare any written report, and make sure that the report is clearly marked “draft” and does not include any premature legal conclusions.

• Remember that not all regulatory requirements are considered conditions of Medicare or Medicaid payment, and the failure to comply with these requirements may not trigger any overpayment refund obligation.

• Have compliance or legal departments document the steps taken to determine if there is an overpayment. If the legal department is not involved, communications regarding whether an overpayment exists will not be protected by attorney-client privilege.

• If you identify a Medicare or Medicaid overpayment after appropriate analysis, document the date that determination is made and ensure that the refund does not slip through the cracks. Understand who is responsible for processing the refund and the date the refund needs to be made, and then hold the appropriate people accountable for timely follow-through. Sixty days can come and go quickly in the real world.

• Decide after consultation with legal counsel whether the underlying overpayment issue was systematic or the result of intentional misconduct that may give rise to other types of liability risk and whether a self-disclosure to law enforcement (e.g., OIG) is appropriate.

By keeping these recommendations in mind when dealing with the next potential overpayment situation, you should be well-equipped to comply with the 60-day rule’s statutory requirements, even though CMS has not yet finalized the rule that implements this important legal obligation.

Author
Howard J. Young

Editors
Andrew Ruskin
Albert W. Shay