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Qualified, experienced BKD client service professionals write the contents of these articles. We urge you to carefully consider all of the facts and circumstances of your situation before applying specific information in our articles. Consult your BKD advisor before acting on any matter covered in these articles.
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April 2010
Health Care Reform: Penalties for Failure to Report & Return
Overpayments Start Soon
Tom Watson
As Congress and President Obama worked to pass health care reform, one of the key areas cited as paying the cost of the legislation was the reduction of health care fraud. Section 6402(a) of H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), increases the penalty for failure to return overpayments from Medicare and Medicaid and mandates the timeline for returning those overpayments. Any overpayments must be returned 60 days after the overpayment is identified or the date a corresponding cost report is due, if later.
Section 6402(a) applies to every type of provider and supplier, managed care plans and others. If an entity has identified an overpayment from Medicare or Medicaid but fails to repay it prior to the date required, the funds are subject to a reverse application of the federal False Claims Act (FCA). That means the government could recover treble damages (triple the damages normally allowed) plus statutory fines allowed by the FCA.
If a provider identifies an overpayment, it must provide a written explanation to the entity receiving the returned overpayment stating why it occurred along with returning the related funds. Health care providers should consider several issues related to this provision:
- The penalties under this section appear to start May 22, 2010, 60 days from enactment of the legislation. Providers that may be aware of known or potential overpayments should carefully assess their repayment obligations prior to that date to avoid possible FCA provisions.
- Providers that file cost reports will need to be sure to repay any amounts due by the cost report due date, which is generally five months after the end of the cost reporting period. If providers cannot repay the amount due on the cost report, they will need to arrange a repayment plan with their Medicare Administrative Contractor (MAC) before the payment is due.
PPACA does not offer guidance on when an overpayment exists or define when it has been “identified.” While some situations are fairly clear, other scenarios are not.
For example, if a provider suspects it has made a billing error, when is the overpayment identified? Is it when the provider determines for certain an error has occurred, or when it has fully analyzed the error and identified the amount of the overpayment? It is unclear how this provision applies to credit balances.
If a provider corrects the error by unbilling and rebilling the claim, do these new provisions apply? If so, how should a provider communicate the reason for the overpayment in writing? The final application of Section 6402(a) will likely be detailed in upcoming Centers for Medicare & Medicaid Services (CMS) regulations, which should clarify the above questions and other uncertainties surrounding this section. Until that time, providers should carefully monitor potential overpayments and consult with legal counsel on when repayment is required. In addition, providers should monitor proposed regulations and consider commenting on areas where the CMS proposal could be improved. For guidance on how this section may apply to your particular situation, contact your BKD advisor.
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