Final 60-Day Rule for Reporting and Returning Overpayments

Quantification Required as Part of “Identifying” and Overpayment

Six years after issuing its Proposed Rule, CMS released its final 60-Day Rule for reporting and returning overpayments. The Final 60-Day Rule is more industry-friendly, but still creates an obligation for providers to exercise reasonable diligence to identify and quantify overpayments.

In the Final Rule, CMS established a national standard which provides more clarity than the 6-year old Proposed Rule.

An overpayment is considered “identified” when a “person has, or should have through the exercise of reasonable diligence, determined that the person received an overpayment and quantified the amount of the overpayment.” This does not mean that providers have an unlimited amount of time to quantify overpayments and repay them, as explained below.

“Reasonable Diligence” Standard for Investigation of Potential Overpayments

In the Final Rule, CMS uses a “reasonable diligence” standard for identification and quantification of overpayments. “Reasonable diligence” is “demonstrated through the timely, good faith investigation of credible information, which is at most 6 months from receipt of the credible information, except in extraordinary circumstances.”

60-Day Clock Starts Ticking After Overpayment Investigated & Quantified

Providers now have a finite timeline for conducting investigations in response to compliance hotline reports, internal audits, and other credible information of potential overpayments such as cost report rejections.

Providers should document their investigative efforts to demonstrate compliance with the 60-month benchmark.

Six (6) Month Lookback

In the Proposed Rule, CMS established a 10-year lookback period in line with the False Claims Act’s statute of limitations. After receiving voluminous comments and “pushback” on this point, CMS revised the lookback period to six (6) years.

Procedures for Reporting & Returning Overpayments

CMS acknowledged in the Final Rule that overpayments may need to be reported in different ways, depending on the nature of the overpayment – credit balances, cost reporting issues, etc. Accordingly, providers may use the “applicable claims adjustment, credit balance, self-reported refund, or other reporting process set forth by the applicable Medicare contractor to report an overpayment.” Such reporting methods include use of the OIG’s Self-Disclosure Protocol or the CMS Voluntary Self-Referral Disclosure Protocol.

The Final Rule became effective on March 14, 2016. You may access the Final Rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-02-12/pdf/2016-02789.pdf.