CMS Issues Refunds For Collections Made On Incorrectly Identified Incarcerated Beneficiary Overpayments

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Medicare does not cover supplies or services for persons who are incarcerated at the time the services are rendered.  However, Medicare had purportedly paid providers in error for many such claims and sought to recover those overpayments.  Subsequently the overpayments were reversed when CMS identified a number of claims that were erroneously denied.  Reprocessing of such claims should be completed by the Medicare Administrative Contractors by late December 2013 and erroneously recouped amounts restored.

Effective April 1, 2013, CMS created an Informational Unsolicited Response (IUR) process to identify and perform retroactive adjustments on any previously paid claims that may have been processed and paid erroneously during periods when the beneficiary data in the Medicare Enrollment Database did not reflect the fact that the beneficiary was incarcerated for the date of service.  On July 31, 2013, CMS updated its Frequently Asked Questions (FAQs) for all fee-for-service providers related to incarcerated beneficiary claim denials. 

Following the implementation of the IUR process, CMS identified a significant number of alleged overpayments, issued demand letters, and automatically recovered the alleged overpayments.  Subsequently, however, CMS has determined that certain of the incarcerated beneficiary claims may have been denied in error, because the information related to the period of incarceration for certain beneficiaries was not completely accurate.  As a result, CMS reviewed the data and worked to identify claims that resulted in recent recovery actions and to correct any inappropriate overpayment recoveries. 

CMS recently published a release stating that providers impacted by the erroneous overpayments could anticipate a refund check postmarked by December 12, 2013.  Providers are encouraged to appeal any claims that have been recouped in error and not yet repaid, to preserve their rights to payment even if CMS is expected to reprocess the claims.  

CMS’s webpage regarding incarcerated beneficiaries and recent claim denials (including a sample letter and spreadsheet of claims detail needed to reconcile the claims) is available here, and more background information related to this topic is available at the Health Headlines published here.

Reporter, Juliet M. McBride, Houston, +1 713 276 7448, jmcbride@kslaw.com.

We will not be publishing Health Headlines on December 30, 2013.  Our next edition will come out on January 6, 2013.  Happy Holidays!

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CMS

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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