Illinois Office of the Inspector General Self-Disclosure Protocol for Reporting Medicaid Overpayment

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The Illinois Department of Healthcare and Family Services ("Department"), Office of Inspector General ("OIG"), has now issued an Informational Notice and Voluntary Provider Self-Disclosure Protocol ("Protocol") providing Medicaid providers a mechanism to notify and repay the Department in the event of a Medicaid overpayment. Although the federal government has had a self-disclosure protocol in place regarding Medicare overpayments, this is the first Protocol issued by the Department pertaining to Medicaid overpayments.

The federal Patient Protection and Affordable Care Act ("ACA") requires providers to timely identify and repay Medicare and Medicaid overpayments. Under the ACA, providers are obligated to report, explain, and repay overpayments within 60 calendar days of "identification." Providers failing to disclose, explain, and repay the overpayment in a timely manner may be subject to liability under the federal False Claims Act, among other federal and State laws.

According to the Department's OIG, the following benefits may be extended to Medicaid providers which participate in a self-disclosure in good-faith:

  • Forgiveness or reduction of interest payments (for up to two years);
  • Extended repayment terms;
  • Waiver of some or all applicable penalties and/or sanctions;
  • Timely resolution of the overpayment
  • Decreased likelihood of imposition of an OIG corporate integrity agreement ("CIA"); and
  • If made within 60 days of identification, avoidance of False Claims Acts penalties.

A Medicaid provider may utilize the Protocol after it fully investigates and confirms that an overpayment exists, or that billings were sumitted erroneously even if no overpayment occurred. Importantly, self-disclosure of an overpayment must be made within 60 days of the overpayment being identified or the date that any corresponding Medicaid cost report is due, if applicable. Failure to report the overpayment in a timely manner subjects the overpayment claims to false Claims Act penalties ($5,500 to $11,000 per claim plus three times the amount of damages).

The Protocol is not intended to be used for minor or insignificant matters such as the repayment of simple occurrences of overpayment(s) (on which the Department did not elaborate). According to the Department, repayment of simple overpayments should typically be handled through traditional resolution methods such as voiding or adjusting the amounts of claims. The Department's OIG encourages providers to utilize the Protocol when circumstance warrant. Items which are appropriate for self-disclosure may include, but are not limited to:

  • Substantial routine errors;
  • Systematic errors;
  • Patterns of errors; and
  • Potential violations of State and federal laws and regulations relating to the Medicaid program, such as noncompliance pertaining to documentation and records, quality of care, cost reports, and their party liability.

Once a provider determines that selfdisclosure to the Department's OIG is appropriate, it should prepare a written Disclosure Report with the following information, where applicable:

  • Provider information, including name (including doing business as name, or first, middle, and last name), Medicaid provider identification number, license number, NPI, DEA number, business address, mailing address, telephone number, fax number, and e-mail address;
  • Contact person, if not the provider, and contact information. Specify the relationship of the contact person to the provider;
  • The basis (or bases) for the disclosure, including the approximate time period covered and an assessment of the potential financial impact;
  • Citations to the specific State and federal Medicaid program laws, regulations, rules, policies, guidance, Department Handbook provisions, and/or other authorities that are or may be implicated;
  • A password protected or otherwise secure Excel or MS Access file on CD with a detailed list of claims paid or submitted that comprise the overpayments. Each claim should list the Medicaid provider identification number, recipient names, Recipient Identification Number, date(s) of service, procedure code(s) billed, and the amount(s) paid by the Department;
  • For identification purposes, the file(s) on the CD must be named in accordance with the following format: NPI Number_SelfD_SubmittingDate. extension (xls/mdb). For example: 1234567890_SelfD_03012 013.xls (Excel) or 1234567890_SelfD_03012013.mbd (MS Access);
  • Any law enforcement, State, and/or federal agency that has been notified of the same conduct. Include the name, title, and contact information of notified individuals, and the date of notification;
  • The nature and extent of any investigation or audit conducted by the provider to identify and determine the amount of the overpayment;
  • A summary of the identified underlying cause of the issue(s) involved and any corrective action taken, the date the correction occured, and the process for monitoring the issue to prevent reoccurrence;
  • The names of individuals involved in any suspected improper or illegal conduct and whether they are still employed by or otherwise affiliated with the provider;
  • An attestation of accuracy and completeness of the Disclosure Report, signed by the provider (if an individual) or an unauthorized individual (if an organization).

The Disclosure Report (including the CD) is to be submitted by mail to the following address:

The Illinois Department of Healthcare and Family Services
Office of Inspector General c/o Self-Disclosure Protocol
Attention: Trish Phillips, Chief of Staff
404 5th Street
Springfield, Illinois 62763

Upon receipt of the Disclosure Report, the Department's OIG will consider each disclosed incident on an individual basis, and will consider the following factors, among others:

  • The exact issue(s);
  • The dollar amount involved;
  • The percentage of the provider's overall Medicaid reimbursement involved;
  • Any patterns or trends;
  • The period of non-compliance;
  • Timely use of the Protocol;
  • The circumstances that led to the non-compliance;
  • The provider's history with the Department, including recurring overpayments for the same reason; and
  • Whether the provider has a CIA in place.

Upon review of the provider's Disclosure Report, the Department's OIG may independently conclude that the matter warrants referral to the Illinois Attorney General's Medicaid Fraud Control Unit and/or other authorities. In the event that the provider and the Department's OIG cannot reach agreement on the amount of the overpayment, or if a provider fails to cooperate in good faith, the OIG may pursue the matter through established audit or investigation processes; and the possible advantages of self-disclosure, such as less stringent repayment and/or sanction terms, may no longer apply.

Matters related to an ongoing department audit of the provider are not generally eligible for resolution under the Protocol. If the OIG is already auditing or investigating the provider, and the provider wishes to avail itself of the Protocol, it should bring the matter to the attention of the assigned auditor and make a submission under the Protocol. The OIG will not accept any payment for self-disclosures as full and final payment prior to finalizing its review and verfication process. Once a repayment amount has been agreed upon between the Department's OIG and the Medicaid provider, the OIG expects the provider to reimburse the State of Illinois for the overpayment with payment in full or to enter into a repayment agreement if repayment was not previously made. Upon closure of a matter, the OIG will issue settlement documentation.

Betsy Anderson also contributed to this article.