On February 16, 2012, the Centers for Medicare & Medicaid Services (“CMS”) issued a long-awaited proposed rule addressing the obligation of health care organizations to return overpayments made by federal health care programs. The proposed rule provides welcome clarity on certain ambiguous aspects of the Patient Protection and Affordable Care Act (the “ACA”) provisions governing the return of overpayments. However, the proposed rule introduces certain concepts not found in the ACA, such as a proposed 10-year “look-back” period that, if adopted, would impose significant new burdens on providers.

Refund Obligations Under the ACA

The ACA added a new Section 1128J(d) to the Social Security Act that provides that “[i]f a person has received an overpayment, the person shall . . . report and return the overpayment” to “the Secretary [of Health and Human Services], the State, an intermediary, a carrier, or a contractor, as appropriate,” and “notify the Secretary, State, intermediary, carrier or contractor to whom the overpayment was returned in writing of the reason for the overpayment.”[1] Section 1128J(d) further requires that an overpayment be reported and returned by the later of (1) 60 days after the date on which the overpayment was identified; or (2) the date any corresponding cost report is due, if applicable. An “overpayment” is “any funds that a person receives or retains under title XVIII [the Medicare statute] or XIX [the Medicaid statute] to which the person, after applicable reconciliation, is not entitled under such title.”[2]

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