Health care providers and suppliers concerned about how the Centers for Medicare & Medicaid Services (CMS) plans to implement the 60-day deadline for returning Medicare and Medicaid overpayments enacted as part of the Affordable Care Act (ACA) now have a proposed rule that provides some insight.

Section 6402(a) of the ACA created a new section 1128J of the Social Security Act, and it establishes that the failure to report and return an overpayment within 60 days of identifying its existence can give rise to liability under the False Claims Act (FCA).  The proposed rule applies only to overpayments identified by Medicare Part A and B providers and suppliers, but CMS made clear that Medicare Advantage Organizations, Medicaid Managed Care Organizations, and Prescription Drug Plans under Medicare Part D still have an obligation under various statutes to report and return overpayments.

Overpayment Identification

Since the enactment of section 1128J, providers and suppliers have wondered when the 60-day clock begins to tick.  CMS attempted to address this issue but left many questions unanswered.  According to the proposed rule, an overpayment is “identified” if the provider or supplier has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.  CMS believes that this standard, which is consistent with the False Claims Act, will motivate providers and suppliers to exercise reasonable diligence to determine whether an overpayment exists.

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