Providers are required by federal law to return Medicare and Medicaid overpayments within 60 days of identifying the overpayment or they can be liable under the False Claims Act. Since 2016, providers have relied on Centers for Medicare & Medicaid Services (CMS) regulations for guidance on when an overpayment has been “identified” for purposes of determining when the 60-day period starts (sometimes referred to as the “60-Day Rule”). In some circumstances, calculating the 60 day period is obvious, such as when a provider discovers Medicare inadvertently paid the provider twice for the same service. But in many cases involving compliance or billing issues, the overpayment is not an isolated occurrence and the underlying issue creates many overpayments which often cannot be investigated and quantified within 60 days. In the 60-Day Rule, CMS adopted a “reasonable diligence” standard basically requiring providers to exercise reasonable diligence to investigate issues resulting in overpayments.
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Shortly after the 60-Day Rule was finalized in 2016, defendants in False Claims Act cases challenged its application, and in 2018 a federal district court vacated the rule finding CMS exceeded its authority under the False Claims Act by adopting a “reasonable diligence” standard more akin to “negligence” and in direct conflict with the False Claims Act’s “knowing” intent element. In response, CMS has revised the 60-Day Rule to remove the “reasonable diligence” standard. This new 60-Day Rule was finalized in November with a January 1, 2025 effective date.
On our podcast this week, we outline the key changes to the 60-Day Rule. Providers who have policies on returning overpayments should also update their policies in light of the new rule. Check out our sample policy here.
