CMS has issued the final regulations to implement that section of the Affordable Care Act amending the Social Security Act to provide that retention of identified overpayment could be a false claim and be subject to both the False Claims Act (FCA) and the Civil Money Penalty Act (CMP).

ACA § 6402(a) established new Social Security Action § 1128J(d), 42 USC § 1320a-7(k)(b).  The statute and the final rule require reporting and returning of an identified overpayment no later than 60 days after the date on which the overpayment has been reasonably identified.  There has been significant debate over the definition of “reasonably identified” and the “look back” period, which is essentially the statute of limitations requiring that similar overpayments in prior years be identified, reported and returned as well.  CMS originally proposed a 10 year look back.

The final rule states that an overpayment has been identified when a person “has, or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount.  A provider will be considered as having acted with “reasonable diligence” when it conducts a “timely, good faith investigation” within “six months from receipt of credible information, except in extraordinary circumstances.”  Therefore, a provider has six months from the time they reasonably suspect that overpayment has been made to conduct an investigation and identify the overpayment, and then 60 more days to report and return the overpayment.  The look back period has been defined as six (6) years.  The CMS press release and the final regulation are linked.