Today, the Centers for Medicare and Medicaid Services (CMS) announced that it is extending the deadline to finalize the rule implementing the Affordable Care Act provision that requires providers to timely report and return overpayments to the Medicare program. The proposed rule was issued in February 2012, and CMS is required to provide notice to stakeholders if there are exceptional circumstances that justify delaying the final rule more than three years after the publication of the proposed rule. The announcement comes days before the three year expiration date and extends the deadline for the final rule until February 2016.

The proposed rule generated significant alarm in the provider community for a number of reasons. Of particular concern was CMS’s proposal to implement a ten-year lookback period for paid claims. Under current law, claims reopenings are limited to four years except in cases of fraud. Please see our February 16, 2012 issue of the Health Law Update for more details on the defects in CMS’s proposal. We submitted extensive comments on the proposed rule during the comment period on behalf of our clients. In addition to the ten-year lookback, we addressed the proposed rule’s definition of an “identified” overpayment, the proposal to limit providers to a single approved refund form, and appeal rights for refunded claims, among other key concerns with the proposed rule.

The delay announced today may be a signal to providers that CMS is meaningfully considering these serious issues raised by stakeholders during the comment period. Indeed, CMS stated in the notice announcing the extension that “significant policy and operational issues” identified by public commenters and internal stakeholders need to be addressed before the rule is finalized. CMS also recognized that further development of the final rule will focus on collaboration between CMS, the U.S. Department of Health & Human Services’ Office of Inspector General and the Department of Justice.

CMS also reminded providers that the statutory requirement to report and return overpayments to the Medicare program is effective, and failure to comply with this provision could give rise to liability under the False Claims Act, the Civil Monetary Penalties Law, and even exclusion from the federal healthcare programs.