The 60-Day Rule was enacted as part of the Affordable Care Act on March 23, 2010 and generally requires a person who has received an overpayment to report and return the overpayment by the later of (i) the date which is 60 days after the date on which the overpayment was identified; or (ii) the date any corresponding cost report is due, if applicable. Any overpayment retained after this deadline may subject the provider to penalties under the False Claims Act.

Among other things, the determination of when an overpayment was “identified” has been unsettling for providers since the enactment of the 60-Day Rule, which did not define this concept. The Final Rule, issued on February 12, 2016 provided some clarification on this issue, and states that a person has identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.

To ensure compliance with the new definition of “identification” of an overpayment, physician practices must have in place effective compliance programs that exercise reasonable diligence, and not avoid, performing activities to proactively determine whether an overpayment exists, such as self-audits, compliance checks, and other research. If the practice receives information concerning a potential overpayment such information creates a duty to make a reasonable inquiry to determine whether an overpayment exists, and failure to conduct such an inquiry could itself violate the 60-Day Rule (and, consequently, the False Claims Act).

CMS provided a list of examples to assist providers with understanding when an overpayment has been “identified”, summarized below:

  • A provider reviews billing or payment records and learns that it incorrectly coded certain services, resulting in increased reimbursement;
  • A provider learns that a patient death occurred prior to the service date on a claim that has been submitted for payment;
  • A provider learns that services were provided by an unlicensed or excluded individual on its behalf;
  • A provider performs an internal audit and discovers that overpayments exist;
  • A provider is informed by a government agency of an audit that discovered a potential overpayment, and the provider or supplier fails to make a reasonable inquiry (in such case the provider may be determined to have acted in reckless disregard or deliberate ignorance of whether it received an overpayment);
  • A provider experiences a significant increase in Medicare revenue and there is no apparent reason – such as a new partner added to the practice or a new focus on a particular area of medicine – for the increase. However, the provider fails to make a reasonable inquiry into whether an overpayment exists (in such case the provider may be found to have acted in reckless disregard or deliberate ignorance of any overpayment).