On May 29, 2012, CMS issued a final rule implementing a new reconsideration process for administrative review of disallowances of Federal Financial Participation (FFP) under title XIX of the Social Security Act (Medicaid) and extending the period states have to credit the federal government for identified but uncollected Medicaid overpayments. 77 Fed. Reg. 31499 (May 29, 2012). The rule implements changes as set forth in section 204 of the Medicare Improvement for Patients and Providers Act of 2008 and section 6506 of the Affordable Care Act.
The rule, among other changes:
- Provides a new reconsideration process at 42 C.F.R. § 430.42 for states for administrative determinations to disallow claims to receive FFP under Medicaid. Under the new process, a state may request a reconsideration of a Medicaid disallowance from the Secretary of HHS during the 60-day period following receipt of notice of the disallowance or a formal adjudication by the HHS Board. Interest charges will accrue during the new administrative reconsideration process if a state decides to retain the disallowance during such process. The new procedures are applicable to CHIP to the same extent as they are applicable to Medicaid.
- Revises 42 C.F.R. § 433.300 through § 433.322 and extends the time from 60 days to 1 year for which a state may collect a Medicaid overpayment from a provider before having to credit the federal government with the funds. The rule provides that interest is due for amounts not timely credited within such time period; however, a state is allowed additional time for debts due to fraud when a final judgment is pending.
- Enables a state to continue to effectively operate its Medicaid program while repaying the federal share of unallowable expenditures by allowing for installment repayments and provides more flexibility for a state to manage its budget during periods of economic downturn.
- Corrects certain technical errors in accordance with section 6 of Executive Order 13563 of January 18, 2011. The rule corrects, among other things, a technical error at Section 447.299(c)(15) relating to the reporting requirements for Disproportionate Share Hospital Payments. CMS clarifies that the reference to Medicaid eligible individuals in the narrative description of uninsured uncompensated costs in the first sentence of Section 447.299(c)(15) “erroneously contradicts” its longstanding policy and that the second sentence of this provision accurately captures the calculation of “total uninsured IP/OP uncompensated care costs,” which excludes Medicaid eligible individuals.
The final rule is effective on June 28, 2012 and is available here. The proposed rule published on August 3, 2011 (76 Fed. Reg. 46685) sets forth the background of the final rule and is available here.