Pursuant to 42 U.S.C. § 1320a-7k(d), which was passed in 2010, an ACA overpayment must be reported, explained, and returned within 60 days after the date it was “identified.” An overpayment is defined by the ACA as funds that are received or retained under the Medicare or Medicaid programs to which the provider was not entitled to. Id. The ACA further provides that any overpayment retained by a person after the deadline for reporting and returning an overpayment is an obligation under the False Claims Act. Id. Since the ACA was passed, providers have had a very difficult time determining when the 60-day overpayment clock starts ticking. This is because the ACA does not explain what it means to “identify” an overpayment. In an attempt to help diffuse some of the ambiguity, the Centers for Medicare and Medicaid Services (CMS) issued proposed regulations in February 2012 to help interpret that rule. The proposed regulations provide that an overpayment has been “identified” for purposes of the ACA “when the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate indifference of the overpayment.” 77 Fed. Reg. 9184 (Feb. 16, 2012). The proposed regulations acknowledge in the preamble that the 60-day clock would not start running until after the provider has an opportunity to undertake a “reasonable inquiry” into the basis of the alleged overpayment. Id. Despite this definition and others, the proposed regulations still leave many questions unanswered, namely: Does a “reasonable inquiry” mean that the amount of the overpayment has been definitively calculated?
Even though the proposed regulations were published in February 2012, they have not yet been finalized. Last week, citing to the intricacy of the proposed regulations and the nearly 400 public comments on the proposed regulations, CMS determined that “exceptional circumstances” warrant delaying the issuance of a finalized rule for another year. Surely, the sheer complexity of the rule warranted the extension, but CMS is likely going to take the needed time to beef up the rule in order to eliminate ambiguity. Expect the finalized rule to contain additional guidance on exactly what kind of events trigger overpayment liability. It is also likely that CMS delayed finalizing the proposed rule because it has its eye on U.S. v. Continuum, a fiercely contested S.D.N.Y. case dealing with overpayments. In that case, the court will likely set the standard on ACA overpayments. This ruling will surely help CMS craft a rule that is reasonable enough to be applied to real world situations, across the board. Stay tuned to see where CMS comes out on this very important issue. Hopefully, the answer will not be costly for providers.