The healthcare industry recently saw the first reported court opinion in a False Claims Act case involving the 60-day rule for overpayments - which says that an overpayment by Medicare or Medicaid must be returned within 60 days of "the date on which the overpayment was identified.” In the closely watched U.S. ex rel v. Healthfirst Inc., Judge Ramos of the Southern District of New York rejected a motion to dismiss over allegations that Healthfirst didn’t return Medicare and Medicaid overpayments within the 60 days required by the Affordable Care Act.
While this opinion related simply to a motion to dismiss, and the case will continue, what’s of interest are the Court’s thoughts on what is required to “trigger the ACA’s 60-day report and return clock” and when overpayments can be said to be identified. Healthfirst asserted that to be “identified” overpayments must be “classified with certainty.” The government countered that overpayments were “identified” when “a person is put on notice that a certain claim may have been overpaid.” In denying the motion to dismiss, the Court agreed with the government, stating:
To define “identified” such that the sixty day clock begins ticking when a provider is put on notice of a potential overpayment, rather than the moment when an overpayment is conclusively ascertained, is compatible with the legislative history of the FCA and the FERA highlighted by the Government.
While we will have to wait to see what the final result of Healthfirst will be, what’s clear is that the government has focused on the False Claims Act’s expanded reverse false claims provision - i.e. those instances when a party has knowingly and improperly avoided an obligation to pay money to the government. Indeed, the Southern District of Georgia recently announced what it asserts is the first settlement of a qui tam action filed under the False Claims Act related to the alleged failure of a provider to investigate credit balances on its books to determine whether they related to payments made by a federal health care program.
The takeaway? The government expects providers who bill federal healthcare programs to not only repay “known” overpayments in 60 days, but to investigate “potential” overpayments and return them in the same timeframe. If they don’t, providers may be subject to the treble damages and penalties of the False Claims Act. Tick tock, tick tock.