On February 12, 2016, the Centers for Medicare & Medicaid Services (“CMS”) published its much-anticipated final regulations (“Final Rule”) regarding the 60-day reporting and returning of Medicare Part A and B overpayments. 81 FR 7654-7684. Since the enactment of the Affordable Care Act on March 23, 2010, there has been much confusion surrounding the requirements of Section 1128J(d) of the Social Security Act, which requires a person who has received an overpayment to report and return the overpayment within 60 days after the overpayment was “identified” or the date any corresponding cost report is due, whichever is later (the “60-Day Rule”).
While the Final Rule provides a great deal of detail regarding the application of the 60-Day Rule, the critical points are (1) what it means to “identify” an overpayment and (2) what is the established lookback period. The Final Rule notes 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.” Id. CMS describes “reasonable diligence” as including “both proactive compliance activities conducted in good faith by qualified individuals to monitor for receipt of overpayments and investigations conducted in good faith and in a timely manner by qualified individuals in response to obtaining credible information of a potential overpayment.” 81 FR 7661. The Final Rule clarifies that the 60-day clock does not begin running until after the “reasonable diligence” period has concluded, which “is at most 6 months from receipt of credible information, except in extraordinary circumstances.” 81 FR 7662. In addition, CMS confirmed that an overpayment is not “identified” until the amount of the refund has been “quantified.” 81 FR 7661. As a practical matter, providers and suppliers may have up to eight months (six months for timely investigation and two months for reporting and returning) to comply with the 60-Day Rule.
The Final Rule also limits the lookback period to six years. Id. Scaling back from the 10-year lookback period initially proposed, CMS settled on the six-year lookback period to be consistent with the federal False Claims Act. In addition, CMS found that many providers and suppliers retain records and claims data for between six and seven years as a result of various existing federal and state requirements. CMS concluded that the six-year lookback period was appropriate to avoid imposing unreasonable additional burden or cost on providers and suppliers. 81 FR 7654.
The Final Rule becomes effective March 14, 2016. Thus, all providers and suppliers reporting and returning Medicare Part A or B overpayments on or after March 14, 2016,—even overpayments received prior to this effective date—must comply with the new regulatory requirements.