On October 21, 2015, the Office of Management and Budget (OMB) received the Medicare Parts A and B overpayment final rule from CMS which is the last phase before the rule is issued in the Federal Register.  While the text of the final rule is not yet publicly available, this development signals that the long-awaited 60-day Medicare Parts A and B final rule from CMS will likely be issued in the near future. 

The 60-day rule requires recipients of a Medicare or Medicaid overpayment to report and refund the overpayment within 60 days of “identification” of the overpayment (or the date the corresponding cost report is due, whichever is later).  See 42 U.S.C. § 1320a-7k(d) (section 6402 of the Affordable Care Act).  The term “identification” is not defined in the Affordable Care Act.

CMS issued the 60-day Medicare Parts A and B overpayment proposed rule in February 2012 which contained many far-reaching revisions, including a proposed 10-year look-back period. While CMS is typically required to publish final rules within three years of the publication of the proposed regulation, as previously reported, on February 13, 2015, CMS announced a one-year extension to issue the final rule due to the complexity of the rule and the scope of comments received from the provider community (CMS Notice).  Accordingly, CMS now has until February 16, 2016 to publish the final rule.  In the absence of final rulemaking from CMS for Medicare Parts A and B overpayments, there has been uncertainty regarding the precise parameters of the 60-day overpayment rule, particularly concerning the interpretation of the word “identification.”  

In the CMS Notice, CMS emphasized that providers “are subject to the statutory requirements found in [§ 6402]” of the Affordable Care Act even absent the publication of the final rule and “could face potential False Claims Act liability, Civil Monetary Penalties Law liability, and exclusion from Federal health care programs for failure to report and return an overpayment.”  Indeed, as also previously reported, in August 2015, the Southern District of New York became the first court to interpret and define the extent of a provider’s obligations under Section 6402 of the Affordable Care Act.  See Kane ex rel. New York v. Healthfirst, Inc., 11 CIV. 2325 (ER) (S.D.N.Y. Aug. 3, 2015).  As additionally reported, on August 3, 2015, DOJ announced the first False Claims Act settlement “involving a health care provider’s failure to investigate credit balances on its books to determine whether they resulted from overpayments made by a federal health care program.”  

The much-anticipated issuance of the Medicare Parts A and B overpayment final rule will be a significant development for the provider community.  Once the rule is finalized, it will be important for providers to evaluate their internal overpayment policies and procedures to ensure that such policies are consistent with the requirements of the final rule.