What overpayments rule means for your practice

Robert A. Dowling, MDOn Feb. 12, 2016, the Centers for Medicare & Medicaid Services (CMS) published its long-delayed final rule concerning reporting and returning of overpayments under the Medicare Part A and Part B program (http://bit.ly/Overpaymentsrule). Medicare Part B charges and payments constitute a significant fraction of the typical urology practice’s income (“CMS data offer insights into urologists’ pay"), and owners of these practices should be aware of the pertinent rules and regulations-and the consequences of failure to comply with them.

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The legislative authority for this final rule comes from the Affordable Care Act, enacted March 23, 2010. In that law, the Social Security Act (SSA) was amended to require “a person who has received an overpayment to report and return the overpayment to the Secretary [of Health and Human Services], the state, an intermediary, a carrier, or a contractor, as appropriate, at the correct address, and to notify the Secretary, state, intermediary, carrier or contractor to whom the overpayment was returned in writing of the reason for the overpayment” (http://bit.ly/Overpaymentexecsummary).

The same section of the SSA describes the penalties that may apply for noncompliance, including monetary penalties, exclusion from Medicare, and liability under the False Claims Act. As described in an earlier article (“OIG to scrutinize eligibility for orders/referrals"), publicly available data indicate very few urologists have suffered these sorts of sanctions in the past.

Defining an overpayment

An overpayment is defined in the rule as any funds that a person has received or retained but are not entitled to. Examples include payments for non-covered services, payments for a service in excess of the allowable amount, duplicate payments, and payments received from Medicare when another payer was actually primarily responsible.

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CMS specifically addressed over-coding in this rule in response to a comment, stating, “Providers and suppliers must report and return overpayments identified as a result of upcoding, whether the inappropriate coding was intentional or unintentional” (page 7657). The rule goes on to address “deliberate ignorance”: “Providers and suppliers have a clear duty to undertake proactive activities to determine if they have received an overpayment or risk potential liability for retaining such overpayment” (page 7664).

Next: Several important clarifications in rule

The final rule offers several clarifications important for your practice to understand. First, an overpayment is defined to have been identified at the time “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” (page 7654).

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There are several activities in a urology practice that could lead to identification of an overpayment and test the standard of “reasonable diligence” in the rule: revenue cycle management (receiving a payment and explanation of benefits, posting that payment to a patient’s account, reconciling any adjustments, and updating the balance of the account), a notice from Medicare or an external auditor, an internal review of documentation and/or coding compliance, and an internal investigation prompted by a complaint from a patient or other third party.

Practices should review their policies and procedures to ensure that when Medicare overpayments are ultimately identified, the review and/or refund process is completed promptly. The SSA requires that overpayments are reported and returned no later than 60 days from the time of identification. Some practices have outsourced their revenue cycle management or coding compliance and should similarly ensure that their vendor partner has in place adequate policies to protect the practice.

Next: Rule clarifies look-back period

Rule clarifies look-back period

Second, the rule clarifies that providers are only responsible for reporting and returning overpayments that are identified within 6 years of the date the overpayment was received. This is known as the look-back period, and is intended to provide a time frame for investigating newly identified possible overpayments that may have occurred in the past. Practices should review their records retention and other policies to ensure that records are available and accessible to comply with this requirement.

Third, the rule specifies how to report and return overpayments to the appropriate entity with a clarification that existing refund processes by different Medicare contractors can be followed. “Providers and suppliers may use the claims adjustment, credit balance, self-reported refund process, or another appropriate process to report and return overpayments” (page 7,675). CMS considered and then rejected a single standard set of required data elements for this purpose.

Bottom line: Urology practices should have best practices in place to investigate and identify overpayments from the Medicare Part B program, and promptly return those overpayments via one of the approved methods. In addition, urologists should be aware that coding compliance activities can potentially trigger identification of overpayments. For more information, see (http://bit.ly/Overpaymentssummary).

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