CMS: Physicians Obliged to Look for Medicare Overpayments

February 12, 2016

Physicians must not only return Medicare overpayments within 60 days of identifying them but also actively look for overpayment through self-audits and other forms of research, according to final regulations released yesterday by the Centers for Medicare & Medicaid Services (CMS).

If a physician fails to hand back overpayments within 60 days, he or she risks getting sued by the government under the False Claims Act (FCA).

The new regulations implement a provision of the Affordable Care Act that requires physicians, hospitals, and other healthcare providers to return overpayments they identify on their own. When CMS issued a draft of the regulations in February 2012, medical societies objected to language that suggested to them that physicians had a "perpetual duty" to research whether Medicare overpaid them.

"This requirement would be extremely burdensome for physicians as it would impose a boundless duty to troll medical records in search of innumerable vulnerabilities," the American Medical Association and dozens of other medical societies wrote CMS in 2012. They asked CMS to clarify that the regulations did not create such obligation.

CMS did not cut organized medicine any slack in its final regulations, but instead said what physicians did not want to hear. The agency also warned that some healthcare providers might avoid self-scrutiny for the sake of not discovering money they would have to return.

"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," the agency stated. It added that self-audits, compliance checks, and other types of research did not represent a new, unfunded mandate from the government.

"We disagree that this rule creates a requirement for any formal compliance plan or audit strategy," CMS said. "Rather, it requires that providers and suppliers maintain responsible business practices and conduct a reasonably diligent inquiry when information indicates that an overpayment may exist."

Wanda Filer, MD, president of the American Academy of Family Physicians, one of the signatories to the 2012 letter to CMS, said she hopes the agency will "interpret 'clear duty' very gently," lest physicians find themselves with more administrative work that reduces face time with patients.

"Physicians have one clear duty, and that's taking care of patients," Dr Filer told Medscape Medical News. "CMS has a clear duty to protect the Medicare trust fund. How we strike the balance...will be the art of this."

A Heavier Billy Club

In terms of safeguarding Medicare dollars, the overpayment rules give the government a heavier billy club. CMS noted that even without the new regulations, physicians are obliged under existing law to return Medicare overpayments, and if they do not do so, they face liability under the FCA and the Civil Monetary Penalty Act, as well as exclusion from government healthcare programs. However, the new regulations spell out a consequence for missing the 60-day deadline.

"Any overpayment retained by a person after the deadline for reporting and returning the overpayment is an obligation that has the potential to trigger FCA liability," CMS said.

The 60-day period does not begin, however, when a physician first suspects that Medicare has overpaid him or her. Instead, the clock officially starts ticking after a physician, through "reasonable diligence," has pinned down that he or she indeed received an overpayment and has quantified the amount. CMS said investigating credible information about a possible overpayment normally should not take more than 6 months.

Look-Back Period for Overpayments Shorter Than First Proposed

The regulations on self-identified overpayments give physicians at least one break: CMS had originally proposed that they were liable for reporting Medicare overpayments for the previous 10 years. Organized medicine complained that a look-back period of 10 years would be extreme and overly burdensome, noting that the look-back periods for Medicaid and Medicare recovery audit programs were only 3 years long.

The final regulations struck a compromise and made the look-back period 6 years.

Dr Filer said that the American Academy of Family Physicians will continue to advocate for a 3-year look-back period and hope that CMS changes its mind "in the midst of its learning curve."

More information about the overpayment regulations are available on the CMS website.


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