The Whats, Whens, & Hows of Repaying Agency-Discovered Overpayments to CMS

Thank goodness that the Centers for Medicare and Medicaid Services (CMS) published its "Medicare Reporting and Returning of Self-Identified Overpayments" final rule CMS 6037-F February 11. Its clarifications set you at ease, because now you know how to proceed.

Nothing changes in the process when Medicare or its contractors discover overpayment and issue a demand letter. Agencies must continue to comply with current CMS procedures to return the funds to Medicare. 

What February's Overpayment final rule does:

1. Define "overpayment identification";
2. Clarify the lookback period for overpayment identification;
3. Specify how agencies should report and return identified overpayments to CMS.

Define "overpayment identification"

The Affordable Care Act (ACA) states that providers must return self-discovered overpaid funds within 60 days after they identify the overpayment, or by the date that the corresponding cost report is due, which ever is later. CMS' fact sheet for this final rule states the ACA also states that providers "could face potential False Claims Act (FCA) liability, Civil Monetary Penalties Law (CMPL) liability, and exclusion from federal health care programs for failure to report and return an overpayment."

The fact sheet also explains 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." 

Clarify the lookback period for overpayment identification

According to the February 2016 final rule, overpayments must be reported and returned only if a person identifies the overpayment within six years of the date the overpayment was received.

Specify how agencies should report and return identified overpayments to CMS

The final rule's fact sheet says "providers and suppliers must use an applicable claims adjustment, credit balance, self reported refund, or another appropriate process to satisfy the obligation to report and return overpayments." No mysterious, new process to follow. And, if the agency has reported an overpayment according to the rule's This approach for returning overpayments provides an array of familiar options from which providers and suppliers can select.

This rule also provides that if an agency has reported a self-identified overpayment and is actively engaged in to either CMS' Self-Referral Disclosure Protocol, or the Office of the Inspector General's (OIG) Self-Disclosure Protocol managed by the Office of the Inspector General (OIG), the provider or supplier is considered to be in compliance with the rule.

Clarification can help.