CMS issued a notice on Friday that it will extend by one year the timeline for publication of a final rule concerning policies and procedures for reporting and returning of Medicare overpayments. This notice creates continued industry uncertainty regarding the implementation of key provisions of the Affordable Care Act and their impact on providers. Despite the lack of clarity on when the 60-day repayment clock begins ticking, the DOJ has already intervened in a qui tam case filed in the Southern District of New York that alleges that the defendants failed to return Medicaid overpayments within 60 days. See United States ex. Rel. Kane v. Continuum Health Partners, Inc. et al (Case No. 11-2325).

CMS stated in the February 17, 2015 Federal Register that the extension was a result of numerous public comments it received and internal stakeholder feedback. From these comments and feedback, CMS ultimately concluded that “significant policy and operational issues … need to be resolved in order to address all of the issues raised by comments to the proposed rule and to ensure appropriate coordination with other government agencies.”

Section 1128J(d)(1) of the Act currently requires a person who has received an overpayment to report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, by the later of (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable. Questions remain, for example, regarding when overpayments are “identified” for purposes of triggering the 60-day clock for repayment.

CMS originally published a proposed rule on February 16, 2012 that would implement the provisions of section 1128J(d) of the Act as to Medicare Parts A and B. The timeline for publishing the final rule, however, cannot exceed 3 years from the date of publication of the proposed or interim final rule, unless there are “exceptional” circumstances. Based on CMS’s recent notice of the “policy and operational issue,” the final rule’s release has been delayed until at least February 2016.

CMS reminded all stakeholders that even without a final regulation, stakeholders remain subject to the statutory reporting requirements of Section 1128(d) 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.”

Returns of overpayments may take the form of direct repayments to the MAC or other government payer.  The resolution of an identified overpayment can also be negotiated with the government, such as through the submission of a self-disclosure to CMS to resolve Stark Law liability or the submission of a self-disclosure to the OIG to resolve identified violations of federal law.

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