CMS Clarifies Reporting and Returning of Self-Identified Overpayments Requirement for Medicare Parts A and B

Last Updated: Feb 16, 2017

The Centers for Medicare and Medicaid Services (CMS) published a final rule on Feb. 12, 2016, regarding Medicare reporting and returning of self-identified overpayments.

The rule clarifies the requirement that Medicare Parts A and B health care providers and suppliers must report and return overpayments by the later of the date that is 60 days after the date an overpayment was identified, or the due date of any corresponding cost report, if applicable. The reporting and returning requirement was part of the Affordable Care Act and was created to reduce improper payments, including fraudulent payments.

The final rule addresses the following issues:

  • The lookback period governing the reporting and returning of overpayments—Any overpayments must be reported and returned only if a person identifies the overpayment within six years of the date the overpayment was received.
  • The meaning of “identification” in connection to the rule—The final rule states 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.
  • How to report and return overpayments—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.

Get the CMS fact sheet on Medicare Reporting and Returning of Self-Identified Overpayments.

A separate final rule regarding Medicare Parts C and D overpayments was published in the Federal Register on May 23, 2014.

What does this mean for physicians?

Failing to report overpayments can result in liability under the False Claims Act, meaning that a provider could either face financial penalties or be excluded from billing the CMS programs, reports Modern Healthcare.

There was some concern that the lookback period could go as far as back ten years. Ultimately the final rule has set a six-year lookback period, which is more in keeping with the record-keeping requirements for most states.

In Pennsylvania, professional and facility licensing regulations set minimum standards for the retention of medical records. A State Board of Medicine regulation requires that medical doctors retain their office records as follows:

  • Adults—At least seven years from the last date of service
  • Minors—At least seven years from the last date of service and one year after the patients turns 18, whichever is longer

A State Board of Osteopathic Medicine regulation sets an identical standard for osteopathic physicians, except that the extended period for minors is two years after the patient turns 18.

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