Overpayments: Exercise reasonable diligence

A. The Affordable Care Act requires a person who has received an overpayment to report and return the overpayment to the government.

For HME providers, overpayments must be reported and returned within 60 days after the date on which the overpayment was identified. This led to many unanswered questions. What does “identified” mean? If a provider uncovers one overpaid claim, is it required to investigate all related claims? When does the 60-day clock start? How far back must the provider look? The answers to these questions are critical, because failure to report and return overpayments within the allotted time risks potential liability under the reverse false claims provisions of the False Claims Act.  

Fortunately, CMS published a final rule clarifying the “60-day rule.” The rule defines “identification” as when a person “has, or should have through the exercise of reasonable diligence” determined and quantified the amount of the overpayment. Therefore, the 60-day clock does not start until the provider has had the opportunity to investigate the scope of the overpayment and quantify the amount of the overpayment. 

Providers must exercise “reasonable diligence,” which requires (1) implementing proactive compliance activities to monitor for the receipt of overpayments and (2) undertake investigations “in a timely manner” after receipt of credible information of a potential overpayment. In the preamble to the rule, CMS states that it considers a timely investigation to be “at most six months from receipt of the credible information, except in extraordinary circumstances.” Therefore, if an investigation takes the full six months to quantify the overpayment, a provider would have eight months to report and return the overpayment. 

Over the next few months, we will explore ancillary issues related to the 60-day rule.

Josh Skora is an attorney with Brown & Fortunato. Reach him at jskora@bf-law.com.