The Final Rule: How to Prevent $389,000 in Medicare Overpayments

New York Hospital to Pay $389,000 to Medicare

In a recent audit of a New York hospital, the HHS OIG identified overpayments for a four-year period at approximately $389,000. The OIG recommended the hospital refund this amount to Medicare. But their recommendations did not end there.

The Final Rule: Credible Information

The recommendation from the OIG for the identified overpayments also stated, “OIG believes that this audit report constitutes credible information of potential overpayments. Upon receiving credible information of potential overpayments, providers must exercise reasonable diligence to identify overpayments (i.e., determine receipt of and quantify any overpayments) during a 6-year lookback period. Providers must report and return any identified overpayments by the later of (1) 60 days after identifying those overpayments or (2) the date that any corresponding cost report is due (if applicable). This is known as the 60-day rule.”1

Interestingly, this comment can be found in almost all OIG audit reports where an overpayment was identified. The OIG expects providers to go beyond any timeframe of the OIG audit and include the 6-year lookback period as described in the 60-day overpayment rule.

The Federal Register Final Rule of the 60-day overpayment regulation requires action whenever “credible information” of an overpayment is provided. Specifically, it states, “When a person obtains credible information concerning a potential overpayment, the person needs to undertake reasonable diligence to determine whether an overpayment has been received and to quantify the amount. The 60-day time period begins when either the reasonable diligence is completed or on the day the person received credible information of a potential overpayment if the person failed to conduct reasonable diligence and the person received an overpayment.”

What Else Qualifies as Credible Information?

So what else qualifies as “credible information?” Well, it depends. In response to a commenter who asked whether a hotline call or complaint would qualify as “credible information,” the government responded with, “whether the complaint qualifies as credible information is a factual determination.” But it is possible that a simple hotline call could qualify as credible information prompting the requirement of taking “reasonable diligence” to determine if an overpayment has been made. The Final Rule states that “if the provider fails to make any reasonable inquiry into the complaint, the provider may be found to have acted in reckless disregard or deliberate ignorance of any overpayment.” This could then lead to liability under the False Claims Act.

Many commenters gave other specific scenarios asking if the “credible information” threshold would be met in other particular circumstances. Some of the affirmative responses from the government confirmed the following examples as meeting the definition of “credible information”:

    • Receiving the results of a contractor or government audit is an example of credible information
    • If the MAC notifies a provider of an improper cost report payment, the provider has received credible information of a potential overpayment
    • RAC audit findings, as well as other Medicare contractor and OIG audit findings, are credible information of at least a potential overpayment

The Final Rule Requirements and Reasonable Diligence

The Final Rule does not limit the requirements to perform reasonable diligence to only reactive activity, such as an audit finding from a contractor or government entity. It is also expected of providers to be proactive in their reasonable diligence.

Specifically, the Final Rule states, “The regulation uses a single term—reasonable diligence—to cover both proactive compliance activities to monitor claims and reactive investigative activities undertaken in response to receiving credible information about a potential overpayment. We believe that compliance with the statutory obligation to report and return received overpayments requires both proactive and reactive activities.”

In other words, it is not good enough to simply respond to credible information when it is received. Providers must also be proactively monitoring for overpayments. For example, this means taking a dynamic approach in performing coding and billing audits.

As always, there’s much more to the Final Rule than what we can share here. Make sure to review the Final Rule regularly and assess whether your compliance program is performing both its reasonable diligence requirements, including both proactive and reactive measures.

1 - The Act § 1128J(d); 42 CFR §§ 401.301– 401.305; and 81 Fed. Reg. 7654 (Feb. 12, 2016). pkg/FR-2016-02-12/pdf/2016-02789.pdf


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