CMS Proposes Amendment to Overpayment Rule

The Centers for Medicare and Medicaid Services (CMS) has proposed a new amendment that could significantly modify the standard governing identification of overpayments by providers.

The Overpayment Rule (the Rule) obliges providers to report and return identified funds that are received to which the provider, after applicable reconciliation, is not entitled within 60 days. If providers fail to do so, they can be subjected to False Claims Act liability.

As the Rule stands currently, providers are obligated to report overpayments if the overpayments could be identified with “reasonable diligence.” Essentially, providers who negligently fail to report overpayments can be held liable. If it is determined that a provider should have identified and reported an overpayment, even if they did not actually discover it, then the provider can still be subject to liability.

The proposed amendment, however, aims to raise the standard from negligence to parallel the “knowingly” standard contained in the False Claims Act. Under this standard, providers can only be held liable for failure to report overpayments if they intentionally do not report an overpayment or are deliberately ignorant or reckless as to whether an overpayment has occurred.

The proposed amendment comes on the heels of federal litigation instituted by UnitedHealthcare and seeks to clarify ambiguity left over after the case was appealed.

If you have questions about the proposed amendment, please contact one of the authors of this alert. Also, visit the Steptoe &Johnson Health Care Team on LinkedIn to keep up with the latest developments in health care law.