When the Affordable Care Act was passed and signed into law by President Obama in 2010, one of its provisions required Medicare providers and suppliers to report and refund Medicare overpayments within 60 days of “identifying” such an overpayment. Violating this so-called “60-day rule” can lead not only to serious administrative sanctions up to and including exclusion, but also to significant civil liability under the “reverse false claims” provisions of the False Claims Act.
Although the ACA—and therefore the 60-day rule—has been the law of the land for over 14 years, up until a few weeks ago, it was still unclear when a Medicare provider or supplier “identifies” an overpayment for purposes of the rule.
In regulations issued in 2014 and 2016, CMS stated that a Medicare participant “identifies” an overpayment when it “has determined, or should have determined through the exercise of reasonable diligence, that it has received an overpayment.”
In 2018, however, in a case captioned UnitedHealthcare Ins. Co. v. Azar, a federal district court in the District of Washington D.C. struck down the “reasonable diligence” standard, holding that it impermissibly created potential FCA liability based on mere negligence, when the FCA itself requires, at minimum, reckless disregard. In response to this decision, in 2022, CMS proposed a new rule that would define the word “identified” the same as “knowing”/“knowingly” under the FCA (i.e., actual knowledge or reckless disregard/deliberate ignorance).
On November 1, 2024, CMS finalized this rule, essentially codifying the UnitedHealthcare holding that the 60-day clock for repayments begins when a provider or supplier “knowingly receives or retains and overpayment,” and explicitly incorporating the FCA’s definition of the word “knowingly.” The Final Rule applies to Medicare Parts A through D.
Importantly, the final rule adopts the same “due diligence” rule that was put forth in CMS’ 2015 rule: the 60-day clock can be tolled/suspended for up to 180 days to allow the provider/supplier to conduct a “good faith investigation to determine the existence of related overpayments.” Under the 2024 Final Rule, this investigation period closes either when the overpayments have been identified and quantified or when 180 days have passed, whichever comes first.
The Final Rule remains unpublished until December 9, 2024. It will go into effect on January 1, 2025.
The attorneys at Chilivis Grubman represent healthcare providers of all types and sizes in connection with Medicare overpayment matters and related issues. If you need assistance with such a matter, please contact us today.