AHA: Overpayment reg overkill

Provider groups criticize CMS repayment plan

ACMS proposal that could apply False Claims Act liabilities to Medicare overpayments going back 10 years has met with an avalanche of criticism from hospitals, physicians and industry attorneys.

The proposed repayment rule would create False Claims Act liability for providers who hold on to excess Medicare payments for more than 60 days after the provider should have figured out whether an overpayment had been made. The possibility of triple damages and $10,000-per-claim fines may apply in cases where providers fail to identify overpayments within 60 days by not acting with “deliberate speed” to investigate allegations.

More than 120 medical societies and associations including the American Medical Association signed letters opposing the proposed 60-day repayment rule during a CMS public comment period that expired April 16. The American Hospital Association and the Federation of American Hospitals, which together represent nearly all of the 5,000 U.S. community hospitals, submitted their own detailed letters of opposition.

“The proposed rule reads like a fraud and abuse enforcement policy, and creates an aura that every Medicare overpayment is the byproduct of suspicious behavior of providers and suppliers,” says the FAH’s letter, signed by President and CEO Chip Kahn.

The rule’s commentary “indicates that a physician has a perpetual duty to ‘research’ whether any overpayment may exist. This requirement would be extremely burdensome for physicians, as it would impose a boundless duty to troll medical records in search of innumerable vulnerabilities,” according to a comment letter signed by the AMA and more than 100 other physicians’ groups.

Experts say the proposal was objectionable partly because many Medicare overpayments are because of errors by the government or its contractors. While providers have long been expected to find and fix such errors within a reasonable amount of time, the new rule defines 60 days as the deadline, 10 years as the look-back period and the False Claims Act as the method of computing penalties.

“So providers have to not only be Medicare’s keeper ... but now that gets to go back for 10 years? Based on fraud? That is really where everyone has lost their minds,” said Polsinelli Shughart attorney Colleen Faddick, describing providers’ reactions. “There are plenty of ways for CMS to go back 10 years when there’s fraud. But extending what are often routine and transactional issues into the area of fraud is what is driving everyone nuts.”

The CMS has long sought to clarify exactly when and how providers are required to return overpayments. In March 2010, the Patient Protection and Affordable Care Act declared a 60-day repayment rule.

Last February, the CMS published the proposed rule for Medicare Part A and Part B providers and suppliers, saying they could simply return overpayments within 60 days through the existing voluntary refund process— though the program is being renamed the “selfreported overpayment refund process” because it is no longer voluntary.

Common reasons for such overpayments would include incorrect service dates or codes, duplicate payments, insufficient documentation, and lack of medical necessity for the service. The rule would apply to overpayments up to 10 years old.

The CMS’ rule says the 60-day clock begins running either when a provider identifies the payment, or when it shows “reckless disregard or deliberate ignorance” to it by failing to make a reasonable investigation into events such as audit findings and unexpected increases in revenue.

“We believe defining ‘identification’ in this way gives providers and suppliers an incentive to exercise reasonable diligence to determine whether an overpayment exists,” the CMS wrote. “Without such a definition, some providers and suppliers might avoid performing activities to determine whether an overpayment exists, such as self-audits, compliance checks and other additional research.”

John Joseph, a principal with Post & Schell in Philadelphia and a former assistant U.S. attorney, said that requirement is new because it no longer requires a provider to actively conceal an overpayment in order to trigger False Claims penalties.

“The law, as it has been changed, can trigger false claims liability without any action on the provider,” he said. “In a way, you are providing liability now for, instead of an action, a state of mind. That is a new feature.”