CMS Finalizes Shorter Risk Period for Overpayments

Home health providers may be breathing a sigh of relief after a final rule reduced the number of years providers are required to repay Medicare overpayments.

The Centers for Medicare & Medicaid Services (CMS) has released its final overpayment rule, requiring that improper payments from the last six years are reported and returned for health care providers of Medicare Parts A and B.

While this is a significant reduction from the initial loopback period of 10 years that was originally proposed, CMS estimates that the annual administrative costs to providers for returning overpayments will range between $120 million to $201 million. The agency did not publish how much the agency expects to recoup. Medicare overpayments are payments that are in excess of amounts properly payable under Medicare statutes and regulations, according to CMS.

“Under this final rule, overpayments must be reported and returned only if a person identifies the overpayment within six years of the date the overpayment was received,” the rule states.

CMS first proposed the rule at the beginning of 2012 with a lookback period of 10 years for returning overpayments. While the final rule reduces that time period 40%, the time and cost required to self-identify overpayments from the last six years is still hefty.

The rule stems from requirements of the Affordable Care Act that providers report overpayments within 60 days of identifying them. The agency is required to try to recover all overpayments when they are identified. The finalized version comes as home health agencies are bracing for other CMS regulations aimed at reducing fraud.

The new rule will require home health agencies to self-identify overpayments from the last six years and issue returns. Medicare providers must look for overpayments themselves and could face a lawsuit if overpayments are not made under the False Claims Act (FCA), as outlined in the Affordable Care Act.

The American Academy of Family Physicians is just one group advocating for a shorter loopback period of just three years.

CMS maintains the rule’s main objective is to reduce costs, fraud and waste. Health care providers must return an overpayment “regardless of the reason it happened.”

In addition to self-identifying overpayments, providers will need to comply with CMS procedures when the agency or its contractors determine overpayments. CMS will also continue its duty to identify and recover overpayments. When overpayments are found by CMS’ contracted reviews, Medicare Administrative Contractors (MACs) will send a demand letter requesting a repayment. If repayments are not made within 30 days, interest begins to accrue, though care providers can submit a rebuttal to dispute the overpayment.

“Our general aim of this final rule is to strengthen program integrity and to ensure that the Medicare Trust Funds are protected and made whole and that taxpayer dollars are not wasted,” CMS stated.

Written by Amy Baxter