The 60 Day CMS Overpayment Rule

On February 11, 2016, the Center for Medicare and Medicaid Services (CMS) issued the final overpayment rule commonly referred to as the “60 Day Rule”. Physicians, labs, hospitals, and other providers that receive reimbursement under Part A or B must comply with the 60 Day Rule or face penalties under the False Claims Act

The 60 Day Rule requires that overpayments (e.g., payment for coding errors) be reported and returned to CMS within 60 days after the date on which the overpayment was identified. Identification of the overpayment was addressed at length in the regulation.  The 60-day clock to identify overpayments starts ticking “when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.”  Reasonable diligence means that the provider takes steps to uncover overpayments and steps to quantify the amount of the overpayment

For example, a practice receives a hotline complaint that it incorrectly billed Medicare on May 1, 2016. On May 15, 2016, the owner of the practice calls an experienced healthcare attorney.  Over the course of the next 3 months, the attorney and practice manager identify the issue as a coding error for 1 patient with an overpayment in the amount of $1,000.  On September 15, 2016, the practice submits a voluntary refund of the $1,000 to CMS.

In this scenario, the practice acted in compliance with the 60 Day Rule because the 60 day clock did not start ticking until the “reasonable diligence” phase ended (when the attorney and practice manager identify and quantify the overpayment at the end of the 3 month period). If the practice did not take action after receiving the hotline complaint, then the practice would be in violation of the 60 Day Rule and subject to False Claims Act penalties.

• Under the 60 Day Rule, a physician cannot bury his head in the sand and claim that he had no knowledge of an overpayment.  A physician must take affirmative steps to uncover overpayments.  One of the key takeaways from the regulations is that CMS places significant importance on compliance programs to ensure providers comply with the 60 Day Rule.  Providers can take the following actions to uncover overpayments in their practice:
• Perform regular audits on certain high volume/revenue procedures.
• Review the findings of the audits in a prudent and timely manner.
• Train or engage individuals who are trained in identifying overpayments.
• If the audit uncovers overpayments, the provider should determine if these were discrete instances of overpayments or more widespread.

In addition, the 60 Day Rule requires that overpayments be returned if the overpayment is identified “within 6 years of the date the overpayment was received.”  Given the extent of the 6 year look back, it is important that physician practices maintain organized medical records.